Are We Facing a Worse Economic Hit?

Bergel_Peter_opinionBy Peter Bergel

Next Big Threat

Well, it’s happening once again and neither our government nor our media seem to be aware, let alone warning us. The newest economic threat comes not from peak oil or global warming (though those are certainly dire threats indeed), but from a completely different direction. It’s called the Shanghai Cooperation Organization or SCO. Ever heard of it? If not, you should and soon will.

Former New York Times war correspondent Chris Hedges explains it in detail in an article entitled “The American Empire Is Bankrupt” and refers to an even more extensive analysis, but here is the gist.

Ever wonder where the money to cover annual deficits, bailouts, stimulus packages and over-spending on the military really comes from? We borrow it, that’s right, but who lends it to us and why do they keep doing it when we don’t pay it back? It’s because for most purposes in the world, the U.S. dollar is the “reserve currency.” That means that the dollar is used as the international pricing currency for products traded on a global market, such as oil and gold. Governments that want to buy these commodities need to keep dollars on hand to pay for them.

SCO Could Eat Our Lunch

The SCO is out to change that. By holding what has been described as “the most important meeting of the 21st century so far” SCO’s six members (China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan) and four observer members (India, Iran, Mongolia and Pakistan) are beginning a process which, if successful, will replace the dollar as the world’s reserve currency.

If that happens, the willingness of the world to lend us money is likely to vanish, the value of the dollar will plummet and the lifestyle we enjoy will collapse quickly. It will no longer be a matter of watching our energy supplies dwindle slowly, driving up the price of everything that depends on them. It will no longer be a matter of enduring serial economic hits caused by global warming’s various effects. Hedges envisions a truly nightmare scenario which I won’t repeat here.

Together the SCO nations represent about half of the people on the planet. Moreover, they also include two of the world’s leading creditor nations (China #1 and Russia #4). Why, they ask themselves, should they finance debt which is primarily used to pay for a U.S. military, which at best vexes them and at worst oppresses them? The existence of SCO and BRIC – Brazil, Russia, India, China – ancitybikes340other economic coalition comprised of the world’s fastest and most consistently growing economies with the largest foreign currency and gold reserves – indicates that, despite the U.S.’ military dominance, the economic fate that claimed the Soviet Union at the close of the Cold War may well be waiting to claim the U.S. as well.

Our oft-repeated claim of being the “greatest nation on Earth” is likely to be sorely tested, and soon. Φ

Peter Bergel is the Executive Director of Oregon PeaceWorks and the founding editor of The PeaceWorker.

Photo: Alice Phalan.

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