“It said that the mercantilist, Confucianist, authoritative system of China is the victor over the Judeo-Christian, liberal democratic free-market West; that their system is better, and they go over how it is better and how they’ve beaten us,” [Steve Bannon] argued.Breitbart News
He warned that there are five things that China is going to achieve in the next few years, and if America does not thwart them, “China will in fact be a hegemonic power.” They are:“If they accomplish those five things, they win,” he predicted.
- The rollout of fifth generation mobile technology — known as “5G.”
- The expansion of the One Belt One Road Initiative — a transport system to go through central Asia and connect China to the Middle East.
- Plan 2025 — 10 industries the Chinese have aimed to dominate by 2025. Bannon described the Chinese as “way ahead.” Bannon said three of those are silicon chips, robotics, and artificial intelligence.
- Conversion of all oil transactions into Chinese currency, which he said will end America as a reserve currency and force the U.S. to start paying off the 20 trillion debt.
- Financial technology. Bannon said the true piece of leverage with North Korea is the ability to decouple countries from the world’s financial system, sanction companies, and shut banks off from capital markets. He predicted that in 5-10 years that ability is gone.
Steve Bannon: If America Doesn’t Thwart These Five Things, China Will Be a Hegemonic PowerAdam Shaw
See also
‘I’m Proud to Be a Christian Zionist’: Steve Bannon Gets Standing O from Leading Jewish Organization
Amanda House
17 comments:
There system must be better then. I'm not sure about never being able to vote the government out is power, though, because if you get a rotten lot you're stuck with them, but we can't vote them out here either because we have the hidden state. Maybe people have more control over their government there, I'll have to look into it.
The US deep state survives because of wealth extraction and so is depleting the competitive powers of the country. Since we can't compete it seems reasonable that the deep state will probably start a war to combat China.
Converting all oil transactions to Chinese currency is a boogie man. Unless their are enough people with sufficient quantities of yen/renmibi they cannot be the "reserve currency" This means that China would have to become a net importer and spend their currency widely, taking other peoples "stuff" in return. Their commitment to mass transit and renewables casts doubt ,for me, on their drive to control the oil markets. If anything they see Americas obstinance to rethinking energy as an opportunity to really profit from our pigheadedness and stupidity.
You know its a scare mongerer extraordinaire when the sentence "force us to pay back our 20 trillion debt" is thrown in there.
What scares me is that when the christo fascists that live in so much of non metropolitan America hear this stuff, they get entranced, nod their heads and immediately go in to survivalist us-or-them mode.
crazy crazy times...... and getting crazier by the day
"Conversion of all oil transactions into Chinese currency, which he said will end America as a reserve currency and force the U.S. to start paying off the 20 trillion debt."
What a Looney Tune this Bannon. There is no "debt." Everything's been paid for.
Reserve status or not, it has no bearing on the $20 trillion the non-government holds.
What a moron.
https://thesaker.is/the-saker-interviewed-by-the-geopolitics-empire-show/
Bannon is mistaken in asserting that China wants all oil transactions denominated in renminbi (Chinses currency), of which the yuan is the unit of account.
PBOC chief Zhou Xiachuan has cited the Triffin dilemma as a cause for concern. He is well aware that the issuer of the global reserve currency should act independently of national interest in issuance but that is not practical, since countries inevitably act in their own interest, especially at time of stress when an international approach is most needed. He is also well aware of Bretton Woods and the bancor proposal of Keynes. He believes it was a mistake to adopt the US proposal, which broke down in 1971, when Nixon left the gold standard for international settlement.
Zhou doesn't advocate a return to the gold standard but rather monetary reform that adopts something like the bancor that Keynes envisioned, which would be a a basket of currencies and a portion of commodities, e.g., gold, as a real anchor. Both China and Russia are gearing up for that by accumulating, since they view monetary reform as inevitable down the road in reaction to the way the US is using the USD-based system politically in its own interest in international affairs instead of managing the reserve currency for the benefit of the world economy as a whole.
See here under "Fiat currency and the Triffin dilemma." There is plenty on this available. Apparently, Bannon doesn't know about it, or maybe he is being disingenuous.
Greg: "Converting all oil transactions to Chinese currency is a boogie man."
As Tom says, China may not want ALL transactions in its currency, but it is aware of the dangers in having the world's most important commodity priced in the reserve currency. China understands the extraordinary leverage the US has if you need dollars. Witness the sanctions and freezing of accounts of other countries which have refused to kiss the ring.
By moving away from an export orientated economy to a more consumer centred one, China is at best half a step step ahead of ay possible action by the US. Whether it can move quickly enough to a consumer orientated economy (unlikely) and rid itself of enough bonds (again unlikely) before the US decides to move against China to ensure another American century is impossible to call. If it can do this, thereby scuppering US economic leverage, only US military action is left. Will the US allow a multipolar world and leave the economic stage to the Far East or will it go down fighting? Has any great power ever gone down without a fight?
Those who claim that it doesn't matter what the reserve currency is - whether its dollars or Bhutanese ngultrums - are living in a fantasy world by saying that there is no leverage to be had by the monopoly issuer of this currency when this issuer knows that foes and friends alike are COMPELLED to acquire this foreign currency, and which moreover never leaves the issuer's central bank. It may not matter in a world in which power relations do not matter, but we do not live in that world; we live in a world in which every country would happily like to be another Rome, or better still another US.
The MMTers are right on the pure economics of a reserve currency, but the MMTers never allow themselves to be drawn on the politics, or the *political* economy, of it. As Neil Wilson has so pithily and eloquently noted: there is no such thing as economics - there's only politics. Notwithstanding the possibility, or indeed probability, of Neil having a different interpretation it in a different interpretation to how I read his elegant aphorism, it nevertheless should be the zeroth law of "economics".
The MMTers are right on the pure economics of a reserve currency, but the MMTers never allow themselves to be drawn on the politics, or the *political* economy, of it. As Neil Wilson has so pithily and eloquently noted: there is no such thing as economics - there's only politics. Notwithstanding the possibility, or indeed probability, of Neil having a different interpretation it in a different interpretation to how I read his elegant aphorism, it nevertheless should be the zeroth law of "economics".
And that's why there is a lot of political stuff posted here at MNE.
MNE is the only MMT-oriented blog that takes sociology, politics and philosophy seriously into account in addition to economics.
There are no disciplinary divisions in the real world and imposing them leads to distortions.
What's needed is the big picture along the ability to focus sharply within it without losing it. This is the basis of systems thinking.
MNE is the only MMT-oriented blog that takes sociology, politics and philosophy seriously into account in addition to economics.
I should qualify the above since Bill Mitchell and Neil Wilson also pay attention to these relationships, and Bill Black also integrates these factors in his analysis.
What I meant is that the comprehensive approach here at MNE that monitors the world pretty comprehensively day by day is unique to this blog, similar to the links at Naked Capitalism.
Tom, yep, the posts here at MNE are second to none. MNE gets some undeserved blows for a lot of the posts being on politics, but that's to miss the essential nature of the economic world. Do these critics think that Goldman Sachs and JP Morgan don't have political analysts? What do you think all those fancy sounding "strategists" and whatnot do all day? They may be clueless, but that's another matter. Friends of mine who are City traders are politically clueless and worse still MMT clueless, which translates as economically clueless (printing money, hyperinflation, bond vigilantes are about to pounce and all the other imbecilities); apparently they spend almost ALL their time making markets, something any child could probably do (so why not a computer?), not actually trading. And when traders do trade the bank's own money, there's something very fishy going on: whether it's fixing markets, front running, high frequency order flow shenanigans etc, and then they still LOSE money! Haha...
The MMT ally closest to the having the big picture and talking about it at least partially in terms of MMT is Michael Hudson.
Bill Mitchell has the big picture, too, and now he is becoming more outspoken about it more often.
Tom, Bill is the finest economist in the world today, perhaps in a league of his own, and I'll fight any man to the death who says otherwise. As you say, he is becoming more politically outspoken, although I've never seen him discuss in any detail whatever hegemonic reserve currencies and to what geopolitical/geoeconomics ends they can be used. I might email him and ask him to think about making it a future blog post, but then again the great man must get a million emails a day, so it'd be pointless,
Michael Hudson is superb, and thankfully he is overtly political and doesn't pull his punches, but he does say some odd things that are very un-MMT, like his insistence that the US can never pay its international "debts". As we all here know, the goods and services have already been paid for (how else did the US consumer get them?), and the rest of the world's central banks are keeping their money in an interest bearing security rather than as a bank balance earning nothing. Or Hudson't insistence that the Pentagon budget is paid by the rest of the world buying treasuries (sometimes he says the US deficit, which he claims is the Pentagon budget, is funded by the ROW)! You'd think a UMKC professor would have figured out long ago that the US treasury "funds" the Pentagon budget by simply crediting bank accounts.
For an example of Hudson's un-MMT analysis see this video, especially 3.47 minutes on: https://www.youtube.com/watch?v=8P1fihT5B7o
@ John
Agree.
Iran was bought to heel because companies who traded with them particularly for oil were not only denied maritime insurance for their oil tanker ships but also denied access to Fedwire since much of the world's trade including oil is conducted in dollars via Fedwire transfer. Would global businesses trust a Communist China version of Fedwire?
John & Mike - it's a lonely fight, but especially if one is talking about the work of an economist like Hudson, one should not disparage the use of the word "debt" as it may lead one to wrongly mislabel things as un-MMT. It is entirely correct to use the word "debt" without scare quotes for international holdings of dollars or pounds, no matter what form they are in. Hudson just may be using the word in the primary English meaning, not a secondary, derived, peculiarly financial meaning. The older the economist (e.g. Lerner, Keynes & many others) the more likely they may be using the more consistent & logical primary usage. Sometimes Hudson can go a bit too far, but often he is just saying things in a way that is too little used in modern MMT circles.
Of course it is unlikely that a total international debt be paid off soon, even in proportion to the size of an economy, but people only hold dollars or pounds because it could be and is constantly being paid off in real terms. So it is a lot closer to reality, needing less qualification and interpretation, to simply say "debt" rather than "the goods and services have already been paid for", which again, is misleading as it is simply not true in the primary sense.
Tom:He [Zhou Xiachuan] is well aware that the issuer of the global reserve currency should act independently of national interest in issuance.
In the real world, the opposite of the truth. Demands for the US to economically "act independently of its national interest" invariably are demands for the US to act to attack its own people and work in favor of "the so-called international bankers." Alex Tsipras is a current example of such a "responsible" leader. Let's hope "responsible" leaders become as rare as kings ruling by divine right. The irresponsible leadership the US & China have been blest by - has showered blessings on the rest of the world.
The US (or the UK or France or China etc) acting economically in its own national interest works for the global interest, NOT against it. Laissez-faire = floating rates, each nation looking out for itself, works just fine in the international setting. Just as it does not in the domestic setting. So in the real world, the bankster (/ parasite / saboteur) class incessantly asks the government to not "intervene" - act in the national interest domestically, while it incessantly demands intervention internationally.
China, Russia, Iran, Venezuela, etc. are well aware that the US has weaponized the dollar, which is called "dollar hegemony" since access to the dollar system is crucial in the contemporary world. Economic hegemony is as important to the US ruling elite as military hegemony. They go hand in hand.
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