William Engdahl, The Gods of Money Pt..2 – US fights to maintain dollar hegemony at expense of economy
PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. I’m Paul Jay in Washington. And joining us again from Frankfurt, Germany, is William Engdahl. He’s the author of the new book Gods of Money: Wall Street and the Death of the American Century. Thanks for joining us again, William.
F. WILLIAM ENGDAHL, ECONOMIST AND AUTHOR: Thank you, Paul.
JAY: So when we first started talking (it must be a couple of years ago), at the time, you, but also some other economists I was talking to, were talking about the perhaps imminent demise of the US dollar. People were talking about the relative stability of the EU and how the EU might become a kind of reserve currency. And things sure have not turned out that way. People have run to the US dollar. The worse the crisis gets, the more T-bills people want. And the EU’s a mess. So what happened?
ENGDAHL: Well, very clearly what’s happened is US policy is at this point to weaken the only potential rival as the world reserve currency, because the US economy—contrary to the Wall Street Journal “green shoots” of recovery of the Obama administration, the US economy is by no means out of the woods; it’s not even in the deepest part of the woods yet in terms of what’s going to come down in the next years. So they have to—the deficits that are going to accumulate in the dollar zone are going to be staggering. And they have to make sure that there is no alternative on the horizon that could play the reserve currency role, because once the US loses reserve-currency role, the game is over. There are two pillars of power in postwar US power, and that is, one, the military power overall, and number two, the dollar as the world reserve currency. As long as that’s the case, the US government can issue debt without limit, and the rest of the world has to swallow the inflation.
JAY: It’s an unwinnable game, though, is it not? Because as the Americans do this—say they weaken the EU, and it leads to strengthening of the US dollar, which means even more products flooding out of the EU as exports, less American products exported, and you wind up having more and more Americans with less jobs. So this whole engine, this—it seems completely unworkable, which is flooding back of American dollars throughout the world back into the United States, buying up enterprises, buying up T-bills and everything. But Americans have no real purchasing power to support the dollar. So where does all this end up?
ENGDAHL: Well, United States is going down the trail that Margaret Thatcher led Britain down 25 years ago. And Britain is no longer an industrial economy and hasn’t been for some decades. And United States is de facto rapidly growing in that situation—as you point out, the outmigration of jobs to Asia to cheap-wage countries–in Iraq, as well as Eastern Europe or Africa or almost anywhere except the United States. But since when did the gods of money care about their indigenous population, though? As long as they have walled, fenced-in communities and independent natural food supplies, let them eat cake is their view, I think. That’s the only interpretation one could put on it. It’s a very, very cynical thing that’s going on. But they simply do not care about a domestic economy, as they are the center of world power.
JAY: And they can have, if their investments in Asia can give them good or best returns, then they don’t actually really care where those investments are, whether they’re in Asia or in the United States.
ENGDAHL: Well, they let Pittsburgh become a rust heap back in the ’70s and the ’80s. They didn’t have any concern about that. Revitalizing American industrial technological excellence, they didn’t care about that. They outsourced everything as a conscious strategy because all they cared about was dollarization of the world economy. The center of the power is the dollar. As Kissinger said in the ’70s, if you control the money, you control the entire world. And the Gods of Money book was written as a third part in this Kissinger trilogy, if you will: the oil, the food, and the money.
JAY: So where’s the UK in all this? The UK is—where is the pound, and what side of the barricades are the British going to be on here?
ENGDAHL: Well, the British seem to be indelibly locked on the Washington side or the Wall Street side of the barricades. I know some very senior bankers in London who are quite uncomfortable with that, but they don’t see any alternative. Interestingly enough, in 1992 the British establishment had made an historic decision to go with the emerging euro strategy of continental Europe—the French and Italy and the Germans and so forth—because their calculation was, if we lock our wagon to the star of the emerging euro, the city of London can play the premier role and actually challenge the power of Wall Street for the first time in the postwar period. Well, those dreams were dashed when a billionaire speculator broke the bank of England, by the name of George Soros. People who believe in the tooth fairy might believe that he gambled and was just a lucky loan gambler. Some people in London are convinced that he had very, very privileged information on the Achilles heel of the pound back in ’92. Be that as it may, that was US policy. The US wish was to prevent the city of London from joining forces with Germany, France, and the emerging euro, the European Central Bank.
JAY: So if you have this train, and the train is make sure that the American dollar stays dominant, make sure it’s the world reserve currency, which continues to drive down the exportability of American products and encourage the industrialization of everywhere else, and weakening of the purchasing power of American workers and people, and it seems—. Like, we—off camera the two of us were joking about, well, who gets to call it? When does this thing, this train go over the cliff? I mean, whether it’s 10 years or 30 years—I mean, China and Japan, I guess, are going to try to keep this train moving as long as they can. It still seems a tenuous situation. Or am I missing something here?
ENGDAHL: Well, it’s dysfunctional; it’s pathologically dysfunctional. The point is I have never predicted the disappearance of the dollar—I mean, that would be silly—but the continual weakening of the dollar as the deficits mount, the economy further deteriorates into depression, and so forth—a very tragic kind of unfolding that we’re seeing before us. But the weakening of the dollar is a game that Wall Street and the so-called gods of money can play as long as they can create the paper that the rest of the world is willing to swallow. So about the time that the Greek crisis mirabile dictu erupted on the stage last November, the Chinese central bank and Chinese officials were talking about their growing concern about the value of their dollar investments. The Arab world, the OPEC countries, the Emirates, and so forth were getting very uneasy about their dollar holdings, and others around the world. And there were signs that the dollar was on the brink of a major, major decline, which would have weakened US power projection dramatically. And just at that convenient moment, the scandals broke on Greece and the attention turned from the dollar weakness to the question of euroland weakness.
JAY: Well, I think ordinary people have a sort of faith that the gods of money eventually will correct things in their own long-term interests. And I think maybe the mistake is the gods of money are thinking about today and tomorrow and not much further, ’cause if you can cash in quick—it’s like Goldman: if you can cash in on your bonuses now, who cares what the company losses are later? After me come the floods.
ENGDAHL: Well, as Lloyd Blankfein said in that infamous interview in The London Times a few months ago, we’re just simply doing God’s work here on Wall Street, Goldman Sachs. That’s their view is, you know, after me, let the floods come. But, you know, we’re in here to accumulate power, and we’ll do it at the expense of the American taxpayer at the cost of trillions of dollars. We’ll do it at the expense of the developing countries in Africa or Latin America. We don’t care. As long as we get our leverage of power and increase that power, that’s our agenda. So I think that’s a fairly unviable strategy in the long run.
JAY: Thanks for joining us, William. And thank you for joining us on The Real News Network. And don’t forget the Donate button over here. Or, if you are in the United States, you can text the word “news” to 85944 on your mobile phone and you’ll be sending us $5. Thanks again.