[GJM] Fw: Strategic options in developing a new global medium of exchange, is war one?
Rodney Shakespeare
rodney.shakespeare1 at btinternet.com
Tue Mar 25 15:16:24 MDT 2008
Dear All,
You may find this to be of interest.
Rodney Shakespeare.
----- Original Message -----
From: Robert Crane
To: KELSO_BINARY_ECONOMICS at LISTSERV.KENT.EDU
Sent: Tuesday, March 25, 2008 1:49 PM
Subject: Strategic options in developing a new global medium of exchange, is war one?
Jeremy,
Thanks for the challenging article "Why the Dollar Bubble is about to Burst." This rightly points out that the greatest trick since the invention of money to replace bartering has been the U.S. practice of printing dollars to pay for imports of goods. This means that, first, America avoids the inflation that has threatened many other currencies, and, second, that the rest of the world ends up as debtors to America since the exporters to America have nothing in exchange for their exports but a lot of potentially useless paper. Two-thirds of the world's "wealth" is now in potentially useless dollars.
The second greatest trick for the United States will be to convince the rest of the world not to shift too rapidly to the Euro in order to escape the collapse of the dollar. This may not be difficult in the short run, because the collapse of the dollar would in effect be a declaration of American bankruptcy and the elimination of two-thirds of the world's paper wealth, all at the expense of the rest of the world.
The rest of the world is fully aware that it must somehow shift slowly without destroying all its wealth that now exists in dollars. The shift may already be occurring too fast. The Euro already has doubled in value since I last stupidly converted a large sum in 1999 from Euros into dollars. If oil is now rapidly shifting to be sold in Euros, the shift may be unstoppable and highly destructive of paper wealth since the practice of buying oil with dollars has always kept the demand for dollars high. Once this artificial demand goes down the worth of the American dollar may plummet.
Now lets consider the American options.
First, the United States might try to bully the rest of the world into sticking with the dollar as a global medium of exchange, perhaps by threatening or waging war. This, however, would have its own costs, which are incalculable and therefore to be avoided in any long-range planning.
Second, the United States might welcome the slow collapse of the dollar in favor of the euro, because this would make it easy for people using a strong currency like the euro (now supported in value because people need euros for the purchase of oil) to buy American goods. Such devaluation of currencies often is the only way to jumpstart failing economies. This happened to be a speciality of mine at Harvard Law School in studying the legal problems of international investment. Purposefully devaluing the dollar would bail out the American export industries, which are losing out in the global competition for the trillions of dollars of add-on wealth likely over the next few decades. It would also prevent inflation in America (as a bonus it would make it safe, for example, to print vast quantities of money to bail out the mortgage and derivative insurance industries).
Thirdly, the Fed could simply and suddenly declare national bankruptcy by refusing to honor any purchases with dollars. America could issue an entirely new currency, which would be based on the value of the U.S. economy. This would create a really sound system of money if it were based on what is called the real bills doctrine whereby money is issued only to purchase real goods, so that it is backed by real value rather than merely by government debt. Except for those Americans who hold their assets in dollars and do not own any real assets, Americans would not suffer directly. Furthermore, an already fairly strong economy with managerial knowhow and skilled manpower would rapidly strengthen so that even those Americans who would lose out in the short run would more than make up for this in the long run. You can be sure that no millionnaires who own real assets would suffer, because the real assets might be worth more in the new currency than in the old dollar.
What would happen to the rest of the world? It might have to start over by declaring its own bankruptcy to the extent that it had not already converted to the euro. If the foreign central banks would shift to the real bills doctrine, as Switzerland and Japan began to do but stopped some years ago, then the rest of the world would recover just as America would.
What will really happen? Probably the first two scenarios will play out simply by lack of action to do anything else. Only if real global chaos results would any paradigmatic change occur, such as by recognizing that money is by nature a total fraud if it is based on debt and not on real asset-backed value.
What might happen in the best of all worlds. The best result of the current meltdown would be world bankruptcy and the creation of new money by central banks, or even by a new world central bank, which would limit the creation of money to financing productive assets owned broadly, for example, by the employees of the companies that borrow and by the residents of land-based cooperatives financed by pure credit to develop new productive enterprises. All Third World debt would automatically be canceled and all new infusions of wealth would be not in the form of loans but only as investments, with return only from a share of the profits. This is the only way to reduce the growing wealth gap both within and among countries based on the wisdom that one must either own or be owned.
Failure to address this ticking time bomb of increasingly concentrated wealth will destroy civilization, as it has every civilization in human history. Perhaps the only compassionate solution to peace through justice will come by itself when all the other options have resoundingly failed. No-one has ever deliberately created a paradigm shift so fundamental as broadening capital ownership through perfecting the system of money and credit. Such fundamental or paradigmatic shifts come in their own time in accordance with the iron law of chaos theory, which applies in every field of hard science and probably in all the soft sciences as well. This is all in accordance with natural law, known variously in Semitic languages as the kalima or Word of God. Kun, wa yakun.
Baba Faruq
From: j.henzell at orange.fr
To: transcendentlaw at aol.com
Sent: 3/21/2008 2:31:22 A.M. Eastern Standard Time
Subj: tr: IS THIS NEW REALISATION GOING TO BECOME A REALITY --- SO WHATS NEXT NEW WORLD ORDER OR WAR
>
Subject: IS THIS NEW REALISATION GOING TO BECOME A REALITY --- SO WHATS NEXT NEW WORLD ORDER OR WAR
>
>
>
> Finally OPEC is coming to its senses and the
> US domination will stop to some extent but the Arabs
> won't have the balls to follow suit - But the EURO must
> go up with the US housing problems still to unfold -
>
> Why the Dollar Bubble is about to Burst?
>
> IRAN HAS REALLY DONE IT…more deadlier than the
> nuclear..
>
> The Voice (issue 264 -) ran an article beginning, '
> Iran has really gone and done it now. No, they haven't
> sent their first nuclear sub in to the Persian Gulf .
> They are about to launch something much more deadly --
> next week the Iran Bourse will open to trade oil, not
> in dollars but in Euros' This apparently insignificant
> event has consequences far greater for the US people,
> indeed all for us all,
> than is imaginable.
>
> Currently almost all oil buying and selling is in
> US-dollars through exchanges in London and New York .
> It is not accidental they are both US-owned.
>
> The Wall Street crash in 1929 sparked off global
> depression and World War II. During that war the US
> supplied provisions and munitions to all its allies,
> refusing currency and demanding gold payments in
> exchange.
>
> By 1945, 80% of the world's gold was sitting in US
> vaults. The dollar became the one undisputed global
> reserve currency -- it was treated world-wide as
> `safer than gold'. The Bretton Woods agreement was
> established.
>
> The US took full advantage over the next decades and
> printed dollars like there was no tomorrow. The US
> exported many mountains of dollars, paying for
> ever-increasing amounts of commodities, tax cuts for
> the rich, many wars abroad, mercenaries, spies and
> politicians the world over. You see, this did not
> affect inflation at home! The US got it all for free!
> Well, maybe for a forest or two.
>
> Over subsequent decades the world's vaults bulged at
> the seams and more and more vaults were built, just
> for US dollars. Each year, the US spends many more
> dollars abroad that at home. Analysts pretty much
> agree that outside the US , of the savings, or
> reserves, of all other countries, in gold and all
> currencies -- that a massive 66% of this total wealth
> is in US dollars!
>
> In 1971 several countries simultaneously tried to sell
> a small portion of their dollars to the US for gold.
> Krassimir Petrov, (Ph. D. in Economics at Ohio
> University ) recently wrote, 'The US Government
> defaulted on its payment on August 15, 1971 . While
> popular spin told the story of `severing the link
> between the dollar and gold', in reality the denial to
> pay back in gold was an act of bankruptcy by the US
> Government.' The 1945 Breton Woods agreement was
> unilaterally smashed.
>
> The dollar and US economy were on a precipice
> resembling Germany in 1929. The US now had to find a
> way for the rest of the world to believe and have
> faith in the paper dollar. The solution was in oil, in
> the petrodollar. The US viciously bullied first Saudi
> Arabia and then OPEC to sell oil for dollars only --
> it worked, the dollar was saved. Now countries had to
> keep dollars to buy much needed oil. And the US could
> buy oil all over the world, free of charge. What a
> Houdini for the US ! Oil replaced gold as the new
> foundation to stop the paper dollar sinking.
>
> Since 1971, the US printed even more mountains of
> dollars to spend abroad. The trade deficit grew and
> grew. The US sucked-in much of the world's products
> for next to nothing. More vaults were built.
>
> Expert, Cóilínn Nunan, wrote in 2003, 'The dollar is
> the de facto world reserve currency: the US currency
> accounts for approximately two thirds of all official
> exchange reserves. More than four-fifths of all
> foreign exchange transactions and half of all world
> exports are denominated in dollars. In addition, all
> IMF loans are denominated in dollars.'
> Dr Bulent Gukay of Keele University recently wrote,
> 'This system of the US dollar acting as global reserve
> currency in oil trade keeps the demand for the dollar
> `artificially' high. This enables the US to carry out
> printing dollars at the price of next to nothing to
> fund increased military spending and consumer spending
> on imports. There is no theoretical limit to the
> amount of dollars that can be printed. As long as the
> US has no serious challengers, and the other states
> have confidence in the US dollar, the system
> functions.'
>
> Until recently, the US-dollar has been safe. However,
> since 1990 Western Europe has been busy growing,
> swallowing up central and Eastern Europe . French and
> German bosses were jealous of the US ability to buy
> goods and people the world over for nothing. They
> wanted a slice of the free cake too. Further, they now
> had the power and established the euro in late 1999
> against massive US-inspired opposition across Europe ,
> especially from Britain - paid for in dollars of
> course. But the euro succeeded.
>
> Only months after the euro-launch, Saddam's Iraq
> announced it was switching from selling oil in dollars
> only, to euros only -- breaking the OPEC agreement..
> Iran , Russia , Venezuela , Libya , all began talking
> openly of switching too -- were the floodgates about
> to be opened?
>
> Then aero planes flew into the twin-towers in
> September 2001. Was this another Houdini chance to
> save the US (petro) dollar and the biggest
> financial/economic crash in history? War preparations
> began in the US But first war-fever had to be created
> -- and truth was the first casualty. Other oil
> producing countries watched-on. In 2000 Iraq began
> selling oil in euros. In 2002, Iraq changed all their
> petro-dollars in their vaults into euros. A few months
> later, the US began their invasion of Iraq .
>
> The whole world was watching: very few aware that the
> US was engaging in the first oil currency, or
> petro-dollar war. After the invasion of Iraq in March
> 2003, remember, the US secured oil areas first. Their
> first sales in August were, of course, in dollars,
> again. The only government building in Baghdad not
> bombed was the Oil Ministry! It does not matter how
> many people are murdered -- for the US , the
> petro-dollar must be saved as the only way to buy and
> sell oil – otherwise the US economy will crash, and
> much more besides.
>
> In early 2003, Hugo Chavez, President of Venezuela
> talked openly of selling half of its oil in euros (the
> other half is bought by the US ). On 12 April 2003 ,
> the US-supported business leaders and some generals in
> Venezuela kidnapped Chavez and attempted a coup. The
> masses rose against this and the Army followed suit.
> The coup failed. This was bad for the US .
>
> In November 2000 the euro/dollar was at $0.82 dollars,
> its lowest ever, and still diving, but when Iraq
> started selling oil in euros, the euro dive was
> halted. In April 2002 senior OPEC reps talked about
> trading in euros and the euro shot up. In June 2003
> the US occupiers of Iraq switched trading back to
> dollars and the euro fell against the dollar again. In
> August 2003 Iran starts to sell oil in euros to some
> European countries and the euro rises sharply. In the
> winter of 2003-4 Russian and OPEC politicians talked
> seriously of switching oil/gas sales to the euro and
> the euro rose. In February 2004 OPEC met and made no
> decision to turn to the euro -- and yes, the euro fell
> against the dollar. In June 2004 Iran announced it
> would build an oil bourse to rival London and New York
> , and again, the euro rose. The euro stands at $1.27
> and has been climbing of late.
>
> But matters this month became far, far worse for the
> US dollar. On 5th May Iran registered its own Oil
> Bourse, the IOB. Not only are they now selling oil in
> euros from abroad -- they have established an actual
> Oil Bourse, a global trading centre for all countries
> to buy and sell their oil!
>
> In Chavez's recent visit to London ; he talked openly
> about supporting the Iranian Oil Bourse, and selling
> oil in euros. When asked in London about the new arms
> embargo imposed by the US against Venezuela , Chavez
> prophetically dismissed the US as 'a paper tiger'.
>
> Currently, almost all the world's oil is sold on
> either the NYMEX, New York Mercantile Exchange, or the
> IPE, London 's International Petroleum Exchange. Both
> are owned by US citizens and both sell and buy only in
> US dollars. The success of the Iran Oil Bourse makes
> sense to Europe , which buys 70% of Iran 's oil. It
> makes sense for Russia , which sells 66% of its oil to
> Europe . But worse for the US , China and India have
> already stated they are very interested in the new
> Iranian Oil Bourse.
>
> If there is a tactical-nuclear strike on - deja-vu -
> `weapons of mass destruction' in Iran , who would bet
> against a certain Oil Exchange and more, being bombed
> too?
>
> And worse for Bush. It makes sense for Europe , China
> , India and Japan-- as well as all the other countries
> mentioned above -- to buy and sell oil in Euro's. They
> will certainly have to stock-up on euros now, and they
> will sell dollars to do so. The euro is far more
> stable than the debt-ridden dollar. The IMF has
> recently highlighted US economic difficulties and the
> trade deficit strangling the US-- there is no way out.
>
> The problem for so many countries now is how to get
> rid of their vaults full of dollars, before it
> crashes? And the US has bullied so many countries for
> so many decades around the world, that many will see a
> chance to kick the bully back. The US cannot accept
> even 5% of the world's dollars -- it would crash the
> US economy dragging much of the world with it,
> especially Britain .
>
> To survive, as the Scottish Socialist Voice article
> stated, 'the US , needs to generate a trade surplus to
> get out of this one. Problem is it can't.' This is
> spot on. To do that they must force US workers into
> near slavery, to get paid less than Chinese or Indian
> workers. We all know that this will not happen.
>
> What will happen in the US ? Chaos for sure. Maybe a
> workers revolution, but looking at the situation as it
> is now, it is more likely to be a re-run of Germany
> post-1929, and some form of extreme-right mass
> movement will emerge..
>
> Does Europe and China/Asia have the economic
> independence and strength to stop the whole world's
> economies collapsing with the US ? Their vaults are
> full to the brim with dollars.
>
> The US has to find a way to pay for its
> dollar-imperialist exploitation of the world since
> 1945.. Somehow, eventually, it has to account for
> every dollar in every vault in the world.
>
> Bombing Iran could backfire tremendously. It would
> bring Iran openly into the war in Iraq , behind the
> Shiite majority. The US cannot cope even now with the
> much smaller Iraqi insurgency. Perhaps the US will
> feed into the Sunni v Shiite conflict and turn it into
> a wider Middle-East civil-war. However, this is so
> dangerous for global oil supplies. Further, they know
> that this would be temporary, as some country
> somewhere else, will establish a euro-oil-exchange,
> perhaps in Brussels .
>
> There is one `solution' -- scrap the dollar and print
> a whole new currency for the US . This will destroy
> 66% of the rest of the world's savings/reserves in one
> swoop. Imagine the implications? Such are the
> desperate things now swimming around heads in the
> White House, Wall Street and Pentagon.
>
> Another is to do as Germany did, just before invading
> Poland in 1938. The Nazis filmed a mock Polish Army
> attack on Germany , to win hearts and minds at home.
> But again, this is a finger in the dam. So, how is the
> US going to escape this time? The only global arena of
> total superiority left is military. Who knows what
> horrors lie ahead. A new world war is one tool by
> which the US could discipline its `allies' into
> keeping the dollar in their vaults.
>
> The task of socialists today is to explain to as many
> as possible, especially our class, that the coming
> crisis belongs purely to capitalism and (dollar)
> imperialism. Not people of other cultures, not Islam,
> not the axis of evil or their so-called WMDs. Their
> system alone is to blame.
>
> The new Iranian Oil Bourse, the IOB, is situated in a
> new building on the free-trade-zone island of Kish ,
> in the Persian Gulf . It's computers and software are
> all set to go. The IOB was supposed to be up and
> running last March, but many pressures forced a
> postponement. Where the pressure came from is obvious.
> It was internationally registered on 5th May and
> supposed to open mid-May, but its opening was put off,
> some saying the oil-mafia was involved, along with
> much international pressure. Just google `pertroeuro'
> , and the story lies before you.
>
> From now on, anyone in the know will wake up every
> morning and, even before coffee, will check out the
> latest exchange rate between the euro and dollar.
>
>
>
>
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