And experts say the dollar’s success isn’t just because of the economy it represents. There’s a lot of military might backing that dollar too. That is something an international currency without a country behind it wouldn’t have. [1]
Disbelief and scoffing is OK, but mentioning the contents of that velvet glove is a serious admission of weakness.
Brad over at the CFR gives an excellent example [2] of the extremely delicate way a serious analyst has to approach this explosive issue. After Wednesday’s festivities I’m confident that China has now made the opening gambit in its inevitable confrontation with America. The process will take a bit over 60 years and we might as well be civilized about it — since it’s going to take a while …
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[1]: "Is China’s global currency plan viable?", reporter Jeremy Hobson, Marketplace / NPR, March 24, 2009.
[2]: "China’s call for a new international financial system", by Brad Setser, Council on Foreign Relations, March 24, 2009.
When the Soviet Union fell apart they had the military means to nuke any country to a glassy plain. Yet they were impoverished.
Military power is good for killing people and busting things. To suggest it is the basis of economic power is to intimate it will be used to either take wealth by force or run a protection racket like when the mob uses the threat of violence to extort money from a shopkeeper. It worked for the Danes when Vikers could threaten single towns. How does one apply that today? Threaten to use a tactical nuke if they stop buying treasuries? Write letters of marque to seize their oil tankers? We would have to renounce the 1856 Declaration of Paris that ended privateering.
BB -
National defence is the most important good a nation can provide for its people. Overdoing it is dangerous, though, because the core society can become soft, flabby and corrupt under the aegis of unassailable military dominance.
My extended family is pretty much in the business of defence, and in particular my late father was responsible for much of the advanced technology that enabled Albert Wohlstetter to crush the Soviet economy. Unfortunately, it has now become clear that the same military preeminence is causing the US itself to slowly implode from the inside — which is one reason I’ve spent some time over the last couple of years jumping up and down like a demented hamster warning people about the macro risks arising out of American housing finance and the misuse of FASB’s Rule #140, among other things. Not that this is going to do any good. It’s also pretty obvious by now that this is a natural process.
By the way, great handle. I swear by the stuff. If it wasn’t for BB (which I get from Lee Valley) and Burt’s Bees I don’t know how my feet would survive the winter up here …
… even if Igor is “disgusted” with the idea of using a veterinarian product on people
I saw this classic exchange by politicians across the pond in Europe in reference to their crashing economy. We can’t be far behind.
I wanted to share it.
http://www.youtube.com/watch?v=94lW6Y4tBXs
John,
Excellent piece and great responses. Long live bagbalm, we buy it by the large can.
I have long contended that the evolution of our global economic power, and conversely, monetary power would lean toward a challenge by large emerging nations and would be assisted by Russian resources. This post cements yet another of my long term predictions coming to fruition.
Bagbalm has demonstrated that a sustainable economy is necessary to support military might; Excellent point.
The English Parliamentary proceedings video provided by clarencebeeks is priceless, not even Master Card could be substituted for this preview of coming attractions.