The American currency and the financial system have been predicted death many times. Several times it was even almost stated.
The Great Depression of 1929-1933 gave the first reason to talk about the collapse of American capitalism. The great crisis of 1973-1982 gave rise to expectations of the end of the dollar, decoupled from gold and devalued in 1971, and after weakening in commodity terms during the years of stagflation and lumpflation, stagnation and recession amid high inflation in the West. In the “zero years”, the dollar was melting in gold and oil terms, and during the crisis of 2008-2020, it fell even more in price against gold. 2020-2021 has revived the trend of increasing challenges as markets rise. The year 2022 has dealt a new blow to the dollar and other Western currencies, calling into question their reputation.
The growth of global inflation in February-Ma-rch 2022 is still trying to p-ass off as a consequence of political changes. Howev-er, the situation is rather the opposite – changes are a consequence.
Does inflation come from Russia?
More and more Western politicians, experts and the media accuse Russia of rising global inflation. It comes to personal accusations against Russian President Vladimir Putin, whom many, in particular the Americans, following their press, blame for the rise in the cost of motor fuel. People in the US, Canada, England and the EU are confident that it was Moscow that raised the cost of gasoline, gas and engine oils for them. Despite the fact that oil prices are still relatively moderate: having reached $120 per barrel on March 9 (at the moment it was $130) per barrel, the price of Brent oil dropped to $103 by March 18. About $ 146 per barrel – the maximum of the pre-crisis average cycle of 2001-2008 – so far we are talking only in the future, which is not necessarily considered wit-hin the framework of 2022.
Now the prices for energy carriers, foodstuffs, fertilizers, metals and almost all types of raw materials are already rising. However, this is not a sign of a new economic crisis, but should be seen as signs of a new recovery – growth within the medium cycle. Markets still have a long way to go, and this process will stimulate some economies through the influx of money, and others through the realization of inefficiency and the need for reforms. If governments, companies and consumers feel uncomfortable, this does not mean that the world economy is stalling. It is developing in a tense political environment that stimulates this process.
Hostility and distrust in the world, the formation of blocs of states worked well for development before. They are still working.
Russia could not generate global inflation even with all its desire. But the policy of ultra-low lending rates of the central banks of Western countries together, the huge debts of companies and the deficit of government budgets have created all the conditions for rising prices. A huge money overhang has formed, which has just begun to sink into the world market. The situation is extremely worrying for the United States, because they have repeatedly asked Saudi Arabia to increase oil production. Washington hopes to compensate for the overproduction of banknotes with overproduction of commodities. However, the rest of the world senses a catch. The Saudis have already refused. They also refused London.
Theft of wealth and loss of prestige
Against this backdrop, German economist Henrik Müller called inflation, san-ctions against the Russian Federation and current changes signs of the decline of the dollar. Seeing the actual arrest of a large part of the reserves of the Bank of the Russian Federation, Russian private property and capital, he stressed that “there will be fears that Washington may at any moment confiscate the foreign exchange assets of ot-her countries, such an und-ermining of confidence will seriously harm the dollar.” Thus, a new situation is be-ing created in the world ec-onomy. Its essence is that the reputation of a whole b-loc of states that are part of the core of the world economy has been destroyed. This is not only the fun-ctional death of the “Washington Consensus” as the rules of “free trade”, the free movement of goods and capital while they are protected. This is the abolition of the rule of law as such.
“Property is theft!” – this is what the French thinker Pierre-Joseph Proudhon once said when he castigated Western capitalism. This maximalist expression was disputed by many, including Karl Marx, a contemporary of Proudhon. But in 2022, the West froze the funds of the Bank of Russia, the Russian Ministry of Finance and individuals in the most ugly way. Moreover, not only the assets of companies, but also the personal property of wealthy citizens were arrested. The reason was that they come from Russia. This pretext is excellent for theft, but, in my opinion, cannot be called legal in any way. Never before has such a significant material wealth of a G20 country been withdrawn from its control. This is especially strange for the EU, where law is based (as in Russia) on the Roman tradition – on laws, and not on precedents, as in the Anglo-Saxon world. For the United States, England and the states of the British Commonwealth, it is logical that the seizure of Venezuelan funds, for example, sets a precedent and on this basis it is possible to appropriate the money and property of any country, any firms and people. Such “theft” as it becomes legal.
Supporting the Kyiv regime, the Western states declared themselves as the whole world. But this “wh-ole world” does not include Africa, Latin America, mo-st of Asia, and many countries outside these areas. And it is there that the main conclusions from the conflict between the West and Russia will be drawn: it is dangerous to keep money in Western debt securities of governments and private structures, as well as in accounts in Western banks. This applies to governments, firms and individuals – that is, everyone. No movable and immovable property can be guaranteed to be protected in the event of a political decision. The states that were perceived as guarantors of the rules refused to comply with them and became dangerous for the rest of the world, including the financial elites, who were loyal to the US, England and the EU. Everything can be assigned.
In this situation, the consolidation of countries outside the West with independent authorities, as well as the consolidation of society in response to an external threat, is logical. Moreover, Russia is now just showing how this can happen, what kind of protection and effectiveness in the fight it can provide.
Another conclusion concerns the development of Eurasian and wider monetary and trade cooperation.
National cycles, new money and rules
Western currencies, no matter how their rate rose at the beginning of 2022, will have to make room. The dominance of the dollar in the world is doomed for economic and political reasons. A Eurasian continental block of countries is being formed, bringing an alternative to the world – the Eurasian consensus. The world has broken into two blocks, and, having struck a sanctions blow against Russia, the West, as it were, informs the mass of neutral countries: whoever is not with us is against us. Moscow, Beijing, Tehran and others offer a completely different format: those who are not against us are with us, they can become a participant in our economic projects and think about protecting their finances, their independence and territory from the aggression of the United States and its allies. The rigidity of the Western formula is dictated by problems. The correctness of the approach of the new Eurasian centers is smeared so far by their lack of financial and other instruments.
The world “after the dollar” is already being created. The Saudis are negotiating with China to trade oil for yuan. The EAEU (Eura-sian Economic Union) and China are discussing the creation of a new currency, which may turn out to be not only a unit of account, but also a reserve currency that can be traded on the stock exchange. If this currency has an issue limit, for example, based on a link to the gold reserves of the founding countries, and various application formats (crypto, cash and non-cash), then it will be able to quickly gain a leading position in the world. And if the Eurasian countries trade their products through their own, and not Western exch-anges, and in their own currency, then the turning point will be complete. In the history of capitalism, the decline of the leaders – Northern Italy of the Renai-ssance, the Netherlands and England – was the result of their loss of industrial primacy, the triumph of the financial sector over the industry. This is happening in the US as well. Because the dollar is threatened with further depreciation in co-mmodity terms. Washingt-on’s political rudeness und-ermines its position and the position of the American market for capital.
The United States is completing its cycle, at the beginning of which the main thing was agriculture, and at the end – the stock market and the dollar (although they have managed to protect their stock exchanges from collapse so far). The Republican Party mercilessly hits Biden with the fact that inflation is rising. At the same time, Beijing is also ready to support the new industrialization of the Eurasian countries, which means the substitution in Russia, Kazakhstan and other countries of Western products: equipment, machinery and parts. Increasingly, they are talking about the possibility of freeing the intellectual property of the United States and its fellow “post-industrial countries.” The Russian government has approved a list of unfriendly states, which can be taken as the basis for a wide range of measures against these countries and their business structures.
New rules of the game are being established. The West canceled the old ones, believing that it could impose a tougher code on the world and get the resources of Russia and China. Instead, the US and the rest of the “collective West” will have to adapt to a reality that is being created against their wishes and efforts. Of great importance will be the liberation of Ukraine from their power. In parallel, a block of Eurasian countries will be formed with a new monetary, trade, technological, ideological, legal and social policy. This leaves little chance for the dollar. But the transformation of the world becomes inevitable and irreversible.