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China, Currency Manipulation and Globalism: The Big Backstory

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During the Cold War diplomats called US-China relations peaceful coexistence. Now, as G-20 nations again gather to sort out the flotsam and jetsam of the Bretton Woods system and mediate globalist greed, that coexistence has shape shifted into economic warfare.

While US treasury secretary Tim Geithner and his minions were buzzing up Chinese "currency manipulation" and linking it to AFL-CIO leader Rich Trumka's too little too late fulminations about loss of American jobs, Beijing orchestrated a two percent swing in the renminbi- dollar rate that has justifiably dampened profit taking by speculators and replicates renminbi market spreads against the Euro, the Japanese yen and the Brazilian real.

For those whose attention spans reside in the Tweetstream this classic, big government quick-fix sets up a back to the future paradigm for a failed post World War II economic order that was created largely by agents of Soviet -- not Chinese -- communism operating inside the US government like Harry Dexter White and his communist sympathizer counterpart John Maynard Keynes who was a consultant to the Bank of England which was still privately operated at that time. Ironically China was living in the era of the "backyard blast furnace" when Bretton Woods was rolled out and it is no secret that Chairman Mao's organization received US funding to conduct anti-Japanese operations during World War II .

The fact that business-to-business solutions alone can't fix the current set of monetary problems linked to sovereign debt flies in the face of the Capitalism 4.0 paradigm being floated by key members of the Davos-based World Economic Forum, projects ideological ambiguity among its leadership and invites irridentist critics to continue to propagate notions of a hidden world government that appeal to American nativists and some on the European right.

If the solution to this globalist red herring known as "currency manipulation" actually succeeds at placing the renminbi in a currency spread basket with the euro, the yen, the real and possibly other currencies, it harkens back to the mother of all "currency manipulations" orchestrated by Washington, the ill-fated Plaza Accords of 1985 during the free-market "Reagan revolution" by then US secretary of state James Baker, with his close ties to globalist oil interests.

What followed was an epidemic of protectionist policy some thought would reduce the huge current account surpluses held by major US trading partners -- notably Japan and West Germany. Like China today, they were buying US government bonds and other instruments to help finance the burgeoning US trade deficit.

While America's great communicator was telling Mikhail Gorbachev to "tear that wall down" nations holding big US paper were propping the US economy up and American's who vote like Joe the Plumber were the last to know about it. The strategy helped bring the downfall of the "evil empire" and the Soviet command economy. But while Plaza helped enhance the euphoria surrounding the end of the Cold War it created problems for Washington's major trading partners and hurt the purchasing power of working American families long before Rich Trumka got on his virtual soapbox.

The resulting economic downturn provided opportunities for free-market globalists to reduce the size of programs associated with democracies built on the social contract model. And it damaged the structural integrity of the US economy, creating that giant sucking sound Ross Perot identified with US jobs being outsourced to low wage nations, setting the stage for peak oil, scandals like Enron and the lack of sound regulatory mechanisms that helped spark the current economic crisis.

Ever since Chairman Mao and Zhou Enlai sat down with Henry Kissinger Beijing has placed more emphasis on growing its economy than on helping Washington contain Kremlin ambitions, one of the cards Kissinger dealt China during his breakthrough visit; the world will know the rest of them when his archives open five years after his death.

Just months after the 1971 meet-up Kissinger's boss on the line and block chart, US president Richard M. Nixon, announced an agreement to end the war in Vietnam, and shortly after that Iraq, Syria and Egypt ganged up on Israel in the Yom Kippur War that touched off a costly OPEC oil embargo.

As oil prices went up, jobs in the US moved from the unionized north to the Sun Belt, where most unions were viewed with disdain. After that many Sun Belt jobs moved south of the border courtesy of NAFTA. Globalists started importing inexpensive Chinese and Japanese goods to subsidize decades of decapitalization-investing outside the US, not in it- and outsourcing, effectively masking declining real wages and loss of purchasing power among working Americans.

US media assets have attempted to magnify the impact of the global crisis in China by characterizing Beijing's sale of $34.2 billion in US Treasury bonds last December as a sign of economic weakness. But according to US Treasury reports, that sale represented just 4.3 percent of China's total dollar bond holdings of about $754.5 billion. Over the past 12 months, meanwhile, China has maintained the economic wherewithal to invest $33 billion in projects to promote sustainable energy with president Lula's government in Brazil, and with the new government of Christian president Goodluck Jonathan in Nigeria. Not quite the economy on the ropes that CNN's resident globalist Fareed Zakaria says it is.

But while Washington puts the negative public diplomacy spotlight on China, Japan, with a current portfolio of about $769 billion, is the largest long term holder of US Treasury bonds. Thanks to US trade imbalances linked to its globalist induced dependence on foreign goods China and Japan hold more than $1.52 trillion in US Treasury instruments. That's about ten times the total amount of gold (148 million ounces) believed to be held at the US gold depository at Fort Knox, Kentucky. If Stan McChrystal wants to make the cover of Rolling Stone as often as Generalissimo Chaing Kai-Shek was on the cover of Time, he ought to start talking about that.

Former Kissinger aide Dr. Fred Bergsten, who has advised the government of China, says that a 20% upward revaluation of the the renminbi is not unreasonable. But Bergsten's construct would drive investors away from banking on China's economy and create the most disastrous global currency swings since Treasury secretary John Connally unilaterally took the US off the gold standard in 1972 on behalf of Richard Nixon.

After decades of playing supermarket sweepstakes with cheap Chinese goods American globalists are engaging in Cold War style brinkmanship that could broaden the income gap between developed regions in China and non-Mandarin speaking rural districts, creating political instability and presenting new risks for the crisis facing US economy. Such an inconvenient and risky strategy playing out in a neighboring nation would not be welcomed by Russian prime minister Vladimir Putin and others in the Kremlin nor those heavily invested in the oil business in the region.

In today's information economy the globalist media place nations in economic groups like the Asian Tigers and the BRIC's and the CIVETS and play them off against each other. China is on the verge of becoming tagged as one of America's public diplomacy scapegoats. Mexico and Japan, who have been there before, can give Beijing lots of advice on how to deal with that problem.