War Threat Rises As Economy DeclinesBy Paul Craig Roberts
In order to protect the dollar’s exchange value in the face of large current account deficits and money creation in support of the balance sheets of “banks too big to fail,” Washington has the Japanese and European central banks printing money hand over fist. The printing of yen and euros offsets the printing of dollars and thus protects the dollar’s exchange value.
Paul Craig Roberts, Keynote Address to the Annual Conference of the Financial West Group, New Orleans, May 7, 2015 |
May 11, 2015 "Information Clearing House" -
The defining events of our time are the collapse of the Soviet Union,
9/11, jobs offshoring, and financial deregulation. In these events we
find the basis of our foreign policy problems and our economic problems.
The
United States has always had a good opinion of itself, but with the
Soviet collapse self-satisfaction reached new heights. We became the
exceptional people, the indispensable people, the country chosen by
history to exercise hegemony over the world. This neoconservative
doctrine releases the US government from constraints of international
law and allows Washington to use coercion against sovereign states in
order to remake the world in its own image.
To
protect Washington’s unique Uni-power status that resulted from the
Soviet collapse, Paul Wolfowitz in 1992 penned what is known as the
Wolfowitz Doctrine. This doctrine is the basis for Washington’s foreign
policy. The doctrine states:
“Our
first objective is to prevent the re-emergence of a new rival, either
on the territory of the former Soviet Union or elsewhere, that poses a
threat on the order of that posed formerly by the Soviet Union. This is a
dominant consideration underlying the new regional defense strategy and
requires that we endeavor to prevent any hostile power from dominating a
region whose resources would, under consolidated control, be sufficient
to generate global power.”
In March of this year the Council on Foreign Relations extended this doctrine to China.
Washington
is now committed to blocking the rise of two large nuclear-armed
countries. This commitment is the reason for the crisis that Washington
has created in Ukraine and for its use as anti-Russian propaganda. China
is now confronted with the Pivot to Asia and the construction of new US
naval and air bases to ensure Washington’s control of the South China
Sea, now defined as an area of American National Interests.
9/11
served to launch the neoconservatives’ war for hegemony in the Middle
East. 9/11 also served to launch the domestic police state. While civil
liberties have shriveled at home, the US has been at war for almost the
entirety of the 21st century, wars that have cost us, according to
Joseph Stiglitz and Linda Bilmes, at least $6 trillion dollars. These
wars have gone very badly. They have destabilized governments in an
important energy producing area. And the wars have vastly multiplied the
“terrorists,” the quelling of which was the official reason for the
wars.
Just
as the Soviet collapse unleashed US hegemony, it gave rise to jobs
offshoring. The Soviet collapse convinced China and India to open their
massive underutilized labor markets to US capital. US corporations, with
any reluctant ones pushed by large retailers and Wall Street’s threat
of financing takeovers, moved manufacturing, industrial, and tradable
professional service jobs, such as software engineering, abroad.
This
decimated the American middle class and removed ladders of upward
mobility. US GDP and tax base moved with the jobs to China and India. US
real median family incomes ceased to grow and declined. Without income
growth to drive the economy, Alan Greenspan resorted to an expansion of
consumer debt, which has run its course. Currently there is nothing to
drive the economy.
When
the goods and services produced by offshored jobs are brought to the US
to be sold, they enter as imports, thus worsening the trade balance.
Foreigners use their trade surpluses to acquire US bonds, equities,
companies, and real estate. Consequently, interests, dividends, capital
gains, and rents are redirected from Americans to foreigners. This
worsens the current account deficit.In order to protect the dollar’s exchange value in the face of large current account deficits and money creation in support of the balance sheets of “banks too big to fail,” Washington has the Japanese and European central banks printing money hand over fist. The printing of yen and euros offsets the printing of dollars and thus protects the dollar’s exchange value.
The
Glass-Steagall Act that separated commercial and investment banking had
been somewhat eroded prior to the total repeal during the second term
of the Clinton regime. This repeal, together with the failure to
regulate over the counter derivatives, the removal of position limits on
speculators, and the enormous financial concentration that resulted
from the dead letter status of anti-trust laws, produced not free market
utopia but a serious and ongoing financial crisis. The liquidity issued
in behalf of this crisis has resulted in stock and bond market bubbles.
Implications, consequences, solutions:
When
Russia blocked the Obama regime’s planned invasion of Syria and
intended bombing of Iran, the neoconservatives realized that while they
had been preoccupied with their wars in the Middle East and Africa for a
decade, Putin had restored the Russian economy and military.
The
first objective of the Wolfowitz doctrine–to prevent the re-emergence
of a new rival–had been breached. Here was Russia telling the US “No.”
The British Parliament joined in by vetoing UK participation in a US
invasion of Syria. The Uni-Power status was shaken.
This
redirected the attention of the neoconservatives from the Middle East
to Russia. Over the previous decade Washington had invested $5 billion
in financing up-and-coming politicians in Ukraine and non-governmental
organizations that could be sent into the streets in protests.
When
the president of Ukraine did a cost-benefit analysis of the proposed
association of Ukraine with the EU, he saw that it didn’t pay and
rejected it. At that point Washington called the NGOs into the streets.
The neo-nazis added the violence and the government unprepared for
violence collapsed.
Victoria Nuland and Geoffrey Pyatt chose the new Ukrainian government and established a vassal regime in Ukraine.
Washington
hoped to use the coup to evict Russia from its Black Sea naval base,
Russia’s only warm water port. However, Crimea, for centuries a part of
Russia, elected to return to Russia. Washington was frustrated, but
recovered from disappointment and described Crimean self-determination
as Russian invasion and annexation. Washington used this propaganda to
break up Europe’s economic and political relationships with Russia by
pressuring Europe into sanctions against Russia.
The
sanctions have had adverse impacts on Europe. Additionally, Europeans
are concerned with Washington’s growing belligerence. Europe has nothing
to gain from conflict with Russia and fears being pushed into war.
There are indications that some European governments are considering a
foreign policy independent of Washington’s.
The
virulent anti-Russian propaganda and demonization of Putin has
destroyed Russian confidence in the West. With the NATO commander
Breedlove demanding more money, more troops, more bases on Russia’s
borders, the situation is dangerous. In a direct military challenge to
Moscow, Washington is seeking to incorporate both Ukraine and Georgia,
two former Russian provinces, into NATO.
On
the economic scene the dollar as reserve currency is a problem for the
entire world. Sanctions and other forms of American financial
imperialism are causing countries, including very large ones, to leave
the dollar payments system. As foreign trade is increasingly conducted
without recourse to the US dollar, the demand for dollars drops, but the
supply has been greatly expanded as a result of Quantitative Easing.
Because of offshored production and US dependence on imports, a drop in
the dollar’s exchange value would result in domestic inflation, further
lowering US living standards and threatening the rigged, stock, bond,
and precious metal markets.
The
real reason for Quantitative Easing is to support the banks’ balance
sheets. However, the official reason is to stimulate the economy and
sustain economic recovery. The only sign of recovery is real GDP which
shows up as positive only because the deflator is understated.
The
evidence is clear that there has been no economic recovery. With the
first quarter GDP negative and the second quarter likely to be negative
as well, the second-leg of the long downturn could begin this summer.
Moreover,
the current high unemployment (23 percent) is different from previous
unemployment. In the postwar 20th century, the Federal Reserve dealt
with inflation by cooling down the economy. Sales would decline,
inventories would build up, and layoffs would occur. As unemployment
rose, the Fed would reverse course and workers would be called back to
their jobs. Today the jobs are no longer there. They have been moved
offshore. The factories are gone. There are no jobs to which to call
workers back.
To
restore the economy requires that offshoring be reversed and the jobs
brought back to the US. This could be done by changing the way
corporations are taxed. The tax rate on corporate profit could be
determined by the geographic location at which corporations add value to
the products that they market in the US. If the goods and services are
produced offshore, the tax rate would be high. If the goods and services
are produced domestically, the tax rate could be low. The tax rates
could be set to offset the lower costs of producing abroad.
Considering
the lobbying power of transnational corporations and Wall Street, this
is an unlikely reform. My conclusion is that the US economy will
continue its decline.
On
the foreign policy front, the hubris and arrogance of America’s
self-image as the “exceptional, indispensable” country with hegemonic
rights over other countries means that the world is primed for war.
Neither Russia nor China will accept the vassalage status accepted by
the UK, Germany, France and the rest of Europe, Canada, Japan and
Australia. The Wolfowitz Doctrine makes it clear that the price of world
peace is the world’s acceptance of Washington’s hegemony.
Therefore,
unless the dollar and with it US power collapses or Europe finds the
courage to break with Washington and to pursue an independent foreign
policy, saying good-bye to NATO, nuclear war is our likely future.
Washington’s
aggression and blatant propaganda have convinced Russia and China that
Washington intends war, and this realization has drawn the two countries
into a strategic alliance. Russia’s May 9 Victory Day celebration of
the defeat of Hitler is a historical turning point. Western governments
boycotted the celebration, and the Chinese were there in their place.
For the first time Chinese soldiers marched in the parade with Russian
soldiers, and the president of China sat next to the president of
Russia.
The Saker’s report on the Moscow celebration is interesting. http://thesaker.is/todays-victory-day-celebrations-in-moscow-mark-a-turning-point-in-russian-history/ Especially
note the chart of World War II casualties. Russian casualties compared
to the combined casualties of the US, UK, and France make it completely
clear that it was Russia that defeated Hitler. In the Orwellian West,
the latest rewriting of history leaves out of the story the Red Army’s
destruction of the Wehrmacht. In line with the rewritten history,
Obama’s remarks on the 70th anniversary of Germany’s surrender mentioned
only US forces. In contrast Putin expressed gratitude to “the peoples
of Great Britain, France and the United States of America for their
contribution to the victory.”http://thesaker.is/15865/
For
many years now the President of Russia has made the point publicly that
the West does not listen to Russia. Washington and its vassal states in
Europe, Canada, Australia, and Japan do not hear when Russia says
“don’t push us this hard, we are not your enemy. We want to be your
partners.”
As
the years have passed without Washington hearing, Russia and China have
finally realized that their choice is vassalage or war. Had there been
any intelligent, qualified people in the National Security Council, the
State Department, or the Pentagon, Washington would have been warned
away from the neocon policy of sowing distrust. But with only neocon
hubris present in the government, Washington made the mistake that could
be fateful for humanity.
Dr. Paul Craig Roberts was
Assistant Secretary of the Treasury for Economic Policy and associate
editor of the Wall Street Journal. He was columnist for Business Week,
Scripps Howard News Service, and Creators Syndicate. He has had many
university appointments. His internet columns have attracted a worldwide
following. Roberts' latest books are The Failure of Laissez Faire Capitalism and Economic Dissolution of the West and How America Was Lost.
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