Trump's real mission is to defend the world role of the Dollar

+ Politics is Dead, Long Live Politics

Today I am providing my English translation of two articles, originally in Italian. (Emphasis mine in both).

The first one is an article by Domenico Moro, published on ComeDonChisciotte.org on 14th November 2024 (all footnotes original):

Trump's real mission is to defend the world role of the Dollar

THE SCENARIO IS COMPLEX, AT STAKE IS CHINA'S TRADING PLATFORM AND DEDOLLARISATION.

Much emphasis was placed in the media on Trump's statements that the US would raise tariffs on imports from China to 60%. Few, however, have remembered that Biden had already raised duties on a whole series of products, quadrupling them for electric cars (102.5%), and raising them considerably for lithium batteries (25%), and for [electronics] chips and solar panels (50%). We are therefore effectively in the middle of a trade war between the US and China. But the trade war is only one aspect of the economic war involving not only the US and China, but also other countries including those belonging to the BRICS+, starting with Russia and Iran, which are affected by US sanctions. One aspect of this war, even more important than tariffs, revolves around so-called dedollarisation.

Dedollarisation is the process by which the US currency, the Dollar, is displaced from its role as reserve currency and with which goods are traded internationally. In fact, until now, every buyer who wants to buy goods quoted in Dollars on the international market has to open an account with a US bank, the correspondent bank, to obtain Dollars. By doing so, however, the buyer in question submits to US legislation and, therefore, to the control of the US government. For this reason, the Dollar is also an important weapon of war on the part of the US, which uses it to sanction countries with which it has open political disputes by blocking trade transactions.

On the subject of dedollarisation, little attention has been paid to a recent event that makes us realise how acute the clash over the Dollar between the US and other countries, starting with China, is: the Bank for International Settlements (BIS), an international body that brings together several of the world's central banks, has abandoned the project known as mBridge, which consists of creating an alternative financial system to the Dollar based on the use of blockchain technology. This technology, which was created after the 2008 financial crisis, allows for intermediation of various kinds without any central control, e.g. banks or financial institutions. mBridge started in 2021 within the BIS, but the real driving force behind the initiative was China, supported by Hong Kong, Thailand and the Arab Emirates. Last June, a major event took place: the accession of Saudi Arabia to mBridge.

The importance of this fact becomes even clearer when we consider that Saudi Arabia, the world's second largest oil producer with the largest proven reserves, announced in the same days that it would not renew the agreement in place since 1974 to use only Dollars in oil sales [it is not entirely clear if this really happened]. After all, Saudi Arabia exports 20% of its oil to China, which has become its main customer. Moreover, Saudi Arabia, with China's good offices, has made peace with Iran, its biggest competitor in the region, and participated as an invited nation in the recent BRICS+ summit in Kazan. The refusal to sell oil in Dollars is of considerable importance because the Dollar plays the role of the world's reserve currency as it is used in the international trade of the most important commodities, starting with oil. Hence, the Saudi decision may contribute to jeopardising the Dollar's role as the world currency and represents a geopolitical snub for the US, which had based its control of the Middle East, the world area with the largest oil reserves, also on its alliance with the Saudi monarchy.

But let us return to BIS's decision. To understand the reason for BIS's exit from mBridge, we must refer to the following statements by Augustin Carstens, BIS's general manager from Mexico: “mBridge was not created to meet the needs of the BRICS... BIS does not operate with any country, nor can its products be used by any country subject to sanctions. All members of the central bank are of the view that we must be careful about sanctions and that any product we create must not be a channel for violating sanctions”¹. It is not very difficult to speculate that BIS's unexpected exit from mBridge is due to pressure from the US government and central bank, which are concerned about the resilience of the Dollar and the BRICS's activism on trade intermediation platforms.

In any case, the BIS's exit from the project will not stop China from using the mBridge project technology without the help and supervision of the central banks within the BIS. Through mBridge, China can use blockchain for cross-border transactions by exchanging Chinese digital currency with other countries. In this way, China can make itself independent from the Dollar and, in particular, from the intermediation of correspondent banks, which, together with the SWIFT messaging system, are the means by which the US imposes sanctions. The mBridge system may be attractive to many countries that are outside the “collective West”, and that fear the sanctions initiatives of the US and its allies, or have already suffered them, such as Russia. In particular, the US seizure of the Dollar-denominated financial assets of Russia and other countries has put several governments in the Global South on notice, prompting them to seek alternatives to the Dollar.

Added to the mBridge affair is what came out of the latest BRICS+ summit in Kazan. The most important change is the decision to use national currencies in transactions between the BRICS+ countries, which will be carried out through their respective banking systems on a platform independent of SWIFT, which is a messaging system for international payments, controlled by the USA. A BRICS currency, however, is still a long way off, although Putin showed Kazan a banknote of a new currency that would be called R5, from the initials of the currencies of the founding countries (Reais, Rouble, Rupee, Renminbi and Rand). In any case, an eventual BRICS currency would not be inspired by the example of the Euro, given the unimpressive results and the serious imbalances within the area created by the single currency.

In general, even if it will not be easy for China and the BRICS to start a new system based on currencies that are as unattractive as the Dollar on the international markets, for the US such a system represents a considerable danger. In fact, it should not be forgotten that the US lives parasitically on the Dollar, since holding the international reserve and exchange currency allows it to finance domestic consumption and its entire economy, in particular its enormous double debt, that of trade and government. Thanks to the need of many countries, especially emerging and peripheral ones, to have reserves in Dollars, the US can easily place its government bonds. The US debt situation, however, has been deteriorating in recent years, making it more difficult to manage. Government debt between 2020 and 2024 grew from USD 27.7 trillion to USD 35 trillion², while trade debt rose from USD 981.9 billion in 2020 to USD 1,151.8 billion in 2023³.

Hence, another far more important challenge lies ahead for Trump than introducing new tariffs on imported goods from China and the EU: defending the global role of the Dollar. Indeed, import duties are very unlikely to stimulate the recovery of domestic production, making the US again what it has not been for a long time, i.e. an industrial and manufacturing powerhouse. This is why the Dollar retains all its importance if the US wants to continue to maintain its level of consumption and its position of economic and geopolitical hegemony.

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The second article of today, by Fabrizio Bertolami, was published on ComeDonChisciotte.org on 11th November 2024:

Politics is Dead, Long Live Politics

Politics has a broad spectrum, it involves multiple aspects of our entire life, it must have a stable horizon to provide a stable framework for the existence of individuals. To be born, to grow up, to have children, to die with dignity are not the ultimate ends of economics, be it industrial or financial, but they must be for Politics which is made by men for men and not by numbers for profit.

35 years ago the Berlin Wall fell, a symbol of the division between the capitalist West and the communist East. A few years later, the Soviet Union also ended for good.

More than seventy years of rivalry between two blocs that were different in everything and opposed to each other came to an end and left only one value system victorious in the field: the western model.

Capitalist, progressive, mostly Christian and democratic; in Europe we have lived in this system for much of our lives now, and the generations we call “young” have known nothing but this.
In the past thirty years, almost every indicator has grown, because regardless of stock market crashes or economic crises, we are now better off in all areas of our existence than we were before the war. Life expectancy is increasing globally, we are eating more, in fact too much, there are more cars and our homes are full of electronic devices that thirty years ago, or even ten years ago, did not exist or were in their infancy.

Is everything OK then? Certainly not.

The end of the USSR put an end to an alternative that was Social, Political and Economic together.

Values, habits, behaviours and logics that had dictated the orientations of so many people were suddenly no longer of any use, indeed they became dysfunctional.

Those doctrines had prevented the ultra-liberal capitalism of the 1920s from becoming a planetary Moloch, while imposing on the world a brake on the expressive possibilities of humanity; in a five-year plan, there is very little room for the strokes of genius and management turns to which people like Elon Musk or the late Steve Jobs have accustomed us.

In Europe, Italy aside, the main communist parties vanished within a few years of the end of the USSR and this left room for a single, possible viewpoint for all political systems. The grip of the left's own concepts in all countries faded and mercantilism became master of the political scene.

Everything for the market, everything through the market.

Anglo-Saxon-style liberalism made up of a minimised state and liberalised markets soon became the sole goal of all Western political systems now free of the Market/Community, Capitalism/Planned Economy dichotomies imposed by the cumbersome ideological presence of Moscow.
In this situation, Politics has found itself having to carry out exclusively the work of administering and resolving instances brought about by the Market. Everything from the Market, Everything for the Market. Society, in this process, had to adapt.

The communist idea, fortunately, died of asphyxiation as it was unworkable without dictatorial coercion capable of imposing its dogmas on individuals who tend by nature to seek personal affirmation.

The risk is that when the maximalist idea dies, a socialist conception of politics and society may also disappear from the political horizon.

To anyone who is not a millionaire, it is clear that a society without a foundation of solidarity, without a sense of sharing common and necessary goods, without any support mechanisms for those momentarily in difficulty, becomes an arena of selfish and cynical struggle. This type of society was the model in vogue before the crisis of ‘29, when in Europe and America (Roosevelt's New Deal was a light socialism in American sauce) the governments of the time had to face the threat of huge impoverished proletarian masses, angry and ready to follow the Marxist sirens and undermine the aristocratic-liberal systems of the time.

The privatisations, the liberalisation of entire economic sectors, the decisive thrust on competition and exports, have partly brought us back to those times and have brought about a new climate and new social relations.

The customer-supplier perspective has become habitual, a necessary forma mentis [Latin for “cast of mind”, “way of thinking”] to interpret new social phenomena.

Let us take an example:

If a large company, formerly owned by the state, is sold in a privatisation phase to large transnational funds aiming at maximum profit, we can imagine that they will break up the company, close unproductive departments, oust staff by relocating some lines and outsourcing internal processing through the spin-off of company branches that will form new, small and medium-sized enterprises.

Within a very few years, the social reality of the workers of that company changes radically; they are now part of an economic process that was formerly internal to the company, which is also partly external and involves other economic operators. The relationship with work changes and with it the way of life.

It is the entire society that now lives in an increasingly close and complex functional interdependence. In these thirty years, the imperatives that guide our actions, our keys to interpretation, our expectations have changed.

We have changed. The outlook is increasingly short-term, new needs arise from ever more intense stimuli.

Fashions follow one another more and more rapidly and influence habits more and more. Existence has become everyday.

An end is missing.

The economic crisis to the extent that the economy has replaced politics as the means to realise our aspirations is also an existential crisis. But the economy has no other end than the continuation of itself, it cannot propose ideal goals that can lead an individual to create for himself a horizon of action that is not merely work.

The more you work, the more you earn. The more you work, the less time you have for everything else.

Politics on the other hand has a broader spectrum, it involves multiple aspects of our entire life, it must have a stable horizon in order to provide a stable framework for the existence of individuals. To be born, to grow up, to have children, to die with dignity are not the ultimate goals of the economy, be it industrial or financial, but they must be for Politics, which is made by men for men and not by numbers for profit.

If we allow politics to be guided in its choices solely by principles of an economic nature without clarifying the socially expressed ends and the values that will support the action, then we will have won the battle against the Five-Year Plans and lost the war against the Quarterly Reports.

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1. Fancesco Ninfole, “Bri, addio al piano antidollaro”, Milano Finanza, 5 novembre 2024.

2. Vito Lops, “Il rischio deficit fa balzare i rendimenti dei Treasury”, il Sole 24 ore, 10 novembre 2024.

3. Unctad, Data centre, Merchandise: Trade balance, annual.