Day: May 27, 2024
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NPR News: 05-27-2024 9PM EDT
President Biden recently raised taxes on American consumers and businesses and may have hastened the end of the dollar’s world reserve currency status. President Biden did this by increasing tariffs on Chinese imports.
Specifically, President Biden raised tariffs on products including Chinese-produced steel and aluminum and many components imported from China for use in manufacturing electric vehicle batteries. Tariffs on Chinese-made semiconductors are rising from 25 to 50 percent while tariffs on Chinese-made electronic vehicles are rising from 25 percent to an astounding 100 percent.
Of course, the costs of these tariffs will be borne by Americans wishing to purchase electric cars and American electric car manufacturers that use material imported from China. These new tariffs thus undercut Biden’s goal of getting more Americans to drive electric cars.
The tariffs on Chinese goods give China even greater Inventive to challenge the dollar’s world reserve currency status. The same week Biden imposed these tariffs, China President Xi Jinping and Russian President Vladimir Putin announced they were strengthening their alliance in order to better challenge US military and economic hegemony. This is a reaction to US foreign policy of the post-Cold War era which has reversed the Richard Nixon-Henry Kissinger strategy of pursuing good relations with China.
A part of the announcement recognized use of the Chinese yuan and Russian ruble for over 90 percent of the trade between the two countries. This is only the latest challenge to the dollar’s world reserve currency status. China’s share of the global economy has more than doubled in the last twenty years from 8.9 percent to 18.5 percent while the US share of the global economy has fallen from 20.1 percent to 15.5 percent. China’s rise is one reason why the US currency held by foreign central banks has dropped from over 70 percent in the early 2000s to under 60 percent today.
Last year, China and Saudi Arabia agreed to expand their use of their own currencies in trade between the two countries. This is the first time the Saudis have agreed to use a currency other than the dollar for the oil trade since Henry Kissinger negotiated a deal where the Saudis would trade exclusively in dollars in return for US support for the Saudi regime. The “petrodollar” is a major reason why the dollar retained the world reserve currency status after President Nixon severed the last link between the dollar and gold.
If the dollar loses its world reserve currency status, the US government would lose the ability to “weaponize the dollar.” Other countries would then have less incentive to abide by US demands, including related to regime changes. It would also reduce other countries’ interest in purchasing US debt instruments. This would increase pressure on the Federal Reserve to monetize the debt, creating more price inflation and leading to a major economic crisis. This will not just end the US military and financial empire abroad. It will also end the welfare state at home.
Since both major presidential candidates and most Congress members are not serious about making the changes in foreign, domestic, and monetary policy necessary to avoid the crisis, America will likely face hard times in the near future. However, the end result may be a return to limited, constitutional government and a political class that realizes that Ronald Regan was correct when he told me that no nation has ever abandoned gold and remained great.
- This article was published at RonPaul Institute
That Gen Z Americans have unique foreign policy views isn’t news, but the recent student-led protests over the Israel-Hamas war has highlighted the generational differences in this country and may portend a future political distancing of the U.S. from its long-time client in Tel Aviv.
Some of the indicators may be concerning. Aside from displaying more support for ceasefire than their older cohorts, a majority of 18-24 year-olds in a December Harvard/Harris poll — 67% — said they believe Jews “as a class” are oppressors, and that the 10/7 attack was justified by Palestinians’ grievances (60%). But then, the poll also found 78% of Americans aged 18-34 believe Israel has a right to exist. The majority of this cohort also called what Hamas did on Oct. 7 terrorism and said anti-Semitism is on the rise on college campuses.
Meanwhile, an April POLITICO-Morning Consult poll found only “15 percent of Gen Zers said they’re more sympathetic toward the Israelis, compared to 4o percent of Baby Boomers,” and 24% of Gen Zers said it was a top issue that would affect their vote vs. 11% for over-65 voters. Some 20% of Gen Zers support providing weapons to the Palestinians vs. 2% of over-65 voters.
And in April, Pew Research reported, “A third of adults under 30 say their sympathies lie either entirely or mostly with the Palestinian people, while 14% say their sympathies lie entirely or mostly with the Israeli people” and “older Americans, by comparison, are more likely to sympathize with Israelis than Palestinians.”
In November, the Brookings Institution reported, “Even before the Hamas invasion, there were distinct generational differences in Americans’ attitudes towards Israel,” adding, “only 41% of those aged 18-29 had a favorable view of Israel, compared to 69% of those aged 65 or older.”
To say this generation was primed for a shift is an understatement. New media has certainly taken advantage and is, at the same time, being fueled by these young voices and their consumption habits. Israel can no longer control the flow of information and messages. Networked tribalism, according to John Robb at City Journal, “bypasses traditional media by directly delivering information and moral framing to people using social networks.”. On TikTok, #freepalestine has 31 billion posts compared to 590 million for #standwithisrael, which led The New Arab to claim, “Palestinian solidarity won the internet.”
By the way, the U.S. has the most TikTok users — 116.5 million; a Pew survey late last year reported that about one-third of young Americans get their news from TikTok.
Recently, Senator Mitt Romney (R-Utah) and Secretary of State Tony Blinken commiserated over the negative effect of social media on the sustainability of the pro-Israel narrative. Romney volunteered that was the reason Congress voted to ban TikTok.
They don’t like that 50% of young Americans trust news from social medianearly as much as they do legacy media, and that more student protesters are relying on foreign media like Al Jazeera, which had been covering the conditions on the ground in graphic and persistent measure until Israel banned the network from operating there in early May.
Gen Z cannot be seen as a monolith but put the polling together and it would seem that younger Americnas are more questioning about why there is an unconditional relationship with Israel. Growing up in the shadow of the Iraq and Afghanistan Wars they may be more skeptical about the prospect of another counterinsurgency at the expense of civilians, or collateral damage, which became the term of art during the years of the Global War on Terror.
Young Americans are rightly dubious when they see retired military officers — the same guys who led to the failures of Iraq and Afghanistan — on television supporting $175 billion to Ukraine for its role as a U.S. proxy in the NATO-Russia war, and over $300 billion to Israel — money that young Americans may think should be spent on “nation building here at home.”
And given the availability of information today, young Americans cannot be ignorant of the fact that far from being an underdog with persistent vulnerabilities in the region, Israel has nuclear weapons, is the most modern military in the region, and gets carte blanche from Washington via nearly $4 billion in military aid each year.
Add this to their social and economic challenges at home: Gen Z suffers from high levels of depression and anxiety. They sense their job prospects are limited, and that the American Dream is out of reach.
But there’s more grim news: America is almost $35 Trillion in debt, over $100,000 per citizen; its bond rating was recently cut to AA+; borrowing costs are climbing and interest costs on debt have nearly doubled to $659 billion over the course of two years. In addition, Social Security has an unfunded liability of almost $66 trillion and is approaching insolvency, probably depleting its reserves by 2033. Things are looking bleak for the U.S. economy as a whole.
Then there’s student loan debt of $1.75 trillion (including federal and private loans), $28,950 owed per borrower on average.
Both Republicans and Democrats would be wise to rethink their unconditional support for Israel as this demographic’s support for it is no longer a given. Much of it too is the obvious gap between Israel’s professed ideals and the “facts on the ground.” According to Columbia University’sRashid Khalidi, many of the students feel a “moral imperative” to support Palestinians and they may not easily be deterred. And their left flank is protected as more American Jews are protesting and calling for a ceasefire in Gaza.When the Zs start running for political office and vote more in force, they may embark on a mission to rejuvenate America by first heeding the warning ofGeorge Washington and shaking off the “passionate attachment” to another nation that “produces a variety of evils” and could hazard America by creating “the illusion of a common interest … where no common interest exists.”
- This article was published at Responsible Statecraft