A few people seem confused about the concept of ‘currency devaluation’.
Given how important it is in understanding exploitation on a global level, let’s review. 🧵
Poor countries exist at the bottom of the global value chain.
In order to develop, poor countries need access to capital to purchase from other countries the labor saving tools & technologies that’ll allow them to begin building an advanced economy.
Enter IMF loans.
On condition of gaining access to these loans, the US uses its unilateral power over the IMF/World Bank to force countries into relinquishing control of their monetary policy.
Among the loan conditions is the stipulation that the national currency be devalued.
The effect of this forced devaluation of the currency is it purposefully undervalues the labor of the entire workforce.
This exchange value disparity is most clearly visible when tourists from the imperial core purchase labor in the periphery for pennies on the dollar.
This devaluation also makes imports very $$$.
And while it’s often argued poor countries “prefer” a devalued currency to keep their exports competitive, these arguments ignore how IMF conditionalities force poor countries into a ruthless race to the bottom in the first place.
This forced devaluation is now a significant component of modern imperialism, a system Lenin began describing over a century ago.
The real insidiousness of imperialism is how the mundanity of such a diffuse financialized form of exploitation makes it virtually ‘invisible’.
But not all countries remain stuck at the bottom!
A select few developing countries manage to climb the value chain ladder, as Japan did in the 70s, and China did in the 90s.
Yet in doing so, their value added exports began to compete with US exports and domestic industries.
Competition is not tolerated by the US, so when these threats emerge, the US intervenes more directly.
The primary way they intervene is no longer to force currency devaluation but to instead force countries into *strengthening* their currency relative to the dollar.
This is exactly what happened to Japan in the 80s with the Plaza Accord, in which the US forcefully inflated the value of the Yen to kneecap Japan’s economy. The resulting bubble led to Japan’s lost decade(s).
The US is arguably pursuing a similar strategy right now in the EU.
Which brings us to China.
Starting in the 2000s, the US began accusing China of being a “currency manipulation”, and accusations have only intensified since.
Central to the US’s frustration is their inability to bully China into succumbing to US monetary policy.
To the global hegemon, China’s exercising of fundamental monetary sovereignty is seen as an affront to the “rules based order”.
And what nefarious rules breaking does China engage in to “manipulate” its currency?
It buys US debt!
To recap:
US forces poor countries to keep currencies devalued as key pillar of imperialism.
Countries that manage to develop are instead forced to inflate currency to prevent competition with US.
China’s exports outcompete US’s, 🇨🇳refuses to cede monetary sovereignty, US mad.
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