“Neoliberalism Has Met Its Match in China”, by Ellen Brown

Jay Owen Reforming Global Finance, Beyond GDP, Transforming Finance, Latest Headlines

“Ethical Markets highly recommends this paradigm-shifting article by our monetary expert, lawyer Ellen Brown, founder of the Public Banking Institute, author of The Web of Debt; The Public Bank Solution and Banking on People (2019).

As a frequent visitor and lecturer in China, I have witnessed the economic policies Ellen describes in China’s form of state-guided capitalism, or as they describe it “Socialism with Chinese characteristics”.  All the 19th century labels are passé in this 21st century, as we humans have evolved into service-based economies in our current “Information ages“ and are now progressing rapidly toward the Solar Age (as we cover in our Green Transition Scoreboard® reports, downloadable from www.ethicalmarkets.com )

We like the newer slogans and seeing shifts in the EU election, and those  of our Green Party friends in Germany “We are neither Left nor Right ..we are Ahead!“

US presidential candidate Andrew Yang has picked up this paradigm-shifting label!

Fascinating reading, Ellen shows how trump’s phony “trade war“ with China hurts US workers and businesses.

~Hazel Henderson, Editor“

When the Federal Reserve cut interest rates on July 31st for the first time in more than a decade, commentators were asking why. According to official data, the economy was rebounding, unemployment was below 4%, and GDP growth was above 3%. If anything, by the Fed’s own reasoning, it should have been raising rates.

The explanation of market pundits was that we’re in a trade war and a currency war. Other central banks were cutting their rates and the Fed had to follow suit, in order to prevent the dollar from becoming overvalued relative to other currencies. The theory is that a cheaper dollar will make American products more attractive on foreign markets, helping our manufacturing and labor bases.

Over the weekend, President Trump followed the rate cuts by threatening to impose a new 10% tariff on $300 billion worth of Chinese products effective September 1st. China responded by suspending imports of U.S. agricultural products by state-owned companies and letting the value of the yuan drop. On Monday, August 5, the Dow Jones Industrial Average dropped nearly 770 points, its worst day in 2019. The war was on.

The problem with a currency war is that it is a war without winners. This was demonstrated in the beggar-thy-neighbor policies of the 1930s, which just prolonged the Great Depression. As economist Michael Hudson observed in a June 2019 interview with Bonnie Faulkner, making American products cheaper abroad will do little for the American economy, because we no longer have a competitive manufacturing base or products to sell. Today’s workers are largely in the service industries – cab drivers, hospital workers, insurance agents and the like. A cheaper dollar abroad just makes consumer goods at Walmart and imported raw materials for US businesses more expensive. What is mainly devalued when a currency is devalued, says Hudson, is the price of the country’s labor and the working conditions of its laborers. The reason American workers cannot compete with foreign workers is not that the dollar is overvalued. It is due to their higher costs of housing, education, medical services and transportation. In most competitor countries, these costs are subsidized by the government.

Continue Reading