“So it’s fragmentation and a coalescence into a battle between a US-led bloc and a China-led bloc. This is the worry for Lagarde and the US-led imperialist bloc – a loss of global control and a fragmentation of global economic power not seen since the inter-war period of the 1920s and 1930s.
Lagarde comments on the economic implications of this: “But that period of relative stability may now be giving way to one of lasting instability resulting in lower growth, higher costs and more uncertain trade partnerships. Instead of more elastic global supply, we could face the risk of repeated supply shocks.” In other words, globalization and the easy movement of supply, trade and capital flows that benefited the imperialist bloc so much (see our paper The economics of modern imperialism) had come to an end.”
Christine Lagarde, the head of the European Central bank (ECB), made an important ‘keynote’ speech last week to the US Council of Foreign Relations in New York.
It was important because she analysed recent developments in global trade and investment and assessed the implications of the apparent move away from the hegemonic dominance of the US economy and the dollar in the world economy and the move towards a ‘fragmented’, ‘multipolar’ world economy – where no one economic power or even the current imperialist bloc of the G7-plus will dominate global trade, investment and currencies.
Lagarde explained: “The global economy has been undergoing a period of transformative change. Following the pandemic, Russia’s unjustified war against Ukraine, the weaponisation of energy, the sudden acceleration of inflation, as well as a growing rivalry between the United States and China, the tectonic plates of geopolitics are shifting faster.”
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