China, Russia, Others to End U.S. Dominance

Historic meeting will finish off U.S. hegemony, kill dollar

Not that you'll hear a word of it in the U.S. mainstream media, but Russia, China, India, and others are holding an historic meeting today and tomorrow (June 15-16, 2009). This will effectively end U.S. hegemony. It will start with a dismantling of western financial power. On June 5, 2009, Russian President Medvedev stated that:

This means creating a new alternative. Rather than making merely “cosmetic changes as some countries and perhaps the international financial organisations themselves might want,” Mr. Medvedev ended his St. Petersburg speech, “what we need are financial institutions of a completely new type, where particular political issues and motives, and particular countries will not dominate.”

What he's talking about, as far as I can discern, is trade agreements wherein local currencies are used instead of hard currencies. China's recent agreements with Malaysia, South Korea, Brazil (and others) are a good example of the new regime. What this means is that the dollar is toast. The global supply of dollars is estimated to be greater than the entire global economic output. Where will all those dollars go when nobody wants or needs them? Right in the crapper.

For the rest of the world, this is very good. Their wealth will rise as the transaction costs associated with dealing in dollars are reduced and the relative value of local currencies rises. For the U.S., this is catastrophic because the dollar bubble is the last bubble left to pop. We have been living on borrowed money for too long. Once we can no longer borrow that money, our standard of living will drop precipitously. The cost of imports (oil, food, clothing) will go through the roof, and supplies will be tight. If Malaysia can trade its shirts with Brazil in exchange for gems and its pants with China in exchange for cheap electronics, none of those countries will be particularly excited to trade with the U.S. in exchange for a fiat currency of no intrinsic value. Then things get really rough.

...the cost of imports, including oil, will skyrocket, interest rates will climb and jobs will hemorrhage at a rate that will make the last few months look like boom times. State and federal services will be reduced or shut down for lack of funds. The United States will begin to resemble the Weimar Republic or Zimbabwe. Obama, endowed by many with the qualities of a savior, will suddenly look pitiful, inept and weak

Much as I like Obama, I have to agree that he's basically powerless to stop this, though I think he can help lead us out of it and into something better if people are willing to make the proper sacrifices. More on that later.

The bursting of the dollar bubble and the end of the American Empire will all happen in the historical blink of an eye, much like the fall of the USSR. One morning, we Americans will wake up to find that we are no longer citizens of a superpower, let alone the solitary superpower. Frances Fukuyama -- the dumb, arrogant shithead -- and all the other neoliberals and neoconservatives had it all wrong: History did not end when capitalism "triumphed" over communism. Not even 20 years after the fall of communism, capitalism is collapsing under its own lies and corruption. It's not a bad thing in the great grand scheme of things because it's really not fair or sustainable for one country to take the wealth of the world simply because it won a game of nuclear chicken.

Still sucks to be an American at this point in history, though. It's a long way down.

It is not a question of if or even when at this point. The seams are coming off in the next few months. The question, then, becomes, "How do we manage this impending and inevitable crisis?" Some of the more cynical of those of us in the know take a bleak view:

There will be long lines at soup kitchens and many, many homeless. Our corporate-controlled media, already banal and trivial, will work overtime to anesthetize us with useless gossip, spectacles, sex, gratuitous violence, fear and tawdry junk politics. America will be composed of a large dispossessed underclass and a tiny empowered oligarchy that will run a ruthless and brutal system of neo-feudalism from secure compounds. Those who resist will be silenced, many by force.

I definitely see soup kitchens, and I see corporate media trying to propagandize the obvious away. Mass homelessness, foreclosures, boarded up shops, and ruthless and brutal neo-feudalism, however, can be avoided if cooler heads prevail, If we are willing to accept this fate (loss of superpower status and a sudden, drastic drop in our nation's buying power) and make the best of it by sacrificing, getting our hands dirty growing our own food and helping each other out, we can >emerge from it stronger. The sun is setting on the American Empire, but it doesn't need to set on the American Dream. This is still the first country in the world founded on revolutionary principles of human rights (slavery aside, and we eventually got that one right, too). It's still the only country in the world to have put men on the moon. It's still the country that invented the Internet and pioneered the digital age (though our friends the Japanese perfected it). We still have enormous resources in the form of land, great universities, unused industrial capacity, wind, sun, water, and even a little bit of oil and gas. The only scenario in which we descend into ruthless fascism, allowing a "tiny empowered oligarchy" to rule over us with an iron fist is the scenario in which we freak out.

Keep a cool head. Get ready. Love your neighbor and help them out. It's about community now. If we can keep it together for a decade or so, the world community might even be willing to accept us back as a member in good standing.

Peace.