China: American Financial Colony or Mercantilist Predator

american finance, monetary reform


China: American Financial Colony or Mercantilist Predator?

The perverse effects of the world dollar standard

Written by Lewis E. Lehrman - The American Spectator

China is an important trading partner of America. But it may also be a mortal threat. And not for the conventional reasons usually cited in the press. Ironically, it is a threat because China is in fact a financial colony of the United States, a colony subsidized and sustained by the pegged, undervalued, yuan-dollar exchange rate. Neither the United States nor its economic colony seems to understand the long-term destructive consequences of the dollarization not only of the Chinese economy but also of the world monetary system. While the Chinese financial system has been corrupted primarily by tyranny, deceit, and reckless expansionism, it is also destabilized by the workings of the world dollar standard. Neither the United States nor China has come to grips with the perverse effects of the world dollar standard.

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U.S. Consumer Price Index

Long-term stability and short-term volatility, by period and monetary system: 1800-2009

Monetary Reform, World Monetary System

Applying two criteria divides the monetary history of the United States into distinct phases. We can compare the stability of these monetary regimes by examining the variation in the Consumer Price Index (as reconstructed back to 1800) by two simple measures: long-term CPI stability (measured by the annual average change from beginning to end of the period of each monetary standard) and short-term CPI volatility (measured by the standard deviation of annual CPI changes during the period). As the table shows, weighting these criteria equally, the classical gold standard from 1879-1914 was the most stable.

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