Thinking about my previous post, Joe Firestone: Another Danger of the TPP: It Sacrifices Monetary Sovereignity and taking into account Murphy’s Law, I started to wonder if signing the TPP could bring on Armageddon.

I decided to look up the major foreign holders of US Treasury securities.

Here is the Murphy’s Law scenario. Suppose we decide to devalue the dollar to bring our wage rates more in line with the countries where all our jobs are being outsourced. Supposing some of those countries decided to sue us before one of the tribunals established by the TPP. Their claim is that by devaluing our dollar, we will be harming their profits and the value of their holdings of our currency. It seems pretty obvious that their claim is true, and our sole purpose for taking that action is to take back some of those jobs and lower the value of our foreign debt.

So what could they sue us for? Japan holds $1.2 trillion of our foreign debt and will be one of the major signatories of the TPP. China holds another $1.2 trillion of our foreign debt. China will not be a signatory of TPP, but I bet they could buy lots of companies in countries that will be signatories. That would give them standing before one of the tribunals.

Rather than demanding immediate payment of $2.4 trillion, they could just hold us hostage and control our major policies.

I have come to a new understanding of Murphy’s Law. It is not just by chance that everything that can go wrong, will go wrong. It is that if you give an adversary a brand new weapon that they could use against you, then they will use it. Do you want to hold your breath hoping they won’t? You could turn blue in the face just from that.

There are two places to go to read this story. Naked Capitalism has the headline Joe Firestone: Another Danger of the TPP: It Sacrifices Monetary Sovereignity. New Economic Perspectives has the headline How Can Our Senators and Representatives Vote for Giving Away Our Monetary Sovereignty?

Let’s see if giving you the first and last paragraphs can give you a clue as to the magnitude of this blunder.

Right now the US fulfills the three essential conditions for monetary sovereignty: 1) it issues its own non-convertible currency, 2) which it allows to float on international currency markets; and 3) it owes no debts in any currency other than dollars. Because it is monetarily sovereign, and can always meet its obligations the US can never be forced into insolvency.
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Which brings us back to our erstwhile Representatives and Senators in Washington. How they can even consider Fast Track Authority for the President without extensively considering and debating the sovereignty-infringing aspects of the TPP is beyond me. Its potential infringement on Monetary Sovereignty is only one of these. There are many others, as well. And it is hard to understand how people who swear fealty to the United States can justify their apparent complete lack of concern for these issues when they make trade agreements.

In one fell swoop, a decision in a single case could force a $350 billion dollar debt on our country and the complainant could insist on payment in Chinese yuan.

If, after seeing the financial collapse of 2008/2009, you realize the magnitude of Bill Clinton’s blunder in doing away with the Glass-Steagal Act, you should contemplate how the TPP could be a blunder of far larger magnitude. What is surprising is that it has taken this long for someone like Joe Firestone to expose the full implications of the Investor State Dispute Settlement (ISDS) tribunals that are set up by the TPP.

All the phoney issues the Republicans raise about our debt to ourselves in our own  currency could be made to come true by changing that debt to be in a foreign currency of the lender’s choice after we have incurred a debt we didn’t even know we had incurred.