The resurgence of the Trump administration has only quickened the fall of the global neoliberal system, although this upheaval simply follow...
The resurgence of the Trump administration has only quickened the fall of the global neoliberal system, although this upheaval simply follows trends that have appeared throughout the history of monetary and fiscal policy. History does not repeat itself, but it has a rhythm. Grasping current geopolitical changes and their impact on Nigeria involves looking at the economic structure that has been in place since the Great Depression.
From the Gold Standard to Dollar Dominance
The Great Depression led to a decline in classical liberalism, making room for social liberalism and increased government involvement in economic matters. This change resulted in the New Deal initiatives, but even more importantly, it led to the Gold Reserve Act, which prohibited private ownership of gold in the United States, moved all gold to the Treasury, and revalued it from about $21 to $35 per ounce. This created significant gains that supported both domestic programs and, importantly, the Exchange Stabilisation Fund (ESF).
The designer of the ESF suggested a straightforward idea: 'the larger the fund, the better'. Following World War II, discussions at Bretton Woods changed this local stabilization system into a worldwide one. Concerned about economic decline after the war due to reduced industrial demand, American representatives advocated for an international stabilization fund, known as the International Monetary Fund (IMF). The architect later cautioned that if the Fund were used to affect member governments, it would 'have a minor, and likely negative role in future economic growth'. His warning was ignored, and the IMF was established not as a global body but as a means of dollar supremacy, ensuring that American economic interests influenced policies in developing nations.
The Myth of the War Economy and the Golden Age
Indeed, military expenditure generated jobs and promoted technological progress, yet state-controlled investments in planned economies have yielded comparable outcomes with reduced human and monetary expenses. However, these conversations are often hindered by immediate claims of communism or socialism. What war did accomplish, especially during the Second World War, was creating circumstances that led to a faster decrease in income inequality, which continued throughout the Cold War. This resulted in the consumer-driven economy known as the 'Golden Era'.
The Unfair Advantage and the Major Default
By the 1960s, French officials acknowledged the dollar's position as the world's primary reserve currency provided the United States with an 'exorbitant privilege,' meaning the power to generate money without backing. They requested gold conversion, doubting America's reserves following its funding of conflicts in Korea and Vietnam. These concerns were justified. After the failure of the London Gold Pool and several nations seeking gold redemption, the government admitted in 1971 that gold reserves had dropped to less than half their levels after the Bretton Woods agreement, despite a significant increase in global trade that required gold-backed dollars.
The 'suspension' of dollar-gold convertibility, declared that year, continues to be in effect even half a century later. The price of gold has increased from $35 to more than $4,000 per ounce, which does not necessarily indicate an increase in the value of gold itself, but rather a decline in the value of the dollar. This represented a significant financial default, allowing Western economies to print money endlessly while transferring inflation and economic instability to the developing world through fiat currency.
The Triffin Dilemma and Economic Reforms
A core conflict arose: providing enough dollars to sustain international trade necessitated ongoing balance-of-payment deficits, which eventually eroded trust as unsustainable debt grew. With federal debt surpassing $37 trillion and yearly interest costs exceeding $1 trillion, the United States is facing the outcomes of financial capitalism. It created an economic framework centered on speculation and capital growth instead of real economic development. This structure contributed to deindustrialization by moving manufacturing to Asia in return for stock market values, benefiting the wealthy while weakening Western industries and causing instability in neoliberal democracies.
After the 1971 default, the United States encountered increasing interest payments on global reserves stored in American banks. The IMF's Structural Adjustment Programs shifted this burden, compelling developing nations to take on loans that redirected interest payments from American banks to the Global South. Unlike European powers, which had direct colonial territories to absorb excess production, the U.S. required methods for surplus absorption. The answer: compelling countries to accept foreign direct investment by privatizing essential public assets for collective development, followed by currency devaluation to discount these assets through exchange rate manipulation. This led to the creation of generational elite dynasties alongside their Western allies, while impoverishing low-income populations and stalling industrial growth. Nations became stuck in debt cycles controlled through interest rate adjustments instead of fostering productive development, turning central banks into "stages for balancing acts."
The New Mercantilism
The current expansionist discourse reflects typical Western methods: colonization, imperialism, and a zero-sum model of control achieved through force. However, the consequences are now evident, as seen today with European satellite states being disposable, northern neighbors being open to negotiation, and Arctic regions being exploited. The United States urgently requires access to the Arctic via key straits, motivated by the area's estimated 90 billion barrels of oil, 1.6 trillion cubic feet of natural gas, and rich reserves of rare earth elements.
The renaming of a significant mountain in honor of former US president William McKinley, who supported expansionist policies from 1897 to 1901, highlights the ideological framework of the current Trump administration. This administration transitioned America from continental expansion to overseas imperialism through 'benevolent expansion,' which aimed at civilizing, Christianizing, and democratizing regions while securing strategic and economic interests. These policies involved territorial acquisitions, the Open Door Policy that advocated for equal commercial access to Asian markets while resisting European influence, and the growth of the navy to safeguard trade and territories.
The modern interpretation views the world as accessible through coercion and violence. As this method proves ineffective against equal adversaries, less powerful but resource-abundant countries like Nigeria experience increased pressure. No concessions from these governments will stop efforts to exploit their resources in order to maintain American dominance and avoid economic instability caused by the rise of a multipolar global system.
Provided by SyndiGate Media Inc. (Syndigate.info).
