At this juncture it’s clear that the attempt of the Trump Administration and related circles in the U.S. military industrial complex have failed in their prime objective, that of driving a permanent wedge between Russia and China, the two great Eurasian powers capable of peacefully ending the Sole Superpower hegemony of the United States. Some recent examples of seemingly small steps with enormous future economic and geopolitical potential between Russia and China underscore this fact. The Project of the Century, as we can now call the China One Belt One Road infrastructure development – the economic integration on a consensual basis by the nations of Eurasia, outside the domination of NATO countries of the USA and E.U. – is proceeding at an interesting pace in unexpected areas.
1971: America’s Twilight Begins
It’s very essential in my view to appreciate where the post-1944 development of America’s role in the world went seriously wrong. The grandiose project dubbed by Henry Luce in 1941 as the American Century, if I were to pick a date, began its twilight on August 15, 1971.
That was the point in time a 44-year-old Under-Secretary of the Treasury for International Monetary Affairs named Paul Volcker convinced a clueless President Richard Milhous Nixon that the treaty obligations of the 1944 Bretton Woods Treaty on a postwar Gold Exchange Standard should be simply ignored. Volcker rejected the express mandate of the Bretton Woods Treaty which would have seen a devaluation of the dollar in order to rebalance world major currencies. By 1971 the economies of war-ravaged countries such as Japan, Germany and France had rebuilt at a significantly higher level of efficiency than the U.S.
A devaluation of the dollar would have given a major boost to U.S. industrial exports and eased the export of dollar inflation in the world arising from Lyndon Johnson’s huge Vietnam War budget deficits. The de-industrialization of the USA could have thereby been avoided. Wall Street would hear none of that. Their mantra in effect was, ‘Nothin’ personal, just bizness…’ The banks began the destruction of the American industrial base in favor of cheap labor and ultra-high-profit manufacture abroad.
Instead of correcting that at a point it could have had an enormously positive economic effect, Volcker advised Nixon to in effect spit on America’s international treaty obligations and to brazenly dare the world to do something about it. On Volcker’s advice, Nixon simply ripped the treaty in shreds and ended Federal Reserve redemption of dollars held by foreign central banks for U.S. gold reserves. The U.S. dollar overnight was no longer ‘as good as gold.’
This post was published at New Eastern Outlook