There are growing signs of a major shift in world currency alignments. Since March, the US dollar has steadily declined, depreciating by 13.3 percent on a trade-weighted basis. Last week the decline accelerated...Rather than warning of the implications of this erosion in the value of the world’s major trading and reserve currency, prominent financial publications and economic commentators are arguing that the trend should be welcomed...
These and similar commentaries evade the immense risks that would inevitably accompany a permanent devaluation of the dollar and dilution of its reserve currency status....What is certain is that the loss of the dollar’s status as the unchallenged world reserve currency has devastating implications for the American working class...
To allow the dollar to continue to fall is to acknowledge the reality of America’s decline and the necessity for world capitalism to find a new basis for growth. At the heart of such a global economic “rebalancing” is a fundamental restructuring of class relations within the United States.
The Bretton Woods framework gave the American bourgeoisie a huge advantage in managing social relations within the US. The US ruling class could utilize deficit spending and inflationary policies to make concessions to the demands of the working class because the world accepted the dollar regardless. Without that advantage, the US must adhere to onerous fiscal and monetary restraints, the burden of which is to be placed on the working class.
This process is already well underway. In the name of global economic rebalancing and reform at home, the Obama administration is seeking to cut the consumption of the working class, slash production costs and drive up US exports.
This amounts to subjecting American workers to the type of economic “shock therapy” that the US-dominated International Monetary Fund has prescribed for a host of indebted Third World countries over the past quarter century. Currency devaluation, accompanied by cuts in state expenditure for social services and the use of mass unemployment to drive down wages and increase exploitation—these are the methods that are now being employed against the American working class.
The process by which the US closed down its manufacturing facilities and farmed out production to cheap labor havens around the world—which produced the unsustainable reliance of the US on infusions of credit from surplus nations such as China and Japan—is to be reversed. Industry in the US is to be revived, but on the basis of the destruction of the wages, working conditions and living standards of the working class.
The US is to become a low-cost producer of goods for the world market. The American working class is to experience levels of exploitation which it hasn’t faced in a century. Its wages and living standards are to be brought more closely in line with those faced by the super-exploited workers of Asia...
http://www.wsws.org/articles/2009/oct2009/pers-o13.shtml