I think I got carried away when I wrote that comment. I apologize, I didn’t read your post entirely. I just looked at that references to “Economist” and the like, and that infuriated me so much that I got blinded to the rest of your post.

As for your last paragraph, I would like to submit that, to the extent possible, this blog would try not to live up to any label or school. I am surely not there yet. But, that is what I am striving for, perhaps, not just on this blog but in other aspects of my life too.

I am very disappointed to see you arguing against the Chinese proposal, on a blog that is titled “Indian National Interest”.

The US dollar has a monopolistic grip as the reserve currency of the entire world. This is stemming directly from its monopolistic grip on the international petro-trade, which is conducted now entirely in US dollars.

If USA mismanages its economy, the entire world suffers. Not just China. China has accumulated trillions of US dollars in its reserves, it has no intention of seeing the dollar go down. But it has all the right to panic about the future. Close to China, Japan has several trillions of US dollars in its reserves.

Why would anybody in a sane state of mind accumulate empty US dollars in return for goods and services of real value ? Most interestingly, why would an industrially advanced economy such as South Korea, Japan or Germany be so dependent on exports to the USA ?

The answer is straightforward. The US has a bastard petro-dollar relationship with Saudi Arabia (and hence with OPEC). Every country has to maintain some US dollars in order to inevitably purchase petrol. This is fueling an artificial demand for US dollars, not reflective of the real state of the US economy.

US has been spending several billions of dollars in the Iraqi and Afghanistan wars. Any country which is running deficits of this order will go bankrupt rightaway. But not the USA. It’s federal reserve bank (Fed) can keep on printing money and the rest of the world will keep buying dollars. The inflationary pressures of USA are being transmitted throughout the world. These are practically experienced via oil prices (the recent oil price hike is directly related to falling US dollar) and commodity prices. We Indians and other developing nations end up paying the highest price for this. This is practically a system of modern slavery !

So who is paying for the Iraqi war ? You and me, as long as the US dollar maintains its monopoly as the global reserve currency.

Most people seem to have forgotten the fact that the current stock market crash is precipitated by the lowered consumer spending on account of high oil prices (and that due to dollar devaluation and Iraqi war). The entire world has to suffer due to the crimes of US banks and politicians.

About China keeping its currency artificially low to encourage exports, it is an age old trick. The USA has done the same thing on the early phases of its industrialization, by keeping the dollar artificially low towards the pound, frank and mark. You are correct that the growth of China is coming partly at the expense of the other developing countries, but that’s not the issue.

What we should be asking is why is the entire world dependent on exports to the USA for growth ? Why are Japan, South Korea and Germany dependent on that ? The average American consumes a lot more food, energy and consumer goods than any other person on the planet. He also “wastes” a lot of food and energy. How much of this is due to the monopoly of the US dollar on the international petro-trade ?

The EU is probably too sissy to agree to the Chinese proposal of looking for alternative reserve currency. But the Russians have supported China wholeheartedly. India would have done the same thing, if we have not been recently bought out by the USA on the nuclear deal. Only future will tell how much we Indians have to gain / lose from this strategic political decisions !

Especially, for a blog which is titled “The Gold Standard”, I expect you to follow the Austrian school of economics, and criticize the fiat currencies of the world. Especially, the most fictitious currency of all : the US dollar.