December 7, 2021 (Angelo Giuliano – DotDotNews) – In 1945, the world woke up to a new reality, a new world order.
The US had escaped World War II unscathed while Europe and Asia were completely destroyed. Throughout the war the US developed a massive industrial base to supply the war effort and its share of the world’s economy had exponentially increased making the US the ultimate winner.
When the war had finally concluded, the US held 35% of the world’s GDP, had 75% of the world’s gold reserves, and owned both the massive debts of its allies and imposed war reparations upon its enemies.
Unlike other wars, debt was not forgiven and many countries (especially Germany) were enslaved by debt for decades. The US imposed on the world the Bretton Woods Agreement; a dollar hegemony backed by tangible gold. In theory, any country could go to the Federal Reserve and ask for the equivalent of gold for a certain amount of dollars.
Back then, the US trade balance enjoyed a large surplus while the rest of the world struggled to recover from the destruction of the war. Production capabilities would need to recover first before a more balanced trade with the US could be established.
In the following decades, an overly confident US embarked upon a series of very expensive wars including in Korea and Vietnam gradually creating for the US economy a deep deficit.
The US found itself buying more from the world than what it sold to it with nations asking for their respective trade surpluses to be repaid in gold. The US presidential administration of Richard Nixon decided unilaterally to suspend the Bretton Woods Agreement, meaning the US dollar was becoming nothing more than paper, backed by no tangible assets.
From then on, the US has pressured the world to convert their trade surplus into US bonds (debt), establishing US dollar hegemony as an immense Ponzi scheme with ever-mounting US debt left unpaid and instead rolled over into continuously renewed contracted debt to repay old debts.
Few dared to challenge this system. Whoever did would pay a heavy price. Memorable victims of US military aggression, targeted amid an attempt to de-dollarize, including Libya’s Muammar Qaddafi and Iraqi President Sadam Hussein. They themselves were killed, their governments removed from power and their respective nations looted and destroyed.
Then came China. It developed a different approach, gradually moving away from buying US debt and the process of sustaining America’s “high standard of living”, and instead investing surplus into its Belt and Road initiative (BRI).
This way China could kill many birds with one stone:
* Recycle its US dollar trade surplus into tangible assets;
* Connect its neighbors in pursuit of better Eurasian economic integration;
* Gain access to new resources and partnerships;
* Bypass the Malacca Strait through developing alternative, inland routes and;
* Partner with the Global South to challenge neo-colonialism and debt enslavement by the IMF and World bank.
This was taken as a declaration of war by Washington, a challenge to its long-standing dollar hegemony and the Ponzi scheme it had transformed into.
During the Opium War, China had been in a similar position as it is today. China was exporting ceramics, tea, and silk to England against silver while not buying anything in return from England. This had completely emptied England’s silver reserves. So, England had imposed opium on China as a means toward rebalancing its trade with China.
Nowadays even US allies are no longer buying US bonds and the US trade deficit is paid instead by printing new dollars and in turn creating super-inflation (official rates are 6.2%, real inflation is upward to 12-15%), meaning that American consumers are losing purchasing power, becoming poorer, all while the Federal Reserve continues printing dollars.
It all comes down to money, control, containment – merely camouflage with feigned concern over “human rights” and “democracy.”
China has learned from the mistakes it made during the Opium War. It has had one hundred years to find a better strategy, giving it the upper hand within America’s own capitalistic game of market economics. It also has delivered tangible results to its population serving as a major embarrassment to neo-imperial interests in the West.
We are living in interesting times, equivalent to the decadence of Rome before its collapse. Despite the West’s apocalyptic views regarding China’s rise, China is only taking back its original position it has historically held throughout most of human history alongside India as global leaders in trade and prosperity.
History tells us that China’s modern rise may be different and will not seek the hegemonic characteristics of the West it is supplanting. It will seek to instead co-exist with the rest of the world, a multi-polar world, one built upon peace and prosperity.
The views do not necessarily reflect those of DotDotNews, where this was originally published.