It was not until Robert Rubin became special economic assistant to president Clinton that the US would figure out its strategy of dollar hegemony through the promotion of unregulated globalization of financial markets. Rubin, a consummate international bond trader at Goldman Sachs who earned $60 million the year he left to join the White House, figured out how the US was able to have its cake and eat it too, by controlling domestic inflation with cheap imports bought with a strong dollar, and having its trade deficit financed by a capital account surplus made possible by the same strong dollar. Thus dollar hegemony was born.
By Greg Moses
As Islamic states and communities caucus over the crisis in Lebanon, non-Islamic populations in the West also desire some quick way to peacefully deter the hyper-violence of the reigning Washington-London-Jerusalem machine. Ahmed Amr calls our attention to currency activism, a grassroots dollar boycott, suggested by former Malaysian Prime Minister Mahathir Mohamad. By withdrawing economic activity as much as possible from the production and circulation of USA dollars, billions of people all over the world might collectively compel substantial and lasting concessions from our steel-tipped oligarchs, if not turn them out naked overnight.
The power of currency activism can be dramatically envisioned upon premises of dollar hegemony worked out in the pages of Asia Times by economist Henry CK Liu. In dialectics marvelous to read, Liu argues that Clinton’s place in economic history was secured by consolidating dollar hegemony as the monetary structure for globalization, a.k.a. neo-liberalism. The care and feeding required by this system explains odd collaborations between Republicans and Democrats, Texans and Saudis, or think about this one: Wal-Mart shoppers and the Communist Party of China (CPC).
Liu’s dollar-hegemony theory explains how Wal-Mart shoppers have the CPC more on the leash than the other way around, because when Lee and Sandy Heartland drop their dollars into the big-box stores crammed with things made in China, what happens is that Chinese money managers have little choice but to preserve their dollar holdings in the form of US Treasury Bonds. The more Wal-Mart shoppers buy, therefore, the more the CPC comes to hold T-bills, and the tighter together we are drawn into the world of dollar hegemony.
To seriously disrupt the productive systems that reproduce dollar hegemony would risk write-downs of all savings dependent on T-bill repayments. So if China is an emerging economic competitor, as everyone can see, Liu stresses that the CPC has more importantly become an embedded financial partner in the dollar’s monetary regime.
Or recall the stashes of cash found and lost in Iraq during the USA-led invasion. Doesn’t a pile of loose dollars count for a most transparent motive anywhere in the world? From the point of view of dollar hegemony, CENTCOM is securing a final frontier with distinct financial topographies.
So an important frontier of dissent has been suggested by Minister Mohamad’s call for oil producing countries to denominate their trade in some currency other than petro-dollars. Indeed this might inscribe a limit to the hyper-violence that dollar hegemony today enables. However, as Ahmed Amr replies, Minister Mohamad’s suggestion will be hard to follow for OPEC managers who would face the same predicament as the CPC in terms of savage losses to their own wealth if the dollar were to suffer. In fact, dollar hegemony helps to explain why the patriarchs if not the people of the Middle East consider Hezbollah retrograde.
As a matter of global economic democracy, Liu has been touting the virtues of currency pluralism while trying to deflate campaigns for belligerent exchange policies. And last week’s refusal by top Western leaders to pronounce cease fire over South Lebanon accelerates the urgency of finding a global activism that can wage simple peace with peaceful tools. Currency pluralism might help. Otherwise, we have been shown a future where we all get sucked into blood games that we can neither begin nor end on our own terms.
If grassroots peace movements could express themselves in currency choices, then we would find new voice in numbers. How many percentage points of monetary withdrawal could make George Bush look up the word magnanimous? It’s a big word, I know, but there are good reasons why people with fleets of F-16s should be compelled to pronounce ethical vocabularies. Those who do not place limits on their own ability to kill are virtually begging grassroots peacemakers to craft real limits for them. In the flashy grins of Western leaders last week we found the promise that we could all be punished some day. The world, including the vast majority of the West, must find some way to grin back.