Published on The Populist,as a commentary, not dated.
Today the US dollar is the world’s reserve currency. That means many necessary commodities, including oil, are priced exclusively in dollars. Since every nation that conducts trade must accumulate dollars, our currency maintains its value … //
… Wall Street’s implosion has created the worst economic disaster since the Great Depression. Yet the Obama administration has not been forced to drastically raise taxes and cut spending. The US Treasury Department and Federal Reserve have simply printed trillions to cover the losses.
The rest of the world has watched in disgust as our financial firms were bailed out with what amounts to the world’s money.
The recent G-20 summit was part public facade, where such niceties as global warming were discussed. Behind closed doors, the real issue was the stability of the dollar. The world’s reserve currency has lost 15 percent of its value this year, and there is a very real prospect of a dollar devaluation.
Russia’s Central Bank has abandoned the dollar as a reserve currency in favor of the euro. China’s Ministry of Finance held their first auction of treasury bonds on September 28th. These bonds denominated in yuan will allow China’s currency to trade internationally.
Robert Zoellick, the President of the World Bank, issued a warning after China’s latest move: “The United States would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency. Looking forward, there will increasingly be other options to the dollar”.
Then the financial world was roiled by Robert Fisk, a journalist for The Independent. According to him, Economic ministers from China, Russia, Japan and France have been secretly negotiating with OPEC “to end dollar dealings for oil”. His news report sent gold prices soaring to record highs, and put more downward pressure on the dollar.
These recent events illustrate how precarious the dollar’s status as the world’s currency is. But this begs a question: How far will our regime go to defend this petrodollar monopoly?
The United States has suddenly taken a much more belligerent stance against Iran. The Obama administration is scrambling to get new sanctions passed, and even threatening war. Why?
Because Iranian President Mahmoud Ahmadinejad ordered his country to conduct all oil trade in euros on September 12, that’s why. His executive decree also shifted the nation’s $80 billion in foreign exchange reserves from dollars to euros. Our confrontation with Iran has less to do with their nuclear program than with saving the dollar … //
… The American oligarchy is playing a very dangerous game, risking another war in the Middle East to save the US dollar. They’ve already destroyed Iraq and Afghanistan, killing at least a half-million people. And they’ve spent the world’s money doing it.
Americans do not pay for the trillion-dollar security apparatus that wages these global wars. It’s the Chinese, Middle Eastern banks, and Sovereign Wealth Funds who buy our debt. If they want to conduct trade, they have no choice but to finance this war machine.
Since the financial crisis began, the United States has flooded global markets with trillions of dollars worth of US Treasuries. Nobody wants them, and soon the world won’t have to buy them. The only question is, will our empire collapse before we start another war. (full long text).