THE U.K.’s “ECONOMIST”: MORE SIGNALS FROM THE CITY ...November 8, 2015
Mr. H.B. shared this article with me, and I pass it along to you as yet another indicator that significant fissures are beginning to appear in the American dollar hegemony and "dollar diplomacy" that have been the mainsprings of American power since the end of the Second World War. Additionally, this article, from the U.K.'s Economist, mouthpiece in a certain sense of the U.K.'s oligarchy, is yet another indicator that there are significant voices in that country now reassessing its "special relationship" with Washington, District of Corruption:
There's a key passage in this article which highlights directly the problems and strategies of the BRICSA bloc, and CHina's new silk road strategy thatwe mentioned in our blog yesterday:
The widening gap between America’s economic and financial power creates problems for other countries, in the dollar zone and beyond. That is because the costs of dollar dominance are starting to outweigh the benefits.
First, economies must endure wild gyrations. In recent months the prospect of even a tiny rate rise in America has sucked capital from emerging markets, battering currencies and share prices. Decisions of the Federal Reserve affect offshore dollar debts and deposits worth about $9 trillion. Because some countries link their currencies to the dollar, their central banks must react to the Fed. Foreigners own 20-50% of local-currency government bonds in places like Indonesia, Malaysia, Mexico, South Africa and Turkey: they are more likely to abandon emerging markets when American rates rise.
In other words, viewed and stated a very different way, the American federal reserve system has been put, by dint of the abandonment of the Bretton-Woods system, and the peg of other currencies to the dollar, into the position of being responsible to the effects of its policies not only on the American scene, but that of other countries as well. The result is that any move by the Fed in this instance, particularly a raise in prime rates, might cause a capital flight from "emerging economies."
Consider this in the light of the New Silk Road and bullion strategy we outlined yesterday. Such precipitous moves are ultimately destablizing and, as I averred, not ultimately productive, since actual productivity and manufacture is curtailed under such a system. And ultimately of course, in the secret councils and counsels of the Fed, a lack of tranparency, or even of "translucency" is itself therefore destabilizing and unproductive.
The "bullion strategy" that we outlined yesterday that might be at the center of the emergence of the BRICSA bloc is this even more evident, for a strategy of this sort unpegs currencies from the dollar, and hence, from destabilizing manipulations by the Fed. Now, once again, add an "alternative OPEC" to the mix, one bypassing the Middle East by the deliberate development of infrastructure (in this case, the energy infrastructure of BRICSA bloc member nations - witness only the bilateral energy deals between Russia and China to develop Siberian energy ), mix, and stir, and one has a recipe for a profoundly different global financial and energy system.
The United States, in this analysis, still has many cards it can play in the emerging game, the only question is, whether it will have the willpower to do so, and cut itself loose from the relationships it has had with incredibly dubious allies like Saudi Arabia. It can seek to join in this process, or to remain in its current relationships, and even then, in the long term, its interests will lie in opening genuine dialogue with the BRICSA bloc. If the geopoltical trends and analyses I've been proposing over the previous weeks have any merit, then this means, like it or not, that over the long term the USA must inevitably come to its senses. And it also means that in the long term, Saudi Arabia is on the menu unless there is dramatic and genuine domestic change, for medievalism will ultimately have no place in the scheme. Even China, for all its current human rights problems, has come a long way since Chairman Mao, and for China to be the financial player it now is, it had to. And this means they're watching developments just as nervously in Tehran and Riyadh as they are in Washington.
See you on the flip side...