The Petro-Dollar and the
is always about achieving a political end. Even holy wars seek to impose a secular
control over the vanquished. At the root of every political conflict, lies the
MONEY component. On the scale of greed or fear, international discords can slide
up or down. Depending on the circumstances or demands, governments rally domestic
populations to accept their foreign interventionist goals. Claims of altruistic
liberation are fictitious, when the rhetoric is stripped away and the real substance
is exposed. Notwithstanding, variances of emphasis; the motive of money underpins
the movements of all military confrontations.
case that the conquest of Iraq is about appropriating control over oil reserves
is well known. The argument that removing Saddam Hussein for a friendly regime
change will enhance the adherence of global community policies, secure and annex
a ‘greater Israel’ and project the power of the empire into the region, has
been circulated widely. The excuses of a “War on Terrorism”, elimination of
WMD, combating radical Islamics, fulfilling prophecy and personal grudges between
feuding criminal families and former business partners, have been known to all.
But the one aspect that seems to elude the scrutiny of most observers is that
of the precarious nature of the global economy, which teeters on the fragile
requirement that the US Dollar must remain as the world reserve currency.
always priced oil in US Dollars. In the perceptive essay,
The Real Reasons for the Upcoming
War With Iraq by W Clark, the thesis that a
shift using the EURO as the settlement currency, drives the Bush/Cheney administration
Federal Reserve's greatest nightmare is that OPEC will switch its international
transactions from a dollar standard to a euro standard. Iraq actually made this
switch in Nov. 2000 (when the euro was worth around 82 cents), and has actually
made off like a bandit considering the dollar's steady depreciation against
the euro. (Note: the dollar declined 17% against the euro in 2002.)
real reason the Bush administration wants a puppet government in Iraq -- or
more importantly, the reason why the corporate-military-industrial network conglomerate
wants a puppet government in Iraq -- is so that it will revert back to a dollar
standard and stay that way." (While also hoping to veto any wider OPEC momentum
towards the euro, especially from Iran -- the 2nd largest OPEC producer who
is actively discussing a switch to euros for its oil exports)."
effect of an OPEC switch to the euro would be that oil-consuming nations would
have to flush dollars out of their (central bank) reserve funds and replace
these with euros. The dollar would crash anywhere from 20-40% in value and the
consequences would be those one could expect from any currency collapse and
massive inflation (think Argentina currency crisis, for example). You'd have
foreign funds stream out of the U.S. stock markets and dollar denominated assets,
there'd surely be a run on the banks much like the 1930s, the current account
deficit would become unserviceable, the budget deficit would go into default,
and so on. Your basic 3rd world economic crisis scenario.
article by Hazel Henderson, is cited that outlines the likely consequences of
the displacement of the US Dollar (translate: federal reserve counterfeit species)
as the reserve currency.
global over-reach in the `war on terrorism' already leading to deficits as far
as the eye can see -- combined with historically-high US trade deficits -- lead
to a further run on the dollar. This and the stock market doldrums make the
US less attractive to the world's capital.
developing countries follow the lead of Venezuela and China in diversifying
their currency reserves away from dollars and balanced with euros. Such a shift
in dollar-euro holdings in Latin America and Asia could keep the dollar and
euro close to parity.
could act on some of its internal discussions and decide (after concerted buying
of euros in the open market) to announce at a future meeting in Vienna that
OPEC's oil will be re-denominated in euros, or even a new oil-backed currency
of their own. A US attack on Iraq sends oil to 40 (euros) per barrel.
Bush Administration's efforts to control the domestic political agenda backfires.
Damage over the intelligence failures prior to 9/11 and warnings of imminent
new terrorist attacks precipitate a further stock market slide.
efforts by Democrats and the 57% of the US public to shift energy policy toward
renewables, efficiency, standards, higher gas taxes, etc. are blocked by the
Bush Administration and its fossil fuel industry supporters. Thus, the USA remains
vulnerable to energy supply and price shocks.
EU recognizes its own economic and political power as the euro rises further
and becomes the world's other reserve currency. The G-8 pegs the euro and dollar
into a trading band -- removing these two powerful currencies from speculators
trading screens (a "win-win" for everyone!). Tony Blair persuades Brits of this
larger reason for the UK to join the euro.
countries lacking dollars or "hard" currencies follow Venezuela's lead and begin
bartering their undervalued commodities directly with each other in computerized
swaps and counter trade deals. President Chavez has inked 13 such country barter
deals on its oil, e.g., with Cuba in exchange for Cuban health paramedics who
are setting up clinics in rural Venezuelan villages.
is missing in this excellent analysis is that the nature of fractional reserve
debt created money, requires ever growing liability and increasing deficits.
There is a limit when higher taxes become unsustainable. However, the clock
never stops on the interest payments needed to retire previous bond obligations
and service ever higher levels of future obligations. And just wait when interest
rates rise to reflect real market risks! Remember all those projections of imaginary
surpluses? This is not a partisan issue between party factions. It is a systemic
quandary, created by design.
box that the world economy has been placed into requires a repudiation of this
sham cycle founded upon the viscous and unforgiving disposition of compound
interest. The consequences for disciplining rogue countries who dare stray from
the dictates of the IMF, World Bank and the WTO, are visible with each explosion
of every JDAM bomb. Even in victory, the pyrrhic character of temporary relief,
offers but a fleeting reprieve to acquire that villa in Tuscany.
Clark essay is significant and should not be ignored. Currency speculation and
exchange rate conversions, carry with them such huge transactional volume. Entire
economies rise or fall on pegging their relative value, against the surreal
and contrived evaluations for the US Dollar. Oil paid in the EURO is more of
a serious threat to the reign of the dollar than all those mythical WMD that
Saddam will use. Nevertheless, don’t be naive and conclude that it is in our
own personal best interest to protect the reserve currency status of the dollar.
Quite to the contrary, as more Western Hemisphere countries adopt the US Dollar,
the adverse impact upon our own net worth, is magnified.
inevitable fall of the US Dollar is unavoidable, when the charade can no longer
be cloaked with smoke and mirrors or tolerable foreign adventures. At that point
the calls for a single world currency, administered through a solitary clearing
house and autarchic central bank, will be offered as the answer for economic
stability. Thus, the ultimate transfer and expropriation of individual wealth
will be achieved. The world runs on money, not oil. Those who control it and
require legal tender laws, rule the economic and political order. You will come
to learn this lesson, no matter what currency you use . . .
- April 4, 2003