By George Athanassakos, Globe and Mail, November 9, 2010
Central bankers around the world have lined up to criticize the recent quantitative easing by the U.S. Federal Reserve. Many economists have done the same. Comments range from “owes us some explanation on the decision” and “international confidence…might be hurt” to “debasing the currency” and “uncontrolled printing of money which will lead to high inflation and another global crisis down the road”.
Another form of brinkmanship? Is the U.S., by printing $600 billion through the purchase of government bonds by the Federal Reserve, really attempting to get the attention of China, who has seemed virtually deaf to previous pleas from the U.S. to raise the value of its currency?
By lowering the value of the American dollar, the U.S. achieves two very critical goals: making U.S. exports more affordable and therefore more welcome abroad, and reducing the value of its debt to China.
But will the decision by Federal Reserve Chair, Ben Bernanke, result in disarray in Seoul at the G20, and produce a serious round of protectionism across the globe?
In a period of intense, and it would seem unbridled, globalization, is the economy the new instrument of conflict between and among world powers? Have we sunk so low, by inflating the importance of "money," that we are now reaping our own rewards?
We "value" money as the currency of relationship. Go to a political meeting, or a meeting of a worthy not-for-profits, and listen to the invitation to "give" money to keep the cause alive.
When reporting on political events, how the money is spent is the central question, because it has become the core issue, not only the core vocabulary, but the central issue in every debate.
Money trumps placing other issues on the top of the list of "issues" in any debate, as if the "cost" were the prime concern of the decision.
And, in the arena of power politics, the U.S. is certainly the country with the biggest fist. They play with the history and tradition of wanting to be, and for the last half-century or more, of being, the world's superpower.
Only now the playing field is shifting. China holds billions of U.S. treasury bills. China, if it were to call its debt, could and would force the U.S. into bankruptcy, something neither the Chinese nor the rest of the world wants. And China wants to continue to grow its manufacturing sector to sell its products to the 'rich' countries, including the U.S., in order to fuel that growth.
So the question may become, "Are the U.S. and China so enmeshed in each other's affairs, that the new world order will have to be the "bastard child" of this illicit union?
Are we all now, irrespective of our national histories, traditions and hopes and dreams, living in the wake of whatever winds blow from the energy created by the friction of these two emerging powers?
Certainly, the most recent wooing of India by the U.S. president is a signal of the U.S. perception of their need to balance the power of China in the world, through the growing influence of India. It would seem that India is likely to be wooed by both China and the U.S., as the U.S. joins the chorus to create a new seat at the U.S. Security Council for India, (albeit excluding the veto, the special preserve of the five original members).
With millions of Americans out of work, without prospects for returning to any workplace, certainly not to their previous workstations, and with China's wall of protectionism and devalued currency making it difficult to penetrate the Chinese market for U.S.-produced goods, the meeting in Seoul will provide us all with early signs of the language and intensity of the next drama, as the forces for private capital and the forces of state management of individual national economies play out against the backdrop of the U.S. Federal Reserve decision.
If you think this looks like a recipe for a roller-coaster ride for all nations, and for the workers (and the unemployed) in all nations, that seems like a realistic understatement. And if you think that the unemployed are likely to remain silent, and grow hungry and bitter in this clash of tectonic plates of ideology, of money and of power politics at the highest level, think again.
The streets of Seoul may be just the first of many theatres for this emerging consciousness to explode.