We were offered products by China which we could not possibly locally replicate
Since 1973, when the US opted to abandon the gold to measure the value of its currency, the world saw the practice of one country unilaterally adopting the dollar as a system of currency.
In the case of the US, it opted to choose gross domestic products (GDP) to measure its economy.
Nobody questioned that policy although many had their doubts the US would remain the world’s top GDP producer.
Many doubted the US would be able to maintain that position.
Like many traditional Marxist economists, they said to produce wealth, a country must produce added wealth to every commodity to add value to it.
The function of currency is to involve oneself in production, meaning one has to produce or manufacture certain products but must make sure the producer has to add value to the commodity to every system of exchange.
To every added value in selling the commodity, he earns additional wealth.
The value added to the commodity or product is what determines the value to the customers or consumers. A continued repetition of this system of exchange or sale accumulates more surplus or profit.
This explains why GDP used to measure the economic strength of a nation has been touted relative or temporary.
When the US used GDP to measure its economy, it made sure the system of measuring one’s economy would favor it, not to mention that it almost had a monopoly in the purchase of gold at a price set by the World Bank at $32 dollars per ounce.
Fortunately, the US dollar no sooner fluctuated in value.
The use of gold in measuring the value of the US currency was visibly affected in numerous wars beginning with its involvement in the Vietnam War.
For the first time, the US incurred a huge budget deficit although the US military industrial complex continued to rake in much profit because of arms sale.
First, the US resorted to the sale of arms to its allies to supplement the burgeoning budget deficit. This particularly put pressure to its former enemies like Germany and Japan by licensing them to manufacture weapons.
Second, the grant to the US to use its own GNP allowed it to freely engage in printing the US dollar, having considered the US currency as flexible relative to its value based on GDP.
Thus, if the US GDP is low relative to its exports, the US can easily make adjustments to avoid inflation to its economy.
Third, the grant to the US to use GDP to measure its economic strength gave it the license to engage in “quantitative easing” to ward off inflation.
Thus, every time it runs short of funds, it simply issues treasury bonds to countries willing to purchase them.
The problem is treasury bonds are redeemable anytime, and the US cannot refuse for fear of being declared in default.
Japan and China redeemed at list 30 percent of its US treasury bonds.
Redemption has caused a snow ball in the demand to de-dollarize the US currency.
Fourth, the licensing of heavy weapons to Germany, United Kingdom, Japan, South Korea, Taiwan, India, and Australia heightened the formation of regional blocs such as the formation of an Asian counterpart of NATO with member- countries willing to participate in a US-sponsored proxy war in Asia.
Fifth, the rapid expansion of trade by China is attributed to the ability of China to maintain at relatively low value of their currency.
They know that increasing the value of the renminbi would result in increased profit but could result in decreased exports.
China can compete with any of the Western-made products.
They already mastered the trick of the trade which is to sell quality products at cheaper prices and producing them in volume which no Western market could compete.
This explains why the US could hardly compete with China in the export of its products.
The US lost to China in its imposition of tariff much that US-imposed tariff is actually a tax on US imports from China.
This alone has reached a staggering amount of more than $200 billion.
There is no way the US can stop its importation because they are mostly consumer items which American consumers badly need and for which they could not produce at a competitive price.
The same reasoning can be said when American lackeys in this country started imposing restriction on the importation of Chinese agricultural products.
Just the same, we miserably lost because the average price of our commodity remains high compared to the price offered by other Asian countries.
Some suspect the price of our goods is based on the peso valued to the US dollar which should not be the case.
The misplaced basis in our currency is the fact that US GDP then registered the highest in the world since it was untouched by the ravages of the Second World War.
The consequences of war have not logically affected them to make the US leading manufacturing country in the world, more than 70 percent of which are for exports.
That alone made the US the leading exporter of manufactured goods.
Instead of following China’s footsteps in lowering the cost of importation, the US chose to increase the cost of imports, importation being the surest income they could earn.
The US followed China’s Belt and Road Initiative of wanting to have an assured and ready market for its exports. This is how China opened to the world market for its exports.
No sooner other Asian countries developed their own industries such as Japan, Taiwan, and South Korea.
Other defeated states like Germany, Italy and former allies like Great Britian and The Netherlands soon rose to develop their own industries and cultivated the same marketing strategy.
Some Asian countries have even perfected their own industries to such high level of development.
Many attained the production to maintain the same high value products.
In the case of the Philippines, we attempted by purchasing agricultural products from China but offered nothing in return.
Foremost, we privatized our local fertilizer plant. The buyers that bought it later on conceived that it is better to consign to foreign manufacturing the local production of fertilizers would cost less to the government.
Thus, after the fertilizer plant was disposed, the whole idea of having our own fertilizers plant was shelved for good.
We were offered products by China which we could not possibly locally replicate.
Many of our economists have failed to analyze this discrepancy but instead opted to resolve our position as a colony of the US.
A classic example is how we adopted the currency valuation of our peso to the US dollar.
How the US dollar fluctuates in the market does not make sense.
Even interest rate is patterned after the dollar.
Many economists could not explain why many of our products are costly with those made in the US yet they continue to peg the value of our peso.
Many of them could not decipher the market nuances are different from those abroad.
The Philippines was even compelled to change its currency to dollars, which strictly speaking constitute our savings such that bringing the currency out of the country is considered punishable and would constitute dollar salting.
The owner of the currency can either be punished by fine or confiscation if he did not make such declaration.
The funny thing about this arbitrary law is that whatever amount of money they manage to confiscate as fine, the penalty goes directly into the coffers of the US treasury, a legalized form of extortion perpetrated by the US government.
This is why US made rules that have to be followed by the people they consider as subjects.
This amplifies the term US unilateralism in international relations.
(rpkapunan@gmail.com)