Preview of “Potential Feasibility of the Work-Standard as a World Reserve Currency”

The following is the new SMP Compendium “Potential Feasibility of the Work-Standard as a World Reserve Currency” for Second Edition of The Work-Standard. Like the previous Entry, everything here has also been rewritten and revised on behalf of the revisions made throughout the rest of the Second Edition. One important addition to this Entry is the flow chart diagram depicting how Petrodollar Recycling operates.

Even though the Bretton Woods System is dead, the US Dollar still continues to be the “World Reserve Currency.” Everyone knows the Value of the US Dollar within Exchange Rates and everyone outside the Western world clamors for it during moments of economic turmoil. Just what is the significance behind the term “World Reserve Currency?” Is there a political-economic relationship to that financial concept? And why should anyone be concerned about the US Dollar someday losing that status? How is it related to “Petrodollar Recycling” and why is it strategically vital for the Socialist Nation to declare its independence from the Petrodollar?

Whereas a “Hard Currency” refers to a commonly-traded Currency in the realm of international trade, a World Reserve Currency is any Hard Currency with the status of being the most commonly-traded Currency on Earth. Significant amounts are being kept by the Financial Regimes and financial institutions in other countries for investment, trade, transactions, and payments. The status is often conferred to any Currency whenever it constitutes the majority of all known foreign exchange reserves. The US Dollar is only able to achieve the global prestige it enjoys, long after the Death of Bretton Woods, due to the US economy as the largest on Earth and the ability of the Jeffersonians to play a predominant role in the world affairs of Thomas Jefferson’s Empire of Liberty, the Liberal International Economic Order (LIEO).

Depending on how one wishes to interpret it, there are seemingly limitless opportunities for large returns on Kapital and Schuld with a World Reserve Currency, except there is very little in the way of Arbeit and Geld. Even though there are Commodities denominated in US Dollars, of which Crude Oil is included in this analysis, the concept of a Petrodollar is not exactly dependent on Petroleum or even Crude Oil per se. In fact, assuming we were to eliminate the Western world’s overdependency on Petroleum, the Petrodollar has proven to be a sort of red herring for the Fractional-Reserve Banking System ultimately forcing the member-states of OPEC (Organization of Petroleum Exporting Countries) into an overdependence on exporting Petroleum. The Socialist Nation will realize this as soon as the State and Totality begins converting their carbon emissions into Zero-Carbon Synthetic Fuels, among other strategic Equipmentalities.

As long as a sizable portion of the Schuld created on Earth in the early 21st century remains denominated in US Dollars, the Jeffersonians will continue to constitute a financial hegemony over the foreign exchange reserves of whole nations. The obvious benefit is the ability to run ever-increasing amounts of Schuld vis-à-vis the US National Debt because the vast majority is being created in the US through the Borrowing and Lending of Kapital for Schuld with Interest. Most of the Schuld in the US National Debt can be traced back to the following sources:

No World Reserve Currency lasts forever, and the same fate will befall the US Dollar someday. After all, the Currency that preceded the US Dollar was the British Pound Sterling in the 19th and early 20th centuries. Prior to the Pound Sterling, the Dutch Guilder upheld the status between the 17th and 18th centuries. No other known Currency in the world is going to supplant the US Dollar anytime soon. The closest ones are the Euro and Chinese Renminbi because of the economic powerhouses of the EU and the PRC. But neither the Euro nor the Renminbi is in the best-possible position to become the next World Reserve Currency.

The EU’s Euro is the second largest Currency in foreign exchange reserves. The EU is a political-economic union of Liberal Capitalist regimes in Europe. The stability of the EU rests on those them continuing to remain as its member-states. But as the Eurozone Crisis has demonstrated, the Euro cannot be expected to serve as a proper rival to the US Dollar. The same can be said for the growing Euroscepticism and calls for various member-states to abandon the EU in the wake of the 2016 Brexit Referendum. While it remains to be seen as to whether any other member-states are willing to leave the EU, it would be remiss to not realize just how fragile the EU truly is. If the Euro fails to keep the EU together, there is a chance that the EU will disintegrate. Thus, it becomes absolutely necessary for the European Central Bank to keep the Euro stable in order to deter member-states from leaving and reestablishing their former national currencies.   

The other potential Currency, the PRC’s Renminbi, is still a very small fraction of the foreign exchange reserves outside Mainland China. There has been a lot of hype about the rise of the Renminbi by Liberal Capitalists. Despite the Renminbi being part of the Basket of Currencies backing the IMF’s Special Drawing Rights (XDRs), the Currency has seen a slow, steady increase. The increase is nowhere as high as some would like to believe, especially when compared to the British Pound Sterling and the Japanese Yen. Those two Currencies, meanwhile, saw small increases in foreign exchange reserves between 2014 and 2021. Even so, the Renminbi, Euro and Yen are nowhere close to breaking the 20% threshold in foreign exchange reserves anytime soon.   

The fact that no Currency in the world is capable of replacing the US Dollar is a consideration that the Socialist Nation must not ignore. For the US Dollar to lose its global hegemony over the world, the Socialist Nation must set an example for the rest of the world to follow, a different world order determined to challenge the LIEO. Here are the important factors which will be favorable to the financial offensives of the Socialist Nation:

  • Multiple nations and investors alike must consensually decide that the US Dollar is not worthy of being worthwhile Store of Value and a reliable Unit of Account.
  • The Federal Reserve has to be creating Schuld faster than what the US economy is capable of sustaining according to its GDP Rate.
  • US Inflation Rate has to be rising higher than the usual 2%; a 20% or 200% increase is more than enough to depreciate the US Dollar.
  • Additionally, the US economy’s GDP Rate also has to be in decline to such an extent that the US is no longer the largest economy on Earth. 
  • There needs to be an alternative not relying on the Post-Bretton Woods Debt-Standard. 

Most of the entries in the SMP Compendium have dealt with the Work-Standard from within the borders of a single Socialist Nation. The Socialist Nation described could be any nation claiming to be Socialistic. How its Pure Socialism was made into geopolitical reality is irrelevant; there really is no scientifically proven way of realizing Socialism and moving away from Liberal Capitalism. One has to remember that Liberal Capitalism is in final analysis an ideology that is a centuries-old product of the Enlightenment. And as an ideology, Liberal Capitalism is literature just like Marxism-Lutheranism; it too can become obsolete once it has finally been proven as impractical. Pure Socialism, meanwhile, is tailored to the ontology and phenomenology of the Totality that constitutes themselves as the Socialist Nation, which will continue to exist for as long as the Totality continues to exist as an identifiable group of people. 

Concerns over how the Socialist Nation engages in international trade will always be a given and that may depend on whether the current world order, the Liberal International Economic Order (LIEO), continues or not. This will certainly be the case if these United States encounters more difficulties sustaining itself and its world order once the Coronavirus Pandemic ends. The world is waiting for the next phase of the 21st century. Therein lies the uncertainty, the anxiety which countless people in the Western world are fearful of. What will happen to the world when the LIEO dissolves? Can anyone seriously expect the People’s Republic of China to take over?

As the LIEO crumbles from its own incompetence and delusions of grandeur, there will be a multipolar world order of competing nations and an ever-changing web of alliances. Some form of cooperation will be needed to overcome issues affecting all of humanity on Earth like Climate Change. Outside of any other planetary issues affecting all of humanity, anything goes so long as any alliance remains mutually beneficial to the national interests of its signatories. If the Socialist Nation of the Revolutionary Realm has been able to survive up to that point, it is now possible to envisage the State and Totality convincing the rest of humanity to adopt the Work-Standard.

In the early 21st century, the whole world is staring at an ever-growing abyss of Schuld, despite being flushed with Kapital. The world has been staring into that abyss since the Death of Bretton Woods. The Post-Bretton Woods Debt Standard is financial nihilism. Everybody still lives with the assumption that this void will always be a given because nobody knows what shall fill the void. What is truly scarce in the 21st century is not gold, silver, cryptocurrencies or semiconductors but Authentic Dasein; everyone gets to become anything they want to be except themselves. The demand for Dasein will climb in tandem with the concurring demand for Arbeit.

This current world order is ripe for change. Once the US Dollar ceases to be the World Reserve Currency, its ramifications are bound to cause a shakeup among the LIEO’s institutions like UN, IMF, World Bank, the EU/NATO, OECD, OPEC and so forth. There is still that looming possibility where these institutions could become delegitimized and even forced to dissolve as the Western world experiences a veritable power vacuum. In the scramble to usher a different world order, the Socialist Nation stands to benefit through the opportunity of creating the World State Organization (WSO) with the rest of the world.

Every people from every nation shall have its own Socialism. Tradition, culture, social norms and customs, language and religion can all affect any nation’s Socialism as much as how they interact with the dynamics of Arbeit and Geld. Council Democracy, the VCS Economy, State Commissariats and Kontore, NSFIs and Reciprocal-Reserve Banking, and all of the countless different amenities are quite flexible and can be remolded to address the needs of any nation. Given the predominant influence of Western Civilization, accommodations will be made and the diversity of different ways of economic life recognized, preserved and promoted under the Work-Standard. 

What has already been discussed about the Work-Standard regarding the Socialist Nation is to be reapplied on a worldwide scale. Everything applies as they are, but with the involvement of the five most powerful nations. Power is to be measured in terms of political, economic, military-industrial, financial, spiritual and cultural powers. One of them includes the Socialist Nation, assuming it has achieved enough power and reputation to command the respect and prestige of other nations. Together with four other countries, as an official function at the WSO, the Socialist Nation shall introduce a World Reserve Currency pegged to their Hard Currencies. There is no genuine need for this World Reserve Currency to replace Foreign Currencies traded between different peoples; a Sociable Currency and two separate Foreign Exchange Certificates (FECs) are more than enough to suffice for their own Financial Regimes.

Furthermore, to accommodate this World Reserve Currency are two NSFIs, one for Arbeit and the other for Geld. The purpose of these two NSFIs will be to maintain sufficient reserves to address any issues affecting the planet. Denominated in this World Reserve Currency, they are to be owned solely by the States of various nations and can be converted into their Sociable Currencies. The arrangement remains valid until the dissolution of the WSO or there is a conflict pitting the five major powers against each other. Should the latter happen, it is also possible for five other neutral member-states to take over until the cessation of hostilities.

And just like the case of the Socialist Nation, Schuld must be kept to a minimum in the case of the WSO. As the infamous Versailles Treaty has demonstrated in the aftermath of World War I, nothing good ever comes out of war reparations. It forces the losers into developing a deep-seated sense of vengefulness to address what its Totality perceives as political injustices. 

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