Wednesday, August 01, 2018
To continue following the increasingly bloody footsteps of the US imposed Petro dollar…
It was shortly after Iraq’s invasion of Kuwait that UN sanctions were first imposed on Iraq (1990). There is a story line, developed from Wikileaks releases, that the US tacitly gave US approval to Saddam Hussein to invade Kuwait, or at least didn’t object to it. Whatever, the invasion commenced. It proved to be an incredibly stupid mistake for Iraq. Iraq lost. The war itself led to crippling sanctions, public malnutrition leading to many deaths of Iraqi children and the dismantling of the prior most progressive state in the Middle East.
Iraq? Progressive? That poor country that was being guided at the time by a depraved monster of evil, Saddam Hussein, who deliberately killed his own people and held weapons of mass destruction that directly threatened the American state? That’s what we were told. But it is known, albeit little reported, that prior to the invasion of Kuwait and the resulting sanctions, Iraq was truly a model of progression. Iraq offered its citizens free education up to and including university, universal health care, support for soldier’s families, subsidies for farmers, encouragement for women to run for public office and generous maternity leave for working women, etc. Iraq, in fact, was a modern, secular state. Until their invasion of Kuwait. The issuing sanctions pushed Saddam to ditch the US dollar in favor of using Euros for oil trade so he would not have to buy US bonds in return that his country couldn’t afford. Which sealed his fate. 9/11 was the excuse the US needed to destroy this direct challenge to the Petro dollar that could bankrupt the US economy. Iraq had to be destroyed first.
Only a fear of their own US economic harm could have justified the US invasion (in their minds) of a small country on the other side of the world that had absolutely nothing to do with 9/11 and had no weapons of mass destruction. What other Iraqi crime could have been committed that had to be paid for by the deaths of 500,000 Iraqi children? What could have been worth the sinking of US governance to the depths of utter depravity in order to offer up the collective, degrading, and most disgusting of lies told to the American body politic for the absolute need for the Iraqi invasion? The US government knew Iraq held no weapons of mass destruction and had nothing to do with 9/11. But what Iraq had done to strike fear in the collective hearts of the US elite was to announce they were ditching the Petro dollar in favor of the Euro. The Iraqis insisted they could not afford to have their oil money eaten up by having to buy US bonds for the privilege of trading. They understood that when any country buys US bonds they are actually buying a piece of a massive US debt. This debt will eat up any marginal interest US bonds might eventually accrue (inflation) so why would anybody buy US bonds if they weren’t forced to? Like Iraq, Libya tried to resist this US Petro dollar choke hold with equally devastating results. Next time.
Thursday, July 26, 2018
Not interested in the Petro dollar because we don’t use Petro dollars? We use Canadian or US dollars here? But these currencies are, more or less, riding on the broad back of Petro dollars. And I want to suggest to you that these currencies may be on the verge of losing about half of their value in the not too distant future. How come? And how would I know to even suggest such a thing?
Because any ole kind of computer search engine will take you to the international agreement at Bretton Woods in New Hampshire in 1944 that made the US dollar the reserve currency for most of the economic world. At the time the US dollar had gold behind it. And then just stay with your search engine to see when the US departed from the gold standard (1971). And then…the coup d’état.
In 1971 President Richard Nixon, with presidential adviser and Sec. of State Henry Kissinger made a deal with Saudi Arabia. Saudi Arabia would sell their oil to the US to be paid, not in their own currency, but in American dollars. And then Saudi Arabia had to agree to buy US bonds with the US dollars they got for their oil. This way the US got both the oil and their American dollars back. Soon all of the oil was globally traded in this way and came to be called the US Petrodollar.
However, this kind of a one-sided deal is just not designed to last forever. Eventually, a few countries started to object to the deal. In 2001 Iraq was the first to ditch the Petrodollar. Saddam Hussein, as president of Iraq, began selling their oil in Euros, which did not require that they buy US bonds or any other kind of bonds in return. But Saddam did not realize that the broad back that held up the Petrodollar had hardened with use into hell fire and brimstone and would cost him his life and his country. First came the sanctions on Iraq. Then came the bombs. You already know the outcome of Saddam Hussein’s final struggle against the Petrodollar, but there are some things that probably weren’t brought to your attention…next time.