As America’s global influence wanes, Australia faces a pivotal moment in its history. The America’s decline dominance signals a shift in international power dynamics, prompting Australia to reconsider its own path towards independence. This looming transformation presents both opportunities and challenges, as Australia navigates its future in an increasingly uncertain world.
Knowing you’re interested in geopolitics and China, I thought you might enjoy this draft of an essay for an Australian publication. It’s about the parallel America’s Decline and US dollar, US military power, and Australia’s reluctance to become independent and, for the first time since its founding, capable of defending itself. What a concept!
CURTIN TIME?
Cultural Unpreparedness Day approaches
The shift to a new economic paradigm has begun. Where it will end is very much up for grabs. The U.S. and EU cannot embrace national-security ‘infant industry’ arguments, seize key value chains to narrow inequality, and break fiscal and monetary rules, while using the IMF, the World Bank, and the economics profession to preach free-market best practices to Emerging Markets. And China can’t expect others not to copy what it does”. Financial Times.
ASEAN ditches dollars for cross-border transactions, promotes local currencies for trade. Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam combined GDP is $4 trillion. The move puts the USD under pressure, as many countries are looking to end reliance on it.
We know not the hour or the day, but we know
With his immortal words, “This sucker could go down,” President GW Bush tipped the US into a financial, reputational and military decline, steepened by three lost wars and metastasizing, long-neglected problems like postwar Britain’s. Rocketing debt, worsening trade balances, deindustrialization, rising inflation, political lawfare, civil unrest, rising inequality and falling life expectancy, and a clapped-out, unaffordable military have rendered the United States a second-rate power. To add to its self-inflicted wounds, it has slashed international dollar use through long-arm jurisdiction over all dollar transactions and by illegally seizing foreign reserves in its custody. Like the pound sterling following Britain’s share of world trade, the dollar’s share of global currencies is falling towards America’s 8.5% share of global trade.
1967. Leaving the Sterling bloc
Prime Minister John Curtin switched our defense alliance from Britain to the US, but Harold Holt led Australia out of the Sterling bloc, in 1967, explaining that Britain’s economic difficulties, high inflation and balance of payment problems threatened Australia’s economic stability, and the move would help insulate us from such risks. Australia could more easily participate in global trade and finance, too, thanks to the dollar’s liquidity and stability, and the move would strengthen our ties with the Asian and American economies, reduce our economic dependence on the UK, and open new opportunities for trade and investment. The RBA switched our accounts and carried on as before, without a political ripple.
2027. Leaving the Dollar bloc
After a dramatic devaluation of the US currency, PM Antony Albanese took Australia out of the dollar bloc in November, 2027. America’s economic difficulties, high inflation and balance of payment problems, said Mr. Alabanese, threatened Australia’s economic stability, and distance would insulate us from such risks. Australia could better participate in global commerce by trading in its own Australian dollars, using the existing, BIS-approved mBridgeplatform. Mr. Albanese added that the move will further strengthen ties with Asian economies, open new opportunities for trade and investment, and reduce our economic dependence on the US.
The technical side is unproblematic. mBridge already handles billions of daily transactions for twenty-eight countries, and even offers online cargo insurance and tracking. RBA folks have seen this in action in Hong Kong. A desk and dedicated terminal at the RBA is all it takes. Processes that consume hours or days and foreign exchange and processing costs can now be executed in seconds, for pennies. Australia will be among the last countries to leave the dollar bloc, and there are less obvious reasons for caution.
The move will force us to become an independent nation, and all that independence entails – a new experience for Australians and our leaders–a long overdue metamorphosis for which we are emotionally, socially, politically and financially unprepared.
Next : Cultural Unpreparedness Day
Independence will fall into our laps–or onto our unprepared heads–when America begins closing its foreign bases, a process that has already begun in Africa and the Middle East. The ANZUS fig leaf will no longer hide our social and national immaturity. We’ve been cultural vampires, slipstreaming behind older, bigger, richer cousins, unwilling to bear the adult responsibilities of indpendence. We have neither grown up, learned self-defense, nor made the weakest effort to create a uniquely Australian culture, which will be the subject of my next essay.
There is every reason to believe that, from China’s point of view, this is the first stage of a very long process of reducing the United States to something like a traditional Chinese client state. David Graeber, Debt, The First Five Thousand Years.
