$ Collapse or WW3


$ Collapse or WW3

 
As I sit here, fingers poised on the keyboard, I find my mind clear, but my heart in turmoil. I know exactly what I want to say, but am having difficulty saying it. For how am I to tell my dear American friends, some in the military and one a retired Lieutenant Colonel, that their country will either disintegrate economically and socially, or start World War Three in last ditch effort and vain attempt to prevent the disintegration from happening?

One way is to guide them on the same path that I have taken, which went through history to the present, so that they will come to the same inescapable conclusion as that at which I have inevitably arrived.

The starting year was 1944, the year of my own beginning, one year prior to the end of World War Two, when, during the Bretton Woods Conference in New Hampshire, 44 countries, many of which war-torn and in economic shambles, unanimously established the U.S. Dollar to be the global reserve currency, based firmly on gold at $35 an ounce. In other words, the Dollar, as good and immutable as gold, was set as the international currency to which all other currencies must refer and defer, by which all import-export activities of every country must abide. Even though the entire world was on the gold standard, no gold could be accessed without going through the U.S. Dollar, and since there is only a finite amount of gold in the world, there could only be a finite amount of U.S. Dollars in circulation, which therefore made it in great demand, and gave it immense prestige and power. And since, all countries need the Dollar for international transactions, they purchased and stockpiled it, as well as US treasury bonds and bills, in large volume, making the U.S. the economic overlord and center of the world, and set the U.S. on the road to unprecedented prosperity.

But like everything else, there is a down side. The hitherto unimagined prosperity cultivated in the U.S. a lavish and unsustainable life style rivalled only by royalties bygone, and the Americans themselves began to demand more dollars than there was gold in Fort Knox. Partly due to this, and partly due to the huge drain upon the U.S. treasury by the Vietnamn War, President Nixon took the drastic step, in 1971, to detached the dollar from any physical reserve such as gold or silver, and made it a Fiat Currency, which basically is a floating currency not rooted in any solid commodity, and thus has no intrinsic value. It is based essentially on faith – faith on the country’s prosperity. If this faith is strong, then the dollar would be strong, but if this faith wavers, so would the currency waver, and if it wanes, the currency would then wane; and if the faith collapses, then so would collapse the entire dollar-based economy. 

Also, since the dollar has been “liberated” from the constraints of finite gold, it can be printed in virtually infinite quantities, and the more paper dollars go into circulation, the less each dollar is worth. This quantity is determined solely by the central bank – the Federal Reserve (“the Fed”), which is independent of the government, immune to governmental audits, beyond governmental control and above governmental supervision. In fact, if the government runs a deficit, it would need to seek interest-bearing loans from the Fed for its expenditure. This is done by means of the government issuing Treasury Bonds to the Fed, which basically is an IOU with compound interest attached, the interest rate being dictated by, you guessed it, also the Federal Reserve.

As of this “Nixon Shock” in 1971, the Dollar began to devalue, and inflation began to take hold of America, both exponentially, becoming steeper and steeper with each passing year – to this day when the national debt to the Fed and other sources top $16 trillion, and the price of gold has risen from the $35 per ounce in 1971 to over $1700 per ounce (as outlined in the first blog of this [Economic Collapse Trilogy] titled [The Imminent Dollar Crash and Social Disintegration]).

Enter the Petrodollar. 

It did not escape the attention of Richard Nixon, nor that of his right-hand man Henry Kissinger, the consequent dollar-devaluation and price-inflation. Had they not, the numbers would have been worse, much worse. In attempt to stem this tide, they did place something under the dollar where gold used to be – oil.

About that time, Saudi Arabia, with huge oil reserves, little defense capability and oil-thirsty neighbors far and near, was in a highly vulnerable position. In 1973, Nixon promised King Faisal of the House of Saud that the US would protect his oilfields from any and all threats, be they internal subversives or external intruders, including the then very powerful USSR, in exchange for Saudi Arabia, and by extension OPEC, agreeing to sell their oil in US Dollars only, and to invest their profits in US treasuries, bonds and bills. Accordingly, the countries hitherto abiding by the gold-based dollar now had to invest in and stockpile the oil-based dollar, and continue buying US treasury bills, bonds and securities to ensure that they could continue purchasing OPEC oil. This means that the U.S. profited hugely on the currency market, while gulping its oil intake practically for free. As the world demand for oil grew daily higher, so did the wealth and power of America. Thus, oil became “Black Gold”, and the ‘Petrodollar’ was born.

And, like everything else that is born, it will grow, age, weaken and die. 

But for the moment, bolstered by the almighty Petrodollar, America rose higher and higher in its global economic hegemony second to none, in the world or in history, and this resulted in a steady US economic growth spiral throughout the 80’s and 90’s. Unfortunately, this proved a long flash in the pan, which began to fizzle as of the opening of the new millennium.

Ask yourselves, even as Americans: Just how long do you expect other countries, with their own cultures, currencies, economies and pride, to subjugate themselves to the domination, manipulations, dictates and unfair advantage of another country, however powerful that other country may be, especially when that power was derived at your own expense? How long would you, as the leader of another country, sacrifice your own modest economy to one that is living beyond its means? And how long, with a strong currency of your own, would you keep converting it into the ever weakening Petrodollar, just so that you could buy oil on the open world market?

From the American stand point, the strength of the Petrodollar is the strength of the Dollar. If the Petrodollar loses its global economic supremacy, the U.S. would lose its global political supremacy. If the Petrodollar falls, the U.S. Dollar will fall, and fall hard, and when it does, the U.S. economy will crash, and when the U.S. economy crashes, the U.S. society will disintegrate. So, it is a matter of national survival to maintain the Petrodollar’s status quo in the global market place at whatever cost. 

Quite simply, the withdrawal of any country from using the U.S. Dollar in oil transactions, that is, the use of any currency other than the U.S. Dollar in oil transactions by any country, would not be, has not been, is not being and will not be tolerated by the U.S. And the way of the U.S. to prevent or stop any such departure from the Petrodollar is by force, albeit on some other pretext, in some form of disguise.

The new millennium has been one of immediate conflict with the Petrodollar front and center. 

In 2001, Saddam Hussein spoke of his plan to sell Iraqi oil for Euros instead of Petrodollars. We all know what happened afterwards and is still happening. Suffice it to say that Iraq is ‘back on track’, selling its oil for Petrodollars once again. Subsequent investigation has discovered that George W. Bush and Condoleezza Rice both knew that there was no weapons of mass destruction in Iraq prior to the invasion. Skeptics and conspiracy theorists have speculated that the Iraq war was about seizing and controlling Iraqi oil, and there might be a grain of truth to that, but the real motive was to preserve the Petrodollar in international oil transactions.

Next, Muammar Gaddafi. No doubt, he had an unsavory history, from harboring the Lockerbie Bombers to allowing terrorist training camps on Libyan soil, to trying to buy nuclear weapons from China, India and Pakistan, as well as nerve gas from Thailand, but in spite of over 50 failed assassination attempts against Gaddafi, Libya had been left without major foreign intervention until he uttered his fatal “gold for oil” call to his own and other Muslim countries. And we all know what happened to him afterwards, note-worthy being that the pretext this time was not WMD, and that the Petrodollar was firmly planted back in Lybia.

The third round was much quieter, but just as lethal in terms of character assassination, the pretext this time being personal conduct. In 2011, former head of the International Monetary Fund Dominique Strauss-Kahn suggested supplanting the Dollar with the Euro as oil reserve currency. Within three months, allegations of rape ruined his career and his bid for the French Presidency. The charges were eventually dropped, but the damage was done. 

Round Four is now – Iran. In 2005, Iran sought to create an Iranian Oil Exchange to supplant the Petrodollar, but put it on hold under pressure of sanction, in favor of other ways including gold-for-oil with China, India, Russia and South Korea, as well as in their own currencies. Unlike the first three rounds, this fourth round, backed by the second, third and other major powers, might just be the last straw that breaks the Petrodollar’s back. In any case, the truth is not what it appears to be. This conflicts has little if anything to do Iran’s nuclear ambitions, because Pakistan and North Korea too have nukes, but the U.S. has never threatened them with military action due to their incapability to threaten the Petrodollar.

And it is not the end of the Petrodollar’s woes either. Something much bigger is on the brew. The major powers themselves, including China, Russia, Japan, India, Brazil, Australia, Chile, the United Arab Emirates, Iran and several African countries including South Africa, have signed recent agreements on trading oil in their own currencies as well as gold, eleven agreements in all, some say “eleven nails in the Petrodollar’s coffin”. 

Finally, there is a twelveth. Back to where the Petrodollar began, Saudi Arabia itself has teamed up with China to build a gigantic new oil refinery, scheduled to be fully operational in the Red Sea port city of Yanbu by 2014, something of which the U.S. media have hardly made a mention.

So, what will the U.S. do in reaction to all these? All I can say is that I do not envy the next U.S. president – the next Commander In Chief of the massive American military – whoever he is going to be. “To use it or not use it?” – that will be his first and last question. 

If in the negative, it will be domestic economic collapse and social disintegration – as outlined in blogs 1 and 2 in this [Economic Collapse Trilogy].

And if in the affirmative, it will be World War 3. With the U.S. military expenditure towering over half of the world’s total – $800 billion of about $1.5 trillion – plus those of the U.S. allies, the West might just “win” – in a total war where everyone will lose.

Anthony Marr, Founder and President
Heal Our Planet Earth (HOPE) 
Global Anti-Hunting Coalition (GAHC)
Anthony-Marr@HOPE-CARE.org 
http://www.HOPE-CARE.org
http://www.facebook.com/Anthony.Marr.001
http://www.facebook.com/Global_Anti-Hunting_Coalition
http://www.myspace.com/AnthonyMarr 
http://www.youtube.com/AnthonyMarr
http://www.HomoSapiensSaveYourEarth.blogspot.com
http://www.DearHomoSapiens.blogspot.com
http://www.AnthonyMarr13.wordpress.com

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