The United States Dollar as the Key Global Economic Deterrent for preventing World Wars

It may come as a surprise for many that USD is no more linked to the amount of gold in the Federal Reserve! The United States government is positioned to print as much currency as it may need if they have the consent of the two principal bodies of their government, namely, the Congress and the Senate. And they have been printing significant amounts of money for the past several decades without facing any significant rise in inflation or hyperinflation. Now, why that be so?

The United States of America has been the undisputed global military and economic superpower ever since the collapse of the United Soviet Socialist Republic (USSR). Even though the US economy is in debts worth trillions of dollars, its currency, the United States Dollar (USD), continues to remain the most dominant in the world. Such is its influence that even its worst and sworn enemies seek to close their economic as well as military deals in USD.

Usually, any currency is supposed to be a representation of the gold bullions in the respective government’s treasury. Technically, you could never print money higher than the value of the gold in the government’s vault. If you do, then the currency would become worthless, leading to a breathtaking rise in the inflation, leading to an inexorable increase in costs of essential commodities, in turn leading to riots, destabilization of government and, even, absolute chaos. Recuperating or recovering from such consequences takes decades. In the recent past Zimbabwe and, currently, Venezuela is facing such crisis.

Usually, any currency is supposed to be a representation of the gold bullions in the respective government’s treasury. Technically, you could never print currency greater than the value of the gold in the government’s vault. If you do, then the currency would become worthless, leading to a stupendous rise in the inflation, leading to a severe rise in costs of essential commodities, in turn leading to riots, destabilization of government and, even, absolute chaos. Recuperating or recovering from such consequences takes decades. In the recent past Zimbabwe and, currently, Venezuela is facing such crisis.

USD is not in sync with the amount of gold in the Federal Reserve! The United States government is positioned to print as much currency as it may need if they have the consent of the two central bodies of their government, namely, the Congress and the Senate. And they have been printing significant amounts of money for the past several decades without facing any significant rise in inflation or hyperinflation. Now, why that be so?

It may come as a surprise for many that USD is no more linked to the amount of gold in the Federal Reserve! The United States government is positioned to print as much currency as it may need if they have the consent of the two principal bodies of their government, namely, the Congress and the Senate. And they have been printing significant amounts of money for the past several decades without facing any significant rise in inflation or hyperinflation. Now, why that be so?

Fascinatingly not one economist has a clear and definitive answer to this question. And they are also unclear how long this status quo would remain. Not many modern economists can explain this scenario or present its future ramifications; those who can are not able to do that without using complex jargons, making it difficult for someone unaware of economic terminologies to understand.

The only text that answers this question is Kautilya’s Arthashastra, notably: The Artha Sutras. Unfortunately, since not many people understand the Vedic Sanskrit, in which Kautilya’s Arthashastra, it has sadly been declared as an “obsolete work.”

We live in a world driven by fear and uncertainties. Although change is the only constant in life, change is seldom taken candidly by anyone. Even a modest change tends to incite mindless fear in the minds of people. Change is abhorred. It is to limit such changes that people in power – leaders – tend to take extreme measures resulting in greater instability. This instability often leads to chaos and uncertainty in the minds of people. And people tend to seek faith in nations where social, economic, and military stability exists.

For almost 250 years, since its independence, The United States of America and its people have proved the viability of Life, Liberty, and Pursuit of Happiness while following the rational principles of democracy. What the United States has achieved since its Declaration of Independence is not just significant but also unparalleled. Great Britain which ruled the most of the known world for a long time was but a Monarchy. And since Monarchies have proven to be less credible in recent decades, the US has a great for stability with its power vested in the hands of its citizens vis-à-vis a sound economy, stable geopolitical and geo-economic policies, along with its formidable military apparatus making it a superpower by very definition.

For almost 250 years, since its independence, The United States of America and its people have proved the viability of Life, Liberty, and Pursuit of Happiness while following the wise principles of democracy. What the United States has achieved since its Declaration of Independence is not just significant but also unparalleled. Great Britain which ruled the most part of the known world for a long time was but a Monarchy. And since Monarchies have proven to be less credible in recent decades, the US has a great for stability with its power vested in the hands of its citizens vis-à-vis a sound economy, stable geopolitical and geo-economic policies, along with its formidable military apparatus making it a superpower by very definition.

Although many nations desire to compete with the US, not many have expressed any desire in replacing the USD with their own. Japan is a classic example. After World War II (WWII) Japanese people worked extremely hard and became a prosperous nation by early 70s. Neither the Japanese government nor any of its leaders ever desired to compete with USD. European Union’s Euro has barely come close to replacing USD.

Some self-styled “economists” sometimes tend to present scenarios where China and India, the two of the world’s populous nations can “bankrupt” the US economy by directly unloading their USD reserves in their treasury. Should India and China decided to start selling USD in their reserves, it will drastically lead to the collapse of USD and the US economy itself. There need not be any doubt. However, that will also be suicidal for India as well as China. Why? Because the Indian and Chinese economies need US markets and USD to post profits. Without a strong USD, exports of both nations would nosedive collapsing local economies of both countries. It would result in immediate hyperinflation leading to a relentless rise in the cost of essential commodities, job loss, riots, and eventually causing the collapse of governments in both nations. In simple, any significant move by China, India, or any other country, to hurt the USD would be catastrophic for itself!

Some self-styled “economists” sometimes tend to present scenarios where China and India, the two of the world’s populous nations can “bankrupt” the US economy by simply unloading their USD reserves in their treasury. Should India and China decided to start selling USD in their reserves, it will drastically lead to the collapse of USD and the US economy itself. There need not be any doubt. However, that will also be suicidal for India as well as China. Why? Because the Indian and Chinese economies need US markets and USD to post profits. Without a strong USD, exports of both nations would nosedive collapsing local economies of both nations. It would result in immediate hyperinflation leading to a severe rise in the cost of essential commodities, job loss, riots and eventually causing the collapse of governments in both nations. In simple, any significant move by China, India, or any other nation, to hurt the USD would be catastrophic for itself!

The very reason why every time USD drops in value; Chinese and Indian central banks move in to buy dollars to stabilize its rates.

After the 2008 Global Financial Crisis, during which major financial institutions like Lehmann Brothers went bankrupt, the Chinese economy took a severe blow. They had to revitalize their national economy and put it on a growth path. Hence their economists came up with a significant project named One Belt One Road Initiative, or OBOR.

OBOR is an ambitious initiative by the Chinese government to revive and enlarge the old Silk Road to create a complex network of land and sea route to connect Chinese mainland around the world. However, there is a catch. China does not intend to pay for these mammoth infrastructure projects. On the contrary, it plans to loan these nations pay for its own state-controlled or state-favored companies to undertake the development. And the loan is not in Chinese Yuan but USD. Why? Because the Chinese government has loads of USD in its treasury. The same USD it brought over the years to stabilize the currency as well as to provide impetus to its exports. Therefore, even though China may appear to be creating way too many hurdles for the US around the world; they are mostly trying to survive. Unfortunately, China’s grandstanding and dominating approach has only created more obstacles to its OBOR initiatives, particularly with India and the countries around the South China Sea. As I write this article Japan, India and America have signed a long-term military treaty to create a joint force that intends to curb any growing Chinese Naval-Military might and misadventure in the South-East Asian seas, including the Indian Ocean.

OBOR is an ambitious initiative by the Chinese government to revive and enlarge the old Silk Road to create a complex network of land and sea route to connect Chinese mainland around the world. However, there is a catch. China does not intend to pay for these mammoth infrastructure projects. On the contrary, it plans to loan these nations pay for its own state-controlled or state-favored companies to undertake the development. And the loan is not in Chinese Yuan but USD. Why? Because the Chinese government has loads of USD in its treasury. The same USD it brought over the years to stabilize the currency as well as to provide impetus to its exports. Therefore, even though China may appear to be creating way too many hurdles for the US around the world; they are essentially trying to survive. Unfortunately, China’s grandstanding and dominating approach has only created more hurdles of its OBOR initiatives, particularly with India and the countries around the South China Sea. As I write this article Japan, India and America have signed a long-term military treaty to create a joint force that clearly intends to curb any growing Chinese Naval-Military might and misadventure in the South-East Asian seas, including the Indian Ocean.

The Indian government, on the other hand, has never sought conflict with the United States. Even during the 1971 Indo-Pakistan war that led to birth of Bangladesh, Indian government ensured that the war is over before the US battleships reached the Bay of Bengal and soon after the conflict made pact with Pakistan, returned its million soldiers who had surrendered publicly; thereby expressing no interest in any direct or indirect military confrontation with the United States.

Given the fact that India and China have a vested interest in survival and stability of USD gives the United States government a significant edge. It is also an undeclared yet absolute assurance for the balance of the US economy. However, the United States cannot take this situation for granted. Should the United States military lose its ability to assert its influence across land, air, and sea, globally, it will reflect on the stability of USD. US military is undoubtedly the key to the survival of USD as well as the US economy in the long run.

Given the fact that India and China have a vested interest in survival and stability of USD gives the United States government a significant edge. It is also an undeclared yet certain assurance for the stability of the US economy. However, the United States cannot take this situation for granted. Should the United States military lose its ability to assert its influence across land, air, and sea, globally, it will clearly reflect on the stability of USD. US military is undoubtedly the key to the survival of USD as well as the US economy in the long run.

And even though the United States faces challenges from countries like Russia, China, and Iran, the fact that these countries have no credible economy to sustain or survive a geopolitical war ensures the dominance of USD and the United States, itself, for at least two more decades.

Thankfully, no nation in the world today is capable of war. Even if these nations desire a conflict, they do not have the economic means to survive, let alone sustain, one. So the World Wars are impossible. American people hate war more than anything else. Therefore, we could conveniently conclude that the United States Dollar is by far the most significant economic deterrent to prevent World Wars. And its existence is the key to ensuring that World War III will never happen. And since all major global economies, including Japanese, Chinese, Indian and British, seek the stability of USD, it is inevitable that these countries will have a vested interest in the security of USD and US economy. So all the warmongering is but a naive theatrics which cannot go beyond limited scale conflicts.

1 responses on "The United States Dollar as the Key Global Economic Deterrent for preventing World Wars"

  1. In a usual sense, the Global Economic deterrent of Dollar is capable to prevent wars as Sri. Mahesh observed. But during some unusual circumstance, the matters will go off hand or beyond our judgement. On keen observation, most of the wars were originated due to the unusual circumstance. Means other than the economic reason. Germany came forward to fight WWII when it faces its worst economic crisis. As like Italy.
    I am of opinion that World War III will happen within 50 years due some other reason. When WWI came to an end the allies have paved the seed for Second World War by inflicting Treaty of Versailles. At the end of the WWII, the victorious powers have put the seeds for third World War by creating a new nation Israel. During the post, Second World War USA played a vital role to keep the world peace excepting the period of the Obama regime. Obama signed the nuke deal with Iran, without prudence, which led to the present crisis.
    I believe World War III will break out within 50 years. See the Bhaghavat Geetha chapter 11 text 12.” Divi Surya – Sahsrasya “ and other scriptures. There are other prophecies in the Bible: Ezekiel chapter 37,38, 39 and in the New Testament; Mathew; chapter 24, 25. Now Soviet, China, Germany India and other few countries are less dependent on USD.

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