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Express Tribune
a day ago
- Business
- Express Tribune
End of 'The End of History'
Year 2025 has seen immense turbulence. Since Donald Trump's formal inauguration as President of the United States, 60% of international development funds have been slashed, immigration controls in the West have multiplied exponentially, trade barriers have gone up, AI has wiped out hundreds of thousands of jobs, the Palestinian genocide has entered its final phase, and conflicts involving nuclear powers have intensified. In the words of Antonio Gramsci, "The old world is dying, and the new world struggles to be born: now is the time of monsters." Following the end of WWII, America experienced 25 years of relatively inclusive growth. Real wages - adjusted for inflation - for both white and blue collar trades rose consistently until 1970. Technological breakthroughs were frequent and significant. The digital computer, data storage devices, microchip technology, and packet-switched networks, which served as precursors to the internet, all entered the fray during the '50s and '60s. In aviation, the sound barrier was broken, the first satellites went into orbit, and rockets landed on the moon. In biomedicine, the DNA structure was mapped, the polio vaccine discovered, and oral contraceptives approved. In media, portable radios and colour TVs were made ubiquitous. Perhaps most significantly, basic amenities like food, clothing, shelter, education, and healthcare were easily affordable for single-earner middle class families. Simultaneously, a comprehensive international development architecture was set up. At the Bretton Woods Conference in 1944, the World Bank and IMF were formally established to foster macroeconomic stability in 'developing' countries - particularly following decolonisation - via policy formulation, short term credit agreements, and infrastructure-related assistance. The UN was inaugurated a year later to promote trade, sociocultural exchange, and peace/harmony between nations. The WHO was set up in 1948 to address public health crises. The United States Agency for International Development (USAID), created in 1961, spearheaded development in the domains of economics, governance, and humanitarian assistance across the world for subsequent decades. During this period, these global institutions played a genuinely constructive role in industrialisation, agricultural modernisation, and institutional strengthening in developing countries. While conflicts (such as the Vietnam War and Korean War) broke out in the context of the Cold War, significant people's movements such as the Civil Rights Movement, Anti-war Movement, Counterculture Movement, first two waves of feminism, and several anti-colonial independence movements also took off and expanded liberties and sovereignties worldwide. The tides began to shift in 1971, when the dollar was unpegged from gold by President Nixon - sending shockwaves across global economies. The US Federal Reserve could now print money to its heart's desire: thus triggering massive inflationary pressures that corroded purchasing power. A couple of years later, the mainstreaming of 'finance capital' was observed. 1973's oil embargo sent prices skyrocketing by almost 300%, following which OPEC countries saw a massive influx of dollars - which they parked in US banks due to limited domestic capacity. These reserves were then recycled into US Treasury securities in exchange for military protection. This fueled a movement away from growth/innovation in tangible goods and services in favor of 'speculative trading' in bonds, stocks, derivatives, etc - a trend that led to greater inequality and declining real innovation. Things took an even worse turn under President Reagan, who kickstarted neoliberalism and aggressive imperialism. The first functioned to empower big corporations via massive reductions in taxation, regulation, trade restriction, etc and widespread crackdowns on organised labour - effectively subverting the state apparatus to the interests of big capital. The 1989 Washington Consensus codified 'privatize, liberalize, deregulate' as global economic orthodoxy, trapping the Global South in debt and resource extraction arrangements that revived colonial dynamics. Second, a series of military and intelligence interventions were launched as part of a broad strategy to lay the pressure on the Soviet Union. While Afghanistan was the major confrontation, the backing of several regimes and militia groups - particularly in Latin America - was a central feature of the 'Reagan Doctrine'. The former included the governments of El Salvador, Guatemala, Honduras, Argentina, and Chile; while the latter constituted the Contras in Nicaragua and 'Mujahideen' in Pakistan. This initiated a cycle of violence, with entire economies of arms/ammunition, sex/drug trafficking, and extremist indoctrination projects proliferating across vulnerable communities. Many of these groups were later involved in the 9/11 attacks, triggering decades-long wars in Iraq and Afghanistan that killed millions. This pattern - economic precarity at home, violence overseas - continued throughout the 2000s and 2010s. The 2008 financial crash, Obama's drone warfare, the rise of ISIS, turmoil in Afghanistan, Israel's continued occupation, and the abysmal handling of Covid-19 were all indications of terminal decline. Even in tech, progress almost ground to a halt during the two decades: reduced to marginal annual improvements in consumer electronics (like the iPhone) with hardly any groundbreaking discoveries. Large language models in recent years have admittedly been the major breakaway from this uneventful pattern, but even these potentially revolutionary tools have been deployed to advance military, surveillance, and immigration control systems - accelerating the movement towards fascism. Having withdrawn from the WHO, drastically reduced contributions to UN agencies, ignored directives from the International Criminal Court, and shut down USAID, it is all but evident that the 'rules based international order' led by the US following WWII is drawing to a close. The recent '12 Day War' with Iran only laid bare US vulnerabilities, as the former was able to preserve uranium stockpiles, give Tel Aviv a pounding, and launch attacks on Gulf airbases. Domestically, New York City - the capital of the 'American Dream' - recently voted for a staunchly anti-corporate and pro-Palestine candidate as Democratic nominee for mayorship, thus rejecting two central ideological tenets of Western hegemony, i.e. Capitalism and Zionism. In 1992, shortly after the collapse of the Soviet Union, political theorist Francis Fukuyama proclaimed the 'End of History', asserting liberal capitalism's final triumph. Three decades on, his claim sounds laughable. What comes next is difficult to predict, but two possibilities have been proposed. One is nuclear armageddon, where nations blow each other up following tit-for-tat engagements in 'World War 3'. The other is the ushering in of a 'globalist' order, one premised upon total control and subjugation: an Orwellian nightmare. There is a third path: a break from endless war, exploitation, and despotism. Its name is Socialism.
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Business Standard
29-04-2025
- Business
- Business Standard
How the US dollar became the world's most powerful reserve currency
The US dollar's sharp slide in recent months has paused, but fears about its long-term stability linger. As analysts assess the damage done by Donald Trump's trade wars and the shifting tides of geopolitics, the dollar's status as the world's leading reserve currency is once again under scrutiny. But what exactly is a reserve currency? How did the dollar come to dominate global trade and finance? And why might some countries prefer to steer clear of the role altogether? What is a reserve currency? A reserve currency is a foreign currency held in significant quantities by central banks and financial institutions as part of their foreign exchange reserves. These reserves serve various purposes: they help stabilise a country's currency, reassure foreign creditors, facilitate international trade, and provide a cushion during times of economic crisis. Since global trade is often conducted in a small number of major currencies, countries need access to those currencies to pay for imports or service debts. Holding reserves, usually in the form of highly liquid assets like government bonds, ensures they can do so. The most widely held reserve currencies are also those associated with large, stable, and open financial markets. When did the US dollar become the world's reserve currency? Although some economists argue that the US dollar began overtaking the British pound as the leading reserve currency in the 1920s, the turning point came in 1944 at the Bretton Woods Conference. Held in the final phase of World War-II, this meeting of 44 allied nations aimed to establish a new post-war monetary order. Delegates agreed to create the International Monetary Fund (IMF) and the World Bank, and most crucially, to peg their currencies to the US dollar, which in turn would be backed by gold at a fixed rate of $35 per ounce. What made the US dollar the right choice? The decision was backed by this logic: the US economy was then the world's largest, and its gold reserves accounted for over two-thirds of global holdings. American industry was intact and booming, unlike Europe and Asia, which had been ravaged by war. The dollar thus became the linchpin of international finance. Dollar-gold convertibility to floating rates The Bretton Woods system was designed to bring monetary stability and avoid the competitive devaluations and trade barriers that had deepened the Great Depression. But by the 1960s, the US could no longer guarantee full dollar-gold convertibility. This was because there were too many dollars circulating globally and not enough gold to back them. Fearing a run on its reserves, President Richard Nixon ended dollar-gold convertibility in 1971. By 1973, the world had moved to a system of mostly floating exchange rates. How Asia kept the US dollar strong Asian markets also played a significant role in ensuring the US dollar's dominance as a global currency, especially as the world moved to adopt floating exchange rates. As the British pound lost its value in the late 1960s, wealthy Chinese families who had made money in industries like rubber and tin started moving their wealth into US dollars instead. According to a report by Bloomberg, the US dollar became the go-to safe currency, replacing the pound as the dominant global currency in Asia. In 1968, Singapore became a popular place for wealthy Asians to store their money in US dollars. The country created a special market for dollar-based investments, helping to make the dollar stronger. Even though Hong Kong could have played a similar role, it was slower to get started because local banks didn't want too much money flowing out of the city. Global trust in American institutions, deep and liquid capital markets (particularly US Treasury bonds), and the pricing of key commodities like oil in dollars all helped the currency retain its dominance. Why the dollar's drop is a double-edged sword for trade Many countries manage their own currencies by pegging them to the dollar or maintaining tight bands around it. Others, like Panama and Ecuador, use the dollar outright. Even when countries allow their currencies to float, trade in goods and commodities often remains dollar-denominated, which blunts the typical benefits of currency depreciation. When a country's currency weakens, it can be seen as an advantage for trade partners to import cheaper goods. However, if the exports are priced in dollars and the US dollar depreciates, then the importers may not gain from the currency fluctuation. Why China has resisted a reserve currency status While having a reserve currency brings benefits, it also has downsides. To supply the world with dollars, the US must run trade and budget deficits, which can create vulnerabilities. Heavy demand for the currency can drive up its value, hurting US exporters. Many countries, including China, have been more cautious. China has taken steps to internationalise its renminbi (also known as Chinese yuan), and the IMF included it in its basket of major reserve currencies in 2016. But Beijing has remained wary of fully opening its capital account, fearing that uncontrolled money flows could destabilise its economy. Switzerland is another case in point. The Swiss franc is highly trusted and does serve as a minor reserve currency. But the Swiss National Bank (SNB) has actively tried to prevent the franc from becoming too attractive. Inflows of speculative capital can drive up the franc's value, hurting the export-driven economy. Between 2011 and 2015, the SNB even imposed a currency cap against the euro to limit appreciation. In 2014, Swiss officials even clarified that they had no intention of encouraging the franc's rise as a global reserve.
New York Post
23-04-2025
- Business
- New York Post
Treasury Secretary Scott Bessent blasts the IMF's woke 'mission creep'
Treasury Secretary Scott Bessent ripped the International Monetary Fund on Wednesday for focusing its resources on promoting woke causes instead of economic stability. Speaking at the Institute of International Finance forum in Washington, DC, Bessent accused the IMF of 'mission creep,' claiming that the agency 'devotes disproportionate time and resources to work on climate change, gender, and social issues.' 'Focus on these areas is crowding out its work on critical macroeconomic issues,' Bessent said. 'The IMF has been whistling past the graveyard.' 4 Treasury Secretary Scott Bessent ripped the International Monetary Fund on Wednesday for focusing its resources on promoting woke causes instead of economic stability. AP Bessent, 63, also warned IMF's partner institution the World Bank, a development lender that claims to eliminate poverty and fight climate change, that it needs to rein in excessive spending. The founder of the Key Square Group investment firm said officials there 'should no longer expect blank checks for vapid, buzzword-centric marketing accompanied by half-hearted commitments to reform' and that it must be 'fit for purpose again.' 'The IMF and World Bank serve critical roles in the international system. And the Trump administration is eager to work with them, so long as they can stay true to their missions,' Bessent said. He urged both bodies 'to refocus on their core missions' and said they would be 'held accountable.' The Post has approached the IMF and World Bank for comment. 'American dominance of these institutions is still a huge part of America First,' one source familiar with the matter told The Post. Bessent also took aim at Beijing's Chinese Communist Party for ' exporting its way out of its economic troubles.' 4 Bessent also warned the IMF's partner institution, the World Bank, that it needs to rein in excessive spending. World Bank headquarters in Washington, DC, above. AFP via Getty Images Bessent's remarks came just a day after the D.C.-based institution slashed its growth forecast for the US economy. Experts cited continued uncertainty over Trump's Liberation Day tariffs as the main reason why they cut expectations for 2025 1.8% from the 2.7% in January. 'The April 2 Rose Garden announcement forced us to jettison our projections,' chief IMF economist Pierre-Olivier Gourinchas said on Tuesday. 'The common denominator is that tariffs are a negative supply shock for the economy, which is imposing them,' he added. Bessent told the audience in D.C. earlier that 'more than 100 countries' had approached the current administration for talks since the announcement of the so-called reciprocal tariffs earlier this month. 4 Experts cited continued uncertainty over Trump's Liberation Day tariffs as the main reason why they cut expectations for 2025 by 0.9% to 1.8% from their January outlook. AP The IMF was created out of the Bretton Woods Conference in 1944 in the New Hampshire when the US, the UK, and the former Soviet Union discussed how to shape the post-WW2 global economy. The 190-member body is often described as a lender of last resort because it helps bail out debt-laden economies, although critics say that it often demands austerity measures that are too harsh. This global financial firefighter was at the forefront of the European debt crisis in 2008 when Eurozone economies were sent into meltdown after the collapse of Lehman Brothers. It asked nations such as Greece, Ireland, and Spain to slash social spending and trim back the public sector in return for loans backed by richer IMF members. 4 The IMF was created out of the Bretton Woods Conference in 1944 in the US when the US, the UK, and the former Soviet Union discussed how to shape the post-WW2 global economy. IMF Managing Director Kristalina Georgieva, above. AFP via Getty Images Ironically, officials at the global lender also enjoy lavish perks virtually unheard of in the private sector and many people in the countries that take its loans can only dream of.. The Post revealed in December how its staffers can gain cut-rate access to an upmarket Maryland golf and country club that costs regular Joes at least $20,000 to join. The IMF's top directors can rake in around $437,000 annually, compared with $52,000 for junior staffers, according to the latest publicly available salary information. They can also pick up eye-popping retirement benefits, including 'a generous final salary' pension and comprehensive worldwide health insurance
Yahoo
07-02-2025
- Business
- Yahoo
US should support World Bank and IMF - Bank of England boss
The Governor of the Bank of England has urged continued US support for two major global economic institutions. Andrew Bailey told the BBC he was "following extremely closely" whether the Trump administration will change its support for the International Monetary Fund (IMF) and the World Bank. Sources in Washington said the two institutions were caught by a White House executive order for a review of United Nations (UN) and other international organisations. Mr Bailey said it is "very important that we don't have a fragmentation of the world economy". He said "a big part of that is that we have support and engagement in the multilateral institutions, institutions like the IMF, the World Bank, that support the operation of the world economy. That's really important." There is growing concern in finance ministries and central banks around the world about US disengagement from the institutions, with radical changes to the global financial system now being floated in Washington DC. The "Project 2025" suggested blueprint for Trump's presidency, which was authored by figures who are now key White House staff, recommended withdrawal from both institutions and termination of financial contributions. It said the institutions "espouse economic theories and policies that are inimical to American principles of free market and limited government principles." Following a White House executive order, all international intergovernmental organisations of which the US is a member will be reviewed to determine if they are "contrary to the interests of the US" and "can be reformed". The six month review may then provide recommendations for withdrawal to President Trump. Sources in the G20, or Group of Twenty - a club of countries that meets to discuss global economic and political issues - said that during his first term, Trump's team suggested abolishing the IMF at the 2018 Buenos Aires Summit. The IMF and World Bank are specialised agencies of the UN. The US is the largest shareholder in both the Fund and the Bank, institutions which were created by the post-war Bretton Woods Conference 80 years ago. The IMF provides last resort lending for nations in financial trouble, and surveys economic problems. The World Bank gives money and cheap loans to developing countries for poverty alleviation and development. The Trump administration is yet to appoint staff to this area, but USAID's development spending is currently the focus of Elon Musk's Department of Government Efficiency cuts. Some members of the administration are believed to be particularly focused on the World Bank's loans to China. Asked about the possibility of the US leaving the Fund, the IMF said yesterday it had a "long history" of "working with successive US administrations". 'I'm alive thanks to US foreign aid'
BBC News
07-02-2025
- Business
- BBC News
Bank of England boss urges US support for IMF and World Bank
The Governor of the Bank of England has urged continued US support for two major global economic Bailey told the BBC he was "following extremely closely" whether the Trump administration will change its support for the International Monetary Fund (IMF) and the World in Washington said the two institutions were caught by a White House executive order for a review of United Nations (UN) and other international Bailey said it is "very important that we don't have a fragmentation of the world economy". He said "a big part of that is that we have support and engagement in the multilateral institutions, institutions like the IMF, the World Bank, that support the operation of the world economy. That's really important."There is growing concern in finance ministries and central banks around the world about US disengagement from the institutions, with radical changes to the global financial system now being floated in Washington "Project 2025" suggested blueprint for Trump's presidency, which was authored by figures who are now key White House staff, recommended withdrawal from both institutions and termination of financial said the institutions "espouse economic theories and policies that are inimical to American principles of free market and limited government principles."Following a White House executive order, all international intergovernmental organisations of which the US is a member will be reviewed to determine if they are "contrary to the interests of the US" and "can be reformed".The six month review may then provide recommendations for withdrawal to President in the G20, or Group of Twenty - a club of countries that meets to discuss global economic and political issues - said that during his first term, Trump's team suggested abolishing the IMF at the 2018 Buenos Aires IMF and World Bank are specialised agencies of the US is the largest shareholder in both the Fund and the Bank, institutions which were created by the post-war Bretton Woods Conference 80 years IMF provides last resort lending for nations in financial trouble, and surveys economic World Bank gives money and cheap loans to developing countries for poverty alleviation and Trump administration is yet to appoint staff to this area, but USAID's development spending is currently the focus of Elon Musk's Department of Government Efficiency members of the administration are believed to be particularly focused on the World Bank's loans to about the possibility of the US leaving the Fund, the IMF said yesterday it had a "long history" of "working with successive US administrations".
