End of the American Empire 190

China’s call today for a new global reserve currency to replace the dollar spells the beginning of the end of the American Empire. China holds most of the dollar credit in the world, and that of course gave China a powerful incentive to maintain dollar hegemony. That China now views the risks to world trade from the US’ indebtedness, to outweigh the potential loss in value of its own dollar reserves, is the tipping point that spells the inevitable beginning of the end of the US empire.

The reserve currency system has since 1795 allowed empires to be built on the economic output of weaker powers. If you achieve sufficient economic power and control of resources that yours is the currency everyone holds, you can print as much of it for yourself as you like and the devaluation effects are spread around not just your economy, but everyone else who holds your deposits. Being the reserve currency is a license to print money. Both the British and the Americans used this position to build military forces which could dominate both formal and informal empires. Both eventually experienced overreach, with military expenditure pushing deficit finance to the point of implosion. Then you lose reserve currency status.

It happened to the British and now it is happening to the Americans.

The colossal 4.7% a year of its wealth the US throws away on defence and security expenditure (broadly defined) – more than double the European average – is a huge factor in US indebtedness. There is an extraordinary failure to mention this in the mainstream media. It seems to be an Emperor’s New Clothes thing. It is the one area of expenditure the xenophobic hatemongers of the Tea Party want to see increased, and the existence of Empire causes all career politicians to compete in public displays of patriotism. That has been a political fact since the dawn of time. Defence spending is a sacred cow, unmentionable in the United States. They probably have a couple of decades to come fully to terms with the fact that they will no longer be in a position to invade who they will in order to control their mineral and other commodity resources. As with the British empire, the beetle on its back will kick its legs a while yet. It will be painful for them.

I shall enjoy it. I never claimed to be a good person!

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190 thoughts on “End of the American Empire

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  • Mike Raddie

    Tom Welsh, “if the USA was willing to fight Germany and Japan in 1939-41, why didn’t it simply declare war on them? Britain and France declared a tripwire on the Polish border, telling Germany that an invasion of Poland would automatically mean war.
    All this talk about how the US government did its best seems to me evasive. If the majority of US voters were unwilling to fight, then the USA was unwilling to fight.” –

    this seems to be to be incredibly naive – very rarely, if ever, is it in the peoples interests to fight a war in a country thousands of miles away and it is always illegal according to international law and the treaty for the renunciation of war of 1928.
    The people of a nation need to be shocked, coerced and lied to before they voluntarily sign up to fight a war of aggression. This is the basis for modern ‘public relations’ – a term coined by the father of propaganda Edward Bernays. In his Sept 2010 article ‘Flying the Flag, Faking the News’ JOhn Pilger describes how, “During the first world war, he was one of a group of influential liberals who mounted a secret government campaign to persuade reluctant Americans to send an army to the bloodbath in Europe. In his book, Propaganda, published in 1928, Bernays wrote that the “intelligent manipulation of the organised habits and opinions of the masses was an important element in democratic society” and that the manipulators “constitute an invisible government which is the true ruling power in our country”.” Was it not Frederick Ogilvie, who succeeded the BBC’s founder, Lord Reith, as director general, who wrote that his goal was to turn the BBC into a “fully effective instrument of war”? The same thing was going on stateside. The idea that voters actually have a say is ludicrous – according to opinion polls, at least 70% of the British electorate want our troops out of Afghanistan and yet we’re still there after ten years and we still have a ready supply of cannon fodder willing to risk life, limb and other trauma to fight a country who never attacked Britain. War is a racket and it only serves the interests of the powerful elite who profit from it and this is why today we have endless war. British armed forces have, save for one year, since 1945, been fighting someone somewhere for no good reason other than for profit. Practically, the only manufactured exports in the UK these days come from the arms industry and you cannot keep this trade going without war and conflict.

  • mark_golding

    Thanks Clark – Yes Grossman is miffed because Bashir has severely restricted movements of American personnel. America is trying to covet Pakistan’s nukes and the damn strategy is ‘top secret’ – one can only speculate at the moment.

  • Jaded.

    Mike Raddie – ‘In his book, Propaganda, published in 1928, Bernays wrote that the “intelligent manipulation of the organised habits and opinions of the masses was an important element in democratic society” and that the manipulators “constitute an invisible government which is the true ruling power in our country”.’
    Exactly, in a nutshell, the best term to describe the current dynamics of power within our society is manipulatocratic. So, what’s the best way for a manipulator, who is invariably only after personal gain with little or no conscience, to further his manipulative agenda? Well, he hooks up with other manipulators of his ilk to form a subversive power structure that is hidden from democractic scrutiny. Alternatively, they can slowly corrupt and take over a power structure that is already in existence. Of course, these manipulators enter mainstream politics too, either as lone manipulators or as members of the hidden, subversive power structure, but the permanent, manipulatocratic power base would exist outside of Parliament. They would simply seek to control high finance and over time, if the population were docile enough, would inevitably slowly begin to take control of the upper echelons of the mainstream political parties. I would say that the situation is pretty grim here, but they don’t yet have maximum control. It isn’t as bad as it is in the U.S..

  • Clark

    Does the US do as Israel says? These Israeli protesters, camped out in Rothchild Boulevard, say that the Israeli government doesn’t do what Israelis want, but serves an elite of rich oligarchs rather than the Israeli people. Does that sound familiar? Maybe Israelis read the blogsphere, too:
    Nationalist settlers arrive to join the protest. Some protesters shout “Fascists, go away, we don’t want you here”. Others invite them to join in, but insist that the protest does not support settlement expansion:
    So maybe neither Israel nor the US calls the tune, but rather both dance to the drum of the global elite and corporatism.

  • Jotman

    Craig wrote:

    “The colossal 4.7% a year of its wealth the US throws away on defence and security expenditure (broadly defined) – more than double the European average – is a huge factor in US indebtedness.”

    A larger factor in US indebtedness is the 16% of GDP Americans spend on healthcare. This figure is rising too. By 2017, the US will be spending 19.5% of GDP on health. By comparison, the UK and Japan spend only half as much — about 8% of their GDP — on healthcare.

    If the US moved to a social healthcare system, not only could the debt be brought under control, but all Americans could be covered.

  • glenn

    Clark: Yes, the US does do as Israel says. Recall earlier this year, when Benjamin Netanyahu addressed the US congress, this is the transcript:
    Can you think of anyone else who would have got that many standing ovations and applause? Senators were jumping up and down like bobbins. His behaviour on the trip was hardly respectful of Obama, and that approach was greeted with wild enthusiasm on the US far right.
    Remember than fanatical kristians want Jerusalem to be established again as the Biblical prophesies demand, then there will be a great battle following which Jews get the chance to redeem themselves and convert to kristianity or be killed. After that, there will be a sufficiently high pile of bodies that the Baby Jaysus himself will be very pleased, come slithering down that pile of bodies and enact The Rapture, taking the faithful American evangelists into heaven for eternity. I know all that is completely insane, but is nevertheless the grounding beneath a lot of US support for Israel.
    In the meantime, it is absolutely impossible for a mainstream journalist or any politician to offer even a suggestion of criticism towards Israel’s foreign policy. You simply cannot do it, or you might as well clear your desk as you submit the article. Even those independent commentators who brag about their famous freedom to speak (such as Rachel Maddow, Thom Hartman and so on) are terrified to go anywhere near Israeli foreign policy. Those who cannot be branded as “anti-Semites” or “self-hating Jews” are simply ignored.
    Roderick Russell: You couldn’t be more wrong about the teabaggers. They’re not a grass-roots movement of concerned citizens, they’re a bunch of half-witted, racist, ignorant and hate-filled True Believers who have entirely bought into the bilge from far-right hate radio and Faux News. They are useful idiots of the Coche brothers, via Dick Army’s “Freedom-works” organisation, who know nothing except they’re really angry, and that fascist/marxist/Kenyan/Muslim in the White House is responsible. The “tea party” movement has given teabaggers a chance to be proud of their stupidity, ignorance and racism. Even the filthy republicans are very worried about this bunch of insane reactionaries that have been voted into office as a result of massive campaign donations by the ultra-rich. Teabaggers are mal-informed, and unwittingly serve the interests only of multi-millionaires and billionaires.

  • angrysoba

    Can Speccy But in fact the BNP are not, I suggest, anything but an intel op designed to contaminate populist policies with the appearance of thuggish, racist stupidity.

    Are you an intel op too? You have all the attributes.

  • John Goss

    @Courtenay. Nice quip. If only we could make “swords into ploughshares” a reality (metaphorically speaking).

  • writeon

    Empires… have two modes. They are either expanding, and, therefore, ‘successful’, or they are contracting and, therefore, ‘failing.’ This is like Galtung’s father saying that the German’s don’t know when to stop. Impirial expansion, the imperial momentum and imperative, knows no bounds. The effort required to launch an imperial, grand strategy, once begun is hard, difficult, to reverse, leading utimately to the emprire’s collapse. And… the paradox that the core nation of the empire usually ends up poorer and weaker than it was before the era of imperial expansion

  • John Goss

    You’re right Clark about it not just being weapons that need abolishing, and I know you have been exploring alternatives in other areas where we are destroying life on earth, but I think cutting spending on weapons would be a good place to start. And a severe depression would probably be the only time when this could realistically be achieved, when people have their minds on survival. I realise that some policing method would need to be imposed if this is going to work. I wouldn’t even mind Hans Blix overseeing it. But we need to get rid of the hawks, warmongers and aggressors. There should be legal structures to deal with them – like there were after WWII (the Nuremberg trials).

  • mary

    Contrast the raw happenings on the streets of Tottenham last night with the waste of money and time being spent in a time of austerity on this irrelevance, a tribute to British nostalgia using our licence fees. Just shows how out of touch the BBC are.
    Avebury Manor belonged to Alexander Keiller – ‘Keiller was heir to the Dundee marmalade business of his family. James Keiller & Sons was established in 1797 and exported marmalade and confectionery across the British Empire.’
    So there we have it, the British Empire lives on.
    On their Middle East page there is a long piece on the depradations of hyraxes (rock rabbits) on gardens in Israel yet there has been nothing from them about the week long air attacks on Gaza.

  • angrysoba

    Mary: On their Middle East page there is a long piece on the depradations of hyraxes (rock rabbits) on gardens in Israel yet there has been nothing from them about the week long air attacks on Gaza.

    Simply not true, Mary. There is an article here on BBC about airstrikes on Gaza and also about the rockets which were fired from Gaza which led to the retaliation:

  • Azra

    @Tom Welsh, absolutely agree with you there.
    “it seems to me that the main reason why so many people seem to be “anti-Israel” is the growing perception that the state of Israel should never have been allowed to exist”
    It is ironic that Jews which were displaced and their properties were taken during WW2, are asking even today for compensation but Palestinian are every day thrown out of their homes and cannot even ask for decent compensation!
    I put the question to Larry yesterday how he felt if he was thrown out of his house.. no reply to that, just side stepped the question. Typical!

  • ping

    It might be ideal to create a virtual reserve currency, which is not tied to any individual countries currencies. Is there any chance in such a thing?

  • Suhayl Saadi

    Well, I was away yesterday, watching Craig’s wife’s excellent performance in ‘Medea’ (thanks, Mary, the weather in Edinburgh yesterday was truly, soddenly atrocious, but much-warmed by the excellent theatrical fare on-hand!), so I missed this thread.
    Interesting that this post is about the USA and China and their changing relationship with regard to the world economy. It’s the historical narrative of kingdoms, republics and empires, isn’t it? The Wealth of Nations, Das Kapital, The History of the Decline and Fall of the Roman Empire, etc. If one looks at any part of the world, it’s the same kind of process, over time. We just get little snapshots, because we don’t live long enough to see the long view. And that’s kind of it, really. Now, if we were giant turtles, say…
    … or did I have a little too much warm sake in that pleasant Japanese restaurant? In my relative alcoholic innocence (!), I didn’t realise that while the Chinese beverage, maotai is drunk cold, sake is consumed warm.
    Good for a wet, freezing summer’s day in Dunedin.

  • mary

    That one crept in Angry and I honestly hadn’t noticed it but should have checked. It is the first for many days and there has been a paucity of reporting from the OPT. We used to have Jon Donnison, Wyre Davies and Jeremy Bowen with their ‘Israel says’ entries and their overuse of the word ‘militants’ for Palestinians but ‘soldiers’ when they were talking about the IDF. I expect they have been moved to the new centre of NATO’s attention, Libya and on hold for Syria which is being reported by Jim Muir from Lebanon.
    The reality of the oppression on 4th August, the latest on the Israeli oppression by this good website.

  • mark_golding

    Angrysober – To me you have no comprehension of the situation in Gaza and the Beeb is gutless in their reporting trying to walk a line where no line exists only a huge monolithic wall. Some time ago now I relayed the distressing account of a friend returning from Palestine – obviously you over-looked it!

  • YugoStiglitz

    Clark wrote above: “Look at YugoStiglitz’s comment to the effect that I “hate Jews”. It could be designed to provoke anger, and it comes from a known sock-puppeteer and abuser of Arabs.”

    How laughable that you think I “abuse” Arabs (how? when? where?), yet you continue to speak such hippie crap about all of us loving each other.

  • Tom Welsh

    John Goss, it seems we agree about a lot of things. But some of the problems we face do not have simple – or indeed, perhaps any – solutions. You wrote, quite understandably, “But we need to get rid of the hawks, warmongers and aggressors. There should be legal structures to deal with them – like there were after WWII (the Nuremberg trials)”.

    The big obstacle here is that no one has yet found a way to deal with hawks and warmongers other than overcoming them by force. Hence the saying “Si vis pacem, para bellum” (If you want peace, prepare for war”). The “appeasement” of the 1930s, while it is often misunderstood and has been grotesquely oversimplified, demonstrated graphically that you cannot fight tanks and dive-bombers with words and positive moral sentiment. And it seems to me that Gandhi’s “passive resistance” would not have worked against people like the Nazis or the Soviets, who would simply have congratulated themselves on having enemies who made the work of killing them so absurdly easy.

    So if you want peace, you must prepare for war. But, as we have seen, if you prepare for war you tend to get it, sooner or later. The conclusions seems to be that human beings will come to blows whatever happens, although after a particularly hideous war it takes them up to a generation (30 years) to forget its lessons.

  • ingo

    Thanks for those many links folks, took some time to keep up.
    The Guardian video shows the raw underbelly of Israel, the mentality that the rightwing are feeding on.

    This is a moment were one Palestine should be on the agenda, with sincerity, it is as if these people demand preferential treatment and it was good to hear the call ‘Have you not got any Palestinian olive grows to burn’, from what I would call a moderate mainstream voice.

    There will be no sitting down with Palestinians, who are making an effort to unite, unless the building of illegal settlements in East Jerusalem stops, not to speak of those on the westbank.

    This swiss cheese approach to building settlements, little hill top bastions, apologiese Evgueni, is making every fine word sound insincere, false and just another time consuming affair.

    The two state solution which now being pursued, imho, would perpetuate instability and war in future, it would always be a problem.
    Unless Gaza is its own Governor, on and off shore, and Israel stops bombing and digging deep wells to divert the ground water, destroy their gardens with tanks, unless Gaza stops sending missiles into Israel, nothing will change, so the first step should be a declaration of a cease fire by all, would it not?
    Israel will have to admit that its 600 million plus ‘Dome’ is just not working as it was supposed to, unless of course, its political and would have made retaliation and bombing unecessarry.
    Glenn made some very valid points. There is a global emergence of a rightwing agenda, very rabid and in alliance with anyone who has nationalistic tendencies, thats what worried me about young Cloe Smith visit to Israel on behalf of the FoI, another young mind indoctrinated.

    We can not overlook Pamela Gellers support for Breivigs apocalyptic pre announcement of his armed massaker on her blog, allegedly, nor should the police ignore her deletions showing complicity.

    Equally our police should not overlook Melanie Phillips writings which supported Breivigs mindset, not to speak of her rabid support for murder in international waters last year, her defense of the indefensable, the bombing of women and children in Gaza, just when the classes were about to swap over, kids everywhere. Her computer should be looked into, just as it is normal routine, or is it?

    Thanks a bunch, again, this blog is humming.

  • Courtenay Barnett

    @ John

    We, the ones who want peace and a safe and sustainable future for the world for ourselves and genrations to come – can but set out to make the swords into ploughshares.

    What is the alternative – a world with everyone armed to the teeth and at each other’s throats?

  • Azra

    @Suhyal, your Sake experience brought back memories of my only Sake Drinking occasion and it was in Kuwait! not cold and freezing, but rather warm and to top it all up, I was not aware that Sake cup is shared. Had to share the cup with a Japanese, a Korean and a Brit. Needless to say drinking from the same cup even after wiping it, is not my cup of tea 🙂

  • CheebaCow

    Sorry for the OT post, but I found this article very interesting and I thought others might also.
    TLDR; Basically the US, France, Canada, the Vatican and the UN (Annan and Ki-moon) all shafted Aristide. It wasn’t until Zuma came to power in South Africa and Dilma Rousseff in Brazil that Aristide was able to leave South Africa and return to Haiti. All documented in US state department cables, courtesy of Wikileaks.

  • colin buchanan

    For the US dollar to fall from it’s perch there must be some alternative. That’s why the Euro is so important. That’s why last week’s collapse is being presented as part of the euro crisis. US/UK plan to knock out the euro or at least force it’s devaluation in order to keep £/$ afloat. The chinese are aware of this and are supporting the euro by buying euro denominated securities, including Greek, Italian and Spanish government bonds and repeatedly proclaiming their support for eurozone. It’s not that the euro will succeed the dollar as world’s reserve currency but that it is a stopgap,a bridge to a new global currency system. This is the crucial battle with virtually all anglo-american financial,media and political forces united against Euro. Just survey the media- a war by any other name is just as vicious.

  • Courtenay Barnett

    Haiti is the “best” example one can find of the West’s dirty hands destroying the future of a country.

    The Haitian slaves defeated Napolean’s army.

    The European and US powers blocaded Haiti and prohibited it engaging in international trade.

    There was a reparations price imposed by the French ( $21b in modern value) and that was extracted as a price that the liberated slaves had to pay because France lost is “property” ( i.e. the slaves who had freed themselves in a revolution).

    Aristide’s rise to power brought with it a demand that the reparations be repaid by France to permit Haiti a realistic chance to rebuild, and he was seroius about advancing his demand through support from nations within the UN.

    Again France and the US ganged up and ensured ouster of Aristide.

    Clinton his gang and now in Haiti claiming that they are about building houses for the Haitians.A closer examination of the figures will establish what the Americans term a “rip-off”. A lot of money announced in aid – but a trickle and sub-standard housing provided. The company that Clinton is involved is being sued back in the US.

    A criminal operation of oppression if one existed. Haiti has truly been screwed.

  • Courtenay Barnett

    @ Colin,

    The currency solution will have to be a basket of currencies to operate as the world’s reserve currency. This, I think, will come incrementally. The US will resist a change in this direction all it can, but the realities will dawn on the US in due time; the Chinese and others with large amounts of dollar designated instruments will be a huge force compelling the change and the US, with all its militarism and resistance will ultimately by compulsion of global financial reality have to relinquish portions of its global financial dominance.

    At present in the US at the domestic level the populace want jobs, they need affordable health care and they need proper education – but – they are being given budget cuts, the maintenance of the same levels military and defence expenditure and more prisons and more war. This is why I say that it will more be the compulsion of economic and financial forces that impose change rather than rational decision making at the political level transposing itself into sensible public and foreign policy changes. The facts and circumstances of the need for certain types of change is there for the American people to see – much as Obama had articulated before his election. Sadly, Obama has betrayed the promise of “change” – and the stupidity in the decisions being made in Washington will serve as the force to compel change. There has been a kicking of the can further down the road with the recent raising of the debt ceiling, without fundamentals being addressed. The same point will be reached again, and the same type of action can be anticipated so far as same is possible. In due course the implications of the excessive deficit will catch up. Since the US won’t voluntarily and sensibly act responsibly, the implementation of change will be not be an exercise of rational political and financial choice – but a process of circumstantial compulsion.

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