A meeting between US and Chinese officials in Anchorage, Alaska, last month, showed that the US-China struggle will no doubt continue during the administration of US President Joe Biden.
The struggle between democracies and authoritarian regimes is likely to last decades, because it stems from the fundamental difference in the two value systems — a difference that the Chinese Communist Party (CCP) sees as an existential threat. The CCP fears that Chinese might someday demand the protection of individual liberties, and has therefore waged a years-long “total war” to undermine democracies, which eventually prompted the US to fight back.
Within the various battlefronts of the CCP’s total war against democracies, the currency war could be the most critical to the establishment of the next global order.
The CCP systematically aims to disrupt the US’ source of power that is the US dollar — the reserve currency of the world that has allowed the US to enjoy “exorbitant privileges,” a term coined by former French president Valery Giscard d’Estaing in the 1960s.
No other country in the world could run trade and fiscal deficits as deep as the US’ without facing a total collapse of its own currency — so far.
To put it into perspective, US mandatory spending plus military outlays took up 135.7 percent of tax receipts last year — this means the military might of the US is “borrowed” and only sustainable if the faith in the US dollar is maintained.
The US national debt is expected to reach US$30 trillion by the end of this year, and 66 percent of the US’ entire debt load in its history would have been added in the short span of the past 13 years alone.
The US Federal Reserve is expected to finance the vast majority of the deficit spending, as the US domestic banking system runs out of capacity to buy more US government debt and international buyers run out of appetite.
The dollar-based financial system is quickly running into structural fragility as trillions of US dollars is printed out of thin air to fill fiscal gaps. The CCP knows this Achilles’ heel well and aims to exacerbate the pain.
After the US in 2013 sanctioned Iran by cutting off its access to the US dollar system, the CCP embarked on a multidecade strategy to de-dollarize itself, and eventually the world.
Two things happened at the time: One, the CCP started hoarding gold in preparation for the gold standard, and two, it created a digital currency task force at the People’s Bank of China, which eventually led to China’s digital currency, DCEP — “digital currency, electronic payment.”
This is a well-balanced move by the CCP to topple the US dollar using tools from history and future technology through gold and digital currency respectively.
How would the CCP weaponize gold? Soon after 2014, the CCP stopped funding US deficits through US…