An oft cited text book example of simplifying the economic understanding of students is the Robinson Crusoe economy: a one person economy going about economic activity to get a clear picture of how economies evolve. It helps to apply the same to international economics to understand the opulence of the few and the wretched existence of the rest.
Let us imagine that there is only one country in the world. It stopped using real things such as sheep, cattle or fowl as currency. It moved away from all barter. And that it also moved away from precious things such as gold, silver or diamonds for buying and selling things. The country has figured out how to make paper and print money. With money it pays its people to make the real things they all need. The country can print as much money as is necessary to accommodate the capacity of its people to produce as much as they want of the various things. There are no foreigners to either borrow from or lend to. This is the de facto description of the international economics of the United States today.
We borrow in American dollars and lend in American dollars. The Federal Reserve prints all of that money to be circulated around the world. Borrowing is done using American debt. Suppose now if we ask what if Zimbabwe did not seek to borrow the stronger foreign money in U.S dollars from the International Monetary Fund (IMF) and the World Bank, but printed their own money on paper to pay their own people as long as they managed to keep them productive. Does Zimbabwe have to be indebted to the wealthy countries?
Many in the G7 group of countries would say, yes. It is known as the “Washington Consensus.” They say this is because we know how to be productive and Zimbabwe does not. So, we have to teach them for which they have to pay us, conditioned on their borrowings. Because Zimbabwe does not know how to be productive with its own currency, we cannot accept it for payment. We have to lend it ours and take it back as payment. How much we lend will determine how fast the welfare of Zimbabwe will improve, provided that is the intent behind the lending. It may not be as easy as throwing the white farmers out after independence. This has largely been the Clinton legacy championed by Robert Rubin, Larry Summers, Alan Greenspan and Timothy Geithner.
Zimbabwe’s Robert Mugabe understands this game all too well and so do India, China and South Africa as well as the Latin Americans. After all, as long as they are productive using their own currency just as the United States was since 1789, enacting a national currency only with great difficulty and that too not really until the founding of the Fed in 1913, they can buy what they do not have locally paying in their own currency. What is the need for their dollar and euro indebtedness?
This is a revelation that is deliberately excised out of the discourse of economics, let alone international economics, because the purpose of economics has become a shell game to redistribute the finite global resources for the benefit of a few, driven by the ideologies of race and religion. To economists in wealthy countries, including at the Federal Reserve and the U.S Treasury, the longer most other countries do not learn self-reliance in economic management the better off the wealthy would be. Therefore, the façade of international economic institutions such as the IMF and the World Bank, whose purpose is to ensure that other countries manage their economies better, is really about perpetuating dependence through lending in the paper currencies of wealthy countries, making papal prodding for debt write-offs an act in sham charity similar to a confessional after an act of pillage.
It is time that the United States and Europe be hung out to dry by the emerging markets if the condition of the world’s peoples is to improve. It is time for the United States and Europe to begin borrowing in foreign currencies or learn to live within their means. Americans and Europeans must be taught to take payment in foreign currencies if they seek to sell their knowledge or stick to buying and selling what they make within their own borders.
At this point in world history, the benefit of an economic crisis induced by currency crises in the United States and Europe is far higher than its cost for the rest of the world that is eager to become a full participant in the global economy rather than depend on the alms of the rich who are dictating the pace of the rest to live better lives. Economic combat can be peaceful as Bill Clinton had taught the rest of the world. It is okay for a few Americans and Europeans to go hungry until they understand that their hunger or joblessness is no different from those of the others around the world.
Any one county’s paper is just as good as any other country’s and so are the people.