Below is Antiwar.com founder Justin Raimundo's lucid take on recent political and economic developments in the United States. However, if you are in not in the mood to read his lengthy commentary, at the very least watch the excellent interview Ralph Nader recently gave RT (link to video posted below). The second and third Op-Ed pieces featured below are relatively speaking unbiased perspectives on the gold standard and the US dollar. Interestingly enough, they appeared in the Wall Street Journal not too long ago. The information found within the materials I have provided here basically underscores the urgent need for this nation's leadership to drastically reassess their political and economic formulations.
The Biggest Threat to America
Ralph Nader: Corporate socialism runs US government: http://www.youtube.com/watch?v=zdAtGV6hVCk
'Fed's $500 billion boost to feed mega-banks':http://www.youtube.com/watch?v=Eiaz7ZZEy8Y
Whenever you go to an airport, you hear an announcement about the “terror alert”: it’s yellow, it’s red, it’s orange, whatever. The color code is linked to “intelligence” flowing into Washington at the moment, whatever alleged plot is being hatched by our enemies abroad. But the reality is that America’s deadliest enemies aren’t hunkered down in some cave in Afghanistan: they’re right here in our midst, in the Imperial capital itself, Washington, D. C. Because the biggest threat to our national security isn’t military – it’s economic. Our economic terror alert, if such a thing existed, ought to be at the brightest red, because what we’re facing is the biggest threat to our national security ever: I’m talking about the spiraling national debt, and the ongoing destruction of the dollar.
People realize this, albeit in an indirect way: that’s what all this “tea party” noise is about, although the tea partiers themselves, for the most part, don’t realize the enormity and immediacy of the threat. Somewhere in the background, just below the level of consciousness, a time-bomb is tick-ticking away. Some people hear it, in various degrees of loudness, while others are deaf to this ominous sound. The day after the election, the Federal Reserve made a little-noticed announcement that it’s printing up another $1 trillion. Go here for a fuller explanation of how and why it happened, and what it means. Suffice to say here that what goes up must come down: a bubble, inflated, must eventually pop. That’s simple enough, but let’s take it one step further: the hubris that inspires the Fed to print up more play money, which will drive up inflation, increase the cost of imports (i.e. everything), and make goods more expensive for average Americans is in the same league as that which inspired George W. Bush and his minions to declare a “war on terrorism,” invade the Middle East, and imagine they would prevail.
The irony is that the former will be the undoing of the latter: the destruction of the dollar means the implosion of the American empire, and the relegation of the US to what used to be called – in more politically incorrect times – a “Third World” nation. The economic crisis is the biggest single threat to our national security: this is something that both the US State Department and Osama bin Laden agree on. A few years after the Evil One chortled that America is bankrupting itself going abroad in search of monsters to destroy, Lehman Brothers fell and took AIG, and a good chunk of the US economy, along with it. Gen. Douglas MacArthur was the Gen. Petraeus of his time, champing at the bit to have an unfettered go at the enemy, but Obama is no Truman, and lacks the strength to rein in the pushy self-promoting commander. Yet MacArthur saw, back then, what his modern day successor is no doubt blind to, and I quote:
"Talk of imminent threat to our national security through the application of external force is pure nonsense…. Indeed, it is a part of the general pattern of misguided policy that our country is now geared to an arms economy which was bred in an artificially induced psychosis of war hysteria and nurtured upon an incessant propaganda of fear. While such an economy may produce a sense of seeming prosperity for the moment, it rests on an illusionary foundation of complete unreliability and renders among our political leaders almost a greater fear of peace than is their fear of war.”
Let us turn to Garet Garrett, the prophetic voice of the Old Right – a prophet without honor in his own time and country. Yet his astonishingly prescient words ring down through the years and haunt our waking dreams:
"The bald interpretation of General MacArthur’s words is this. War becomes an instrument of domestic policy. Among the control mechanisms on the government’s panel board now is a dial marked War. It may be set to increase or decrease the tempo of military expenditures, as the planners decide that what the economy needs is a little more inflation or a little less – but of course never any deflation. And whereas it was foreseen that when Executive Government is resolved to control the economy it will come to have a vested interest in the power of inflation, so now we may perceive that it will come also to have a kind of proprietary interest in the institution of perpetual war."
That was written sometime in 1950 – see, I told you Garret’s prescience would astound you. Think of war as just another “stimulus package,” one that stimulates the military-industrial complex and keeps the production lines humming – for the moment. Wars are financed by inflation, by the printing of Federal Reserve Notes (otherwise known as “money”), as is the whole panoply of government programs and “entitlements” designed to keep the people dumb and happy. This was a “progressive” “reform” that was pushed through at the turn of the last century, and supposedly immunized us from the depredations of the business cycle. Yes, they really believe that, even as the cycle returns with a vengeance. Now here come the tea partiers, asking: but what about the growing government debt? “Progressives” answer: there is no debt, because, as Franklin Delano Roosevelt — their family god — once put it: “We owe it to ourselves!”
That was no kind of answer, at least not one overseas investors in our debt would today find reassuring, but that doesn’t bother our Keynesian geniuses, the economic planners who think their edicts are weightier than the immutable laws of economics. Given the course we have been on and are continuing on – in which the government printing presses are seen as the path to recovery – we are headed for hyper-inflation and economic catastrophe. There is, however, a growing awareness of the cause of the crisis – the Federal Reserve system – and a burgeoning movement to rein it in, and eventually abolish it. That would be like driving a stake through the very heart of the War God – and the whole pantheon of self-imagined deities who populate the Mount Olympus of official Washington.
This election season, the tea partiers stormed the halls of Congress and took several key positions, but were outflanked by the Federal Reserve, which announced that very day that we’d be spending another trillion – and it was done without congressional approval. Since the Fed is a “private” agency, it doesn’t have to answer to Congress — even though it was created by Congress which passed the Federal Reserve Act in 1913.
Opposed by many at the time, the Fed was nonetheless rammed through by the Eastern financial establishment, which clearly benefited from creation of a government-sponsored central bank. It passed with the full support of President Woodrow Wilson – who would need it in order to launch his war to “make the world safe for democracy” a mere four years later. While the Fed is the central issue here, and the tea partiers who have recently enjoyed such electoral success seem amenable to taking up this fight, what they don’t yet get is that all government spending – including military spending – must be put on the table. The “big government conservatives,” such as Bill Kristol, fully understand that this is where the logic of the tea partiers is leading the movement – and they’re determined to head them off at the pass by scaring them into silence.
The tea partiers, however, don’t seem like the types who are easily scared, and it seems to me they are likely to react by going where they are told only angels fear to tread. Well, no tea partier is an angel, but perhaps a good many of them are contrarians who will dare to go against the “conventional wisdom” in Washington, and the so-called conservative movement, and begin to ask some basic questions. Starting with: why are we spending more on our military than the defense expenditures of all other nations on earth combined? Why is this untouchable? Because if they don’t ask these kinds of questions, their entire effort is futile and their movement is doomed to fail.
The politicians who lead them, or who have jumped on the tea party bandwagon without being rudely pushed off, have a political and moral responsibility to … well, lead. And leading, in this context, means raising the “defense” issue, and questioning why a bankrupt nation such as ours thinks it can afford an empire. Ron Paul makes this point at every opportunity, and now that his son is in the Senate, one hopes he’ll raise the issue, too. Progressives are rightly challenging the tea partiers and demanding to know: okay, now that you’re in power, what specifically are you going to cut? On election night, as the Republican wave rolled over the country, Chris Matthews asked one newly-elected tea party-type Republican, Marsha Blackburn of Tennessee, if cuts in the defense budget are part of her vision. “No,” she said, “you don’t cut defense and you don’t cut Homeland Security.”
So we must maintain our empire of bases, all across the face of Europe, Asia, and the rest of the globe – as we sink into the double-quagmire of bankruptcy and unwinnable overseas wars. Marsha Blackburn is a problem for the tea partiers, such as Ron and Rand Paul, who imagine they are going to lead a movement to return our republic to the path of fiscal solvency and economic sanity. How they intend to overcome this obstacle is the key to their success – or ultimate failure. I was a little hard on Rand Paul when he showed signs of caving in to pressure on foreign policy-related issues in general, but now that he’s elected he may feel safer in taking a bolder stance. Be that as it may, it’s not just a matter of taking up a side issue, as a favor to libertarians: it is quite simply a fact of reality that the debt cannot be controlled as long as uncontrolled military spending is on autopilot.
Rep. Blackburn babbles on about how “Homeland Security” cannot be cut – when we inspect a minuscule portion of the tremendous flow of cargo that comes into this country each and every day. What kind of homeland security is that? Meanwhile, we’re fighting two unwinnable wars, and inching into Pakistan – and, back in the homeland, there is neither security nor prosperity. The crisis of the state-capitalist system is ripened to the point of bursting, and the objective conditions for a popular revolt are similarly overripe. What this means, in operational terms, is that the crisis is reduced to one of leadership. As Garrett put it at the very end of his scintillatingly prophetic pamphlet, Rise of Empire:
“When the economy has for a long time been moving by jet propulsion, the higher the faster, on the fuel of perpetual war and planned inflation, a time comes when you have to choose whether to go on and on and dissolve in the stratosphere, or decelerate. But deceleration will cause a terrific shock. Who will say, ‘Now!’ Who is willing to face the grim and dangerous realities of deflation and depression? “When Moses had brought his people near to the Promised Land he sent out scouts to explore it. They returned with rapturous words for its beauties and its fruits, whereupon the people were shrill with joy, until the scouts said: ‘The only thing is, this land is inhabited by very fierce men." Moses said: "Come. Let us fall upon them and take the land. It is ours from the Lord.’ “At that the people turned bitterly on Moses, and said: ‘What a prophet you have turned out to be! So the land is ours if we can take it? We needed no prophet to tell us that.’” “No doubt the people know they can have their Republic back if they want it enough to fight for it and to pay the price. The only point is that no leader has yet appeared with the courage to make them choose.”
Gold vs. the Fed: The Record Is Clear
When it meets next week, the Federal Open Market Committee (FOMC) is widely expected to signal its desire to increase the rate of inflation by providing additional monetary stimulus. This policy is based on a false—and dangerous—premise: that manipulating the dollar's buying power will lead to higher employment and economic growth. But the experience of the past 40 years points to the opposite conclusion: that guaranteeing a stable value for the dollar by restoring dollar-gold convertibility would be the surest way for the Federal Reserve to achieve its dual mandate of maximum employment and price stability.
From 1947 through 1967, the year before the U.S. began to weasel out of its commitment to dollar-gold convertibility, unemployment averaged only 4.7% and never rose above 7%. Real growth averaged 4% a year. Low unemployment and high growth coincided with low inflation. During the 21 years ending in 1967, consumer-price inflation averaged just 1.9% a year. Interest rates, too, were low and stable—the yield on triple-A corporate bonds averaged less than 4% and never rose above 6%.
What's happened since 1971, when President Nixon formally broke the link between the dollar and gold? Higher average unemployment, slower growth, greater instability and a decline in the economy's resilience. For the period 1971 through 2009, unemployment averaged 6.2%, a full 1.5 percentage points above the 1947-67 average, and real growth rates averaged less than 3%. We have since experienced the three worst recessions since the end of World War II, with the unemployment rate averaging 8.5% in 1975, 9.7% in 1982, and above 9.5% for the past 14 months. During these 39 years in which the Fed was free to manipulate the value of the dollar, the consumer-price index rose, on average, 4.4% a year. That means that a dollar today buys only about one-sixth of the consumer goods it purchased in 1971.
Interest rates, too, have been high and highly volatile, with the yield on triple-A corporate bonds averaging more than 8% and, until 2003, never falling below 6%. High and highly volatile interest rates are symptomatic of the monetary uncertainty that has reduced the economy's ability to recover from external shocks and led directly to one financial crisis after another. During these four decades of discretionary monetary policies, the world suffered no fewer than 10 major financial crises, beginning with the oil crisis of 1973 and culminating in the financial crisis of 2008-09, and now the sovereign debt crisis and potential currency war of 2010. There were no world-wide financial crises of similar magnitude between 1947 and 1971.
At the center of each of these crises were gyrating currency values—either on foreign-exchange markets or in terms of real goods and services. As the dollar's value gyrates it produces windfall profits and losses, feeding speculation and poor judgment. The housing bubble was fed in part by 40 years of experience with a dollar that lost purchasing power every year. Today, individual investors are piling into gold and other commodities in hopes of finding a safe haven from the FOMC's intention to decrease the buying power of the dollar and reduce the value of our savings.
And what of the seductive promise that a floating dollar would make American labor more competitive and improve the nation's trade balance? In 1967, one dollar could buy the equivalent of approximately 2.4 euros (based on the pre-euro German mark) and 362 yen. Over the succeeding 42 years, the dollar has been devalued by 72% against the euro and 75% against the yen. Yet net exports have fallen from a modest surplus in 1967 to a $390 billion deficit equivalent to 2.7% of GDP today.
The members of the FOMC, like their predecessors, are trying to do the best they can, but they are not really sure what it is that needs to be done. They have kept the federal-funds rate near zero for almost two years, but small businesses find it difficult to get loans and savers suffer from the lost income brought by artificially low interest rates. Now they're about to advocate higher inflation—i.e., less price stability—in hopes of spurring economic growth. Economists and pundits may disagree on why the gold standard delivered such superior results compared to the recurrent crises, instability and overall inferior economic performance delivered by the current system. But the data are clear: A gold-based system delivers higher employment and more price stability. The time has come to begin the serious work of building a 21st-century gold standard for the benefit of American workers, investors and businesses.
Mr. Kadlec is a member of the Economic Advisory Board of the American Principles Project, an author and founder of the Community of Liberty.Source: http://online.wsj.com/article/SB20001424052748703440004575548451304697496.html
The World's Dollar Drug
For all the talk about the problems of Greece and their implications for the euro zone, there is another currency that presents equally profound problems: the U.S. dollar. The dollar is, as everyone knows, the world's reserve currency, and it widely seen as a boon and an anchor for the emerging global economic system. It is also the only thing standing between the United States and its own moment of reckoning, and that is not a good thing. The evolution of the dollar as the world's reserve currency tracked the emergence of the U.S. as a dominant power.
The Bretton Woods agreement of 1944 designated the dollar as the currency of last resort because the U.S. accounted for a significant percentage of world manufacturing and held much of the world's gold in Fort Knox and other depositories. The British at first demurred but were forced to accept the primacy of the greenback in 1946 when faced with a choice between bowing to the dollar or defaulting on their loans because the Americans would not lend to them otherwise.
Bretton Woods obligated participating countries to determine their exchange rates and the value of their currencies in relation to the dollar, with gold as the underpinning. Then, in 1971, President Richard Nixon ushered in the era of fiat currency when he announced that the U.S. government would no longer allow foreign nations to redeem their U.S. dollars for gold. The move came in response to rising inflation in the U.S. It also came in response to competitive pressures from Germany and Japan, which were beginning to undermine American manufacturing—a decline that has continued unabated since and can only be laid at China's door by a willful forgetting of the legacy of a host of lower-cost competitors over the past 40 years. By the early 1970s, the U.S. was importing heavily from new manufacturing centers outside America (though not yet running trade deficits) and being forced to redeem ever larger amounts of dollars for rapidly dwindling reserves of gold.
After 1971, currencies began to float against one another. This fiat system is what exists today, with notable outliers such as China, which continues to peg the value of its currency to the dollar. It does so primarily because when Beijing began to liberalize its economy in the early 1980s, the dollar was the most important avenue of access to the U.S., the world's most vital and dynamic economy.
Over the past decade, the relative position of the U.S. has shifted. It is no longer a creditor to the world but rather a large debtor. It is a net importer of manufactured goods—thought its manufacturing sector remains quite large even while employing fewer workers. Its national economy is the world's largest but is surpassed by the multinational euro-zone. And China's economy, while still perhaps not much more than a third the size of the U.S., is growing three to four times as rapidly and accumulating dollars at a torrid clip.
Yet the dollar remains the linchpin of the global system. The financial crisis brought global grumblings about the U.S. currency, about the toxicity of the U.S. financial system, and about the need and desire for an alternate global currency. The Chinese were vocal in their desire to find a new anchor, and the Europeans echoed the sentiment along with others. But words are easy. Even the Chinese, who have made moves toward pegging the yuan against a basket of currencies, still find that having tethered their system to the dollar they can't simply walk away because they would rather things were different.
The dollar's dominance has clear short-term benefits for the U.S. Unlike Greece or just about any other country, when the American federal government wants to take on additional debt it has the advantage of a world that must buy dollars. Because much of global trade is conducted in dollars, especially Chinese trade, governments and institutions throughout the world have little choice but to invest in U.S. assets. The U.S. government also has the ability to print that global reserve currency when dire straits demand it. That gives the U.S. considerable latitude to spend its way out of a crisis without confronting real structural challenges.
Greece is being forced to adopt more austere government fiscal policies, as are Latvia and many other smaller countries. Having to turn to global markets with cap in hand is a bitter pill but could force reforms that will eventually leave those economies in stellar shape. The U.S. has been able to forestall deep reforms because it has the dollar. But while the presence of the dollar keeps money flowing in and the system well-oiled, it no longer reflects the world's economic pecking order. For all the talk of currency manipulation by Beijing, it is equally true that China's peg to the dollar is currently propping up an otherwise shaky American economy. The Chinese have become the ultimate offshore bank for American capital, and there is no evidence they deploy it to less American benefit than Americans themselves do. The Chinese government invests conservatively in U.S. bonds, and spends heavily on a domestic economy that produces goods for American consumers.
India continues to use English as a lingua franca, more than 60 years after the British departed, not because Britain remains a world empire but because India needs a common tongue and English was already in place. The dollar today serves the same purpose for the world. The ubiquity of the dollar allows Americans to believe that their country will automatically retain its rightful place as global economic leader. That's a dangerous dream, an economic opiate from which we would do well to wean ourselves.Source: http://online.wsj.com/article/SB10001424052748704342604575222701291563876.html
Additional perspective on the mighty Dollar:
Re-denominating Iraqi oil in U. S. dollars, instead of the euro
Re-denominating Iraqi oil in U. S. dollars, instead of the euro
What prompted the U.S. attack on Iraq, a country under sanctions for 12 years (1991-2003), struggling to obtain clean water and basic medicines? A little discussed factor responsible for the invasion was the desire to preserve "dollar imperialism" as this hegemony began to be challenged by the euro. After World War II, most of Europe and Japan lay economically prostrate, their industries in shambles and production, in general, at a minimum level. The U.S. was the only major power to escape the destruction of war, its industries thriving with a high level of productivity. In addition, prior to and during WWII, due to extreme political and economic upheaval, a considerable amount of gold from European countries was transferred to the U.S. Thus, after WWII the U.S. had accumulated 80 percent of the world's gold and 40 percent of the world's production. At the founding of the World Bank (WB) and the International Monetary Fund (IMF) in 1944-45, U.S. predominance was absolute. A fixed exchange currency was established based on gold, the gold-dollar standard, wherein the value of the dollar was pegged to the price of gold-U.S. $35 per ounce of gold. Because gold was combined with U.S. bank notes, the dollar note and gold became equivalent, which then became the international reserve currency.
Initially, the U.S. had $30 billion in gold reserves. But the United States spent more than $500 billion on the Vietnam War alone, from 1967-1972. During these years, the U.S. had over 110 military bases across the globe, each costing hundreds of millions of dollars a year. These expenses were paid in paper dollars and the total number given out far exceeded the gold reserve of the U.S treasury. By then (1971-72), the U.S. Treasury was running out of gold and had only $10 billion in gold left. On August 17, 1971, Nixon suspended the U.S. dollar conversion into gold. Thus, the dollar was "floated" in the international monetary market. Also in the early 1970s, U.S. oil production peaked and its energy resources began to deplete. Its own oil production could not keep pace with growing home consumption. Since then, U.S. demand for oil continually increased, and by 2002-2003 the U.S. imported approximately 60 percent of its oil-OPEC (primarily Saudi Arabia) being the main exporter. The U.S. sought to protect its dollar strength and hegemony by ensuring that Saudi Arabia price its oil only in dollars. To achieve this, the U.S. made a deal, some say a secret one, that it would protect the Saudi regime in exchange for their selling oil only in dollars.
Throughout the late 1950s and 1960s the Arab world was in ferment over an emerging Nasser brand of Arab nationalism and the Saudi monarchy began to fear for its own stability. In Iraq, the revolutionary officers corps had taken power with a socialist program. In Libya, military officers with an Islamic socialist ideology took power in 1969 and closed the U.S. Wheelus Air base; in 1971, Libya nationalized the holdings of British Petroleum. There were proposals for uniting several Arab states-Syria, Egypt, and Libya. During 1963-1967, a civil war developed in Yemen between Republicans (anti-monarchy) and Royalist forces along almost the entire southern border of Saudi Arabia. Egyptian forces entered Yemen in support of republican forces, while the Saudis supported the royalist forces to shield its own monarchy. Eventually, the Saudi government-a medieval, Islamic fundamentalist, dynastic monarchy with absolute power-survived the nationalistic upheavals. Saudi Arabia, the largest oil producer with the largest known oil reserves, is the leader of OPEC. It is the only member of the OPEC cartel that does not have an allotted production quota. It is the "swing producer," i.e., it can increase or decrease oil production to bring oil draught or glut in the world market. This enables it more or less to determine prices.
Oil can be bought from OPEC only if you have dollars. Non-oil producing countries, such as most underdeveloped countries and Japan, first have to sell their goods to earn dollars with which they can purchase oil. If they cannot earn enough dollars, then they have to borrow dollars from the WB/IMF, which have to be paid back, with interest, in dollars. This creates a great demand for dollars outside the U.S. In contrast, the U.S. only has to print dollar bills in exchange for goods. Even for its own oil imports, the U.S. can print dollar bills without exporting or selling its goods. For instance, in 2003 the current U.S. account deficit and external debt has been running at more than $500 billion. Put in simple terms, the U.S. will receive $500 billion more in goods and services from other countries than it will provide them. The imported goods are paid by printing dollar bills, i.e., "fiat" dollars.
In November 2000, Iraq began selling its oil in euros. Iraq's oil for food account at the UN was also in euros and Iraq later converted its $10 billion reserve fund at the UN to euros. Several other oil producing countries have also agreed to sell oil in euros-Iran, Libya, Venezuela, Russia, Indonesia, and Malaysia (soon to join this group). In July 2003, China announced that it would switch part of its dollar reserves into the world's emerging "reserve currency" (the euro). On January 1, 1999, when 11 European countries formed a monetary union around this currency, Britain and Norway, the major oil producers, were absent. As the U.S. economy began to slow down during mid-2000, Western stock markets began to yield lower dividends. Investors from Gulf Cooperation Council nations lost over $800 million in the stock plunge. As investors sold U.S. assets and reinvested in Europe, which seemed to be better shielded from a recession, the euro began to gain ground against the dollar .
After September 11, 2001, Islamic financiers began to repatriate their dollar investments-amounting to billions of dollars-to Arab banks, as they were worried about the possible seizure of their assets under the USA PATRIOT Act. Also, they feared their accounts might be frozen on the suspicion that such accounts fund Islamic terrorists. Iranian sources stated that their banking colleagues felt particularly hassled as Washington heated up its war of words and threats of military intervention. This encouraged Tehran to abandon the dollar payment for oil sales and switch to the euro. Iran also moved the majority of its reserve fund to the euro. (Iran is the latest target of the U.S., which has interfered by stirring up opposition forces, and making covert threats.)
OPEC member countries and the euro-zone have strong trade links, with more than 45 percent of total merchandize imports of OPEC member countries coming from the countries of the euro-zone, while OPEC members are the main suppliers of oil and crude oil products to Europe. The EU has a bigger share of global trade than the U.S. and, while the U.S. has a huge current account deficit, the EU has a more balanced external accounts position. The EU plans to enlarge in May 2004 with ten new members. It will have a population of 450 million; it will have an oil consuming-purchasing population 33 percent larger than the U.S., and over half of OPEC crude oil will be sold to the EU as of mid-2004. In order to reduce currency risks, Europeans will pressure OPEC to trade oil in euros. Countries such as Algeria, Iran, Iraq, and Russia-which export oil and natural gas to European countries and in turn import goods and services from them-will have an interest in reducing their currency risk and hence, pricing oil and gas in euros. Thus momentum is building toward at least the dual use of euro and dollar pricing.
The unprovoked "shock and awe" attack on Iraq was to serve several economic purposes: (1) Safeguard the U.S. economy by re-denominating Iraqi oil in U.S. dollars, instead of the euro, to try to lock the world back into dollar oil trading so the U.S. would remain the dominant world power-militarily and economically. (2) Send a clear message to other oil producers as to what will happen to them if they abandon the dollar matrix. (3) Place the second largest oil reserve under direct U.S. control. (4) Create a subject state where the U.S. can maintain a huge force to dominate the Middle East and its oil. (5) Create a severe setback to the European Union and its euro, the only trading block and currency strong enough to attack U.S. dominance of the world through trade. (6) Free its forces (ultimately) so that it can begin operations against those countries that are trying to disengage themselves from U.S. dollar imperialism-such as Venezuela, where the U.S. has supported the attempted overthrow of a democratic government by a junta more friendly to U. S. business/oil interests.
The U.S. also wants to create a new oil cartel in the Middle East and Africa to replace OPEC. To this end the U.S. has been pressuring Nigeria to withdraw from OPEC and its strict production quotas by dangling the prospects of generous U.S. aid. Instead the U.S. seeks to promote a "U.S.-Nigeria Alignment," which would place Nigeria as the primary oil exporter to the U.S. Another move by the U.S. is to promote oil production in other African countries-Algeria, Libya, Egypt, and Angola, from where the U.S. imports a significant amount of oil-so that the oil control of OPEC is loosened, if not broken. Furthermore, the U.S. is pressuring non-OPEC producers to flood the oil market and retain denomination in dollars in an effort to weaken OPEC's market control and challenge the leadership of any country switching oil denomination from the dollar to the euro.
To break up OPEC and control the world's oil supply, it is also helpful to control Middle East and central Asiatic oil producing countries through which oil pipelines traverse. The first attack and occupation was of Afghanistan, October 2001, in itself a gas producing country, but primarily a country through which Central Asia and the Caspian Sea oil and gas will be shipped (piped) to energy-starved Pakistan and India. Afghanistan also provided an alternative to previously existing Russian pipelines. Simultaneously, the U.S. acquired military bases-19 of them-in the Central Asian countries of Uzbekistan, Tajikistan, Kyrgyzstan, and Turkmenistan in the Caspian Basin, all of which are potential oil producers. After the invasion and occupation of Afghanistan and Iraq, the U.S. controlled the natural resources of these two countries and, once again, Iraq's oil began to be traded in U.S. dollars. The UN's oil for food production program was scrapped and the U.S. Iaunched its Iraqi Assistance Fund in U.S. dollars. In December 2003, the U.S. (Pentagon) announced that it had barred French, German, and Russian oil and other companies from bidding on Iraq's reconstruction.
How would a shift to the euro affect underdeveloped countries, most of which are either non-oil producing or do not produce enough for their home consumption and development? These countries have to import oil. One of the advantages that may accrue to them is that they are likely to earn more euros than dollars since much of their trade is with the European countries. On the other hand, a shift to euro will pose a similar dilemma for them as dollars. They will have to pay for oil in euros, have enough euros deposited-invested in EU treasuries, and borrow euros if they do not have enough for their oil purchases. If, as is projected, the dollar and euro are in a price band (that is, prices will stay within an agreed upon range), they may not have much of a bargaining position.
Oil for euros would be far more helpful if oil-importing underdeveloped countries could develop some form of barter arrangement for their goods to obtain oil from OPEC. Venezuela (Chavez) has presented a successful working model of this. Following Venezuela's lead, several underdeveloped countries began bartering their undervalued commodities directly with each other in computerized swaps and counter trade deals, and commodities are now traded among these countries in exchange for Venezuela's oil. President Chavez has linked 13 such barter deals on its oil; e.g., with Cuba in exchange for Cuban doctors and paramedics who are setting up clinics in shanty towns and rural areas. Such arrangements help underdeveloped countries save their hard currencies, lessening indebtedness to international bankers, the World Bank, and IMF, so that money thus saved can be used for internal development.