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Watch: Forum on Ukraine, The New Cold War, and The Changing International Situation

Last Sunday, March 19th, Voices for New Democracy hosted our latest monthly political forum covering the crisis in Ukraine and its implications for global geopolitics. Spring Wang, Steve Clark, and Floyd Huen joined the panel to discuss each of their analyses around the current international situation, sparking spirited debate over the nature of the war in Ukraine, its beneficiaries, and the long-simmering tensions and contradictions that preceded it. The debate raised key questions and implications that the Left should consider in our analysis of global politics and our strategy for building progressive change.

Watch the full forum below, and email voicesfornewdemocracy@gmail.com to submit your own reflections on these issues.

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March 20 Monthly Political Forum: Ukraine, The New Cold War & The Changing International Situation

Join Voices for New Democracy on Sunday March 20th at 7 p.m. ET / 4 p.m. PT for our next monthly political forum discussing the war on Ukraine, the new Cold War, and the changing international situation. Spring Wang, Steve Clark, and Floyd Huen will share their reflections on the ongoing conflict and its implications for international geopolitics. The majority of the time will be spent in conversation, so we encourage you to come with your ideas and analysis.  

Click here on Sunday, March 20th at 7 p.m. ET / 4 p.m. PT to join the forum.

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Analysis Ecological Justice Environmental Justice Global Peace & Collaboration Immigration Social Justice

Mass Migration, Land Back and a Sustainable Earth

| Steve Clark |

At long last, our world seems to have accepted the reality of climate change and the devastation it portends. But, we still have a long way to go in assessing, much less implementing, an effective global response. 

Inevitably, the struggle for programmatic clarity unfolds against the backdrop of long-entrenched corporate domination of the key entities – the IMF and most of today’s nation-states — that might do something about it.  These cautious and self-interested perspectives controlled the agenda at the recent COP26 climate conference in Glascow. Outside the conference, however, more thoughtful voices are beginning to be heard.

“US immigration policy is harsh and xenophobic, but it’s also rear-looking and stupid,” says (I paraphrase) Parag Khanna, author of Move: The Forces Uprooting Us

Khanna was interviewed November 20 on the MMT-themed Macro ‘n Cheese podcast by regular host Steve Grumbine.

In world system geographer Khanna’s mind, climate change will impose adaptations on civilization that, unfortunately, the recent COP26 conference barely mentioned. Anticipating the conference’s stance, he says, it will focus on mitigations to “virtue signal” that “we can do this, world.”

That’s what it did, but that’s not good enough, says Khanna. Instead, he is laser-focused on one imposing, yet well-ignored adaptation: mass migration. Already unfolding and irreversible – just like climate change, itself – mass migration can be ignored only at civilization’s peril. 

This is because, as climate change deepens and imposes its will, a great swath of the places where people live today will become increasingly uninhabitable.  This devastation of ancient, previously-productive habitats distresses the Global South and indigenous people far more than the “modern” societies of the Global North. According to Khanna, mitigation efforts must, of course, be deployed, but they won’t be adequate to prevent the impending catastrophe in the South. Independent of our will and efforts, our warming earth is going to make life for humans in equatorial regions difficult and sparse. Adapting to that reality, mass migration from South to North is vital, but unfortunately, excruciatingly difficult. 

While tragic in so many ways, this inevitable migration, Khanna avers, is also a “silver bullet.” For people of the Global South, it provides a place to go to sustain families and build new lives. And for nations in the North that are already at or near zero population growth, migration provides the younger workforce that these aging societies can’t do without. 

In Khanna’s prophecy, mass migration serves both North and South and helps get humanity to the other side of its ecological nightmare. In stark contrast, the indigenous radicals behind The Red Deal say mass migration (social displacement) is just the latest and greatest catastrophe imposed on Nature and native people by capitalism and settler colonialism. “Land Back!” is their demand. They insist on full indigenous control of natural resource management everywhere because, without such strategic (anti-capitalist, anti-colonial) oversight and guidance, human life – indeed, all life – is in jeopardy.

To indigenous people, the earth – just like the water, animals, plants and other people – is a “relative” and, like all relatives, must be treated with care, justice and opportunity. Relative-care is the only way to save our planet from the destruction of capitalist exploitation. Thus, indigenous people look forward to managing the earth’s fragile, climate-ravaged, equatorial regions, and they will endure whatever hardship is necessary to restore their wounded relative — the earth. But for this, indigenous people expect nothing less than the decisive voice in civilization’s long-range, natural resource management agenda (aka, the Green New Deal) as well as all the resources necessary to mitigate and abate the crisis wherever it exists or emerges. In the meantime, indigenous people expect the right to emigrate and to be welcomed wherever they choose (or are forced) to go.

Today’s ill-conceived US immigration policy erects walls against the very workforce the nation needs for its own survival. Biden-Harris take note. A good policy would encourage immigration and a path to citizenship. Khanna cites Canada and Kazakhstan as nations that have sound immigration and citizenship programs and stand to prosper as people and production move north through the 21st century. After traveling extensively in Russia (where global warming is creating vast regions of newly arable land), he also reports rising interest in the Russian hinterland for a more welcoming immigration policy. The US, meanwhile, stands to lose substantially if it does not ease its anti-immigrant policies and correct its white-supremacist fringe.

Khanna acknowledges but doesn’t much concern himself with the injustice that, “once again,” hits the Global South far worse than the North. In his brief allowance that mitigations (as well as adaptations) must be deployed, Khanna expresses solidarity with those seeking redress of imperialism’s unjust equatorial legacy, yet he stresses the inevitability and redeeming worth of mass migration and, accordingly, urges an “incremental evolution” in anti-imperialist demands. He does not so much as mention “indigenous rights” or “indigenous authority,” apparently presuming that existing means of natural resource management and allocation can be adequately reformed within the framework of evolving but on-going capitalism and nation-state authority. He also never mentions socialism or any transformational vision of mainstream production and exchange.

His omission of indigenous impacts and other class dynamics is hardly unexpected given the white, settler, colonial blind spots of Western imperialism and the academics within. It is a major, ideological shortcoming but should not disqualify Khanna’s factual point that – depending on various geographic factors (resources, borders, infrastructure and people) – climate change is already having uneven and divergent impacts that will make life easier and more sustainable in northern regions than in southern. Sound public policy will ground itself in this reality.

Khanna also anticipates sharpening competition between the US and China because both are competing for younger workers, yet both are rather xenophobic. He says that China, with a younger domestic workforce, was ascendant as the (post-Soviet) global economy took shape in recent decades – and was more nimble with state finances than the West. But, going forward (post-pandemic), it will endure strong competition as all economies seek to add (restore) local production and commercial circulation against the pandemic-made-apparent danger of over-reliance on global supply chains. Diversification and localization are the now the rising trend. China’s share of global trade is bound to shrink. He notes that Cuba and Viet Nam (among others) evidence sound practice in endogenous self-sufficiency. In contrast, he lists Norway and other Scandinavian countries that, despite their welcoming social perspective, cast a heavy global footprint due to their national reliance on oil revenue.

The divergence in viewpoint between Khanna and the Red Nation reveals the depth that the present climate change discourse must still fathom. It’s a deep and wide chasm, but with only a decade or less to figure it out, a much intensified debate and a re-tooled strategy is indispensable. Who is going to lead us to salvation… the corporate sector with its financial and technological “fixes” or indigenous people at the head of a popular, global movement? Time is short; we need to get this right, and we need to do it soon. 

The podcast is titled: Mapping the Future of Humanity with Parag Khanna. It runs 1 hr 7 min.

The Red Deal, Indigenous Action to Save Our Earth (2020) is an ebook by the Red Nation, a revolutionary collective of native people.

This essay was published concurrently in GlobalTalk.

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Analysis Ecological Justice Economic Justice Environmental Justice Financial Justice Global Peace & Collaboration Organizing

Watch: Forum on the Climate Crisis

On Sunday, December 12th, Voices for New Democracy hosted our latest monthly political forum exploring the climate crisis and what it means for today’s left.

Moderated by our very own José Z. Calderón, the discussion was led by Voices for New Democracy friends Bob Eng and Harrison Carpenter-Neuhaus, starting with a presentation highlighting the scope of the climate crisis and the path toward a decarbonized world. The discussion touched on important and challenging issues raised by the specter of climate change: the disruption of extreme weather events, demobilization due to “climate grief,” a new era of geopolitics driven by demand for clean energy commodities like lithium, and the threat of exploitative business models driving the global energy transition. Conversation with the audience also raised important questions about how the left should orient itself politically amid these headwinds: whether we must embrace the movement for “degrowth,” prioritize indigenous liberation and anti-colonialism in our efforts (as advocated in The Red Deal), and how to engage with more mainstream labor-climate proposals like the Green New Deal.

Given the scope of the climate crisis, our presenters believe that climate politics represents the political terrain of the 21st century. But big questions remain about how the left can rise to the moment, and we need your analysis.

With that in mind, we encourage our readers to write to us to share their thoughts and analysis around these questions. If you’re interested in responding to any points raised by this discussion, please email voicesfornewdemocracy@gmail.com.

Watch the full conversation below.

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Politics Should Frame the On-Going Discussion of MMT and the Dollar Regime

| Steve Clark and Tom Clark |

Tom Clark and Steve Clark (unrelated) were the initial proponents of October’s two-part, Voices for New Democracy forum on Modern Monetary Theory (MMT).

The recent discussions about MMT and the Dollar Regime showed clearly that (1) we are all deeply opposed to US imperialism and wish to break its stranglehold on the global economy; (2) we all agree that finance capital uses its present domination at the IMF to retain US dollar dominance in the world’s financial affairs and to impose sanctions on those that resist this domination; (3) we all favor deep cuts in US military spending, an end to the US-imposed sanctions regime and, alternatively, development of international collaboration (climate change, etc.) and peaceful conflict resolution; and (4) we all want higher taxes on billionaires and corporations to constrain their private hoarding and political influence.

We differ on a number of interconnected monetary issues including (1) the nature and cause of inflation and what recent price increases indicate about potential for runaway inflation; (2) how interest rates come to be what they are (how they are set), their impact on the economy, and whether falling rates are a problem; and (3) whether rising deficit spending relative to GDP is a barometer of a nation’s financial fragility.

In our minds, the matters of unity are crucial for working together and uniting with other segments of the progressive movement. In contrast, the issues in struggle are less crucial and can be worked on (and worked out) in the course of today’s practical fight for progressive political power.

One meaningful two-line struggle clearly came out in these discussions. After Steve offered the view that progressives gained a significant measure of dual power in the 2020 elections and the key political task, now, is expanding our base in 2022 and 2024, this participant said (we paraphrase) that a peaceful path to socialism is near-fantasy and the overthrow of corporate power by force is the only real path to socialism in this country. No one overtly agreed with him so, presumably, he is alone on this point. Apparently, we others share unity that, currently, progressives are in pursuit of a socialist USA via non-violent struggle and the election box.

Another important two-line struggle may exist but needs more clarification. While we — Tom and Steve, representing the MMT perspective — say Biden’s agenda is fully affordable and should be enacted forthwith, it’s not entirely clear (to us) whether Dennis Torigoe (who wrote — again, we paraphrase — swords must be beat into plowshares because we can’t do both) supports its passage, given Biden’s on-going failure to restrict military spending and his anti-China adventurism. In our view, progressives should continue criticism of Biden’s imperialist agenda while fully affirming his effort to put domestic spending on a new foundation.

Certainly, the results in 2022 will turn on the voters’ perception of the Biden Administration’s efforts to pass its domestic agenda, as well as its approach to certain international issues (like immigration and climate change).

Yet, the Biden agenda is being sabotaged by conservative (corporate) Democrats who reject it for corrupt (bought-off) reasons while offering the public rationale that it is too expensive and can’t be paid for. In the context of such obstruction, MMT stresses that Uncle Sam is the monopoly supplier of US dollars and can always create as many as are necessary to fund Congressionally-mandated objectives. A decision not to fully fund Build Back Better agenda is politically, not financially, motivated.

We appreciate the views that were shared in the forums. Our discussion about the nature of contemporary public finance (aka, modern money) must continue, and the on-going struggle for social justice and ecological salvation, worldwide, will provide plenty of context for resolution of our current differences.

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Analysis Economic Justice Financial Justice Global Peace & Collaboration

THE US DOLLAR REGIME

A RESPONSE TO STEVE CLARK, TOM CLARK AND SIGNE WALLER FOXWORTH ON THE DOLLAR AS THE WORLD’S RESERVE CURRENCY

| Dennis Torigoe |

First of all, thank you Steve, Tom, Signe and others for responding to my recent article, The Dollar as the World’s Reserve Currency. This discussion will help activists grasp the issue’s importance as well as deepen our understanding of this issue.

Under US capitalism, policies pushed by MMT can help with partial solutions to some of the country’s problems. However, in practice, the continual debt-driven printing of money drives economic polarization and the country down the wrong path to the future. Under what we call the US dollar regime, the rich are getting much richer while structural unemployment, as shown in the labor participation rate and deindustrialization, is worsening.  While the prevailing narrative of unemployment is that the Chinese are taking our jobs away, this story is increasingly being contradicted by acknowledging that we can simply print money and get their manufacturing products. Why should we then bother to do the dirty work of investing and manufacturing at home in the first place? 

Under the Fed’s huge printing of money the assets of the rich, like stocks and desirable real estate, have been skyrocketing. Wages and salaries for most workers are stagnant. While it shields the middle class, who own their homes in the right places and stocks in retirement funds, from the ravages of inflation, the super-rich are getting richer and the poor are getting a lot poorer. The paradox is that economic polarization gets worse as more money is printed. Alongside that, the US has always used its ability to print money — a de facto use of what is described in MMT — to fund wars of aggression and expand its military dominance around the world.

Printing money to fund spending on infrastructure and human needs makes sense because they are a direct investment in our postindustrial future. Large budgetary spending on programs such as early childhood education, cleantech, and communications make sense because they will propel us into a highly productive, more equal and democratic postindustrial future. Federal support of research and development — whether through universities, national labs or private enterprises engaging in activities such as semiconductor chip development — is decades behind and should be vastly increased. Printing money for use in these endeavors enhances the sciences and productivity and will be paid back in time. Even when a direct payback is absent, such as for Covid vaccination and climate adaptation in developing economies (provided these are offered free of conditions and imperialist designs), these types of expenditures  are essential to further a just and fair society. 

We are not against the dollar as a reserve currency in principle if it was a result of superior US productivity and innovation or the use of deficit spending by the government to carry out crucial infrastructure, for human needs and in developing human capital that will propel us into a highly productive, more equal and democratic postindustrial future. What we are against is the dollar as a reserve currency used as a weapon of the US to rip off other countries and vastly overfund the US military to carry out wars of aggression and threaten other countries with economic sanctions. We are against the use of the US dollar regime as a means to push the US into gutting its real industries, creating greater structural unemployment and extreme polarization in society. 

Turn Swords into Plowshares

Military spending and adventures that serve and enrich a narrow part of US society and special interest groups, to further empower the US military industrial and intelligence complex, are the opposite of the positive expenditures enabled by printing money. They take away useful, value-added productivity and turn it into death, destruction, waste and decay.

Thus, as part of a progressive program, we call for swords to be beaten into plowshares.

All of us agree that spending money on wars of aggression and huge military budgets are wrong.  We also agree that spending on domestic programs to increase productive activities that increase social wealth and equality are positives. 

Here is where we disagree. We cannot do both: there has to be a choice between plowshares and swords. Swords have to be turned into plowshares. That’s an essential programmatic element for any progressive agenda.  As Signe has said, there is a challenge to our view of economics and ethics.

By saying that we can do both, we are following the narrative of neoliberal US imperialism, which indeed, always attempts to do both guns and butter, of war, with reform and repression. But their neoliberal narrative does not acknowledge that spending at least 750 billion dollars every year on war and the military, with its hundreds of bases in foreign countries, is the amount not spent creating the conditions for postindustrial development. 

Even from a perspective of national self- defense, should such an unlikely eventuality become a necessity, a vast and rigorous R&D culture and network with the aim to better humankind will form a strong scientific and technological basis for a new and innovative national defense. 

Moreover, the cost of sustaining the current vast war machine is not just reflected in the annual Federal budget. It is reflected in the oppression of people in other countries who are victims of that war machine and US imperialism and the lost opportunities to implement real positive change in the conditions of the American people and the world.   

The Nature of Fiat Currency

We would like to address Tom’s point on fiat currency. All currency serves two basic purposes: first as a unit of account and as a store of value within a legal jurisdiction (normally within a country). Secondly,  it is a medium of exchange. Gold and silver have often been used historically for these purposes. However due to the expansion of human production and civilization (roads, cities, productive tools, cultural products and services) both in scale and quality, there is no longer an adequate amount of these precious metals to perform these two functions. 

Store of Value

However, to understand the US dollar regime, we must study a national currency used in more than one jurisdiction, that is, internationally. The rise of mercantile capitalism, colonialism and imperialism meant that a dominant currency was used in multiple jurisdictions. So a fiat currency of a particular nation, say in the case of  the British Pound, particularly one that’s powerful militarily and, like the Bank of England, has a long tradition of honoring its currency and establishing its global value. It built trust in maintaining its currency’s value or for goods and services. The replacement of Great Britain by the US as the premier international power, allowed the US dollar to have a greater value as a fiat currency with global dominance.

Medium of Exchange

The other principal reason for the dominance of a currency is its value for the exchange of goods. The US dollar through its redeemability in gold and silver and even before OPEC became the ONLY currency permitted in buying oil. Since the value of the global oil trade at oil’s high points could constitute up to 60-70% of the total value of global trade, the US dollar became more valuable and desirable as a result of this linkage,( which by the way seems voluntary but is not. It’s decidedly by force or the threat of force). Almost all globally-traded commodities are priced in US dollars, including energy, precious metals, base metals, and agricultural commodities. 

The US dollar is the dominant global currency. As such, it is used as a reserve currency by other countries. Today the US dollar is about 50-69% of all currencies kept by other countries for trading and other reserve purposes, though this has declined since the 1990s, before the US invasion of Iraq. To show the relative strength of the US dollar, only 2% of the world’s reserve currency is in China’s renminbi, even though it is a dominant trading nation. The Euro is in the ballpark with 20-30% while the Japanese Yen is about 10%.The US dollar is dominant not just in trade. It is also used as the basis for other pegged currencies such as the Hong Kong dollar and other currencies around the world including China which has printed its RMB from 1980 to the present, but particularly in the early years, based on the amount of US dollar they owned.

Why Has US Inflation Been So Low Since the 1990s?

The US became a world reserve currency and relatively free from inflation, even though a  much larger amount is printed beyond its domestic economic needs, because a large amount of printed currency gets absorbed by other countries, free from US domestic circulation, which would be highly inflationary. MMT and some mainstream economists contend that we can print as much as we need since there is no inflation. For example, they set up a 2% inflation goal (which justifies printing 2% more US dollars as a neutral, non-inflationary act). Since this 2% US dollar inflation was never reached in recent years, they say that it shows that it’s okay to print even more. 

What they didn’t say is that this is only a temporary phenomenon. Many formerly colonial and developing countries have embarked on economic development and created a lot of savings in the last two or three decades.  Their savings were saved in US dollars due to the weakness of their own currencies.  Absorption of this large pool of global savings enabled the US dollar to be printed without inflation. 

But will this continue indefinitely? We don’t think so. There are no free lunches in the world. These developing world savings are finite and have been exhausted. There is no more coming. Furthermore, will manufacturing countries continue to accept the US dollar as good IOUs as the Federal Reserve engages in quantitative easing, again and again into infinity? 

The recent commodity inflation (PPI) index has reached 10% and the consumer price (CPI) index over 5% indicating a pivotal change in inflation. Many mainstream leaders in finance such as Jamie Dimon and Larry Summers challenge the Federal Reserve’s view that inflation is only temporary. They both said that we will be surprised by the persistence of this inflation.

The Nature of the Federal Reserve’s Interest Rate Cycles

As Prof. Salas stated in his recent immigration forum, the Mexico border issue is not just a Mexico-US problem. It’s a North-South or developing world-US problem as a result of the US neoliberal imperialist system. US neoliberal imperialism is an economic-industrial-military political order which reaps world wide profit from the massive expansion of low-interest debt. As the US raises interest rates in due time, it bankrupts those that borrowed massively for economic development. This interest rate cycle, often depicted as a boom and bust cycle, or a Federal Reserve interest rate cycle are global and omnipotent. It sweeps the world first with hope and then certain despair. The finest assets such as Korea’s Samsung were once almost taken over (which would be like taking over a country without firing a shot) by the same group of hedge funds such as Elliot Management, the same group that attacked the Thai Baht, the Malaysian and HK dollars in the Asian Financial Crisis. The force of US-led global capital pushed Latin American countries and Russia  into bankruptcies or debt traps like the Brady Bonds. This spreading of the fishing net and reaping by pulling it in is predictable in almost 10-12 year cycles. 

The Federal Reserve’s Interest Rate Cycle is the US Dollar Regime

The key point is that the Federal Reserve’s MMT-like currency cycle is the US dollar regime. It doesn’t separate military spending from lending to poorer nations. If the set up does not guarantee “reaping,” that is, the ability to enforce measures on those who default on loans or the  military capacity to enforce isolation of countries like Iran or Venezuela when they get out of line (which is the post World War II practice) they won’t lend their money until the country targeted capitulates or there is regime change. In the first place, the US dollar regime is a regime — an established system of monetary, political, military and organizational orders that doesn’t separate where the money goes. It prints because it’s set up. It is set up to reap. 

When we say Keynesian spending on human capital and needs is good, we are not saying that as a part of that system. We are against the US dollar regime as a system. We are just saying there is nothing wrong to borrow through legitimate commercial channels or even by government spending but without military, SWIFT and hedge fund enforcement — the way it is done today.

The Counter-Cyclical Nature of Interest Rate Cycles of the Former Victims of the US Dollar Regime 

The US Fed has lowered the interest rate to almost zero as Covid-19 hits. Now they are tapering and ready to raise the rate to reap. However, this time things may be different. Many countries learned this game and have raised their rate before the US raises its rate. They do so to be countercyclical to preempt US reaping by minimizing potential damage, by trying to get out of or lowering debt before the nets are pulled in. Countries from North to South, Turkey to Korea, China to Vietnam are all trying to raise interest rates and lighten their debt owed before it’s too late. This actually has forced Federal Reserve Chairman Powell to taper ahead of schedule! This is another reason that this round of US monetization of debt and QEs may not hurt others as much it hurts itself.

After the wakeup call from China reversing its buying of US Treasuries, this round of the interest rate cycle may be a reset for the US. The amount of US government debt of $29 trillion along with $5.6 trillion of Federal Reserve debt on its balance sheet is scaring the rest of the world and they are buying fewer US Treasuries fearing inflation. This is part of the counter-cyclical interest rate game to minimize their losses.

This makes the latest round of Fed Chairman Powell’s moves questionable. Inflation is widening from commodities to everyday consumer products, a rare global occurrence that may foreshadow the beginning of the end of the US dollar regime. Stanley Druckenmiller has stated that the US dollar regime could end in 15 years if we keep printing money like this. And, he says, that could be the end of the American way of life as we know it.

Massive Deficits a Burden? 

Tom states: “As Godley showed, this accounting is a fact, not a theory, and decisively exposes the myth that the national debt is somehow a burden to our descendants, any more than the massive deficits from WWII were a burden to us.”              

While it is not necessarily true that national debt is a burden, there are limits to a sovereign currency. One is that the fiat money supply (printing money)  must not continually vastly outstrip the amount of goods produced, services available or savings or the currency will devalue. This devaluation most often will show itself as inflation, where prices paid in that currency rise on goods and services, which will lower people’s buying power and if it grows higher and uncontrolled will devastate the economy. This happened, for instance, in the 1970s in the US during and after the Vietnam War and in Latin America during the 1980s and early 90s and most infamously in Weimar Germany in the 1920s. In fact, Modern Monetary Theory recognizes that the limit of currency creation by a sovereign country is the ability to keep inflation at a tolerable level. Thus, sovereign currency debt creation is in fact not unlimited, but constrained by the real economic conditions in which it functions.

The other limit is that the government has to service debt created by deficit financing, for instance the servicing of bond interest. As the US government continues to deficit finance its budgets, it has to be able to pay bondholders the promised interest on the bonds. Right now, the US government allocates about 7.9% of its budget to interest payments ($325 billion) and the 2021 Federal Budget Proposal projects this by 2030 to become 10% of the budget, or $665 billion. The Congressional Budget Office projects that federal debt payments could reach 27% of GDP (GDP, not the Federal Budget !) by 2050 from around 8% in 2021. No amount of raising taxes could save the day. Moreover, any problem that arises from this debt servicing, such as the Tea Party Republicans threatening to default on US interest payments in 2011 and 2013, or like the Republicans in the Senate are doing today, will cause US treasuries interest rates to rise because of perceived risk, slows economic growth and weakens the dollar’s value, increasing import costs.

This growing federal debt service eating up more of the federal budget is also both a lost opportunity to fully fund more productive postindustrial programs and an increase to the inflationary threat. As more dollars are printed to cover this debt service, more dollars are released into the economy, causing inflationary pressure. It can also cause asset bubbles as investors chase higher returns  than near 0% interest Treasuries,  bubbles which burst and cripple the economy as happened in the 1970s, the dotcom stock market bust in the 1990s and the Great Recession in 2009-2014. Today, leading investors like Stanley Druckenmiller (who along with George Soros broke the Bank of England by shorting the English pound in support of the US dollar as the rising reserve currency) see that as a real risk in the next year or two. As stated before, he also predicted that the US dollar reserve regime may end in 15 years, fundamentally changing the American way of life as we know it.

On the question of the US’s massive deficits after WWII, I think we have to look at the global economic picture after the war.  While the US was not invaded or devastated, the countries of Europe and Asia were. The fact is that the US won the war. The statement that the US didn’t feel the effects of its debt fails to take into account the widespread economic destruction in China, SE Asia, the Soviet Union and Europe. The outcome was that America felt it in lives lost in war but in fact profited economically. By taking the mantle of global superpower and imposing the post war international order on the non-socialist world, through means of the Marshall Plan, the reconstruction of Occupied Japan and the crushing of Communist-led rebellions in Greece, the Philippines, Vietnam and Malaya, the US enriched itself by reconstruction contracts, the control of third world commodities, the domination of global trade and commerce producing major profits for its capitalist class. With the Bretton Woods dollar regime, the US lorded over the rest of the world economically and militarily.

In fact, North America enjoyed the longest rise in the standard of living in history during the post WWII period, until we hit Vietnam, Iraq and the Middle East. The Vietnam War ended in 1975 with 55,000 American lives lost but millions of lives lost in SE Asia. The war cost a little less than $1 trillion then. But combined with the rebellion pacification money of the Great Society and Urban Renewal (the last big printing of money by the US government) it was less than 20% of what we spent in wars in the Middle East and Afghanistan. Even then the Volcker recession drove the US economy way down in the 1980s (see The Myth of American Deindustrialization) until we revived it through the digital revolution that went from the mid 1980s until it went bust in the stock market’s internet debacle in 2000.

Is US Dollar Hegemony a Product of, or Integral to US Imperialism?

Tom states that the “dollar’s status as reserve currency is a result, not a cause, of US imperialism.” That is untrue.  The key fact is that US dollar hegemony is an integral part of US imperialism, and is part and parcel of US domination of other countries. Iraq was invaded and Saddam Hussein was ousted mainly because of his attempt to decouple Iraqi oil from petrodollars (oil could only be bought and sold by using US dollars). This agreement  was imposed by the US and OPEC. It was not only due to his invasion of Kuwait, as the US claimed.

The forging of the petrodollar and other US dollar-denominated commodities took arm-twisting, and were a huge part of what formed the post Vietnam War US-led world order in the first place. The agreement to back Saudi Arabia with US weapons and the stationing of troops there was in exchange for the Saudis and OPEC’s willingness to couple oil transactions with the US dollar to the exclusion of all other currencies. 

The Brady Bond Debt Trap

Another example is the imposing of the Brady Bond solution to the massive debt crisis in Latin America of the 1970s and 1980s that became shackles on many Latin American countries. The Latin American debt crisis was in large part due to the large loans to third world countries by US and European banks when interest rates were low, and this became a crisis caused by the increased debt service on loans because of  the huge increase in oil prices in the 1970s and 1980s. Because all oil had to be paid for in dollars, those countries had to further borrow huge amounts of US dollars from US and European banks (who were getting petrodollars invested from OPEC) to pay for imported oil. Latin American countries, beginning with Mexico in 1982 started to default on US dollar loans.  The results were catastrophic. According to Wikipedia, “A massive process of capital outflow, particularly to the United States, served to depreciate the exchange rates, thereby raising the real interest rate. Real GDP growth rate for the region was only 2.3 percent between 1980 and 1985, but in per capita terms Latin America experienced negative growth of almost 9 percent. Between 1982 and 1985, Latin America paid back US$108 billion.[4]

The Brady Bonds were a way to restructure the Latin American loans to make it easier for them to be repaid, but also to recover as much as possible for US and European banks and investors, rather than lose all in defaults.  Even then, defaults occurred in Brady Bonds. Ecuador, for instance, defaulted on interest payments and faced immediate repayment demands. It ended up cut off from the world financial markets and suffered through years of deprivation, social and political unrest.

The US Dollar Regime is the Most Effective Part of US Imperialism

The use of sanctions against Cuba, Venezuela, Russia and Iran, were direct acts of imperialism through the control of the dollar regime. The US SWIFT sanctions became in fact far more effective than the US military, as US military ventures often stalled and became ineffective, costly and unpopular in the US. There are no protests against US economic sanctions since there are no American soldiers brought home in body-bags by such acts.

In fact, today US dollar hegemony is the most effective part of US imperialism. It allows the US to conquer and dominate countries without firing a shot. The US dollar regime is the highest development of Western imperialism, and represents the furthest development of Lenin’s thesis of imperialism and the export of capital.

Weakening of the SWIFT system Weakens the US Dollar Regime

The excessive use of economic sanctions by the US against Iran, Russia, Cuba, Venezuela and many others and even European countries that use the SWIFT currency settlement information system forced many countries into developing alternative currency systems such as the Chinese Union Pay or the European Interdex systems. Some stopped using the US dollar as a reserve currency, period — like Russia. Furthermore China has signed a 25- year agreement with Iran in trade and economic cooperation to bypass the US dollar based SWIFT system.  

The development of sovereign digital currencies that don’t require SWIFT or any settlement systems at all also weaken the US dollar as the required reserve currency. MMT accepts the logic of the US dollar as a reserve currency. But this logic is failing.

Conclusion

The money printing policies of the US dollar regime is an integral part of modern US imperialism. On the domestic front, it can partially finance needed postindustrial development and necessary social needs, but as practiced in the US over the last decades, overall it has caused deindustrialization and devastating economic polarization.  

Internationally, the policies call for indiscriminate printing of money and lending it out at low interest rates around the globe as the beginning of the “seeding” cycle. For the US to reap the maximum profits from the world, they must inject or “seed” the largest amount of capital to the most vulnerable or greedy developing countries, who most need economic development. This first cycle is justified by MMT.  Then interest rates are gradually raised and liquidity is withdrawn around the world. This reaping process leads to destruction of the seeded and a profit festival for the global banks and hedge funds. This repeated seeding and reaping process, along with economic sanctions, the use of military force and the control through the SWIFT system is the reign of neoliberal imperialism.  

In order for the US dollar regime to survive it must keep on reaping profits either through outright military victories or continuous reaping from other countries.  The actual human toll of the US dollar regime’s repeated seedings and reapings around the world can be seen in deforestation, waves of refugees, overcrowding of urban centers and the gutting of American industries and urban decay.  We now have the unprecedented divergence of extreme wealth and hopeless poverty driven by extreme financial crises like the Asian Financial Crisis in the 1990s and the Great Recession, sparked by the Lehman Brothers collapse in 2008.  

In response, we must work to end this destructive, imperialist US dollar regime. We must turn swords into plowshares, resist US imperialist wars and economic aggression while fighting for the desperate need of the American people to build a highly productive, more equal and just postindustrial future for the nation and the world.   

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Analysis Economic Justice Global Peace & Collaboration Organizing Social Justice

Watch: Forum on Palestine, 2021 Unity Uprising, and Beyond

In our latest monthly forum, Danya from the U.S. Palestinian Community Network joined Voices for New Democracy to discuss political developments in Palestine and recent uprisings throughout the occupied territories. Exploring the history of Zionism, Palestinian activism and resistance, and ongoing developments in the region, the conversation offers an important overview of the status quo in Palestine and possibilities for political change.

Watch the full forum below.

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Analysis Commentary Financial Justice Global Peace & Collaboration

Steve Clark Responds to “The Dollar as the World’s Reserve Currency”

| Steve Clark |

In this piece, Steve Clark responds to Dennis Torigoe’s recent article, “The Dollar as the World’s Reserve Currency.”

Thanks to Signe for raising a stimulating comment on Dennis’ piece in regard to Modern Monetary Theory (MMT). I appreciate what Tom had to say and wanted to comment further.

A bifurcated agenda (MMT at home and financial imperialism abroad) would be inconsistent and morally reprehensible for any progressive, and I don’t think anyone in or around MMT takes such a position. Rather, at worst — and like Dennis (and most of us) — MMT advocates don’t have a clearly articulated plan for remaking the international financial order. They know how it works, but they don’t know how to assert popular control at that scale (currently, their focus is on gaining effective influence in sovereign states and, someday, “going global” from such new-found power bases). Rather than criticize MMT for the same shortcoming that we all share, we need to put our MMT thinking caps on, figure out the necessary “next steps,” and advocate for consistent financial restructuring across our both domestic and global economies.  This might require a think tank and a legal corps, but that could set us in the right direction.

It seems to me that when our nation’s progressive wing overcomes dual power (defeats neoliberalism) in the US (that is, for now, in the Biden Administration and the Congress), all nations and people stand to benefit because the world does, in fact, have an integrated, global, financial system (and I think Dennis would agree) in which the US dollar and the US central bank (the Fed) dominate decision-making and financial power (at the IMF/BIS/SWIFT/IIF etc.). 

Given this institutional domination, if/when American progressives gain the power necessary to implement a true, worker-oriented, social investment agenda in the US, we also will gain (or will be on the verge of gaining) the power to pursue a similar agenda at global scale (via the IMF, where we progressives will have just acquired dominant power, or via some new authority that we and the world create to replace the IMF).

Further, given the scale and breadth of today’s crisis, when American progressives finally break the power of finance capital in the US (winning majority control of our government), the rest of the world’s progressives (in countries everywhere) will demand we immediately break that same financial power globally as well. Having gained control of the US votes at the IMF, we will have no choice but to comply (twist my arm!). 

Few American progressives have given much thought to how this “next system” of finance must operate to meet the needs of the whole world, including its impoverished nations. Obviously, “trickle down” from the US to the world doesn’t work, but, for sure, there’s no way some kind of global planned economy will be imposed. Rather, the next system — which has to carry civilization through the era of climate change impact and mitigation ahead — will be some kind of global mixed economy in which private entities and markets operate alongside public investment entities and non-market allocations, both within the world’s many nations and in transnational forms as well (corporations, global NGOs, UN-determined public investments(?), etc.).  

However this next system shapes up, the world is never going back to the gold standard. It will remain on fiat currencies because that is the actual and only way, now, that nation-states and their markets can operate (if anyone can see beyond the era of fiat currencies, please let us know what that might look like!). When US progressives quash dual power and take general control of our government (sometime over the next few election cycles), the dollar will become our currency (the public’s currency!), and we can directly and forthrightly engage China, Europe, Japan, Britain — the other four IMF-approved-for-trade currencies — the Global South, and all other sovereign nations on the matter of how best to reconstruct and democratize global finance for the challenging crisis-mitigation era ahead (including, possibly, setting a new Special Drawing Rights (SDR) currency to replace the dollar as the global reserve… MMT suggests how that might be done).  

I think that forging a new system of global finance is a necessary piece of this era’s struggle, an issue to be resolved sooner rather than later. MMT is empowering because it explains not only how the system works (and, as a corollary, how finance capital exploits the system for its own ends) but, also, how our nation’s democratic majority can impose its will on the system, reprioritize its investment agenda, move on to global financial reform, and, thereby, tackle all the vital problems of our time.

To me, a crucial task, now, is raising the financial consciousness of voters so elected politicians fight for popular oversight of finance in the public interest. That’s how we overcome dual power (defeat neoliberalism) and win progressive legislative majorities over the next few election cycles. Right now, the MMT folks are leading this project, but they need allies as well as broadened popular grounding and intersectional collaboration. I hope we Leftists will walk towards them, learn from them and help them see and link more effectively, beyond the financial realm.

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Economic Justice Global Peace & Collaboration Organizing Social Justice

Forum on Labor’s Future: International Solidarity

As part of our recent Forum on Labor’s Future, panelist Carolyn Kazdin delivered a presentation on her experiences in the international solidarity movement and the links between the American labor movement and the international context. The following is a summary of the key points she presented, and the full presentation is available to watch below.

To understand the possibilities for international labor solidarity, it is first essential to understand that the American labor movement has traditionally been a reactionary one on the international stage. The U.S. trade union movement has been known for engaging in “trade union tourism” in visits to other countries, rather than building relationships and forging solidarity. While progressive unions around the world have already been working together, U.S. unions have largely been left out of the picture.

Fortunately, this is beginning to change. And as the American labor movement begins to explore international possibilities, it is worth taking a look at the trends already unfolding across the world.

The Brazilian labor movement is an important place to start, as they elected one of their own as President of the country with the election of Lula da Silva of the Workers Party (PT). In his 8 year tenure, Lula and his movement lifted 40 million people out of extreme poverty, and created 20 million jobs. While the movement has since faced significant setbacks under the Bolsonaro administration and the corrupt trials that jailed Lula and his associates, their successes are an important reminder of what a robust trade union movement can achieve when it wins power.

International solidarity work also offers an important illustration of the ways that global capital works. During NAFTA struggles, for example, amid all the anti-immigrant rhetoric a number of U.S. workers were sent on delegations to Mexico to see where their jobs went. Those American workers saw firsthand what had happened to their jobs with heightened exploitation, which is why these jobs were offshore to begin with: to exploit workers in the Global South, where their governments would allow it. And when they came back, those workers were able to speak to other workers across the U.S. to explain what was really happening with NAFTA, why Mexican workers are allies not enemies, and why global capital is at the root of the issues they face.

When these international bonds are forged, they pay dividends. When Brazilian companies bought steel mills in the U.S. and mines in Canada, workers across these countries resisted the union-busting efforts and launched campaigns forcing those companies to respect unions and right to bargain. When the UAW attempted to unionize Nissan workers in Canton, MS, they recognized that the U.S. is the only country where Nissan workers are not unionized, and brought in unionized Nissan workers from other countries to show why their unions are so important to them. And when the tire maker Firestone opened new sites in Liberia, the Steelworkers union sent delegates to the Liberian workers to help them in collective bargaining.

International solidarity work also casts an important light on the intersection of class and race. As the U.S. and Brazilian labor movements have built relationships, they’ve also been able to explore how racial struggles fit into the labor struggles both domestically and internationally. Brazil’s is over 50% Black, home to the largest Black population outside of Africa, and Black Brazilians face many of the same struggles as Black Americans. In particular, Black Brazilians suffer from an epidemic of police murders and a growing prison-industrial complex. With that in mind, Black Brazilian workers have been inspired by the recent resurgence of racial justice movements in the U.S., and have been eager to learn more about how the Black Lives Matter movement was launched so that they could develop their own.

All told, international solidarity work offers an important reminder that the labor movement is a global struggle. And in building relationships between labor movements across countries, we can both strengthen our own campaigns at home and gain new insight into how we can advance our shared struggles.

Hear the full presentation from the Forum on Labor’s Future below.

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Democracy: Rule of Law & Elections Economic Justice Global Peace & Collaboration Social Justice

Is the U.S. Now in the Weimar Era?

| Dennis Torigoe |

Walden Bello and I go way back as grad students at Princeton’s sociology department and activists on campus and in the years since. In his recent interview after the events of January 6th, Walden, a famed activist, author and public intellectual from the Philippines, asserted that the United States “has entered the Weimar Era.” In Germany after the First World War, a section of the German capitalist class and its politicians backed right wing mobs to take to the streets in violent demonstrations. Since the Right could not take power through elections, they worked to delegitimize the democratic process and the government. This, Bello contends, paved the way for fascism to replace the representative government ending up with Hitler as Chancellor of the Reich.

As the US is one of the oldest, and certainly the biggest, continuous democracies (in some form) in existence, the sounding of its death knell is a bit premature despite the severity of the crisis. There are a number of reasons for this. These reasons are not to assert that the challenges and crises that democratic governments face from the extreme right in the US are not serious. I agree with Walden’s characterization of neoliberal policies leading to deindustrialization, and therefore feelings of loss and anger among some workers and small business people, who have been manipulated by Trump and other right-wingers. Political violence from the white supremacist right is a historic current in this country and a rising threat. We must counter it by gaining and strengthening cultural hegemony with such values as equality, inclusiveness and thoroughgoing democracy through organizing people and politically isolating the extreme right.  When they do resort to violence, we must make sure that they are dealt with aggressively legally, politically, by law enforcement and, if necessary, through armed self-defense.  

However, due to their actions against the government on January 6th, the extreme right is now in the crosshairs of the US Government and a large majority of the American people. The events of January 6th has not increased their strength, but has isolated them from the vast majority of the American people who believe in democratic government.

The Curious Case of the Missing Movement

One of Walden’s omissions in this interview is curious. Did he forget about the millions of demonstrators in every major city, localities and small towns across the country after George Floyd’s murder? Did he forget about Black Lives Matter? For some reason, he forgot about the people’s fight against police and racist violence occurring for months during the last year. He also dismisses the hard-won electoral victories through the relentless organizing efforts of hundreds of thousands in places like Georgia and Arizona, and indeed across the country. Here is the problem with this. According to this line of thought if we fight for more democracy, organize harder and succeed, then the Right gets more violent in the streets, the political situation gets chaotic and the military or a tyrant takes over. Thus, his view is that of self-defeat.   

That is the problem with his historical analogies, one that compares the United States as the world’s superpower to Third World countries like Chile in the 70’s and the Philippines under Marcos and to Weimar Germany. The United States today is starkly different from any of those examples that Walden Bello uses. For one thing, each of those examples were times of fatally deep economic crises, with runaway inflation in Chile and in the economic collapse of the Weimar Republic. There was relatively sudden, widespread and brutal  impoverishment if not outright starvation because of the economic catastrophes  they faced.    

As their economies were weak, their currencies were devalued to almost worthless pieces of paper and issuing more meant even more inflation and economic ruin.

In contrast, the United States controls the world’s recognized reserve currency, which gives it vast economic power. The US Government issues virtually as many dollars as it wants, knowing it will be accepted as the currency of world trade and commerce. Printing money in this way not only sustains its own economy, US capitalists have also used this tactic to manipulate other currencies and suppress other economies. That can be shown by the  Asian currency crises in the 90s and the trade and economic sanctions on Cuba and Venezuela, which are not allowed to conduct trade through the clearing system based on the US dollar.  

On top of that our economy is very unlikely to experience the kind of economic collapse that breeds fascism. The 2 trillion dollar rescue plan put out by Biden, impossible in Chile or a Weimar Republic, will not result in hyperinflation, but in real benefit to the welfare of the country’s citizens. The Federal Reserve Bank can and does further prop up the economy by lowering interest rates and directly buying US government, and mortgage-backed bonds through its quantitative easing program. The government can also forgive college loans, lower taxes, and a host of other steps to buoy the economy. This is not the economy of 70s Chile, the Philippines under Marcos and not even close to what Weimar Germany was.   

The same facts that Walden Bello uses to promote his view of deepening chaos and military rule in fact shows that the tide is running high against the right wing extremists. The breach of the Capitol was a sign of desperation, not a sign of strength. Their President had been thrown out after one term (the last time that happened was in 1992) and the left had dominated the streets for months, the Democrats had won both houses of Congress and the left is resurging.  

Is Military Intervention Likely?

Bello argues that chaos brought on by right wing street violence will trigger a military takeover. In fact, that is the least likely scenario given the circumstances the country is in now. For one thing, we must not forget or belittle the power of the constitutional and normative tradition of the US military’s position being under civilian control.  The Joint Chiefs of Staff are, in the military chain of command, directly below the Secretary of Defense and this Secretary under the President.  In the 233-year history since the ratification of the Constitution, this has never been breached, though it has been challenged twice — once by General McClellan against Lincoln during the Civil War and by Douglas MacArthur against Truman during the Korean War.  Both Generals were fired summarily.  

More recently, in light of Trump’s misuse of Federal power, numerous former Defense Secretaries and retired Generals and Admirals have stated their positions clearly: the active military shall not be used in internal politics and that the military should be staunch in its position that, as stated in the in Uniform Code of Military Justice, no illegal order order should be obeyed. The testament of these military leaders has put both institutional as well as political weight behind the military’s non-intervention in civilian political affairs.  

Another telling incident on military non-intervention in political affairs  was the apology of the sitting Chair of the Joint Chiefs for marching with Trump to his Bible-holding photo op after the site was cleared of Black Lives Matter protestors with federal officers. As reported in the Guardian:

Milley and defense secretary Mark Esper were widely criticized for participating in the photo-op, with many former defense officials saying the two were helping Trump’s efforts to politicize the military.

“As senior leaders, everything you do will be closely watched, and I am not immune,” Milley said.

“As many of you saw the result of the photograph of me at Lafayette Square last week, that sparked a national debate about the role of the military in civil society. I should not have been there,” Milley continued.

“My presence in that moment and in that environment created a perception of the military involved in domestic politics. As a commissioned uniformed officer, it was a mistake that I have learned from, and I sincerely hope we all can learn from it.”

These are not the words of a military ready to pounce on civilian leadership of the country if chaos in the streets erupts. 

Walden Bello has dedicated his life to effectively fight for the people of the Philippines and the world. His contributions are historic and will be remembered for generations to come. Though I believe he does not correctly view the United States at this historic juncture, I look forward to his continued contributions to the people’s movement for justice and democracy in the future.