United States president Obama’s recent visit to the land of the Great Wall, rather than the 20th anniversary celebration of the fall of the Berlin Wall, taken by some in Europe as a sign of post election distance, may in fact be indicative of the degree to which the international economy proves itself to take ever graver turns – at least for those with certain positions at stake.

Those who monitor international exchange rates have certainly noticed the steadily decreasing comparative strength of the U.S. Dollar, but perhaps not the strategy and effect behind the appearance, as it were. Rather than the dollar simply being in a state of depreciation (which was already the case before the present economic situation), what may not be known outside of economy departments is that the dollar is actually being “devalued”. The strategy of present monetary policy is an intentional inflation of U.S. Currency: making foreign produced or imported goods more expensive on American domestic markets and inversely making American domestically produced goods cheaper, thus more competitive on foreign markets with the intent to re-stimulate the U.S. economy and reestablish a more customary growth rate. That is, this policy is not simply to produce more money in order to pay off the quantity of debts to foreign investors (notably China) more easily, though this does in fact happen. This side effect of economic stimulation is precisely what has aroused concern politically with America’s leading economic rivals and partners (and ironically frightened foreign treasury bond investors needed for a jump-start on economic growth), predominantly China.

China itself is enacting monetary policy measures for its own stimulus package, and gearing itself for an economic deceleration. However, with its historically slow-but-steady approach to its state-capitalist economy, China is now in a position unlike that of the more Ponzi-character liberal-capitalist market’s unhappy outcomes. Effectively financing the 2 major wars that the Obama Administration has inherited and still engaging in trade and investment throughout the world, China finds itself currently in comparatively secure position, given certain factors. Although critics have warned China that its simultaneous market deregulations and domestic lending increases may lead to the asset bubbles that proved so problematic elsewhere throughout the world, the potential for development in the country with still a million in poverty seems to be able to better accommodate the need for constant growth, or reinvestment of profit in production which is necessary for a successful capitalist economy. A prime political concern of China’s then, is the return on it “foreign investments” in the United States. This has informed the accusations of critics of the Obama administration, citing his rather less-critical tone of diplomacy towards China for its “human rights violations”. Others say he is simply taking a more diplomatic angle, still discussing free media with Chinese students in a recent speech, which was ultimately censored.

In less risky economic climates, where “the crisis” may be less felt (such as the European welfare state), the stakes and possible changes may not appear as grave, at least locally. However, in light of current economic-political relations shifting character, our geopolitical order may indeed rapidly be moving away from its “unipolar”, post-Cold War or formerly “end-of-history” configuration, as some are speaking of a shift away from the use of the American Dollar in international oil pricing. Others speak of a return to the gold standard, which of course would have new geopolitical ramifications. This could only have a reciprocally diminishing effect on the United States’ slowly declining hegemonic position, and thus deeper systemic effects on other areas. One may already wonder then, though Barack Obama may be known as many things – “the candidate that many were glad the Americans chose instead of the other guy”, a positive change, Bush’s unlucky successor, or yet another American politician – if he may in fact prove to be remembered as the President of an alteration in America’s singular world significance. Whether one leaves the possibility to find this a good or bad thing; diplomatic good-will or realpolitik, may depend on who you are. Similarly, much as one may applaud or object to such fine lines between politics and economy being drawn so thin that they virtually disappear, it may safely be stated that one’s position may also have a bearing on any “ethical” reply to this fact. |