6/18/2024

America's overcapacity in printing the dollar is a threat to the whole world

 Grandma Yellen is becoming one big con-woman in her daily chanting that China's overcapacity is posing difficulties for others to compete. She should categorically tell the world that it is the USA itself that is unable to compete! She is just trying to drag in the rest of the world into her argument to garner more support, nothing more and nothing less.

Where in the world has this mantra ever been raised by any country about a competitor's overcapacity that was posing problems for others? Isn't global trade all about favoring countries having economies of scale and comparative advantages, resulting in that country having that advantage in capacity to produce cheaper goods which will ultimately benefit the whole world. Today, China is able to produce goods cheaper, better and faster due to cheaper energy from Russia, its dominance in the control of raw materials and a well-oiled and educated population specializing in industrial expertise.

To put it bluntly, the real reason is that the USA has lost the edge in competition and wants to stop China from moving forward and even to pull China down to its level of economic malaise.

When the USA was the kingpin of ICE vehicle production, did anyone complain of USA overcapacity posting problems for others? When Japan overtook the USA, did the USA warned Japan similarly about its overcapacity in ICE vehicle exports to the rest of the world?

Now, China's overcapacity is a problem for them. What a sore loser!

Oh, what about USA's overcapacity in weapons production and toilet paper printing? Will the USA put a stop to that?

Anonymous

1 comment:

  1. That threat is over with Saudi Arabia's move to sell oil in other currencies than be tied to the US$. The USA and the West may downplay the effect as they like, but the consequence cannot be that simple.

    With this move taken by the Saudis, other oil producing countries are not going to just stand idle as their market share is bound to be affected. When all oil producers start to accept payments for oil in other currencies, you can see the effect in its appropriate proportions. No use denying and hoping to retain the status quo.

    Now, oil is not the only problem for the USA and the West. Metals and agricultural production are moving into a whole new Trading Exchange Bloc set up within BRICS, away from having to conform to entities like the London Metal Exchange, European Energy Exchange and others, with BRICS countries setting its own pricing and conducting trade in its own currencies outside of the US$.

    The fact that the Global South is tremendously rich oil reserves, in mineral resources, agricultural output is not to be sniffed at in terms of its effect on the US$. Within BRICS currently, Saudi Arabia, UAE and Russia are already important players in energy resources. When Iran and Venezuela join BRICS later, the control of energy is almost total.

    Russia and Brazil are already major players in grain production in their own right. Africa and South America are rich in mineral resources, mostly in the hands of the Chinese and favoring the Chinese moving forward.

    Now China is investigating pork dumping by the EU in the latest escalation. No problem says the EU. Well, left to be seen.

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