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On June 5, Medvedev told the St. Petersburg International Economic Forum that Russia, China and India have an opportunity to "build an increasingly multipolar world order" away from America's "artificially maintained unipolar system (based on) one big centre of consumption, financed by a growing deficit, and thus growing debts, one formerly strong reserve currency, and one dominant system of assessing assets and risks."
In other words, America "makes too little and spends too much," especially with regard to its military. It also gluts the world with dollars that end up in foreign central banks. Either they recycle them into US Treasuries or "let the 'free market' force up their currency relative to the dollar - thereby pricing their exports out of world markets, creating domestic unemployment and business insolvency."
Given a choice up to now, they've had to choose the least bad alternative. "Now they want out" as Medvedev explained in St. Petersburg saying: "what we need are financial institutions of a completely new type, where particular political issues and motives, and particular countries will not dominate." How so is the question, and can it work?
"For starters, the six SCO (and other BRIC) countries intend to trade in their own currencies" to benefit by what America "until now has monopolized for itself." China's central bank governor Zhou Xiaochuan wants a new reserve currency "that is disconnected from individual nations." It was discussed in Yekaterinburg.
These and other countries see America as "a lawless nation, not only financially but also militarily." It forces its rules on others but won't abide by them itself - a practice now intolerable, and there's more.
So much of America's budget is for militarism that the Pentagon faces overstretch while the nation is so indebted it's effectively a deadbeat with amounts impossible to repay. For countries like China, the problem is especially acute given its $2 trillion holdings "denominated in yuan."
A "return to the kind of dual exchange rates common between World Wars I and II" may be the solution - "one exchange rate for commodity trade, another for capital movements and investments."
With or without these controls, "foreign nations are taking steps to avoid being the unwilling recipients of yet more dollars" that face lower valuations the more of them America prints. If SCO countries and Brazil have their way, America "no longer (will) live off the savings of others....nor have the money for unlimited military expenditures and adventures." For these nations and many others, it can't come a moment too soon.
Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.
Also visit his blog site at sjlendman.blogspot.com and listen to The Global Research News Hour on RepublicBroadcasting.org Monday - Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening.
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