Rembrandt van Rijn, Belshazzar’s Feast, c. 1635, London, National Gallery
The phrase they are probably going to need most will be: “And would you like fries with that?”
Electing radicals from the democrat party’s Marxist fringe has consequences, and the Telegraph reports that the Obama Administration’s “Just turn on the printing presses!” economic policies are probably going to have some very nasty ones.
The Telegraph quotes a new report from Hongkong and Shanghai Banking Corporation (HSBC)’s currency chief that says the handwriting is on the wall for the United States.
“The dollar looks awfully like sterling after the First World War,” said David Bloom, the bank’s currency chief.
“The whole picture of risk-reward for emerging market currencies has changed. It is not so much that they have risen to our standards, it is that we have fallen to theirs. It used to be that sovereign risk was mainly an emerging market issue but the events of the last year have shown that this is no longer the case. Look at the UK â€“ debt is racing up to 100pc of GDP,” he said
Crucially, China and rising Asia have reached the point where they can no longer keep holding down their currencies to boost exports because this is causing mayhem to their own economies, stoking asset bubbles. Asia’s “mercantilist mindset” of recent decades is about to be broken by the spectre of an inflation spiral.
The policy headache was already becoming clear in the final phase of the global credit boom but the financial crisis temporarily masked the effect. The pressures will return with a vengeance as these countries roar back to life, leaving the US and other laggards of the old world far behind.
A monetary policy of near zero rates â€“ further juiced by quantitative easing â€“ is completely incompatible with circumstances in most of Asia, the Middle East, Latin America, and Africa. Divorce is inevitable. The US is expected to hold rates near zero through 2010 to tackle its own crisis.
What is occurring is an epochal loss in the relative wealth and economic power of the old G10 bloc of rich countries compared to rising regions of the world. The euro, yen, sterling, Swiss franc and other mature currencies will be relegated along with the dollar in this great process of rebalancing, but the Greenback will bear the brunt.
Yes, Virginia, we’re talking about the End here: the end of the US dollar as world reserve currency, the end of the whole post-WWII era of American economic, cultural, and military ascendancy, including economic decline, retreat from no longer sustainable overseas responsibilities, the inability to support a first class military, and a whole new American way of life centered on decline, pessimism, and yearning for the permanently vanished good old days.
They may not have understood it at that time, but that is what they voted for.