Bombing For Bucks (part two)

  On a steamy Sunday evening in August of 1971, U.S. President Richard M. Nixon went on television and announced America’s “New Economic Policy”. That announcement contained a stunning element, delivered about half way through the speech, not quite as an after-thought, but almost-:

Nixon:  “In recent weeks, the speculators have been waging an all-out war on the American dollar. The strength of a nation’s currency is based on the strength of that nation’s economy–and the American economy is by far the strongest in the world. Accordingly, I have directed the Secretary of the Treasury to take the action necessary to defend the dollar against the speculators. I have directed Secretary Connally to suspend temporarily the convertibility of the dollar into gold or other reserve assets, except in amounts and conditions determined to be in the monetary interest of the United States.”

Everyone knew why Nixon did it, what hardly anyone knew though, was – what would come next.

Currencies floated…the pound sterling was devalued…but still the dollar continued to lose ground. America was losing the war in Vietnam; the country was discouraged and depressed and Nixon would soon be forced to resign to avoid impeachment on charges of high crimes and misdemeanors in the Watergate affair.

The next step wasn’t long in coming…not long at all.
In less than a year, Europe began its long struggle to be America’s equal and by mid-1972, had set a Europe-wide fixed exchange rate, allowing fluctuations between currencies of just over 1%. A few  years down the road, a currency would be born that might rival or even eclipse the U.S. greenback. Gold was no longer a shield for America, its deficits were enormous, emergency action was essential.

The Saudi Arabians had stood on the sidelines and watched with narrowed eyes, the monetary turmoil in America. They knew just what form the "emergency action" would take – in fact they had known as far back as 1971, on the night Nixon made his famous appearance on TV. The Saudi’s knew the Yanks were desperate and they were ready to lend a hand.

You see the Royal Family of Saudi Arabia was sitting on top of what would become the way to save America from its own follies – the new gold standard – the new way to measure international dominance – and a new way for the Princes and Consorts to gain more prominence. In those days, the Desert King was still the Oil King and OPEC was just an extension of the Kingdom. But certain people in America were bosom friends and the U.S. was home to more than a billion dollars worth of lucrative investments…so the Saudi’s looked on America from behind their desert shades and smiled quietly and knowingly.

The King would be the reluctant midwife to the birth of the Petro Dollar. He did not like America’s support for Israel, but hey…when there are several fortunes to be made…just put on a darker pair of shades…and tighten the screws.

Faisal and his petroleum friends demonstrated the monumental power of oil. Production was cut, prices shot up and the oil crisis was suddenly a world-wide phenomenon, with big-time inflation, high interest rates and ever higher oil prices.

American authorities viewed the situation with alarm and went on bended knee to the Saudi Monarch. Gerald Ford was President when a series of agreements with the Saudi’s were concluded. OPEC countries fell in line with Saudi wishes and from 1975 onward, if you wanted to buy a barrel of oil, you had to pay in U.S. dollars.

Thus the Americans averted disaster by finding a new standard by which to measure their dollar. Dollars would never again be exchanged for gold, but they could and would be exchanged for oil.

(That could be how come all the Saudi bigwigs were flown out of the U.S. in special planes immediately after 9/11.)

But it was a house of cards that began to tumble when Saddam Hussein – (who hated al Qaeda by the  way- but who also hated the U.S.) – decided to sell oil only in – euros. That was in the year 2000.

Initially, Saddam lost money on every barrel, because then the dollar was stronger than the euro. But the euro soon gained and eclipsed the dollar and those who wanted Iraq’s oil had to use their dollars to buy the European currency in order to pay for it.  Bad news for The Federal Reserve…America’s Central Bank.

Soon after the toppling of Saddam, Iraq’s euro accounts were switched back to dollars and once again the $ was safe. But let’s not forget…there are others who sell oil too.

Iran is the second largest oil producer in OPEC. It has recently announced that it will accept payment for oil in currencies other than the dollar.

Already, Japan has made arrangements to pay for Iranian oil in Yen and European nations will be able to pay in euros.

China – the current economic strongman may follow suit on a large scale, especially after Bush and Harper – joined at the hip in war – weirdly received the world’s peace symbol the Dalai Lama, with such open arms.

North Korea, the 3rd member of the Axis of Evil (Now re-named "The Axis of Economic Evil", does all of its trade in euros.

This kind of behaviour is simply unacceptable. These countries…Iran, Japan, North Korea, and yes…curse them…the Venezuelans… are challenging the supremacy of the US Dollar…with China now holding the wild card.

Can the United States bomb them all?