Recently, I have read a book “All the Presidents’ Bankers”, which illustrate the history of interconnection of USA political and financial power since 1900s. The most intriguing part to me is that this book provides an insight how USA succeed to become the world most powerful and wealthy country in the 20 century.
In this book, the story begins with 1907 stock market panic, how JP Morgan save the market by his power. JP Morgan influence stunned the president Theodore Roosevelt and every people. At that time, Theodore want to reduce the bankers power and setup the famous institution “Federal Reserve” to replace JP Morgan position.
After 1907 and 1929 stock market crash, USA economy stumbled into bottom, millions of people lost their savings and jobs, since most banks and companies closed. However, God bless America, the world war I and II dragged most countries into chaos except USA. The previous dominant countries, such as UK, France, Germany were begging USA to loan dollars for winning the war. The USA presidents and bankers realized that they can get huge benefits by uniting together. The banker make huge profits by issuing loans and bonds to other countries; numerous orders were pouring from the war zones, so the steel industry, manufacturing industry, etc grew very fast, and millions people got job. So the president not only won the embrace of people, but also make USA become the most influence country.
When the world war II was over, the president and bankers faced two different challenges, on the one hand, the USA wanted to chase communism out of the world and beat Soviet Union; one the other hand, bankers were desperate to keep and grow their profit and market share once the war bonds were terminated.
The cold war began, and USA government brought “Marshall Plan” which aligned the government and bankers benefits together. “Marshall Plan” is for USA providing capital to help Europe countries to recover from perilous war, however, in essence, it only supported those countries to embrace the same ideology as USA and rejected communism countries. And then World bank and IMF were setup to regulate the capital loans mainly by USA interests. The private Bankers, such as Morgan, Chase, Citi Bank, Bank of America, continued made huge fortune through “Marshall Plan” by extending many more branches and providing loans in these countries who sided with USA, especially in Europe and South America. Many industries in USA also benefited from this, such as manufacture, because of high demand from other countries. The unemployment rate is historically low, USA became the most powerful and wealthy country.
After 2008 global financial turmoil, most countries suffered for great loss, the world economy as a whole barely grew except China. China successfully have a surging development for more than 30 years since beginning of reform an open policy. Capital and manufacturing industry were accumulated in China, comparing to the bearish market in western world. So in 2014, Chinese government introduced “One Belt One Road” strategy to provide capital, manufacturing, manpower to assist other countries, especially in improving their infrastructure area, such as railway, high speed road, telecom, etc.
Like World Bank and IMF, Asia Infrastructure Investment Bank (AIIB) was setup leading by China. AIIB will regulate capital loans to other countries to improve their infrastructure and increase local job opportunity. This will not only boost the friendship between China and benefited countries, but also benefit many Chinese manufacture and infrastructure companies. For example, CRRC (中国中车), have a leading capability to design and manufacture high speed train, already won many contracts from overseas last year. One more important thing, with more and more countries cooperating with China, the contracts from “One Belt One Road” will be based on CNY instead of US dollar, Chinese Yuan will become a dominant currency globally.
In my opinion, history always has similar traits, China have astounding development in the last 30 years by ” Reform and Open” policy, and will have at least another 30 years of golden time by “One Belt One Road” strategy.