USA DOLLAR PARADOX: As long as the USA can print its currency and almost literally stuff those dollars down the throats of almost every other country around the world, the USA will continue to print money and stuff its dollars down the throats of every other country…but at an accelerating rate.
This makes the USA akin to a monopoly on money printing. USA can print as much as it wants, anytime it wants and the world is committed to vacuuming it up into the central reserves of banks in just about every country. Those dollars-without-limit go to finance budget deficits and wars around the world punishing the very countries, such as China, that are forced to buy and trade in USA dollars, which, in turn, creates a need to vacuum up even more USA dollars to pay for their consumption of imports, oil, and anything else. To quote from a highly respected geo-political author of great integrity, William Engdahl, “…that has meant that China has de facto financed the military action of Washington that act to go against Chinese and Russian sovereign interests.” See end Note 1 Because every country in the world is so dependent upon having a significant stash of USA cash, the USA dollar is currently in great demand. And, the USA can continue to print willy-nilly to pay for its military, wars anywhere it wants to have a war, and it massive government spending programs…but herein is another paradox.
It is because the USA is beholden to every other country which sucks up it massive printing of currency that the USA can not only print money but that can do so with almost total immunity from driving up the inflation within the USA. Without this privilege, the people of the USA would be experiencing MASSIVE COST INCREASES with each printing. With each printing the value of each unit of USA currency becomes less and less. That means that the USA must be living in a fantasy world of sorts, and it is. Because every other country transacting in USA dollars, and all of them must do so, must absorb the flood of currency, the cost of their goods goes up. Those same countries helping to soak up the flood of dollars printed by the USA are the very ones which experience and suffer inflation. Thus, we hear it said in financial circles that the USA has been EXPORTING its inflation. Because the USA has, indeed, been exporting its inflation, Americans, and others strongly tied to the USA, such as Canada, are currently ARTIFICIALLY immune to the ravages of soaring living costs. But if the USA dollar was ever allowed to fall to its inherent, its true value, the USA, the people, would be plunged into turmoil, mass chaos, because of screaming-high inflation costs.
The one item that the dollar is compared to, in order to know its real value, is GOLD. It is gold that never changes in latent value. It is by comparing to an ounce of gold that we arrive at the purchasing power, the “value”, of each unit of the USA dollar. But therein lies another paradox.
The price per ounce of gold is currently ARTIFICIALLY MANIPULATED by the USA Federal Reserve and its banking members through the issuance of paper contracts called “Futures”. And there is no limit to how many contracts can be manufactured out of thin air. Using this process the USA Federal Reserve can, and does, keep the comparative value of the USA dollar against gold artificially strong. It is against gold that the value of the USA dollar arises, such as a unit of gold being worth $1,000 an ounce, or $950 and ounce, or $1,900 an ounce. That price of gold is the one you read and hear in the business news. In this relationship and its paradox of valuing one with another, there arises a favourite but time-wasting conspiracy among website pedlars of gold bullion: the claim that the USA Federal Reserve is “manipulating” the price of gold. It is. But it is allowed to do so. More than that, the USA Federal Reserve, is encouraged to do so by LAW. By law the USA Federal Reserve MUST MANIPULATE the price of gold to protect the value of the USA dollar. So, there is no conspiracy here. It is the law.
So here we are. A collection of paradoxes:
- The USA government can continue to print USA dollars because the world needs to buy goods in USA dollars. As long as the world needs to buy goods in USA dollars, the USA can continue to print its currency.
- To create inflation in other countries, which, in turn would require even more USA dollars to buy goods in those countries, the USA prints its currency and thereby exports its inflation which makes the people of the USA the global privileged class experiencing almost zero inflation for any goods manufactured within its borders.
- The USA was the most aggressive country in shipping its manufacturing base to China making China the most powerful economic country in the world and destroying the powerful USA manufacturing base it once had.
- To expand its manufacturing, China had to vacuum up the most amount of USA dollars of any country. USA was only too happy to print more currency and encourage that expansion.
- China is the one country holding the most amount of USA currency and the USA is doing everything it can to contain China’s economic growth, since it has grown too strong and too rapidly, but the USA has very little economic clout left with which to do so.
- Here’s the ultimate “kicker”: by printing so much currency the USA is pissing off the very country it most depends on to hold it currency. Guess what? China is getting pissed off at the USA for printing so much currency and for being so irresponsible with its money printing.
It is this latter paradox that is most troubling to those in the know…
The largest holder of USA dollars is CHINA, and China is fed up with the USA’s lack of integrity in managing its responsibility as the world’s most important currency. So, China is doing something about that…
China is working with the International Monetary Fund to DISPLACE THE USA DOLLAR and, to Quote author Engdahl once more, “…enshrine a multi-currency reserve system at the heart of the world’s financial order”. That currency is called the SDR, (Special drawing Rights).
The most frightening part of China’s global strategy, at least it ought to frighten everyone in western nations, (USA, Canada, Britain, Japan, etc.), is the backing of the SDR that is intended by China: gold. Not the fictitious price of gold that is established and manipulated today by the USA Federal Reserve, but the REAL VALUE OF GOLD internationally.
At that point in time–and that time is in the not-too-distant future–the USA dollar, and the USA economy will literally collapse. When it does, Western nations beholden to the USA dollar will suffer the greatest, most inhumane, inflation the world has ever witnessed.
Those countries that have been accumulating gold, physical gold, in its reserves will be most immune to the ravages of this sudden onslaught of inflation as the USA dollars crumbles in value and crumbles in global purchasing power. Which countries will reportedly do best? China, Russia, India, and a few others. But, not USA, Britain, or Canada, the very countries most economically allied to the USA and, worse, the very countries which were persuaded over the past few decades to export its manufacturing and its gold to China.
I’d encourage my readers to visit, and to take the time to read, Mr. Engdahl’s enlightening piece titled, “China Quietly Prepares Golden Alternative to Dollar System”.
- “China Quietly Prepares Golden Alternative to Dollar System” by William Engdahl. May 18, 2016. http://journal-neo.org/2016/05/18/china-quietly-prepares-golden-alternative-to-dollar-system/
- ABOUT F. WILLIAM ENGDAHL: F. William Engdahl is an award-winning geopolitical analyst, strategic risk consultant, author, professor and lecturer.He has been researching and writing about the world political scene for more than thirty years. His various books on geopolitics—the interaction between international power politics, economics and geography—have been translated into 14 foreign languages from Chinese to French, from German to Japanese.
His most recent works trace the strategies and events that led to the rise of the US as an international superpower.