PAPER DOLLAR EMPIRE - Why War for Oil...a brief history
For a country, or an empire, to go to war, Either to gain more wealth Or to defend itself. The benefits must outweigh the costs.
In understanding ongoing things today A little history goes a long way…
In 1945 was born with Bretton Woods the ‘American Empire’
The world had adopted a new reserve currency: the United States dollar.
It would be the backbone of international exchange.
And why not? The American economy was supremely robust
And two successive wars had taken their toll on Europe
Who was busy rebuilding the glory it had lost.
The idea was nothing really new, now or then:
To have a gold standard backing the US currency.
In truth the U.S. dollar wasn’t convertible to gold fully,
But foreign governments could ask to convert it on demand.
For quite some time this system worked
Most of those dollars were handed over to foreigners
in exchange for economic goods,
without necessarily the prospect
of buying them back at the same value.
But then Murphy’s spectre reared its mocking head
The US With irresponsible deficit management at home
And a pathological pursuit of war abroad
Against the global communist threat
In an little place called Viet-Nam
The once allies began losing faith in Uncle Sam
When in early 70’s foreign nations,
Notably Britain and France, demanded,
For their US dollars due payment in gold
On August 15,1971 The U.S. Government defaulted
This was termed the ‘Nixon Shock’ (or so I was told)
The free market of supply and demand
Would set the value of the currency.
Thus So far The US had extracted
An enormous amount of economic goods
From the rest of the world,
With no intention or more to the point
The ability to return those goods,
The world could not do anything about it
The world was powerless to respond,
The world was in a real sense being taxed!
Essentially, to the cynical well-informed outsider,
The U.S. had officially declared itself an Empire.
The Free-floating dollar soon precariously sank
While it was getting real expensive to fill up a tank
From that point on, to sustain this Paper Empire
And to continue to tax the rest of the world,
The United States had to force the world
To continue to accept ever-depreciating dollars
It kept printing in exchange for economic goods
And to have the world hold more and more
Of those ever-depreciating dollars.
It had to give the world
An ECONOMIC REASON to hold dollars,
And that reason was OIL.
In 1972-73 an iron-clad arrangement
Was forged with the House of Saud
Unwavering American support of the Saudi regime
In exchange for accepting ONLY U.S. dollars for its oil.
The rest of OPEC was to follow suit and also accept only US dollars.
Because the world had to buy oil from the Arab oil countries,
It had the reason to hold dollars as payment for oil.
Because the world needed ever increasing quantities of oil
At ever increasing oil prices,
The world’s demand for dollars could only increase.
Even though dollars could no longer be exchanged for gold,
They were now in effect exchangeable for oil.
The gold had now become black
The currency was now backed with this system
And -if warranted- with US military muscle.
The benefit of this system is for America indeed enormous.
For almost every country in the world
Needs to stockpile dollars to purchase oil.
Since Everyone accepts dollars because dollars can buy oil.
The world’s exports compete to capture dollars
To service their dollar-denominated debts
And to stockpile reserves of more dollars
To sustain the value of their own currencies.
America has the luxury of maintaining a trade deficit
Because its greatest export is in effect the dollar,
Which it can print at will.
This is called 'dollar hegemony.'
Simply put: the dollar rules!
The US produces dollars
While the rest of the world
Produces things that dollars can buy.
These dollars then make their way back home
Through New-York and London banks,
Recycled through the ‘petroleum exchanges’
Where Wealthy nation become eager to loan money
to US to finance its deficit through bonds of the treasury.
Collecting interest on the dollar
And leverage on US policy by owning its debt.
This system is called ‘petrodollar recycling.’
At this point in time
The dollar accounts for 70% of the world transactions
It has become the Economic Lifeblood of the globe.
Those who do not have the sign of the dollar
Cannot buy oil.
But history tells us there is always a breaking point
Even America couldn’t sustain this kind of spending indefinitely
As the US prints more and more dollars,
It loses value vis-à-vis the euro,
The new European Union currency.
Since EU nations are now the major purchasers of oil of the world
The pricing in euro may become tempting for the some producing countries
– that may want to profit as well as hit America where it hurts.
In the fall of 2000, There was a man
Who, instead of US dollars, did demand
Euros for his oil. His name:
Saddam Hussein.
This was purely a political decision.
‘No trading in the currency of the enemy state’ as he put it.
But at the end of the day
It became apparent that he meant business.
It could be said that some people obviously thought
That this practice if left unchecked might gain momentum
In the international community and challenge
The status quo of the mighty dollar
As reserve currency for the world
The now one true unshakable god
Of the western economy
Precipitating the demise of the dollar
– to put it another way:
The oil-for-paper empire was under attack
And the New-World Order responded.
2003, Operation Iraqi Freedom was go!
Indeed, two months after the United States invaded Iraq,
The Iraqi Euro oil accounts were switched back to dollars,
And oil was sold once again only for U.S. dollars.
No longer could the world buy oil from Iraq with Euro.
Iraq was now sovereign, and freedom would reign!
The Freedom to purchase oil in dollars, not euros.
So the war in Iraq was maybe not so much about
Iraq’s nuclear capabilities,
Or Iraq’s program of weapons of mass destruction
Or about defending human rights,
Or about spreading democracy,
Or even about seizing oil fields;
As it was about defending the dollar.
Not keeping the American public safe
But the actual US-lead-world economy safe.
The New-World Order had been defended.
An example had been set:
Anyone demanding payment in currencies
Other than U.S. Dollars
Could be likewise punished.
There was then Saddam
And now there is Iran.
Since the spring of 2003, Iran has required payments
In the euro currency for its exports both European and Asian.
Although the oil pricing for trades are still denominated in the dollar
Plans are being made by Iran to start a bourse
-a commodities exchange – for oil in Euros (of course) .
If this is allowed to happen then
The Dollar will be openly challenged
As a reserve currency on the global market
Some alarmists have labelled this a threat
To the US ‘more devastating than any atomic bomb! ’
A seemingly senseless war with Iran
With a nuclear-terror agenda
Would be more a of a pre-emptive strike
-A necessary evil for the right wing,
A despotic act seen by the left wing-
Against a more democratic world economy
An economy that is, in all cases, inevitable historically.
Let the reader be reminded that oil is a finite resource.
And the more dollars printed the more it depreciates
And that a deficit is seldom a positive thing.
In the Real world however there would be limited devastation.
Isn’t the global economy in too deep in this system already?
After all 70% of all trade reserves are in US dollars.
Any sudden shift in the value of the dollar would bring disaster for everyone
The modern world interlinked economy is such a fragile thing
A sudden blood transfusion might kill the patient.
Added to this that the system of using one currency
is mighty convenient for everyone in the oil industry
And like my father so often told me
‘Economy makes politics. Not the other way’
So nothing will happen overnight
Because nothing can.
But As history taught us
Time and time again
And as we choose to ignore facts
You cannot stop the march of events.
History stops for no one.
As one’s times come to an end
To let Another one’s begin
Each tragic play has to come to its final act
For a new one to be staged.
But to this author the real tragedy
Is the leaders inability to cope
To accept changes gracefully
To relinquish power
With changing tides of time
To cling to it like a dog to its bone
Blind ambition marred by lack of vision
That leads to Limited options.
That ultimately demand human sacrifice
In the end there is a price to pay
And the ones to pay are the people, WE, always
Which ironically have the power to affect changes
But almost always choose never to exercise it.
At present it could be said even surrendered it,
Out of ignorance - borne out of careful misinformation-
to gain a superficial sense of security
or worse, laziness, the results of comfort’s numbing addiction.
Cozing up to a beer watching the next war unfolding on TV!
For a country, or an empire, to go to war,
Either to gain more wealth
Or to defend itself.
The benefits must outweigh the costs.
So what will it be:
Monetary compromise
Or continued petrodollar warfare?
A question for the wise:
How much gold, oil or paper
Is worth for lives to be lost
And the living to suffer?
Or do YOU even care?
