America Must Do As It Says

In 1997, during the Asian financial crisis, the U.S. Treasury and International Monetary Fund warned East Asian countries against the risks of bailouts or raising interest rates. Ten years later, America ignored its own past lectures and bought up billions of dollars of bad mortgages and lowered interest rates. This after America managed to pass off hundreds of billions of dollars worth of bad mortgages to banks around the world. Isn’t it time We the Apathetic Maids get career politicians to practice what they preach?

The Fed’s actions cast doubt on the future of paper money. China experimented with paper money 1,000 years ago. As the government printed more and more to fund its own profligacy, people refused to hold it and paper money disappeared from history. The current monetary system ─ paper money with no tangible anchor to back it up ─ is four decades old. As soon as the Nixon administration abandoned the dollar linkage to gold, it led to a severe bout of inflation which was contained by globalization. Inflation is back and can no longer be contained by globalization. It can only be contained by Sino-U.S. interlocalism.

China was able to withstand the subprime crisis and recent global recession that created economic havoc in America because it is no longer dependent solely on America. Furthermore, it has usurped the U.S. as the driver of world growth. The U.S. subprime crisis made Hong Kong the China beachhead for foreign funds. Today China has overtaken the U.S. as the largest seller to the euro-zone and is rapidly doing the same in the Middle East, Latin America, Russia and Africa. Isn’t this a geopolitical partner America should be embracing so that it can also cushion any future global inflationary or recessionary economic disasters?