Paul Craig Roberts: An Economic Lesson for China and Russia

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Written by Paul Craig Roberts; Originally appeared at paulcraigroberts.org

Is there anyone in Trump’s government who is not an imbecile?

After years of endless military threats against Russia—remember CIA deputy director Mike Morell saying on TV (Charlie Rose show) that the US should start killing Russians to give them a message, and Army Chief of Staff Mark Milley threatening “We’ll beat you harder than you have ever been beaten before”—now the US Treasury Secretary Steven Mnuchin threatens China. If China doesn’t abide by Washington’s new sanctions on North Korea, Mnuchin said the US “will put additional sanctions on them [China] and prevent them from accessing the US and international dollar system.”
https://www.rt.com/usa/403118-usa-china-sanctions-north-korea/

Here is the broke US government $20 trillion in public debt, having to print money with which to buy its own bonds, threatening the second largest economy in the world, an economy on purchasing power parity terms that is larger than the US economy.

Paul Craig Roberts: An Economic Lesson for China and Russia

AP File Photo

Take a moment to think about Mnuchin’s threat to China. How many US firms are located in China? It is not only Apple and Nike. Would sanctions on China mean that the US firms could not sell their Chinese made products in the US or anywhere outside China? Do you think the global US corporations would stand for this?

What if China responded by nationalizing all US factories and all Western owned banks in China and Hong Kong?

Mnuchin is like the imbecile Nikki Haley. He doesn’t know who he is threatening.

Consider Mnuchin’s threat to exclude China from the international dollar system. Nothing could do more harm to the US and more good to China. A huge amount of economic transactions would simply exit the dollar system, reducing its scope and importance. Most importantly, it would finally dawn on the Chinese and Russian governments that being a part of the dollar system is a massive liability with no benefits. Russia and China should years ago have created their own system. Being part of Washington’s system simply lets Washington make threats and impose sanctions.

The reason Russia and China are blind to this is that they foolishly sent students to the US to study economics. These students returned completely brainwashed with neoliberal economics, “junk economics” in Michael Hudson’s term. This American economics makes Russian and Chinese economists de facto American stooges. They support policies that serve Washington instead of their own countries.

If China and Russia want to be sovereign countries, they must pray that the imbecile Mnuchin does cut them off from the dollar system that exploits them. Then Russia and China will have to put in place their own system and learn real economics instead of propaganda posing as economics that serves Washington’s interest.

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  • George King

    After two decades (of example Walmart) forcing all suppliers to move all manufacturing operations to China to remain a Walmart supplier shelves would quickly empty to bare with no resupply. Of course one must understand that the complete supply line businesses ie container shipping ocean going and US/Canadian ports closure, US/Canada/Mexico rail and trucking collapse within a week (jobs, taxes, transportation infrastructure maintenance collapse).

    The transnational criminal cabals only understand pillage, plunder and casino gambling with others money and resources, tax cuts and bailouts will collapse as well without taxpayers support or funding. Time for a reset but reparations from the elite is the only salvation of the masses possible.

    • FlorianGeyer

      Reparations and a noose.

      • George King

        I have visited both Versailles France (guillotine) and Milan Italy (nose). Both were proven efficient. The only problem was that too many enablers were spared to repeat the “Iron Law of Oligarchy”.

    • Orcbuu

      Isnt Walmart=China? I heard that the Boss is in china or chinese.

      • George King

        Walmart is family owned and once touted made in USA products as its advertising motto who not only moved its modus operandi to cheap (slave) labor and built its fortune on it. The family holds all created wealth out of Arkansas after production facilities and American jobs were sent to China as a demand/requirement that only those who did could be a supplier for Walmart under its policy.

        Visit any town under a 100,000 population to see the destruction (up close and personal) of not only jobs lost but infrastructure collapse as local small family businesses were forced to close and the money supply which recirculated many times locally disappeared as corporate money flow went to either China or the 1% family in Arkansas.

  • Obvious stupidity in economic terms. Or is it mental illness – living with a fixed delusion? Could be US is so evil that it can’t think in terms of cooperation, mutual beneficial exchanges? Stupid, insane or evil? I can’t tell what is going on.

    • FlorianGeyer

      I think you are correct. Arguably all past empires elite’s and the citizens of the host ( USA in this case ) have gradually become insane with hubris , entitlement and a sense of Exceptionalism. People such as these have long forgotten how to interact . They just dictate and shout a lot.

      Even the Great Dealer himself ,President Trump, is only successful when blackmailing and cajoling the weak.

      • That seems to describe it.

        • Tommy Jensen

          USA has been used to brutal dictates for decades.
          Remember US MoD Ashton Carter when Russia took Crimea under control and his bragging about “teaching Putin a little behavior” and the enormous arrogance the world have been facing since.
          They have swallowed a lot of camels since. Its not an easy task for them.

    • Daniel Rich

      @ ghartwell,

      Delusional comes to mind, but, insane, although is a judicial term, comes in a close second.

      You might find this of interest: Who really rules America? The power elite in the time of Trump – link to SOTT

      Excerpt: “In the last few months, several competing political, economic and military sectors – linked to distinct ideological and ethnic groups – have clearly emerged at the centers of power. “

  • pet

    What Russia and China are doing would be comparable to Stalin supplying tanks to Wermacht during the siege of Stalingrad.

    • Daniel Rich

      @ pet,

      Russia and China have to deal with a [very] hostile entity, one that’s hellbent on extending wars, expanding wars and start new ones, thus it’s best to kill the flames of war by depriving them of oxygen [aka diplomacy].

      You are aware of the fact that Russia’s presence in Syria is minimal and that the FUKZUS war machine [including NATO] can and will field a force much larger than that, if someone is idiotic enough to want to prove the world he’s got balls?

      The Germans would have welcomed the T-34. In fact, they morphed much of it into their Panzer V ‘Panther’ design.

  • Manuel Flores Escobar

    YUan currency will be the next US petrodollar as China is the largest Oil import and now are paying in Yuan to Russia, Iran and Venezuela for oil imports!

    • goingbrokes

      I would prefer that Yuan does not become the new petrodollar. The word petrodollar stands for the entire system of agreements propping up the US dollar as the global reserve currency (GRC). It is not backed up by gold, but oil, and as Saudi Arabia is the country with the largest reserves of oil, it is the de-facto underwriter of the US dollar as the GRC. The Saudis are obliged to spend a large amount their oil earnings on the US military industrial complex in a feedback loop that gives US additional financial muscle. How else could they possibly support 900 military bases around the world – do the math!
      The petrodollar agreement also included the enforced purchase of petroleum on the world market in dollars only. Saddam started accepting Euro at one point, he paid the price; Qaddaffi was planning a gold dinar for African trade, he too paid the price. No one has been allowed to leave the system. The reason is simple. If the petrodollar ceases to be the global trade currency, its value will plummet. Suddenly all the countries that have hoarded US dollars (because it is the GRC) will face massive drop in their assets, they will want to get rid of it as quickly as possible, but so will everyone else. All the sold paper dollars around the world will get returned to the US, and folks that is trillions, and the domestic value of US dollar will collapse as well. If no one wants US dollars any longer, how is US going to pay their 20 trillion debt? Hard to imagine what happens next, but at least there won’t be so many US military bases around!
      This is just to show what it means for one country’s currency to be GRC. There are better models, that were rejected during Bretton-Woods which US dominated. We need a new system that is not based on US dollar, International Monetary Fund (which is US puppet), Bank of International Settlements (which is a Vatican puppet) or Rothchild Central Banks (which are Rothschild puppets) or international communism (which is discredited zionism) or digital currency (which is New World Order wet dream). Perhaps we need to go back to bartering in international trade until a better model is invented. But whatever happens, all the gold in the vaults of Bank of International Settlements should be distributed among all nations where it was stolen from in the first place.

      • John Mason

        Well put together and 100% spot on. Countries need to have their own sovereignty in place backed by their own monetary system and trade. Gold and maybe other precious metals as a reserve currency.

        • goingbrokes

          Thanks! It occurred to me that if the US dollar value collapses they will be able to pay their 20 trillion debt quite easily – it’ll be about the value of a loaf of bread!

          • John Mason

            Agree. I don’t think that China or Russia want to see the US collapse completely, immediately but slowly over time their economy is to be eroded. If the US collapses overnight then the probability of a nuclear warm is very high. US wealthy citizens will go into suicide mode which will be followed by the military.

        • Анрэс Суарэс

          You don’t need a ‘reserve currency’ and don’t need to have the money ‘backed’ by anything. Read intercambioasincrono.com and you may understand.

          • goingbrokes

            Could you translate it please.

      • Анрэс Суарэс

        I invented a better model. You can read it at intercambioasincrono.com if you know ‘spanish’.

        • DYS

          The problem with your model is that it too has opportunity for corruption. Any model which is not inherently “non-corruptible” is just changing one master for the other. I applaud your effort, however misguided it may be.

          • Анрэс Суарэс

            Did you actually read it?

          • DYS

            Si, pero no me pareció muy interesante. Capaz que tendrás que hacer un resumen ejecutivo…. son muchas paginas.

      • George King

        Saddam and Qaddaffi were the canaries in the mine and because the process of NWO control has not been completed yet but has been noted and alternatives are down to only a multilateral bloc that can bring it down now that the Orwellian path (modus operandi) exposed and citizen support waning.

        I would make one suggestion by adding nation’s citizens treasure, commons and inalienable rights to “all the gold in the vaults of Bank of International Settlements should be distributed among all nations where it was stolen from in the first place.”

      • Tommy Jensen

        US should just have foreign assets and/or gold.
        With 30-40% decrease in $ value its cheaper to buy out their own debt.

  • Daniel Rich

    The BRICS + format [future expansion of countries joining in] will opt for their own crypto currency and thus deprive the US of its tentative financial tentacles that allow it to smother the rest of the planet.

    Ethereum will set them free.

  • Igor Dano

    2hat PCR states, is since 25 years visible and obvious.
    It is not so simple to change a running system. But those two should seriously pland deliver and execute the plans.
    They should not wait a single second to proceed.

  • Gladius et Scutum

    Why not discuss the $20 trillion in debt China has racked up in less than 10 years? The fake economic numbers China has posted for years? The worthless infrastructure China has built. The demographic crisis that China is facing with an aging population. The fact that China is far more dependent on the US consumer market than the US is on Chinese production capacity. The huge amount of US bonds the Chinese own which can be used as leverage against China. China is far weaker than they appear.

  • Cyriak Papasissis

    Exactly , such a US move as suggested by Mnuchin , would play perfectly in the hands of China & Russia , who very carefully on their own initiative try to gradually disengage from the petrodollar. Maybe Mnuchin thinks he can force them in doing that hastily , and suffer some inconvenience thereby , since in the long term they ”ll be out of it anyway.