The Dollar, The World's One Currency Is Trump's Best Weapon

Donald Trump's all-out trade war has a singular source of ammunition, even as China is pushing to make the RMB a global currency on par.

Only the dollar is getting stronger
Only the dollar is getting stronger
Jean-Paul Betbèze

PARIS Making the American dollar the only global reserve currency, thus undermining the euro and Europe's monetary strategy, while preventing China's dream of financial power through the renminbi RMB ... Is this what President Donald Trump really meant by "Make America Great Again"?

It is understandable that the U.S. president wants more growth and employment at home, aiming to reinforce his nation's technological superiority and to widen the gap with his competitors, in particular China. He wants to amplify the benefits of having the dollar as the only global reserve currency: boosting GDP, extending the lead in the knowledge (and information) economy, as well as the power of language, law and military dominance, which is now expanded into space. This is how the Trumpian agenda is being built.

But the actual purpose of a reserve currency is as a protection against economic crises and wars. Yet we are told we have now had 70 years of relative peace, which holds today for an apparent balance of power in a tripolar world (U.S., Europe, China). It's all an illusion!

China's strategy after years of hidden diplomatic expansion, thanks to entry into the WTO, is becoming proactive. The New Silk Road investment strategy is as political as it is business-oriented, to strengthen alliances in Asia and integrate Africa, which will have an impact on United Nations votes. Add to this the race for rare metals, essential to new technologies, plus military investments and advances (China is the second largest military investor in the world).

The Chinese economy has one of the world's major currencies: the RMB still trails in influence behind the dollar, euro and yen, but is ahead of the British pound. China thus intends to develop trade without going through the dollar, avoiding U.S. threats and sanctions.

Playing the customs card is easy.

This is the moment Donald Trump chose to ignite the conflict on the grounds of fighting trade imbalances, and reducing them with China, Germany, Mexico, Turkey and Canada. These "usual suspects' are now under pressure for alleged crimes of trade surplus. Playing the customs card is easy for him: it allows him to bypass Congress by increasing customs duties.


Donald Trump meeting with Xi Jinping in Beijing in 2017 — Photo: TPG/ZUMA

The great advantage of this American war to rebalance trade is that his competitors can't win. China exports four times more to the United States than it imports in American products ($510 billion against $130 billion in 2017). If, for example, the United States increases its import taxes to 20%, the additional cost it pays is $100 billion. But this would imply, on the Chinese side, duties of 80% on American imports to reach the same $100 billion. It is impossible for China to take such a risk.

This war via customs duties will slow down the opposing economies more than the American economy, which has relatively fewer imports. But as it takes time to materialize in "others," stock markets play their catalytic role.

Concern about Chinese, Russian and Turkish growth is precipitating currency declines. With its ultimate goal of turning the RMB into a truly global currency, the Chinese central bank cannot let it decline too far. It is thus forced to support the economy through deliberate indebtedness, whereas it wanted to reduce its debt. As a result, China is weakening financially.

This is even more true for Russia, which has no choice but to lower the ruble (and produce more oil). The Turkish lira, too, is plunging, with its companies indebted in U.S. dollars. From one country to the next, emerging currencies are falling (South Africa, India so all the BRICS), as well as the euro. With concern spreading in indebted countries, long-term rates are rising everywhere (in Italy, for example).

In short, only the dollar is rising. This is proof that the dollar is the singular world currency of choice. Even better, U.S. long-term rates are falling to 2.9%, as much as inflation (which is rising), while the budget deficit is going to explode with its projects for major, peaceful and military works. Thus we have a global currency: It is the one the world wants, the best for lending more and cheaper money.

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The Food Truck, A Sign That The White And Wealthy Are Moving In

In San Diego, California, a researcher tracked how in the city's low-income neighborhoods that have traditionally lacked dining options, when interesting eateries arrive the gentrification of white, affluent and college-educated people has begun.

Balboa Park Spring Fling Food Truck festival

San Diego Food Trucks via Facebook
Pascale Joassart-Marcelli

SAN DIEGO — Everybody, it seems, welcomes the arrival of new restaurants, cafés, food trucks and farmers markets.

What could be the downside of fresh veggies, homemade empanadas and a pop-up restaurant specializing in banh mis?

But when they appear in unexpected places – think inner-city areas populated by immigrants – they're often the first salvo in a broader effort to rebrand and remake the community. As a result, these neighborhoods can quickly become unaffordable and unrecognizable to longtime residents.

An appetite for gentrification

I live in San Diego, where I teach courses on urban and food geographies and conduct research on the relationship between food and ethnicity in urban contexts.

In recent years, I started to notice a pattern playing out in the city's low-income neighborhoods that have traditionally lacked food options. More ethnic restaurants, street vendors, community gardens and farmers markets were cropping up. These, in turn, spurred growing numbers of white, affluent and college-educated people to venture into areas they had long avoided.

This observation inspired me to write a book, titled The $16 Taco, about how food – including what's seen as "ethnic," "authentic" or "alternative" – often serves as a spearhead for gentrification.

Take City Heights, a large multi-ethnic San Diego neighborhood where successive waves of refugees from places as far away as Vietnam and Somalia have resettled. In 2016, a dusty vacant lot on the busiest boulevard was converted into an outdoor international marketplace called Fair@44. There, food vendors gather in semi-permanent stalls to sell pupusas, lechon (roasted pig), single-sourced cold-brewed coffee, cupcakes and tamarind raspado (crushed ice) to neighborhood residents, along with tourists and visitors from other parts of the city.

Informal street vendors are casualties.

A public-private partnership called the City Heights Community Development Corporation, together with several nonprofits, launched the initiative to increase "access to healthy and culturally appropriate food" and serve as "a business incubator for local micro-entrepreneurs," including immigrants and refugees who live in the neighborhood.

On paper, this all sounds great.

But just a few blocks outside the gates, informal street vendors – who have long sold goods such as fruit, tamales and ice cream to residents who can't easily access supermarkets – now face heightened harassment. They've become causalities in a citywide crackdown on sidewalk vending spurred by complaints from business owners and residents in more affluent areas.

This isn't just happening in San Diego. The same tensions have been playing out in rapidly gentrifying areas like Los Angeles' Boyle Heights neighborhood, Chicago's Pilsen neighborhood, New York's Queens borough and East Austin, Texas.

In all of these places, because "ethnic," "authentic" and "exotic" foods are seen as cultural assets, they've become magnets for development.

Food vendor at outdoor international marketplace called Fair@44.

Fairat44 via Instagram

A call for food justice

Cities and neighborhoods have long sought to attract educated and affluent residents – people whom sociologist Richard Florida dubbed "the creative class." The thinking goes that these newcomers will spend their dollars and presumably contribute to economic growth and job creation.

Food, it seems, has become the perfect lure.

It's uncontroversial and has broad appeal. It taps into the American Dream and appeals to the multicultural values of many educated, wealthy foodies. Small food businesses, with their relatively low cost of entry, have been a cornerstone of ethnic entrepreneurship in American cities. And initiatives like farmers markets and street fairs don't require much in the way of public investment; instead, they rely on entrepreneurs and community-based organizations to do the heavy lifting.

In City Heights, the Community Development Corporation hosted its first annual City Heights Street Food Festival in 2019 to "get people together around table and food stalls to celebrate another year of community building." Other recent events have included African Restaurant Week, Dia de Los Muertos, New Year Lunar Festival, Soul Food Fest and Brazilian Carnival, all of which rely on food and drink to attract visitors and support local businesses.

Meanwhile, initiatives such as the New Roots Community Farm and the City Heights Farmers' Market have been launched by nonprofits with philanthropic support in the name of "food justice," with the goal of reducing racial disparities in access to healthy food and empowering residents – projects that are particularly appealing to highly educated people who value diversity and democracy.

Upending an existing foodscape

In media coverage of changing foodscapes in low-income neighborhoods like City Heights, you'll rarely find any complaints.

San Diego Magazine's neighborhood guide for City Heights, for example, emphasizes its "claim to authentic international eats, along with live music venues, craft beer, coffee, and outdoor fun." It recommends several ethnic restaurants and warns readers not to be fooled by appearances.

Longtime residents find themselves forced to compete against the "urban food machine"

But that doesn't mean objections don't exist.

Many longtime residents and small-business owners – mostly people of color and immigrants – have, for decades, lived, worked and struggled to feed their families in these neighborhoods. To do so, they've run convenience stores, opened ethnic restaurants, sold food in parks and alleys and created spaces to grow their own food.

All represent strategies to meet community needs in a place mostly ignored by mainstream retailers.

So what happens when new competitors come to town?

Food vendor at outdoor international marketplace called Fair@44.

Fairat44 via Instagram

Starting at a disadvantage

As I document in my book, these ethnic food businesses, because of a lack of financial and technical support, often struggle to compete with new enterprises that feature fresh façades, celebrity chefs, flashy marketing, bogus claims of authenticity and disproportionate media attention. Furthermore, following the arrival of more-affluent residents, existing ones find it increasingly difficult to stay.

My analysis of real estate ads for properties listed in City Heights and other gentrifying San Diego neighborhoods found that access to restaurants, cafés, farmers markets and outdoor dining is a common selling point. The listings I studied from 2019 often enticed potential buyers with lines like "shop at the local farmers' market," "join food truck festivals" and "participate in community food drives!"

San Diego Magazine's home buyer guide for the same year identified City Heights as an "up-and-coming neighborhood," attributing its appeal to its diverse population and eclectic "culinary landscape," including several restaurants and Fair@44.

When I see that City Heights' home prices rose 58% over the past three years, I'm not surprised.

Going up against the urban food machine

Longtime residents find themselves forced to compete against what I call the "urban food machine," a play on sociologist Harvey Molotch's "urban growth machine" – a term he coined more than 50 years ago to explain how cities were being shaped by a loose coalition of powerful elites who sought to profit off urban growth.

I argue that investors and developers use food as a tool for achieving the same ends.

When their work is done, what's left is a rather insipid and tasteless neighborhood, where foodscapes become more of a marketable mishmash of cultures than an ethnic enclave that's evolved organically to meet the needs of residents. The distinctions of time and place start to blur: An "ethnic food district" in San Diego looks no different than one in Chicago or Austin.

Meanwhile, the routines and rhythms of everyday life have changed so much that longtime residents no longer feel like they belong. Their stories and culture reduced to a selling point, they're forced to either recede to the shadows or leave altogether.

It's hard to see how that's a form of inclusion or empowerment.The Conversation


Pascale Joassart-Marcelli is a Professor of Geography and Director, Urban Studies and Food Studies Programs at San Diego State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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