I Don’t Know
I enjoy reading C. K. Liu‘s articles, although I don’t understand half of his financial jargon. What eases my way through his lengthy specialized writings is that the social, cultural, historical, even artistic and philosophical aspects are always included. That’s where I got some idea about the history of central banking, the Bretton Woods regime and its collapse in 1971, the fiat currency, the dollar hegemony, etc.
“[…] The hollowing out of America’s manufacturing and digital sectors becomes a compelling rationale for US control of the world to protect its offshore sourcing. After all, wars have been fought to protect the supply of oil in places where nature has placed it; why should the United States not fight to protect where the “free” market puts its manufacturing and data processing? In this strategy, the US needs only two things: a powerful military with instant power-projection capability everywhere around the globe, and dollar hegemony to create dollars that can buy all the things that the world makes for export to the US. The British Empire was rationalized by the need of Britain to import food as domestic agriculture became crowded out by industry. Similarly, the US Empire will be rationalized by the need of the United States to import manufactured goods as domestic production is crowded out by financial services.
There are only two difficulties with this grand strategy: 1) to build the ideal empire, US workers will have to be retrained for the service sector and large numbers of both blue- and white-collar workers will fall through the cracks – and that creates problems in a democracy; and 2) the rest of the world is not stupid and may not take it lying down. So freedom and democracy at home will have to be modified in the name of homeland security and foreign resistance will have to be crushed in the name of freedom and democracy. The “war on terrorism” is tailor-made for this grand strategy.”