Dollar - Devaluation...
Or Doomed?
By Douglas Herman
"The U.S. economy is a confidence trick based on everybody else's perception that the United States is centrally important for the world's security and that its economy is centrally important for the world economy. --Gwynne Dyer
Future Tense: The Coming World Order
Anybody besides me watch, "Oil Storm" a couple weeks ago? A fictional-futuristic documentary, the program's noble purpose may have frightened more than a few motorists in America, comfortably ensconced in their gas-guzzling SUV's. Especially after seeing the price of gasoline rise suddenly, during the program, due to various, semi-believable scenarios and unpredictable factors. Gas rose to an eye-popping $8.29 a gallon ($8.39 for premium). Never mentioned, however, were the huge, trade imbalances or monthly deficits we currently absorb for the sake of imported oil. Or the huge costs we pay to "safeguard" that continuous supply.
Still, I gave the program an A+ for effort, although I channel surfed away from time to time due to my AADD.
The producers tried to show the human side to any disruption in the supply of foreign oil, people dying or going bankrupt or losing their homes and jobs. "Oil Storm" dared to show what I call the Day After Tomorrow syndrome: where bad things happen to shortsighted people. For example, that China, flush with Yankee dollars, would--predictably--outbid us (with out own money) one day for imported oil.
I would have preferred the program use other examples of powerful, film imagry. For example, show an endless line of shiny SUVs, with absurdly low prices painted on their windshields, parked at a used car lot. After the first OPEC oil embargo, I recall, gas guzzling muscle cars went cheaply while high mileage cars were much in demand. Although prices for some of these collectable, muscle cars has rebounded into the ridiculous realm, that probably won't happen with the current crop of land yachts.
Likewise, in the program, Bush named some guy named Roden as his Energy Czar. Roden looked just like Wolfowitz and the sternest measure Roden could devise was a return to the 50 MPH speed limit! As if most Americans, the brightest and most ingenious inventors who have ever walked the planet, wouldn't have devised a whole fleet of alternate energy vehicles after gasoline approached five, six or seven dollars a gallon. Indeed, that guy who created his own cryogenic car, getting 120 MPG, would not only have been swamped with orders but hired by General Motors as CEO.
But the idea that America could buy or bribe or legislate her way out of trouble with the rest of the world, troubled me. The US dollar just ain't that strong. The program rated a D in Econ for that rosy scenario.
Unless you're older than seventy, most Americans don't know that after England "won" the war with Nazi Germany in 1945, the English pound was devalued from the equivalent of $4.00 in worth comparable to the US dollar (prewar) to less than 3/4 that previous value just a few years later. Then again in 1967, the pound dropped from $2.80 to $2.40. And during the 'Eighties, the English pound dropped again, to about half that value. Thus the English empire had spent itself out, just as we appear to be spending ourselves out.
Is the devaluation of the US dollar very far away--the first of many devaluations? In a Wall Street Journal column entitled, "Another Bubble Set To Blow Up?" investment guru, Paul Farrell, wrote: "Lately I'm seeing telltale signs everywhere that despite all the bullish talk, a bubble's about to burst. Something will pull the trigger---real estate, hedge funds, deficits, something." Perhaps Farrell recently read Mike Ruppert's Book: Crossing the Rubicon. The underlying premise of that book being Peak Oil created a need for a false flag terrorist event to promote whole-hearted military incursions into the Persian Gulf.
A South Florida reader of the WSJ, a fellow named Bruce Carey, queried columnist David Wessel: "Concerning the national debt: to which countries do we owe money and how much?...What security, if any, is given to each of the countires. How much interest does the US government pay?"
Wessel replied that Japan held 552 billion in US government bonds, China 189 billion, Taiwan 65 billion, United Kingdom 45 billion, South Korea 43 and Germany 42 billion. "In all, foreigners held about $1.9 trillion in US government debt," observed Wessel. But he also noted, "US businesses, governments and banks had borrowed a whopping $8.36 trillion from foreigners." Call me a naive old hippie, but that seems like a whole lot of bread.
Not mentioned in "Oil Storm" posts were the deeper, darker reasons for America's involvement in Iraq and Afghanistan. This was the war to save the US dollar, as Gavin Putland phrased it. In short, the US dollar was doomed without a few bold strokes. Bush and his band of oiligarchs chose, for whatever sinister reasons--personal greed, lust for power, thinly-disgiused alliance with Israel, or pragmatic, national security interests--to put aside any moral reason and simply use military power to grab the oil fields and thus ensure the US dollar is the currency of choice, now and forever (or for as long as the Neocons wield power).
"If a second currency were allowed into the oil market, it would soon become a general-purpose trading and reserve currency, especially if it were legal tender in an economy comparable in size to the USA," wrote Putland. "The Euro Zone already has a bigger share of world trade than the USA...If the euro becomes a global currency to rival the dollar, central banks and other traders will sell down their dollar reserves, causing the value of the dollar to plummet."
Free markets--as we are always told in school--are one indicator of a true democracy. One would then expect American bankers and business leaders, who essentially wield all the power in the USA and have for two centuries, to embrace the competition. Curiously, the most outspoken critic of the monopolistic system of US petro dollars, was Saddam Hussein.
"In October 2000, Iraq persuaded the United Nations to allow Iraqi oil to be sold for euros instead of dollars, with effect from November 6," wrote Putland. With this impudent act, Hussein ensured his hasty removal. "Iraq then converted its entire $10 billion "oil for food" reserve fund from dollars to euros. These events went unreported in the US media."
Imagine if Hussein had succeeded--and convinced other troublesome OPEC nations to adopt the euro conversion plan? If that had happened, the US dollar would have crashed years ago, predictably plunged in value, probably in the months just before September 11, 2001.
For now, the US dollar is propped up by massive amounts of borrowing--and by costly military actions against any rogue nation foolish enough to decry the dollar. Like, formerly sovereign nation, Iraq. But for those who profess a belief in family values--ironically many Bush supporters--the massive amount of debt accrued will remain for their kids to pay.
Douglas Herman writes regularly for Rense and is the author of the recent novel, Guns of Dallas, available online or autographed copies may be purchased directly from the author at



This Site Served by TheHostPros