The clock is ticking on US economic hegemony. Or rather, there’s been a lull in conversation and the ticking of the old fashioned, otherwise comforting wind up clock sitting on the mantlepiece over the fire is suddenly very, very noticeable, in a way that it wasn’t before. TICK TOCK TICK TOCK and so on. It’s become impossible to ignore. TICK TOCK TICK TOCK. What was once a soothing and reassuring noise has become an ominous portent TICK TOCK TICK TOCK The noise fills the room, each inevitable increment smashing its way into your consciousness. TICK TOCK TICK TOCK. You get the idea.
China wants to “de-Americanise” the world. Not in the sense of rubbing the American continent out on maps, or even waging war against the USA. The latter in particular would be impossible and impossibly foolish for any nation to attempt. But the Chinese state won’t have to, because the fortress of US global predominance is built on very shaky and shifting foundations. The USA has existed in its present form for more than 200 years, and, because the Great Powers of Europe fought each other to a standstill twice in the early C20th, ruled imperiously over that century. However, on a Chinese timescale that is nothing, and the pendulum (that clock again) is swinging back the other way.
US global control is enforced through its military, but the most powerful military in history is reliant entirely on the economic advantage given to the US by having the world’s reserve currency. Having the dollar means that wherever the US is playing in the world, they’re playing at home. It is the trading currency in all important global markets, which bequeaths to the US a natural advantage. Since Nixon unilaterally left the gold standard in 1971 – the ‘Nixon shock’ that was a far more significant event than the Watergate scandal that undid him – the US has had the ability to create money at will and manipulate markets to their advantage. Military conquest and alliance has left client states littered throughout the globe, paying tribute to the US by participating in the ‘free market’ and buying US debt in the form of treasury bonds. The US, since Bretton Woods, always been able to kick the can further down the road, and ensure that resources flow inwards.
The end of the Cold War left the US as the sole global superpower, and a binge was begun that spiralled further and further out of control. The Dotcom bubble bursting only prompted Fed chairman Alan Greenspan to give the can another mighty heft, by artificially lowering interest rates and stoking up the trouble that hit in 2007-8. What does that all mean? It means the US is spent. The are no frontiers for the US to conquer now. The game is changing and the impetus is swinging back East again. The Americans have bust their currency. So have we British with the pound. How it will unravel is far from clear, but the signs are very clear that they will.
Into view come the Chinese who, since the 1970s, have been playing a very long game. State media has called for the “de-Americanisation” of the world, which would remove the US’s monopolistic advantage. More commodity and financial transactions will take place in Renminbi and power will ebb from one side of the Pacific to another. The Chinese state have secretly been building up their gold reserves, possibly with the plan to launch of an economic coup, in making a bit to usurp the dollar. The real world consequences of this will be immense. Early signs are already emerging of countries looking to guess the coming weather. The Chancellor’s recent atrocious deals with the Chinese telecoms and nuclear industries can easily be read as sweeteners for keeping the City of London as a viable financial hub in years to come.
That is what Osbourne et al hope at least (I’m guessing of course). The other distinct possibility is that the UK economy, along with the pound, tanks spectacularly – as some are predicting – and all bets are off.
Either way this particular clock is alarming, and definitely not a wind-up.