American strategy of “quantitative easing” (QE) intends to deflate American assets while inflating the rest of the world, most agree that American-led markets will function chaotically and have a polarizing effect on the world with a dollar sphere in which central banks in Europe, Japan and many OPEC and Third World countries hold their reserves [in] the form of U.S. Treasury debt of declining foreign-exchange value; and a BRIC-centered sphere, led by China, India, Brazil and Russia, reaching out to include Turkey and Iran, most of Asia, and major raw materials exporters that are running trade surpluses (Hudson, 2010). In October 2010, however, under Federal Chairman Ben Bernanke’s initiative the Obama administration continued the same money policy as George W. Bush. Bernanke plans to inject another $1 trillion dollars on top of the already committed $2 trillion to help float another bubble to aid American recovery: “the upshot of the Fed trying to save the banks from negative equity is to flood the global economy with a glut of U.S. dollar credit, destabilizing the global financial system” (Hudson, 2010). Nevertheless, American domestic policy to boost the American recovery undermines US hegemony in foreign policy. At the November G20 meeting in Seoul, South Korea, the emerging Asian and Latin American economies (e.g. India, Brazil) criticized America’s weak dollar policy for overheating their economies, dampening exports and leaving them open to dangerous inflows of capital. The strong capitalist workshops of the world (e.g. Germany, Japan) criticized the US for the inflating the Euro and overpricing manufactures, and China criticized the US for pressuring it to appreciate the Yuan to dampen growth and reduce the competitive advantage of exports (Torobin, 2010). The midterm elections solidified a bipartisan American “blame China” story. ijep.icpres.org/2010/v4n1/jkachur.pdf
Posted on: Thu, 04 Dec 2014 22:32:46 +0000
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