The Real War: Moving Toward A Multi-Polar World

In simplest terms The Real War is a dispute over maintenance of the Uni-Polar World Order—in whatever form and under whatever “rules” that order comes to be defined by its NATO/EU rulers—as opposed to a move toward a Multi-Polar World Order, favored by rising nations such as Russia, China, India, and others. As a sign of the movement afoot, there are reports that not only is Argentina seeking to join the BRICS group (Brazil, Russia, India, China, South Africa) but—get ready for this—so is Saudi Arabia.

The Uni-Polar world order is defined by King Dollar as the world’s reserve currency. The point of contention can be seen to boil down to the way in which America has dollar dominance to control and exploit much of the rest of the world by exporting inflation. In this way America has been enabled to fund a vast National Security apparatus, including appointing itself World Cop, while at the same time maintaining artificially high living standards in its hollowed out economy. The result has been the death, for many important purposes, of the American Republic, and the rise of a New Class composed of a rent seeking oligarchy.

From this standpoint, The Real War amounts to the desire of America and the WEF led EU (which has benefited from the Unipolar order by outsourcing its security needs to America) to maintain and strengthen the hold of the Unipolar World Order by subjugating the rest of the world to its self defined Rules-Based Order by means of a Great Reset. The imperative need to subjugate rising nations—especially Russia and China—arises from the growing instability of the unipolar Rules-Based Order, brought about by the rule and abuses of King Dollar. This is the root cause of the war on Russia, brought about by the use of Ukraine as a proxy to subjugate Russia to the Rules-Based Order before moving on to China. In opposition to the Unipolar world order with its arbitrary “rules”, Vladimir Putin—in alliance with China—has appealed to the concept of a Multi-Polar world order rooted in the traditional concepts of the International Law of Nations.

To illustrate some of the state of play at this point in history I’ll be drawing on Friend George’s commentary, spurred by a David Goldman at The American Mind. However, we need to make some preliminary observations having to do with measuring the economies of nations. For that we turn to a recent article by Tom Luongo:

From Currency Resets to Limiting Infinite Growth: I Brake For Malthus

A fundamental assumption of anti-Russia ideology is that Russia is a vast country, rich in resources, but with a tiny economy in relation to the size of its population and its natural resources—perhaps equivalent to the size of Canada’s economy. This assumption of Russia’s criminal mismanagement of its resources, economy, and (by implication) its populace by a “dictator” is offered as justification—for public consumption, at any rate—for “regime change” in Russia as an essentially humanitarian venture by the Rules-Based Order, i.e., American and the Anglosphere.

Luongo’s article attacks this assumption at its base by attacking the almost universally used metric for the economic activity of nations: GDP. To set the stage Luongo offers a quote:

Kopylov explained that the strengthening of the ruble is due to the fact that it is now based purely on exports and imports, and its value is determined by its purchasing power parity (PPP). The International Monetary Fund (IMF) estimated the Russian currency’s PPP at the end of 2021 at 29.127 rubles per one dollar. According to the Big Mac Index, that rate stood at 23.24 rubles to the dollar.

By contrast, measured in GDP evaluation terms, the Ruble stands (today) at 66 per one Dollar. Luongo’s contention is that GDP—within the framework of the Unipolar reign of King Dollar—seriously distorts the value of the ruble as well as that of the Russian economy as a whole. While he doesn’t regard PPP as a perfect measure, he sees it as closer to reality. The problem with GDP within the Unipolar framework is inflation:

I have pointed out for years that all discussions of the Russian economy in terms of nominal GDP are bogus. Nominal GDP is spending within the Russian economy converted through the RUB/USD exchange rate.

But that metric is irrelevant. It doesn’t say anything about what that spending buys the average Russian.

GDP is a stupid metric. It should be called GNS, Gross National Spending. It is a dumb way to measure the ‘output’ of a society. It’s at best a very gross approximation but it is, again, just aggregated spending.

This is the fundamental fallacy of Keynesian demand-side economics and all theories about which economies are expanding or contracting based on spending are literally bogus.

But we have all been trained to believe in GDP as some all-powerful measure of growth and power. It’s not anything of the sort. When you have the ability to print money at will to bid up the cost of the goods purchased with that money, how is that telling you anything about the health of the country, the people… or frankly anything at all?

However, this deceptive system is what America and the EU wish to maintain. It is the system to which they wish to subjugate the rest of the world because it enables the systematic exploitation of nations like Russia that are rich in the resources that the West needs. This is the explanation for the extreme measures being taken to stave off the advent of a Multi-Polar world:

This is why the discrepancy between the ruble’s purchasing power internally is so much higher than its purchasing power externally. Pre-war the ruble traded at 75 or so versus the dollar. But it’s PPP value was less than 30? This means Russian GDP is at least (by this flawed metric) 2.5 higher than the nominal value. This is how the Russian economy in PPP terms is actually larger than Germany’s.

But even then, PPP GDP is still a terminally flawed metric as a measure of output. It gets us closer to fair comparisons between country’s but it still says nothing about the economic value of the things the country spent their money on.

The funny thing is Russia’s economy shouldn’t be larger than Germany’s in real terms, since most of Russia’s output is base commodities, which have the lowest value-added component of any good in a market. The whole point of a sophisticated division of labor and economic system is to build up value through each stage in the production chain.

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This tells you how out of whack the world is in terms of the diversion of capital to unsustainable activity it actually is if a commodity producer is leading a manufacturing giant in wealth generation. This is exactly why the currency shift from debt-based to commodity-based money is going to be so painful.

And why the debt issuers are willing to risk nuclear war over it occurring. To them this is the end state of their power.

Seen in light of the above, Putin’s recent remarks about the Russian economy appear to be a quite realistic assessment (cf. Russia - Ukraine: Big Picture).

With that lengthy intro, we turn to Friend George and his critique of David Goldman’s America’s Fatal Dependency. Goldman is writing about America’s vastly increasing dependency on foreign debt. It’s a very informative article, but the metrics used are based on GDP—that’s my caveat based on Luongo’s argument. America is in a difficult spot—as we saw yesterday, imports from China are 3x American exports to China. That can’t continue. At the same time, China, while being exploited by America’s inflation, is also in a tough position. China …

is not committed to tearing down the US Treasury market. Firstly, such a “nuclear” approach is not in China’s interest at this point in time. The Chinese analysis is balanced insofar as it underscores the double trap. I characterized the Chinese negotiating position as one of “waiting for Trump”, whereas the strategist does not wait and does not sit passively on the sideline hoping that an optimal assumption will become real. China is positing a negotiation stance, for which Trump’s policies are a marker ... for how a transition to the “multipolar” world can be managed.

The Russians apparently moved from offering negotiations to preemptive war. That, too, is a negotiating stance.

China is seeking an accommodation with the US, as is Russia—a Multi Polar world. America, under the Neocons, seeks continued dominance. It is not interested in accommodations. And in that regard Friend George offers a fairly remarkable quote from Trump:

On his Telegram channel on the 24th, Trump posted this:

I never thought, in my wildest imagination, that the United States would be involved in a Nuclear War. Now, however, because of our leaders rhetoric and very poor choice of words, it is perhaps more likely to happen than not. Russia/Ukraine would NEVER have happened under a TRUMP Administration. Now there are fewer cards to play, but still very playable. China up next?

Viewed from this perspective, the West’s provision of junk military equipment to Ukraine is also a form of negotiation—politics by other means. The question then becomes, just who is in the driver’s seat in these high stake negotiations? Friend George now quotes Goldman—starting at the conclusion:

If the United States finds itself unable to run large current account deficits financed by sales of assets, the outcome will be a sharp decrease in consumption. The indicated solution is aggressive preemptive action to restore U.S. manufacturing capacity and reduce America’s crippling dependency on imports. Unfortunately, current economic policies have led the U.S. into greater dependency. Without a policy change, this will not end well for the United States.

Friend George raises the very obvious question:

How long would “aggressive preemptive action” need to achieve the goal of restoring US manufacturing and thus changing the trajectory of dependency on imports?

Where there’s a will there’s a way, but does America have the will to undertake such a fundamental shift? Will the ruling elites permit such a shift, which is so much counter to their personal interests? And that gets us to the current state of play, says Friend George:

If, …, China and Russia saw a credible will and the requisite know-how to change that trajectory, the stage would be set for negotiations. Without negotiations, the “hybrid war” will continue and both Russia and China will be increasingly aggressive – if you can imagine that possibility – on all fronts. At a certain point negotiations will occur. There is no doubt about that. They can be negotiations with a sovereign state or with a defeated one. What, in the short term, basically immediately, would cool down current escalation moves across the board and set the stage for negotiations before all the cards have been burnt?

You have three options for answering that question, and only one answer is right. (1) Trump; (2) Trump; or (3) Trump.

With this we see the breathtaking extent of the Ruling Class and Neocon irresponsibility. The coup against Trump derailed America’s most promising path forward. Trump was a deal maker. The American ruling class systematically tied his hands and then deposed him. This is the regime crisis of America.

Friend George continues re trade deficits and balance of payments:

… it simply does not work if a $100 dollar invoice can be paid with currency worth $10. The “bottom line” is that such devaluation is a measure of the “real economy” performance of a country, but if currency itself, and not the real productive capacity of a country, can be made into a commodity, then the devaluation by the metrics of real economic value can be hidden by creating a “demand” for the currency. Supply and demand ought to determine the price of a commodity, but that formula no longer functions when the main and only controlling metric for “value” is the demand for a currency and not for the volume of goods produced and their value. By providing the world with a “reserve currency”, the US created “demand” for the dollar, and that hid the real devaluation of the currency over decades.

Thus, the “assets” the US sold or sells to cover “current account deficits” refers not to a trade balance of imported versus exported goods but to the balance of currency flows in and out of the US: Treasury bonds, stocks, industrial bonds, insurance fees, etc. For example, some 20 years ago, General Motors went bankrupt: for a decade earlier, GM was losing about $500 on each car sold, but GM’s Credit Corporation was still making profits, so the materials bought to produce cars and the people who made them could still be paid, and those people could still pay for their consumption. When the bubble burst, GM was reorganized – “saved” – and thousands were out of work, thousands more lost their pensions.

So there is no “if” in reality. In absolute terms, the bubble has to burst and so consumption has to drop, and pensions have to evaporate. Unless... there is an agreement with the major players that the US will go for “the indicated solution”. It so happens that two of the major players, Russia and China, are already shifting, not toward domestic consumption in the form of more Nike sport shoes or iPads, but more domestic infrastructure and real technology investment, which entails, radically or progressively, less investment in the Dollar reserve currency, less feeding of the financial asset bubble. The real-economy solution is thus obvious and feasible, and all that remains to be accomplished is that the US goes in the same direction.

The way to make this shift toward reviving US manufacturing – to put in the simplest terms – acceptable, first of all, and then also feasible, is to prove, by way of shock-therapy, that any attempt to continue “to run large current account deficits financed by sales of assets” is doomed to destroy both the country and those who seek to profit from its demise.

That’s the bottom line.