THE END OF INTERNATIONALISM
We are now seeing the disintegration of internationalism. The very ideal is dying.
The colonies are
asserting themselves. Some of them are buying weapons that could challenge the Western
oligarchy. That’s what the howl over WMD is really all about: the fuzzy-wuzzies are about
to get
Gatling guns. Some of them already have: the ones we are polite to. Diplomacy is what goes on
between nations of equal firepower or who have alliances with nations of equal firepower. The
oligopoly with the weapons seeks to maintain a closed club. Such is the history of weaponry.
The post-war rise of Asia was foreseen by the internationalists in 1945, but they
bet the farm on
Japan, which is also an oligopoly. Five families controlled the country, 1868–1945. The
best book
on this is Carroll Quigley’s Tragedy and Hope (1966). (Quigley taught Bill Clinton history at
Georgetown, a fact that Clinton mentioned in his 1992 acceptance speech at the Democratic
Convention.) Today, there are a few more families, but the system is essentially unchanged.
The internationalists’ bet is turning sour. Japan’s banking system
is close to collapse. China,
Japan’s ancient enemy, has replaced Japan as the central nation in this century’s Greater
East
Asia Co-Prosperity Sphere.
To put restrictions on Asia, the Western alliance must control the oil spigots. This
goal is what is
now driving the Bush Administration. When Ghadaffi nationalized British Petroleum's oil in1971, he
fired a shot across the bow of the West, whose oil companies controlled the distribution of the
Middle East’s oil. The West did nothing. OPEC saw its opportunity. The OPEC price hikes
of 1973
and 1979 made it clear that the Arabs and Iranians would henceforth take the lion’s share of the
oil
income.
Their big problem was where to invest this income. They let Western banks do this
for them. Then
they bought big cars, set up college scholarships for selected students from the masses, and
generally became dependent on the West’s production system. Now they are trapped by their
own
social welfare states. They are dependent on American-produced spare parts for their military. They
can do little to resist the United States, which is coming back into the region to extract those lost
oil profits.
What Quigley called the Anglo-American alliance is about to smash its fist into what
I have called
the mother of all tar babies.
France and Germany see what’s coming – an Islamic reaction –
and have opted out. Russia has
joined with them. Regionalism lies ahead: Asia, Europe, and the Western hemisphere. This is
David Rockefeller’s vision, the Trilateral Commission,
but without the hoped-for cooperation. The
regional blocs that he forecasted a generation ago as inevitable are now going their own way, just
as he feared they might. The original regional alliance – the United States and Great Britain – still
has a special relationship, but the large continental European powers have officially broken ranks.
The glue that holds the system together today is fractional reserve banking. The Bank
for
International Settlements in Basle cleared central bank accounts all through World War II. For
central bankers, world war was a side issue, an inconvenience. But without a gold standard, the
international system has moved to currency blocs. The United States dollar is the central factor.
Central banks have 70% of their foreign currency reserves invested in T-bills and T-notes. But
Greenspan’s FED and the sagging US economy have combined to push interest rates to about
1%. It’s getting almost as cheap to hold gold.
The glue is the dollar. If the world’s central bankers could decide on
an alternative currency, they
would start selling dollars and investing in that currency’s T-bills. I think the French-German
alliance is a political move against the pound and the dollar. The split is not complete yet. No
central banker wants to be the first to dump dollars and move to an untried currency, such as the
euro. But the longer the euro survives, the more likely that move will be.
If China ever makes the Yuan convertible into gold, the dollar will be abandoned.
China now
constitutes about 5% of all world trade. The growth curve is heading up fast. See chart #7, "World
Shifts Production to China’s Export Platforms," prepared by Jeff Rubin of the Canadian
Imperial
Bank of Commerce.
When China’s currency finally reflects this, and its central bank abandons
its fixed ratio with the
dollar (price controls always break down), the run against the dollar will begin.