Morning Comrades!
In yesterday’s patreon-only dispatch I focused on what to do as we are witnessing and definitely experiencing the end, or rather the beginning of a new economic world order with genuine threats to your and my material realities.
In short, in order to survive and grow in the soon-to-come economic meltdown here in the “west” - the same principles that relate to political power apply to survival. Organize! If you need a refresher course, go back to this piece from last week as to how to’s:
Before I get into it, two subtle reminders. One: I am still thinking about how to make the subscription model for this newsletter for accessible. For the time being, if you dig this work here but don’t want to sign up for a monthly subscription, here is a link to my gratitude online tip jar:
Also, as we are all heading into the weekend, take these tunes with you.
Empire End Time Economics
The economic might that has sustained the extremely high standards of living in the NATO Empire is coming to an end, much quicker than I had anticipated but I have been wrong plenty of times before. Whilst the results will be relatively similar in North America and here in the EU, the reasons are different, whilst obviously being interlocked. Fact is, whatever little stability we believe we have in terms of food, shelter, warmth ( energy in general ) - yeah, kiss all that good-bye. I say that with no glee, far from it, every inherent crisis within capitalism has always been shouldered by us working people - never by the ones that made and uphold this system and thus cause these crashes. I, for one, am extremely worried about what is on the horizon - not some far off random event, but I am now, or latest starting this fall.
You have heard all the talk in the mainstream press: inflation, supply chain issues ( yeah…call that the effects of a deadly pandemic but sure, blame zero-covid tactics in China ), war- everything is becoming much more expensive, for us in any case, and yeah, the rulers of our empire have been prepping the narrative for another crash. Except I don’t believe it is “just” another crash but the beginning of the end for the omnipresent rule of the US dollar ( that everyone in the NATO empire benefits from ) that will result in the end of the life that we have been living, financially, at the very least. As per usual, whenever our capitalists are in danger they quickly huddle their proverbial settler wagons and find a scapegoat: Russia, China, Transsexuality, you name it and we’ve all seen it in these last few months. Fact is, after centuries of militant dominance of the globe, this, like any other empire before us, this rule is coming to an end.
As far as I understand it, there are two stories at play here: the end of the hyper-inflated value of the US Dollar, that will mostly affect people in North America and the sacrifice of the EU economies by the US to uphold their dwindling stranglehold on the world for a brief respite in civil unrests in North America. The results are similar, we’re going to get shafted and after 40 years of neoliberalism we don’t even have any significant organized labour structures to protect us. Hence the link to the Organize, Organize! dispatch earlier here.
The USD is going to begin to sink to its true value. But what is its “true value”? Despite only accounting for ~10% of global trade, 85% of global trade settlements are made in USD. This creates a continuous demand for USD above and beyond what would otherwise exist. In this way, the value of the dollar is massively propped up relative to other currencies. Most countries must hold a large portion of their foreign reserves in USD because up until recently, the dollar was required to purchase crude oil on the international market, leading to the emergence of the petrodollar.
This requirement to pay for crude with USD is maintained primarily through a simple agreement: in exchange for depositing their dollars back into banks on Wall St and Lombard St, OPEC states are defended militarily by the US. This recycling of petrodollars back into US banks is a key mechanism behind why the US has been able to finance federal deficit spending for decades with no reduction in purchasing power of the dollar. But the foundation of this arrangement is beginning to show cracks. The cracks in dollar hegemony are materializing in seemingly mundane ways. Those wanting to buy Russian energy now must pay in Russian rubles. China, through its BRI, is structuring loans in Chinese yuan. It may seem absurd to learn that the world didn’t already operate like this. The ultimate irony is that this loss of hegemony was precipitated by the US itself earlier this year when they illegally seized Russia’s dollar reserves, conclusively demonstrating to the rest of the world that the sovereignty of reserves held in USD is an illusion.
So if the USD is indeed losing value, why is the Euro falling against the USD?
The Euro is currently falling as a result of their subservience to the US in its proxy war with Russia. EU exports are becoming more expensive due to skyrocketing energy costs and governments around the world are rebalancing foreign reserves in anticipation of impending EU turmoil. However, increased demand for rubles, due mostly to Russia’s new insistence on being paid for gas in its own currency, demonstrates that the buoyancy provided to the USD by forcing the EU’s head under water is likely short lived.
What then is the “true” value of the USD? What portion of current demand for dollars is “real”? Some estimates believe this could be as little as 30% of its current value. If so, the cost of imports would more than triple (eg. a $30k imported vehicle would now cost 100k). With demand for USD decreasing as foreign reserves shift to more diverse baskets of currencies, the dollar will depreciate. This will start gradually but can easily snowball, especially if triggered by a disruption to the continuity of the US government. The lowered USD may temporarily make US exports more attractive, however, a large number of US exports rely heavily on having inputs of cheap raw materials and labor. And as we already saw, the cost of these imported inputs will dramatically increase as the dollar value falls.
The proxy war in Ukraine was an attempt by the US to use the EU’s economy as a desperate buttress against dollar hegemony erosion. But ironically, this move will only serve to precipitate a more dramatic collapse, as the US increasingly isolates itself through sanctions. Conversely, the sanctions are also directly fostering the strengthening of trade between countries outside the western hegemonic structure.
The true value of currencies in a post-USD hegemony global economy will be determined by the demand for goods/services they produce. So how much will a unit of western labor be valued relative to global south labor once the largest mechanism of imperialist exploitation crumbles? To afford a washing machine, the average Sri Lankan needs to labor for 4 months. It takes the average person in the US half a week. The US’s new equilibrium point will either involve socialism or it will involve a historic collapse of living standards. There is no third option. After hundreds of years marked by colonialism and imperialism, we are entering an age in which the unique contributions of individual countries to the global economic web will finally be reflected in their currencies, leading to more just stores of value. The US’s military protection of OPEC countries of course comes with an important caveat: do not under any circumstances try to create an alternative to the petrodollar! Just ask Iraq, Libya or Venezuela about that.
This means that the legitimacy of the establishment is eroding. Their grip on the world's economy is eroding. And what happens when this begins to tip into a rapid crisis? They will do whatever it takes in order to maintain control. They have started world wars for lower stakes than this. They have instituted the most brutal fascism for lower stakes than this. So my question is: are we ready?
Are we organized enough, are we educated enough, are we dedicated enough to genuinely be able to prevent this from happening? Or are we not taking it seriously? Is class struggle some kind of game, or moral posturing, or social scene at protests? The working class we have is the only one we have. If we are still too far up our own asses when crisis comes to draw on its support, to provide the clear way forward to liberation, rather than oppression, I guarantee you, we will be soundly defeated. We won't be able to post snappy comebacks at this sort of defeat. For this and countless other reasons, we no longer have time to sit around chastising everyone else. It's time to step forward, and become the force capable of leading our ENTIRE society into socialism.
It's time to realize that the masses do not have to prove themselves to US. It is WE who have to prove ourselves to THEM. Class struggle isn't a game. And if you're more interested in childishness, maybe step aside and let serious people do it. It's not for everyone. Supporting your Communist Party will be paramount. Building it into the force capable of doing this will be paramount. Both of these are options. But please. Enough with the silliness.
Again and to be absolutely clear, I am not writing this to fear-monger or with glee, I am genuinely worried here and I will be one of the first assholes to be directly affected by this erosion of the empire. The only way for all of us to get through this, is to organize, once and and for all realize what the game is, that is rigged against us and only through the organization of the working classes can we not only make it through these end times, but, at the very, least have a shot at rebuilding our part of the world into something better.
Normally, I would flood your attention span with heaps of resources going into the weekend but I am going to leave that for Monday. This is a lot to take in and we all feel it. Ideally, I would like each and every one of you to have a good long think about the above, take it in and understand what it means to you, personally and then how to act against it. Not react but take action. Protect yourself and your community, starting with yourself, your (chosen) family, the apartment complex you live in, think about street & neighbourhood organizations, creating them and / or joining. This is happening, no matter if we want it to or not but what will determine the outcome for each one of us and us as a whole is how we preemptively act, now.
Wishing you all a restful, pleasurable weekend and thank you for your time, support and attention.
Yours, without compromise,
V.