Making China great again
The US-led war against Russia for Ukraine will succeed only in making China great again, and all Americans will suffer for that.
Hello, this is Darrell Castle with today’s Castle Report. This is Friday the 28th day of April in the year of our Lord 2023. I will be talking about the economic and industrial nature of modern war and how that nature inures to the benefit of China. I will also talk about how the world is turning away from the financialized system used by the US and how much of the world’s population of people and nations are turning away from the dollar to other currencies especially the Chinese Yuan.
Modern war – from WWII onwards
For purposes of our discussion, I will presume that modern war began with World War ll, and that war certainly was industrial. The United States, protected from attack by two oceans, was able to convert its massive industrial base into war production. But Germany and Japan were subjected to strategic bombing to destroy their industry and with it their capacity to make war, and therefore, industry was the difference.
Most war today is psychological although there is plenty of kinetic warfare in the world. Both still depend to a large extent on economics and industry. For example, this Castle Report was inspired by an article I read on Russia Today entitled:
Russia has enough coal for 300 years—Energy Ministry.
It seems that Russia has enough coal to last for centuries, while industry in the US is winding down. This is largely because of efforts to convert from fossil fuels to green energy, and the movement of manufacturing offshore. Russia, meanwhile, just goes about digging its coal out of the ground and shipping it all over the world.
China buying Russian coal
Russia has far more coal than it can use at the present time. So who is buying it? Europe at first, but now, China of course. I quote briefly from the article:
Russia produced 443.6 million tons of coal in 2022, a 0.3% increase from 2021. Exports fell 7.5% to 210.9 million tons following the introduction of embargoes last August on Russian coal by the EU and UK, which had previously been the recipient of nearly a third of Russian coal exports.
You can see from that quote that almost half of Russian coal is being exported and before the sanctions it went to the West. Now the sanctions have allowed the enemies of the West, or at least the opponents if you prefer that term, to prosper. This seems like madness to me, but I suppose it is part of the suicide of the west as Pat Buchannan used to refer to it. China has continued to stockpile Russian coal this year in record amounts with imports hitting a record last month of 8.8 million tons up 29% over February and three times more than the same month a year ago according to Chinese customs data.
So, despite the sanctions, the Russians don’t seem to be having any trouble finding markets. While the US and the West are breaking down industry and talking constantly about wind and solar the BRICS nations led by China are importing coal and ratcheting up their industries. That is a message that the world apparently wants to hear but the West isn’t listening. Many nations are tired of the US drive for world hegemony and they now sense weakness. The sanctions have finally made the difference in the world’s willingness to put up with financial bullying.
Russia has many other resources – but the US has dollars
Russia covers 12% of the earth’s surface and coal is only one of its many sources of fuel. Russian deposits of oil and gas can and did power most of Europe until Joe Biden decided to teach those Germans who runs this world and sabotaged the Nord Stream. Russian timber, a renewable resource, is convertible into charcoal in massive amounts. Many other natural resources lie under Russian soil as well.
To counter all this the US has the world’s reserve currency. We can print money at virtually no cost and the rest of the world takes it at the value we assign to it. If you want to buy oil or gas you must convert your own currency into dollars because we run the world and only dollars are permitted in trade. We invade any country that displeases us, but they cannot invade us. To bolster this disparity we have approximately 750 military bases around the world. No one seems to know the exact number but 750 is a close approximation.
Dollars are and have been since the Bretton Woods agreement in 1948 extremely valuable. The new system of value in financialization is extremely favorable for the elite and extremely impoverishing for everyone else. US stocks are currently worth $45 trillion. US real estate is worth $36 trillion and US government bonds $31 trillion. That is all smoke and mirrors, but the rest of the world has always bought it because they have no choice.
Role of the US military
The US military, especially the US navy, enforces this system around the world. US word is law all over the world, so you do what we say or else. If the Russians grow weary of a US coup and regime change to a US friendly government right on their border well that’s just too bad. If the Russians grow nervous about a hostile military alliance with nuclear weapons growing to its very border despite solemn promises not to do so, well that’s just tough.
Yes, that was a pretty cool system for the US. But that was yesterday’s world and tomorrow’s world will be completely different. We need to come to grips with the fact that the world we have lived our lives in is ending. Furthermore, there is no saving it from the world our children and grandchildren will live in. The 40-year trend toward lower and lower interest rates with no resulting inflation is ending. With its end comes the end of constantly increasing asset values for the elite who could borrow at virtually no cost and invest in constantly rising stocks.
That system I just described along with US imperialism abroad has destroyed the middle class in the US and condemned those below the middle class into poverty. The future will not elevate those people but will add more and more to their numbers. Let’s look at a partial reason the US ruling elite were able to get away with that system of exploitation for so long.
US dollars, foreign goods – including from China
The extra dollars the US printed and pumped into the system were spent mainly on foreign made goods because foreigners now make virtually everything. The dollars went to China, Vietnam, Bangladesh, India and many other places like those. Nations where people work for a living for very low wages made the goods and accepted pieces of paper in return for their labor. A movement is underway across the world to move away from the dollar, and it is rapidly gaining steam. The BRICS include Brazil, Russia, India, China, and South Africa, but many other nations are lining up to join.
In Brazil, which has been a de-dollarization leader, President Lula at a recent conference, famously said, “Every night I ask myself why all countries have to base their trade on the dollar”. Many others are asking that question as well. According to Bloomberg the BRICS are expected to outpace the US led G7 nations in terms of their contribution to the world’s economic growth, for this year. Brazil is not the only one because Argentina just announced it would be dropping the dollar in favor of the Yuan. The Mexican president just completed a trip to China and Chinese on the border of the US would be problematic for me. I wonder if it will be a problem for Biden, but then I guess what goes around comes around.
De-Dollarization is happening faster than economists expected apparently as the dollar continues to lose its reserve status. The dollar’s share of global reserves fell 10 times faster last year than it has in the last two decades. Countries are looking for alternatives after Russian sanctions started to affect their own abilities to trade abroad with whomever they wanted. On the other side of the world the Middle East is rapidly leaving the dollar. China’s efforts to bring an alliance between Iran and Saudi Arabia, enemies since the Saudi State was formed after World War l are well known.
It is fascinating to think that Saudi Arabia was formed by the British when the Ottoman Empire fell with its defeat in World War l. The British just drew some lines on a sand map and chose the Saud family to rule it. Since the Petrodollar agreement in 1974 the US has kept the Saud family in power with its military. The Chinese have a different plan it seems. The US likes the plan of making enemies that people must be protected from. Iran the ancient enemy always threatening to expand had to be kept form taking over the Middle East and expelling the Saud family.
China has its appeal
I’m not going to tell you that the Chinese Communists are nice people that we should strive to emulate. But I will say that they have a different appeal, and the world is buying it. They bring diplomats from Iran and Saudi Arabia to China which was in itself a very significant move and very noticeable to the world. They tell the two countries to stop fighting and make plans to get along and they will follow China into a world of trade and wealth and not one of constant warfare.
Is that a true and fair picture of what China has in store for the world it leads? Who knows? But I know that the world is buying what the Chinese are selling. For eight years Iran and Saudi Arabia have been fighting a proxy war in Yemen. The war has killed about 350 thousand civilians and plunged Yemen into a state of abject poverty and starvation. The Saudis have made no military progress despite advanced weapons from the US, and their military is exhausted. Within two weeks of the China conference there was a ceasefire in Yemen. When asked about what the US would think about his Chinese and Iranian deals, the Saudi Crown Prince Mohammed bin Salmon said, “I don’t care what the US thinks.” So for the first time in 48 years the Saudis say they are open to trading in currencies other than the dollar.
And in the West…
Even the West is looking for a way to move away from the dollar. The Chinese and other Asian nations have spearheaded the drive away from the dollar, but they are by no means the only ones. France wants to be free of the dollar’s dominance as well. Perhaps the Nord Stream had something to do with the dollar’s coming demise in Europe. The people who fell on Normandy’s beaches and who liberated France and freed Europe from the NAZI menace can no longer be trusted not to ruin their economies and starve their people.
What happens when all those dollars held in reserve by central banks all over the world, so they don’t cause US inflation, come home? I’ve got a feeling we are about to find out and I don’t think it is a very pretty picture. No, the picture looks more like out-of-control inflation to me with a very much lower standard of living for Americans. Falling asset prices, rising prices on goods, especially essentials like food and fuel appear to be in our future.
Secretary of the Treasury Janet Yellen recently admitted on CNN that US sanctions against Russia might be undermining the dollar’s reserve status around the world. She went on to say that it does create a desire on the part of China, Russia, and Iran to find an alternative. She didn’t mention all the other countries looking for an alternative. Nor did she say that the countries on the other side of this divide from the US outnumber the US in population by about 50:1.
Finally, folks, who says there’s no good news. The faceless collective running this country into the ground announced the other day that it would seek reelection to continue our national plunge to the bottom. It said it wanted to “finish the job. “I suppose it believes there is a small remnant of American society and the American economy that is yet to be completely destroyed.
At least that’s the way I see it.
Until next time folks,
This is Darrell Castle.
From CastleReport.us; appears by permission.
Darrell Castle is an attorney in Memphis, Tennessee, a former USMC Combat Officer, 2008 Vice Presidential nominee, and 2016 Presidential nominee. Darrell gives his unique analysis of current national and international events from a historical and constitutional perspective. You can subscribe to Darrell's weekly podcast at castlereport.us
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