De-Ideologization Of Russia’s Relations With Latin America
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Georgia O’Keeffe Red poppy No. VI 1928 Andrew Korybko: “The Old Cold War Paradigm Is Irrelevant In The New Cold War”, which Indian Profe
[See the full post at: De-Ideologization Of Russia’s Relations With Latin America]Just listened to a podcast by my favorite geopolitical analysis team at The Duran; an interview with Jeffrey Sachs where he discusses many of the same underlying issues of the emergent multipolar world. An excellent complement to this discussion:
https://theduran.locals.com/post/3791364/brics-rising-as-neocons-destroy-the-west-w-jeffrey-sachs-live
I am hopeful!The “new left” globalists are Trotskyist in their fervor to spread global revolution, rather than to consolidate political benefits at home.
Trotsky was a complex dude. I used to favor him over brutal old Joe Stalin, who had him asassinated, but now I cannot be that judge.
History keeps needeing re-interpretive overlays as time-marches-on…Having its national currency as the international reserve currency is the centrepiece of the wealth pump that enables empires to bribe the elites of its vassal states and other resource providers and to maintain gigantic armies and carry on endless wars. Any talk of multi-polarity will remain just talk as long as there is not a global financial system that distributes financial clout in some more equitable manner. Glazyev understands the need but so far he has not been able to put forth an acceptable solution. See https://mronline.org/2023/03/15/sergey-glazyev-the-road-to-financial-multipolarity-will-be-long-and-rocky/ .
As stated in my comment at the end of Andrew’s previous post, a possible solution is to create a standard unit of value physically defined as one gram of gold of specified purity. This unit would be used in the negotiation and pricing of contracts for international sales. Settlement of amounts coming due under contracts would be made in local currencies. Conversion from the valuation unit to the settlement currency would be made at rates determined by a referent exchange market where currencies of the participating nations and gold and other commodities are traded. The stability of the unit of value would be enhanced if all major gold producers pledged to carry out all international sales of gold through the referent market. To assure an adequate exchange market for the currency of smaller nations, nations could agree that all contracts for the sale of commodities be settled in the currency of the vendor nation.
An international trading regime such as that outlined above could be introduced by the founding nations in stages to ease what would be a major disruptive effect to foreign trade. The problem is to get sufficient major trading nations actually committed to getting the ball rolling.
The two major nations pushing the notions of multi-polarity and dedollarization are China and Russia. The US is using its reserve currency status and resulting financial power to impede the economic development of these two nations so they are strongly incentivized to achieve dedollarization. But it is likely that dedollarization can be accomplished without putting into effect a financial system for international trade that is consistent with the principles of multi-polarity. If the US dollar system falls and there is no overall new system ready to replace it, the natural market place drive for efficiency will result in the international reserve currency gravitating to the currency of the new market leader. The yuan will replace the dollar and China will replace the US as financial hegemon. Similarly, if China becomes the financial hegemon, Russia, as a peerless provider of energy and other resources to China and to the rest of the world, is strongly positioned to share the benefits of China’s newly-gained financial power. This is not to say that China or Russia is acting in bad faith; it is just the natural outcome.
The nations that suffer most from a hegemonic financial system are those that are the providers of resources to the hegemon and are not economically strong enough to get special treatment. The best chance to put in place an international trade financial system that is consistent with the vision of a multi-polar world order is for the disadvantaged resource rich nations to take the initiative, hopefully led by Brazil and South Africa. But here again there is a problem. What is true for a nation is not necessarily true for all elements of society of a nation. It is the working poor who always bear the cost of financing the luxuries of the rich and powerful. Those who profited from collaborating with the old hegemon are powerfully incentivized to support the systems that keep them rich and powerful regardless of any change in hegemon.
@hostebbe: Input appreciated. Glazyev is the new Keynes. Brilliantly insightful and independent of the will of the powerful, hence frustrated.
It is possible electronically to create what you discussed with a floating reference, which can remain nameless, which might be better politically. this is a very sensitive topic.
At the moment, China has forged ahead with Yuan/Renminbi trade substituting in for the $US.
This may be the camel’s nose under the tent…
We shall see (if we live long enough).
I sincerely hope that Glazyev’s proposals are accepted, since they will create a system which does not foster financial imperialism. That will have important efficiencies and flexibility.John
You absolutely need a named unit of either international currency as proposed by Glasyev or a unit of value, independent of any currency, as I am proposing. A unit of some sort is needed to anchor the system and to avoid undue complexity in pricing the cost of proposed production where inputs from different sources are priced in a multiple different units. A common unit of value is also needed as a unit of account for reporting on international trade and various other activities where analysts make financial comparisons between nations. Now such international reports are usually stated in US dollars. Reports providing comparisons over long periods are already often given in gold as there is no other unit of value that has a history extending thousands of years.Note that the science(?) of economy and the art of accounting also suffer greatly from the lack of a generally accepted standard unit of value and account that can be applied to all areas of economic activity involving exchange transaction.
I prefer my suggestion to Glazyev because a physical gold unit of value would likely be far more stable than a currency unit based on a mix of other currencies or mix of commodities. How do you do rational forward planning in a unit whose forward value depends on monetary policy decisions of a number of competing governments or on the myriad occurrences that can affect the pricing of a range of commodities? As to stability of national currencies, when I was a kid a quart of homo milk could be had for a dime, now a half quart is over a dollar. Over those 80-some years productivity of farms and dairies has greatly increased. As a value unit, that lying Canadian dollar is telling me that me that the economic worth of a quart of milk has gone up by a factor of 20. It just ain’t so.
The Conflict in Ukraine is definitely being fought to prevent the reemergence a multi-polar world. However, the USSR/USA 1st Cold War will never repeat. Instead, the signing an UN Armistice and manning a DMZ between Ukraine and Russia would legalize a new multi-polar world of global businesses empires. The year long Ukraine trench war signifies a WWI level of incompetence and shows that the current rulers could care less about the hundreds of thousand war casualties (let alone, the seven million coronavirus victims).
Indeed, this war is not about changing the current neoliberal global capitalistic system. BRICS simply want to stop Wall Street and City of London’s extortive cut of their businesses’ profits. Even the Communist Party ended China’s coronavirus public health campaign when it became clear that it put their economy at jeopardy.
The WWI aristocracy’s flat-earth descendants who took down Jimmy Carter’s White House solar panels continue to rule the world and are getting hugely rich at the expense of everyone else. But there are those who see the Earth as a planet in an expanding universe with finite resources. If true, there will never be portable safe thorium reactors. The West will not have the resources, the energy, to fight a second Cold War. Either reality is acknowledged and humans learn to cooperate and live within their means, or a global apocalypse will occur.
1789 and 1917 People Revolts happened when working former middle-class had nothing left to lose — the autocracy has plundered everything of value.
All money is Fiat money.
It is never backed up by ‘secure’ .. ’solid’ goods, commodities, anything physical.
E.g. one can have paper that certifies one is the owner of ‘x amount’ of gold. And then what? Besides that physical gold is not delivered for x, y reasons to some private person, company, group (that is a whole other story), what is the holder of gold to do with it, provided he has it?
Sell it for ‘money’? What ‘money’?
Hmmm… Exchange it for goods, services, paid with ‘money’ in the sense of dollaris? Or if paid with ‘gold’, how? (In the world today ..)
If there is no standard accepted and **enforced** value for ‘gold’ coins / holdings of gold for exchange / store of value purposes (i.e. fiat standards) there is no point to it at all.
It can only work because everyone believes gold is ‘precious’, or is a ‘for now’ agreed-upon benchmark thingie. That can collapse in 1 day..
Anecdote. I have a very nice diamond and gold ring. It came down to me from my granny, who tried desperately to sell it to Germans so she could eat. Gold was worth nothing at the time. The Germans didn’t pay for it any longer, not interesting, they already confiscated most of it and a ring? ..Nein. They wanted super Art Works…
OK, I have a non-conventional pov on finance, money, etc.
Noirette
I totally agree that all money is fiat money. All past attempts to base currencies on a defined quantity of gold or any other commodity have failed. The only place where exchange values can be realistically set is the place where exchanges occur, i.e., the market place. The broader the market place, the more efficient it will be in determining exchange values.
My proposal is to set up the broadest possible market where currencies, gold and other commodities are exchanged. In any market other than a strictly barter market, there must be (1) a unit of value for negotiating contracts and setting prices, (2)a unit of settlement for payments to vendors and (3)a unit of account for the transactions that have taken place. Currently, for international transactions, the US dollar is the unit of value, the unit of settlement and the unit of account. There is no special economic reason for the US dollar to perform these three functions. Mostly it is the historical result of the size of the US army and navy just as in the past the currencies of Britain, Spain and so on have performed those functions. The literature of economics and geopolitics has much to say about the problems that result from using national currencies to fulfill the three exchange functions; a particular concern being the excessive enrichment of the nation that issues the international reserve currency and the underdevelopment of the countries that supply that nation with commodities. In my proposal, the unit of value and account is distinct from the settlement unit. To result in fairness, the unit of settlement must be the currency of the nation of origin of the commodity. This leaves the problem of deciding what is to be the unit of value and account. Since the market I propose only deals in currencies and commodities and currencies have been eliminated from consideration, that leaves only a commodity or a blend of commodities. In my view a blend of commodities would be an artificial construct that would be difficult to use for negotiating and setting prices because of the difficulty in predicting the economic value of the resultant unit of value over time relative to the economic value of the commodity (or any other thing) you are selling. (Note that the unit of value being created is expected to have broad use in all international trading.) Eliminating currencies and a basket of commodities, that leaves only a single commodity as the basis for a unit of value and the best commodity for this purpose that I am aware of is gold.
Your comment implies that I am suggesting gold be accumulated by individuals to be used as a monetary unit. Not so. Gold is only a unit of value in the system I am proposing. All transactions are settled in fiat currencies. Gold is now held by individuals and nations because historically it has proved to be good store of value (when the cost of storage has not been taken into account). It is also held as a gamble that an international reserve currency tied to gold may be created which could raise the value of gold relative to the value of other currencies and commodities. My proposal actually eliminates the need for an international reserve currency. The system proposed does not require nations or individuals to accumulate gold. The normal demand for gold for jewelry and industrial and other purposes ensures a healthy market for gold provided governments do not impose restrictions on ownership or trading (as they have been prone to do in the past when currencies were tied to gold).
Your grandmother’s experience with the gold and diamond ring did not result from a lack a value but rather from a lack of access to a market. I expect that in today’s market you could buy quite a few loaves of bread from the sale of the ring (not that you would relinquish ownership of such a precious heirloom except under the most dire circumstances). Both gold and diamonds have great intrinsic value stemming from unique qualities that make them especially valuable for both jewelry and many industrial uses.
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