posted March 19, 2006 03:16 PM              

February 15, 2006

The End of Dollar Hegemony

A hundred years ago it was called “dollar diplomacy.” After World War II, and especially after the fall of the Soviet Union in 1989, that policy evolved into “dollar hegemony.” But after all these many years of great success, our dollar dominance is coming to an end.

It has been said, rightly, that he who holds the gold makes the rules. In earlier times it was readily accepted that fair and honest trade required an exchange for something of real value.

First it was simply barter of goods. Then it was discovered that gold held a universal attraction, and was a convenient substitute for more cumbersome barter transactions. Not only did gold facilitate exchange of goods and services, it served as a store of value for those who wanted to save for a rainy day.

Though money developed naturally in the marketplace, as governments grew in power they assumed monopoly control over money. Sometimes governments succeeded in guaranteeing the quality and purity of gold, but in time governments learned to outspend their revenues. New or higher taxes always incurred the disapproval of the people, so it wasn’t long before Kings and Caesars learned how to inflate their currencies by reducing the amount of gold in each coin-- always hoping their subjects wouldn’t discover the fraud. But the people always did, and they strenuously objected.

This helped pressure leaders to seek more gold by conquering other nations. The people became accustomed to living beyond their means, and enjoyed the circuses and bread. Financing extravagances by conquering foreign lands seemed a logical alternative to working harder and producing more. Besides, conquering nations not only brought home gold, they brought home slaves as well. Taxing the people in conquered territories also provided an incentive to build empires. This system of government worked well for a while, but the moral decline of the people led to an unwillingness to produce for themselves. There was a limit to the number of countries that could be sacked for their wealth, and this always brought empires to an end. When gold no longer could be obtained, their military might crumbled. In those days those who held the gold truly wrote the rules and lived well.

That general rule has held fast throughout the ages. When gold was used, and the rules protected honest commerce, productive nations thrived. Whenever wealthy nations-- those with powerful armies and gold-- strived only for empire and easy fortunes to support welfare at home, those nations failed.

Today the principles are the same, but the process is quite different. Gold no longer is the currency of the realm; paper is. The truth now is: “He who prints the money makes the rules”-- at least for the time being. Although gold is not used, the goals are the same: compel foreign countries to produce and subsidize the country with military superiority and control over the monetary printing presses.

Since printing paper money is nothing short of counterfeiting, the issuer of the international currency must always be the country with the military might to guarantee control over the system. This magnificent scheme seems the perfect system for obtaining perpetual wealth for the country that issues the de facto world currency. The one problem, however, is that such a system destroys the character of the counterfeiting nation’s people-- just as was the case when gold was the currency and it was obtained by conquering other nations. And this destroys the incentive to save and produce, while encouraging debt and runaway welfare.

The pressure at home to inflate the currency comes from the corporate welfare recipients, as well as those who demand handouts as compensation for their needs and perceived injuries by others. In both cases personal responsibility for one’s actions is rejected.

When paper money is rejected, or when gold runs out, wealth and political stability are lost. The country then must go from living beyond its means to living beneath its means, until the economic and political systems adjust to the new rules-- rules no longer written by those who ran the now defunct printing press.

“Dollar Diplomacy,” a policy instituted by William Howard Taft and his Secretary of State Philander C. Knox, was designed to enhance U.S. commercial investments in Latin America and the Far East. McKinley concocted a war against Spain in 1898, and (Teddy) Roosevelt’s corollary to the Monroe Doctrine preceded Taft’s aggressive approach to using the U.S. dollar and diplomatic influence to secure U.S. investments abroad. This earned the popular title of “Dollar Diplomacy.” The significance of Roosevelt’s change was that our intervention now could be justified by the mere “appearance” that a country of interest to us was politically or fiscally vulnerable to European control. Not only did we claim a right, but even an official U.S. government “obligation” to protect our commercial interests from Europeans.

This new policy came on the heels of the “gunboat” diplomacy of the late 19th century, and it meant we could buy influence before resorting to the threat of force. By the time the “dollar diplomacy” of William Howard Taft was clearly articulated, the seeds of American empire were planted. And they were destined to grow in the fertile political soil of a country that lost its love and respect for the republic bequeathed to us by the authors of the Constitution. And indeed they did. It wasn’t too long before dollar “diplomacy” became dollar “hegemony” in the second half of the 20th century.

This transition only could have occurred with a dramatic change in monetary policy and the nature of the dollar itself.

Congress created the Federal Reserve System in 1913. Between then and 1971 the principle of sound money was systematically undermined. Between 1913 and 1971, the Federal Reserve found it much easier to expand the money supply at will for financing war or manipulating the economy with little resistance from Congress-- while benefiting the special interests that influence government.

Dollar dominance got a huge boost after World War II. We were spared the destruction that so many other nations suffered, and our coffers were filled with the world’s gold. But the world chose not to return to the discipline of the gold standard, and the politicians applauded. Printing money to pay the bills was a lot more popular than taxing or restraining unnecessary spending. In spite of the short-term benefits, imbalances were institutionalized for decades to come.

The 1944 Bretton Woods agreement solidified the dollar as the preeminent world reserve currency, replacing the British pound. Due to our political and military muscle, and because we had a huge amount of physical gold, the world readily accepted our dollar (defined as 1/35th of an ounce of gold) as the world’s reserve currency. The dollar was said to be “as good as gold,” and convertible to all foreign central banks at that rate. For American citizens, however, it remained illegal to own. This was a gold-exchange standard that from inception was doomed to fail.

The U.S. did exactly what many predicted she would do. She printed more dollars for which there was no gold backing. But the world was content to accept those dollars for more than 25 years with little question-- until the French and others in the late 1960s demanded we fulfill our promise to pay one ounce of gold for each $35 they delivered to the U.S. Treasury. This resulted in a huge gold drain that brought an end to a very poorly devised pseudo-gold standard.

It all ended on August 15, 1971, when Nixon closed the gold window and refused to pay out any of our remaining 280 million ounces of gold. In essence, we declared our insolvency and everyone recognized some other monetary system had to be devised in order to bring stability to the markets.

Amazingly, a new system was devised which allowed the U.S. to operate the printing presses for the world reserve currency with no restraints placed on it-- not even a pretense of gold convertibility, none whatsoever! Though the new policy was even more deeply flawed, it nevertheless opened the door for dollar hegemony to spread.

Realizing the world was embarking on something new and mind boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence “backed” the dollar with oil. In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite the radical Islamic movement among those who resented our influence in the region. The arrangement gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as dollar influence flourished.

This post-Bretton Woods system was much more fragile than the system that existed between 1945 and 1971. Though the dollar/oil arrangement was helpful, it was not nearly as stable as the pseudo gold standard under Bretton Woods. It certainly was less stable than the gold standard of the late 19th century.

During the 1970s the dollar nearly collapsed, as oil prices surged and gold skyrocketed to $800 an ounce. By 1979 interest rates of 21% were required to rescue the system. The pressure on the dollar in the 1970s, in spite of the benefits accrued to it, reflected reckless budget deficits and monetary inflation during the 1960s. The markets were not fooled by LBJ’s claim that we could afford both “guns and butter.”

Once again the dollar was rescued, and this ushered in the age of true dollar hegemony lasting from the early 1980s to the present. With tremendous cooperation coming from the central banks and international commercial banks, the dollar was accepted as if it were gold.

Fed Chair Alan Greenspan, on several occasions before the House Banking Committee, answered my challenges to him about his previously held favorable views on gold by claiming that he and other central bankers had gotten paper money-- i.e. the dollar system-- to respond as if it were gold. Each time I strongly disagreed, and pointed out that if they had achieved such a feat they would have defied centuries of economic history regarding the need for money to be something of real value. He smugly and confidently concurred with this.

In recent years central banks and various financial institutions, all with vested interests in maintaining a workable fiat dollar standard, were not secretive about selling and loaning large amounts of gold to the market even while decreasing gold prices raised serious questions about the wisdom of such a policy. They never admitted to gold price fixing, but the evidence is abundant that they believed if the gold price fell it would convey a sense of confidence to the market, confidence that they indeed had achieved amazing success in turning paper into gold.

Increasing gold prices historically are viewed as an indicator of distrust in paper currency. This recent effort was not a whole lot different than the U.S. Treasury selling gold at $35 an ounce in the 1960s, in an attempt to convince the world the dollar was sound and as good as gold. Even during the Depression, one of Roosevelt’s first acts was to remove free market gold pricing as an indication of a flawed monetary system by making it illegal for American citizens to own gold. Economic law eventually limited that effort, as it did in the early 1970s when our Treasury and the IMF tried to fix the price of gold by dumping tons into the market to dampen the enthusiasm of those seeking a safe haven for a falling dollar after gold ownership was re-legalized.

Once again the effort between 1980 and 2000 to fool the market as to the true value of the dollar proved unsuccessful. In the past 5 years the dollar has been devalued in terms of gold by more than 50%. You just can’t fool all the people all the time, even with the power of the mighty printing press and money creating system of the Federal Reserve.

Even with all the shortcomings of the fiat monetary system, dollar influence thrived. The results seemed beneficial, but gross distortions built into the system remained. And true to form, Washington politicians are only too anxious to solve the problems cropping up with window dressing, while failing to understand and deal with the underlying flawed policy. Protectionism, fixing exchange rates, punitive tariffs, politically motivated sanctions, corporate subsidies, international trade management, price controls, interest rate and wage controls, super-nationalist sentiments, threats of force, and even war are resorted to—all to solve the problems artificially created by deeply flawed monetary and economic systems.

In the short run, the issuer of a fiat reserve currency can accrue great economic benefits. In the long run, it poses a threat to the country issuing the world currency. In this case that’s the United States. As long as foreign countries take our dollars in return for real goods, we come out ahead. This is a benefit many in Congress fail to recognize, as they bash China for maintaining a positive trade balance with us. But this leads to a loss of manufacturing jobs to overseas markets, as we become more dependent on others and less self-sufficient. Foreign countries accumulate our dollars due to their high savings rates, and graciously loan them back to us at low interest rates to finance our excessive consumption.

It sounds like a great deal for everyone, except the time will come when our dollars-- due to their depreciation-- will be received less enthusiastically or even be rejected by foreign countries. That could create a whole new ballgame and force us to pay a price for living beyond our means and our production. The shift in sentiment regarding the dollar has already started, but the worst is yet to come.

The agreement with OPEC in the 1970s to price oil in dollars has provided tremendous artificial strength to the dollar as the preeminent reserve currency. This has created a universal demand for the dollar, and soaks up the huge number of new dollars generated each year. Last year alone M3 increased over $700 billion.

The artificial demand for our dollar, along with our military might, places us in the unique position to “rule” the world without productive work or savings, and without limits on consumer spending or deficits. The problem is, it can’t last.

Price inflation is raising its ugly head, and the NASDAQ bubble-- generated by easy money-- has burst. The housing bubble likewise created is deflating. Gold prices have doubled, and federal spending is out of sight with zero political will to rein it in. The trade deficit last year was over $728 billion. A $2 trillion war is raging, and plans are being laid to expand the war into Iran and possibly Syria. The only restraining force will be the world’s rejection of the dollar. It’s bound to come and create conditions worse than 1979-1980, which required 21% interest rates to correct. But everything possible will be done to protect the dollar in the meantime. We have a shared interest with those who hold our dollars to keep the whole charade going.

Greenspan, in his first speech after leaving the Fed, said that gold prices were up because of concern about terrorism, and not because of monetary concerns or because he created too many dollars during his tenure. Gold has to be discredited and the dollar propped up. Even when the dollar comes under serious attack by market forces, the central banks and the IMF surely will do everything conceivable to soak up the dollars in hope of restoring stability. Eventually they will fail.

Most importantly, the dollar/oil relationship has to be maintained to keep the dollar as a preeminent currency. Any attack on this relationship will be forcefully challenged—as it already has been.

In November 2000 Saddam Hussein demanded Euros for his oil. His arrogance was a threat to the dollar; his lack of any military might was never a threat. At the first cabinet meeting with the new administration in 2001, as reported by Treasury Secretary Paul O’Neill, the major topic was how we would get rid of Saddam Hussein-- though there was no evidence whatsoever he posed a threat to us. This deep concern for Saddam Hussein surprised and shocked O’Neill.

It now is common knowledge that the immediate reaction of the administration after 9/11 revolved around how they could connect Saddam Hussein to the attacks, to justify an invasion and overthrow of his government. Even with no evidence of any connection to 9/11, or evidence of weapons of mass destruction, public and congressional support was generated through distortions and flat out misrepresentation of the facts to justify overthrowing Saddam Hussein.

There was no public talk of removing Saddam Hussein because of his attack on the integrity of the dollar as a reserve currency by selling oil in Euros. Many believe this was the real reason for our obsession with Iraq. I doubt it was the only reason, but it may well have played a significant role in our motivation to wage war. Within a very short period after the military victory, all Iraqi oil sales were carried out in dollars. The Euro was abandoned.

In 2001, Venezuela’s ambassador to Russia spoke of Venezuela switching to the Euro for all their oil sales. Within a year there was a coup attempt against Chavez, reportedly with assistance from our CIA.

After these attempts to nudge the Euro toward replacing the dollar as the world’s reserve currency were met with resistance, the sharp fall of the dollar against the Euro was reversed. These events may well have played a significant role in maintaining dollar dominance.

It’s become clear the U.S. administration was sympathetic to those who plotted the overthrow of Chavez, and was embarrassed by its failure. The fact that Chavez was democratically elected had little influence on which side we supported.

Now, a new attempt is being made against the petrodollar system. Iran, another member of the “axis of evil,” has announced her plans to initiate an oil bourse in March of this year. Guess what, the oil sales will be priced Euros, not dollars.

Most Americans forget how our policies have systematically and needlessly antagonized the Iranians over the years. In 1953 the CIA helped overthrow a democratically elected president, Mohammed Mossadeqh, and install the authoritarian Shah, who was friendly to the U.S. The Iranians were still fuming over this when the hostages were seized in 1979. Our alliance with Saddam Hussein in his invasion of Iran in the early 1980s did not help matters, and obviously did not do much for our relationship with Saddam Hussein. The administration announcement in 2001 that Iran was part of the axis of evil didn’t do much to improve the diplomatic relationship between our two countries. Recent threats over nuclear power, while ignoring the fact that they are surrounded by countries with nuclear weapons, doesn’t seem to register with those who continue to provoke Iran. With what most Muslims perceive as our war against Islam, and this recent history, there’s little wonder why Iran might choose to harm America by undermining the dollar. Iran, like Iraq, has zero capability to attack us. But that didn’t stop us from turning Saddam Hussein into a modern day Hitler ready to take over the world. Now Iran, especially since she’s made plans for pricing oil in Euros, has been on the receiving end of a propaganda war not unlike that waged against Iraq before our invasion.

It’s not likely that maintaining dollar supremacy was the only motivating factor for the war against Iraq, nor for agitating against Iran. Though the real reasons for going to war are complex, we now know the reasons given before the war started, like the presence of weapons of mass destruction and Saddam Hussein’s connection to 9/11, were false. The dollar’s importance is obvious, but this does not diminish the influence of the distinct plans laid out years ago by the neo-conservatives to remake the Middle East. Israel’s influence, as well as that of the Christian Zionists, likewise played a role in prosecuting this war. Protecting “our” oil supplies has influenced our Middle East policy for decades.

But the truth is that paying the bills for this aggressive intervention is impossible the old fashioned way, with more taxes, more savings, and more production by the American people. Much of the expense of the Persian Gulf War in 1991 was shouldered by many of our willing allies. That’s not so today. Now, more than ever, the dollar hegemony-- it’s dominance as the world reserve currency-- is required to finance our huge war expenditures. This $2 trillion never-ending war must be paid for, one way or another. Dollar hegemony provides the vehicle to do just that.

For the most part the true victims aren’t aware of how they pay the bills. The license to create money out of thin air allows the bills to be paid through price inflation. American citizens, as well as average citizens of Japan, China, and other countries suffer from price inflation, which represents the “tax” that pays the bills for our military adventures. That is until the fraud is discovered, and the foreign producers decide not to take dollars nor hold them very long in payment for their goods. Everything possible is done to prevent the fraud of the monetary system from being exposed to the masses who suffer from it. If oil markets replace dollars with Euros, it would in time curtail our ability to continue to print, without restraint, the world’s reserve currency.

It is an unbelievable benefit to us to import valuable goods and export depreciating dollars. The exporting countries have become addicted to our purchases for their economic growth. This dependency makes them allies in continuing the fraud, and their participation keeps the dollar’s value artificially high. If this system were workable long term, American citizens would never have to work again. We too could enjoy “bread and circuses” just as the Romans did, but their gold finally ran out and the inability of Rome to continue to plunder conquered nations brought an end to her empire.

The same thing will happen to us if we don’t change our ways. Though we don’t occupy foreign countries to directly plunder, we nevertheless have spread our troops across 130 nations of the world. Our intense effort to spread our power in the oil-rich Middle East is not a coincidence. But unlike the old days, we don’t declare direct ownership of the natural resources-- we just insist that we can buy what we want and pay for it with our paper money. Any country that challenges our authority does so at great risk.

Once again Congress has bought into the war propaganda against Iran, just as it did against Iraq. Arguments are now made for attacking Iran economically, and militarily if necessary. These arguments are all based on the same false reasons given for the ill-fated and costly occupation of Iraq.

Our whole economic system depends on continuing the current monetary arrangement, which means recycling the dollar is crucial. Currently, we borrow over $700 billion every year from our gracious benefactors, who work hard and take our paper for their goods. Then we borrow all the money we need to secure the empire (DOD budget $450 billion) plus more. The military might we enjoy becomes the “backing” of our currency. There are no other countries that can challenge our military superiority, and therefore they have little choice but to accept the dollars we declare are today’s “gold.” This is why countries that challenge the system-- like Iraq, Iran and Venezuela-- become targets of our plans for regime change.

Ironically, dollar superiority depends on our strong military, and our strong military depends on the dollar. As long as foreign recipients take our dollars for real goods and are willing to finance our extravagant consumption and militarism, the status quo will continue regardless of how huge our foreign debt and current account deficit become.

But real threats come from our political adversaries who are incapable of confronting us militarily, yet are not bashful about confronting us economically. That’s why we see the new challenge from Iran being taken so seriously. The urgent arguments about Iran posing a military threat to the security of the United States are no more plausible than the false charges levied against Iraq. Yet there is no effort to resist this march to confrontation by those who grandstand for political reasons against the Iraq war.

It seems that the people and Congress are easily persuaded by the jingoism of the preemptive war promoters. It’s only after the cost in human life and dollars are tallied up that the people object to unwise militarism.

The strange thing is that the failure in Iraq is now apparent to a large majority of American people, yet they and Congress are acquiescing to the call for a needless and dangerous confrontation with Iran.

But then again, our failure to find Osama bin Laden and destroy his network did not dissuade us from taking on the Iraqis in a war totally unrelated to 9/11.

Concern for pricing oil only in dollars helps explain our willingness to drop everything and teach Saddam Hussein a lesson for his defiance in demanding Euros for oil.

And once again there’s this urgent call for sanctions and threats of force against Iran at the precise time Iran is opening a new oil exchange with all transactions in Euros.

Using force to compel people to accept money without real value can only work in the short run. It ultimately leads to economic dislocation, both domestic and international, and always ends with a price to be paid.

The economic law that honest exchange demands only things of real value as currency cannot be repealed. The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars or Euros. The sooner the better.

http://www.house.gov/paul/congrec/congrec2006/cr021506.htm

posted March 19, 2006 03:31 PM              

We speak with John Perkins, a former respected member of the international banking community. In his book Confessions of an Economic Hit Man he describes how as a highly paid professional, he helped the U.S. cheat poor countries around the globe out of trillions of dollars by lending them more money than they could possibly repay and then take over their economies. [includes rush transcript] John Perkins describes himself as a former economic hit man - a highly paid professional who cheated countries around the globe out of trillions of dollars.

20 years ago Perkins began writing a book with the working title, "Conscience of an Economic Hit Men."

Perkins writes, "The book was to be dedicated to the presidents of two countries, men who had been his clients whom I respected and thought of as kindred spirits - Jaime Roldós, president of Ecuador, and Omar Torrijos, president of Panama. Both had just died in fiery crashes. Their deaths were not accidental. They were assassinated because they opposed that fraternity of corporate, government, and banking heads whose goal is global empire. We Economic Hit Men failed to bring Roldós and Torrijos around, and the other type of hit men, the CIA-sanctioned jackals who were always right behind us, stepped in.

John Perkins goes on to write: "I was persuaded to stop writing that book. I started it four more times during the next twenty years. On each occasion, my decision to begin again was influenced by current world events: the U.S. invasion of Panama in 1980, the first Gulf War, Somalia, and the rise of Osama bin Laden. However, threats or bribes always convinced me to stop."

But now Perkins has finally published his story. The book is titled Confessions of an Economic Hit Man. John Perkins joins us now in our Firehouse studios.

* John Perkins, from 1971 to 1981 he worked for the international consulting firm of Chas T. Main where he was a self-described "economic hit man." He is the author of the new book Confessions of an Economic Hit Man.

RUSH TRANSCRIPT

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AMY GOODMAN: John Perkins joins us now in our firehouse studio. Welcome to Democracy Now!

JOHN PERKINS: Thank you, Amy. It’s great to be here.

AMY GOODMAN: It’s good to have you with us. Okay, explain this term, “economic hit man,” e.h.m., as you call it.

JOHN PERKINS: Basically what we were trained to do and what our job is to do is to build up the American empire. To bring -- to create situations where as many resources as possible flow into this country, to our corporations, and our government, and in fact we’ve been very successful. We’ve built the largest empire in the history of the world. It's been done over the last 50 years since World War II with very little military might, actually. It's only in rare instances like Iraq where the military comes in as a last resort. This empire, unlike any other in the history of the world, has been built primarily through economic manipulation, through cheating, through fraud, through seducing people into our way of life, through the economic hit men. I was very much a part of that.

AMY GOODMAN: How did you become one? Who did you work for?

JOHN PERKINS: Well, I was initially recruited while I was in business school back in the late sixties by the National Security Agency, the nation's largest and least understood spy organization; but ultimately I worked for private corporations. The first real economic hit man was back in the early 1950's, Kermit Roosevelt, the grandson of Teddy, who overthrew of government of Iran, a democratically elected government, Mossadegh’s government who was Time's magazine person of the year; and he was so successful at doing this without any bloodshed -- well, there was a little bloodshed, but no military intervention, just spending millions of dollars and replaced Mossadegh with the Shah of Iran. At that point, we understood that this idea of economic hit man was an extremely good one. We didn't have to worry about the threat of war with Russia when we did it this way. The problem with that was that Roosevelt was a C.I.A. agent. He was a government employee. Had he been caught, we would have been in a lot of trouble. It would have been very embarrassing. So, at that point, the decision was made to use organizations like the C.I.A. and the N.S.A. to recruit potential economic hit men like me and then send us to work for private consulting companies, engineering firms, construction companies, so that if we were caught, there would be no connection with the government.

AMY GOODMAN: Okay. Explain the company you worked for.

JOHN PERKINS: Well, the company I worked for was a company named Chas. T. Main in Boston, Massachusetts. We were about 2,000 employees, and I became its chief economist. I ended up having fifty people working for me. But my real job was deal-making. It was giving loans to other countries, huge loans, much bigger than they could possibly repay. One of the conditions of the loan–let's say a $1 billion to a country like Indonesia or Ecuador–and this country would then have to give ninety percent of that loan back to a U.S. company, or U.S. companies, to build the infrastructure–a Halliburton or a Bechtel. These were big ones. Those companies would then go in and build an electrical system or ports or highways, and these would basically serve just a few of the very wealthiest families in those countries. The poor people in those countries would be stuck ultimately with this amazing debt that they couldn’t possibly repay. A country today like Ecuador owes over fifty percent of its national budget just to pay down its debt. And it really can’t do it. So, we literally have them over a barrel. So, when we want more oil, we go to Ecuador and say, “Look, you're not able to repay your debts, therefore give our oil companies your Amazon rain forest, which are filled with oil.” And today we're going in and destroying Amazonian rain forests, forcing Ecuador to give them to us because they’ve accumulated all this debt. So we make this big loan, most of it comes back to the United States, the country is left with the debt plus lots of interest, and they basically become our servants, our slaves. It's an empire. There's no two ways about it. It’s a huge empire. It's been extremely successful.

AMY GOODMAN: We're talking to John Perkins, author of Confessions of an Economic Hit Man. You say because of bribes and other reason you didn't write this book for a long time. What do you mean? Who tried to bribe you, or who -- what are the bribes you accepted?

JOHN PERKINS: Well, I accepted a half a million dollar bribe in the nineties not to write the book.

AMY GOODMAN: From?

JOHN PERKINS: From a major construction engineering company.

AMY GOODMAN: Which one?

JOHN PERKINS: Legally speaking, it wasn't -- Stoner-Webster. Legally speaking it wasn't a bribe, it was -- I was being paid as a consultant. This is all very legal. But I essentially did nothing. It was a very understood, as I explained in Confessions of an Economic Hit Man, that it was -- I was -- it was understood when I accepted this money as a consultant to them I wouldn't have to do much work, but I mustn't write any books about the subject, which they were aware that I was in the process of writing this book, which at the time I called “Conscience of an Economic Hit Man.” And I have to tell you, Amy, that, you know, it’s an extraordinary story from the standpoint of -- It's almost James Bondish, truly, and I mean--

AMY GOODMAN: Well that's certainly how the book reads.

JOHN PERKINS: Yeah, and it was, you know? And when the National Security Agency recruited me, they put me through a day of lie detector tests. They found out all my weaknesses and immediately seduced me. They used the strongest drugs in our culture, sex, power and money, to win me over. I come from a very old New England family, Calvinist, steeped in amazingly strong moral values. I think I, you know, I’m a good person overall, and I think my story really shows how this system and these powerful drugs of sex, money and power can seduce people, because I certainly was seduced. And if I hadn't lived this life as an economic hit man, I think I’d have a hard time believing that anybody does these things. And that's why I wrote the book, because our country really needs to understand, if people in this nation understood what our foreign policy is really about, what foreign aid is about, how our corporations work, where our tax money goes, I know we will demand change.

AMY GOODMAN: We're talking to John Perkins. In your book, you talk about how you helped to implement a secret scheme that funneled billions of dollars of Saudi Arabian petrol dollars back into the U.S. economy, and that further cemented the intimate relationship between the House of Saud and successive U.S. administrations. Explain.

JOHN PERKINS: Yes, it was a fascinating time. I remember well, you're probably too young to remember, but I remember well in the early seventies how OPEC exercised this power it had, and cut back on oil supplies. We had cars lined up at gas stations. The country was afraid that it was facing another 1929-type of crash–depression; and this was unacceptable. So, they -- the Treasury Department hired me and a few other economic hit men. We went to Saudi Arabia. We --

AMY GOODMAN: You're actually called economic hit men --e.h.m.’s?

JOHN PERKINS: Yeah, it was a tongue-in-cheek term that we called ourselves. Officially, I was a chief economist. We called ourselves e.h.m.'s. It was tongue-in-cheek. It was like, nobody will believe us if we say this, you know? And, so, we went to Saudi Arabia in the early seventies. We knew Saudi Arabia was the key to dropping our dependency, or to controlling the situation. And we worked out this deal whereby the Royal House of Saud agreed to send most of their petro-dollars back to the United States and invest them in U.S. government securities. The Treasury Department would use the interest from these securities to hire U.S. companies to build Saudi Arabia–new cities, new infrastructure–which we’ve done. And the House of Saud would agree to maintain the price of oil within acceptable limits to us, which they’ve done all of these years, and we would agree to keep the House of Saud in power as long as they did this, which we’ve done, which is one of the reasons we went to war with Iraq in the first place. And in Iraq we tried to implement the same policy that was so successful in Saudi Arabia, but Saddam Hussein didn't buy. When the economic hit men fail in this scenario, the next step is what we call the jackals. Jackals are C.I.A.-sanctioned people that come in and try to foment a coup or revolution. If that doesn't work, they perform assassinations. or try to. In the case of Iraq, they weren't able to get through to Saddam Hussein. He had -- His bodyguards were too good. He had doubles. They couldn’t get through to him. So the third line of defense, if the economic hit men and the jackals fail, the next line of defense is our young men and women, who are sent in to die and kill, which is what we’ve obviously done in Iraq.

AMY GOODMAN: Can you explain how Torrijos died?

JOHN PERKINS: Omar Torrijos, the President of Panama. Omar Torrijos had signed the Canal Treaty with Carter much -- and, you know, it passed our congress by only one vote. It was a highly contended issue. And Torrijos then also went ahead and negotiated with the Japanese to build a sea-level canal. The Japanese wanted to finance and construct a sea-level canal in Panama. Torrijos talked to them about this which very much upset Bechtel Corporation, whose president was George Schultz and senior council was Casper Weinberger. When Carter was thrown out (and that’s an interesting story–how that actually happened), when he lost the election, and Reagan came in and Schultz came in as Secretary of State from Bechtel, and Weinberger came from Bechtel to be Secretary of Defense, they were extremely angry at Torrijos -- tried to get him to renegotiate the Canal Treaty and not to talk to the Japanese. He adamantly refused. He was a very principled man. He had his problem, but he was a very principled man. He was an amazing man, Torrijos. And so, he died in a fiery airplane crash, which was connected to a tape recorder with explosives in it, which -- I was there. I had been working with him. I knew that we economic hit men had failed. I knew the jackals were closing in on him, and the next thing, his plane exploded with a tape recorder with a bomb in it. There's no question in my mind that it was C.I.A. sanctioned, and most -- many Latin American investigators have come to the same conclusion. Of course, we never heard about that in our country.

AMY GOODMAN: So, where -- when did your change your heart happen?

JOHN PERKINS: I felt guilty throughout the whole time, but I was seduced. The power of these drugs, sex, power, and money, was extremely strong for me. And, of course, I was doing things I was being patted on the back for. I was chief economist. I was doing things that Robert McNamara liked and so on.

AMY GOODMAN: How closely did you work with the World Bank?

JOHN PERKINS: Very, very closely with the World Bank. The World Bank provides most of the money that’s used by economic hit men, it and the I.M.F. But when 9/11 struck, I had a change of heart. I knew the story had to be told because what happened at 9/11 is a direct result of what the economic hit men are doing. And the only way that we're going to feel secure in this country again and that we're going to feel good about ourselves is if we use these systems we’ve put into place to create positive change around the world. I really believe we can do that. I believe the World Bank and other institutions can be turned around and do what they were originally intended to do, which is help reconstruct devastated parts of the world. Help -- genuinely help poor people. There are twenty-four thousand people starving to death every day. We can change that.

AMY GOODMAN: John Perkins, I want to thank you very much for being with us. John Perkins' book is called, Confessions of an Economic Hit Man.

http://www.democracynow.org/article.pl?sid=04/11/09/1526251

posted March 19, 2006 03:51 PM              

quote:

---

Well, I know this prediction brings joy and glad tidings to the hearts of every America hater. Finally, America and Americans get their comuppance.

But wait, those thinking this would be a disaster for the United States haven't engaged their brains. It would be a disaster for the rest of the world bringing on a worldwide depression...except FOR the United States.

Our currency IS the federal reserve note and the prices of goods and services within the United States would not undergo much change. The exception to that IS that prices of goods and services produced outside the United States but sold in the United States would rise according to the amount of devaluation of the Federal Reserve Notes on the world currency markets.

So, instead of taking a worse case scenario...that the US currency becomes worthless, let's just take a 50% devaluation and see what follows along naturally, as day follows night.

Those $30,000 Toyotas and Nissans overnight rise to $45,000. Those $50,000 BMWs and Mercedes overnight rise to $75,000. All those televisions, computers, cameras and other foreign produced goods overnight rise to prices 50% higher than they were the day before. Oil at $60 per barrel goes to $90, overnight. Foreign produced goods would disappear off retailers shelves because they wouldn't be competitive with American produced goods.

The world has forgotten a lesson of history. America invented modern manufacturing. Invented the assembly line production process. What the rest of the world doesn't understand is that America can manufacture ALL the products Americans want to purchase but chooses to export manufacturing to other nations for lower prices at the point of purchase here. Remove those lower prices on foreign produced goods and watch how fast America can and would retool to produce them here.

So, what would happen to the rest of the world? America is the biggest market for the worlds exports. Imagine what a devaluation in the value of the American currency would mean to Europe, Japan, China, the Far East and Indonesia, even Canada, Mexico, Central and South America and Australia.

Their exports which America imports fuel their economies, puts their people to work
and transfers about $750,000,000,000...that's 750 BILLION dollars a year to their economies. Color that gone. That's $750 BILLION a year of American wealth that no longer flows out of America to countries around the world. That's not all by any means. That $750 BILLION is only the trade deficit. It doesn't include other imports which balance...in dollar terms, what the US exports...which for purposes of this example is a wash. Color the rest of those imports gone too.

NAFTA, CAFTA, WTO all gone too. Who for instance is going to have the money to buy US produced goods...so there would be no reason for the organizations to exist. Gone too are the International Monetary Fund. Ditto the World Bank. These are heavily subsidized by the United States but if funding had to increase by 50% in real dollar terms just to stay even then taxpayers wouldn't entertain the idea for a second.

This would cause a depression of biblical proportions in the rest of the world with massive layoffs, factory closings, bankruptcies. Governments would fail and fall. But in the United States, it would touch off an economic boom of biblical proportions the likes of which has never been seen in the history of the planet.

I know there will be some who would say the rest of the world would trade amongst themselves. But how? Where is China going to sell all their production? Who in Europe is going to have the money to buy them...because a hell of a lot of people are going to be unemployed in Europe. Where is Japan going to sell all their cars and electronics goods? Not Europe, not China. China would be most devastated, so Europe isn't going to sell them anything and neither is Japan. Neither is Europe or Japan going to sell each other much. Most of the world has an EXPORT economy.

In the United States, it would mean full employment..in fact, more than 100% employment and people would have to be granted work visas just to fill all the demands of the workforce. Gone is welfare, gone are all those social programs which cushion some Americans from the reality of work.

Another immediate effect would be the construction of nuclear power plants all over America....constructed by American engineering and construction firms. That would reduce the dependence on imported oil down about 30-40%. ANWR would be drilled and brought online quickly. Alaskan oil would stop flowing to Japan and elsewhere. Offshore drilling would commence and gas and oil production quickly brought online.
Coal gasification plants would be built. Diesel fuel from coal would come online quickly....all the while exploring other alternatives. There is enough coal in the US to service US energy needs for something on the order of 200-300 years...without the use of a single drop of oil.

Who are the middle east oil producing countries going to sell all their production to? Same with Hugo Chavez, Canada, Mexico and Africa. Good luck. In the past, everytime the US has started to get serious about cutting dependence on middle east oil, the producers there have lowered their prices to discourage that notion. With a currency devaluation it would no longer be a talking point but a structural problem the US would be forced to deal with.

Lessons: American can produce everything America needs...in America. America has the largest economy in the world. If California was a nation, it alone would have the 4th-7th largest economy in the world all by itself...depending on whose statistics one uses. The American work force is one of the most efficient and productive in the world.

A devalued currency would also permit the US to call all those foreign held bonds and pay them off in devalued federal reserve notes at 50% of their actual value today...since the Federal Reserve Note is the currency in which those bonds are denominated.

So, would you call all this the Law of "Intended" OR "Unintended" Consequences? Or, would this be called the world getting even with America?-jwhop

---

posted March 19, 2006 04:18 PM              

There is an economics-textbook myth that foreign-exchange rates are determined by supply and demand based on market fundamentals. Economics tends to dismiss socio-political factors that shape market fundamentals that affect supply and demand.

The current international finance architecture is based on the US dollar as the dominant reserve currency, which now accounts for 68 percent of global currency reserves, up from 51 percent a decade ago. Yet in 2000, the US share of global exports (US$781.1 billon out of a world total of $6.2 trillion) was only 12.3 percent and its share of global imports ($1.257 trillion out of a world total of $6.65 trillion) was 18.9 percent. World merchandise exports per capita amounted to $1,094 in 2000, while 30 percent of the world's population lived on less than $1 a day, about one-third of per capita export value.

Ever since 1971, when US president Richard Nixon took the dollar off the gold standard (at $35 per ounce) that had been agreed to at the Bretton Woods Conference at the end of World War II, the dollar has been a global monetary instrument that the United States, and only the United States, can produce by fiat. The dollar, now a fiat currency, is at a 16-year trade-weighted high despite record US current-account deficits and the status of the US as the leading debtor nation. The US national debt as of April 4 was $6.021 trillion against a gross domestic product (GDP) of $9 trillion.

World trade is now a game in which the US produces dollars and the rest of the world produces things that dollars can buy. The world's interlinked economies no longer trade to capture a comparative advantage; they compete in exports to capture needed dollars to service dollar-denominated foreign debts and to accumulate dollar reserves to sustain the exchange value of their domestic currencies. To prevent speculative and manipulative attacks on their currencies, the world's central banks must acquire and hold dollar reserves in corresponding amounts to their currencies in circulation. The higher the market pressure to devalue a particular currency, the more dollar reserves its central bank must hold. This creates a built-in support for a strong dollar that in turn forces the world's central banks to acquire and hold more dollar reserves, making it stronger. This phenomenon is known as dollar hegemony, which is created by the geopolitically constructed peculiarity that critical commodities, most notably oil, are denominated in dollars. Everyone accepts dollars because dollars can buy oil. The recycling of petro-dollars is the price the US has extracted from oil-producing countries for US tolerance of the oil-exporting cartel since 1973.

By definition, dollar reserves must be invested in US assets, creating a capital-accounts surplus for the US economy. Even after a year of sharp correction, US stock valuation is still at a 25-year high and trading at a 56 percent premium compared with emerging markets.

The Quantity Theory of Money is clearly at work. US assets are not growing at a pace on par with the growth of the quantity of dollars. US companies still respresent 56 percent of global market capitalization despite recent retrenchment in which entire sectors suffered some 80 percent a fall in value. The cumulative return of the Dow Jones Industrial Average (DJIA) from 1990 through 2001 was 281 percent, while the Morgan Stanley Capital International (MSCI) developed-country index posted a return of only 12.4 percent even without counting Japan. The MSCI emerging-market index posted a mere 7.7 percent return. The US capital-account surplus in turn finances the US trade deficit. Moreover, any asset, regardless of location, that is denominated in dollars is a US asset in essence. When oil is denominated in dollars through US state action and the dollar is a fiat currency, the US essentially owns the world's oil for free. And the more the US prints greenbacks, the higher the price of US assets will rise. Thus a strong-dollar policy gives the US a double win.

Historically, the processes of globalization has always been the result of state action, as opposed to the mere surrender of state sovereignty to market forces. Currency monopoly of course is the most fundamental trade restraint by one single government. Adam Smith published Wealth of Nations in 1776, the year of US independence. By the time the constitution was framed 11 years later, the US founding fathers were deeply influenced by Smith's ideas, which constituted a reasoned abhorrence of trade monopoly and government policy in restricting trade. What Smith abhorred most was a policy known as mercantilism, which was practiced by all the major powers of the time. It is necessary to bear in mind that Smith's notion of the limitation of government action was exclusively related to mercantilist issues of trade restraint. Smith never advocated government tolerance of trade restraint, whether by big business monopolies or by other governments.

A central aim of mercantilism was to ensure that a nation's exports remained higher in value than its imports, the surplus in that era being paid only in specie money (gold-backed as opposed to fiat money). This trade surplus in gold permitted the surplus country, such as England, to invest in more factories to manufacture more for export, thus bringing home more gold. The importing regions, such as the American colonies, not only found the gold reserves backing their currency depleted, causing free-fall devaluation (not unlike that faced today by many emerging-economy currencies), but also wanting in surplus capital for building factories to produce for export. So despite plentiful iron ore in America, only pig iron was exported to England in return for English finished iron goods.

In 1795, when the Americans began finally to wake up to their disadvantaged trade relationship and began to raise European (mostly French and Dutch) capital to start a manufacturing industry, England decreed the Iron Act, forbidding the manufacture of iron goods in America, which caused great dissatisfaction among the prospering colonials. Smith favored an opposite government policy toward promoting domestic economic production and free foreign trade, a policy that came to be known as "laissez faire" (because the English, having nothing to do with such heretical ideas, refuse to give it an English name). Laissez faire, notwithstanding its literal meaning of "leave alone", meant nothing of the sort. It meant an activist government policy to counteract mercantilism. Neo-liberal free-market economists are just bad historians, among their other defective characteristics, when they propagandize "laissez faire" as no government interference in trade affairs.

A strong-dollar policy is in the US national interest because it keeps US inflation low through low-cost imports and it makes US assets expensive for foreign investors. This arrangement, which Federal Reserve Board chairman Alan Greenspan proudly calls US financial hegemony in congressional testimony, has kept the US economy booming in the face of recurrent financial crises in the rest of the world. It has distorted globalization into a "race to the bottom" process of exploiting the lowest labor costs and the highest environmental abuse worldwide to produce items and produce for export to US markets in a quest for the almighty dollar, which has not been backed by gold since 1971, nor by economic fundamentals for more than a decade. The adverse effect of this type of globalization on the developing economies are obvious. It robs them of the meager fruits of their exports and keeps their domestic economies starved for capital, as all surplus dollars must be reinvested in US treasuries to prevent the collapse of their own domestic currencies.

The adverse effect of this type of globalization on the US economy is also becoming clear. In order to act as consumer of last resort for the whole world, the US economy has been pushed into a debt bubble that thrives on conspicuous consumption and fraudulent accounting. The unsustainable and irrational rise of US equity prices, unsupported by revenue or profit, had merely been a devaluation of the dollar. Ironically, the current fall in US equity prices reflects a trend to an even stronger dollar, as it can buy more deflated shares.

The world economy, through technological progress and non-regulated markets, has entered a stage of overcapacity in which the management of aggregate demand is the obvious solution. Yet we have a situation in which the people producing the goods cannot afford to buy them and the people receiving the profit from goods production cannot consume more of these goods. The size of the US market, large as it is, is insufficient to absorb the continuous growth of the world's new productive power. For the world economy to grow, the whole population of the world needs to be allowed to participate with its fair share of consumption. Yet economic and monetary policy makers continue to view full employment and rising fair wages as the direct cause of inflation, which is deemed a threat to sound money.

The Keynesian starting point is that full employment is the basis of good economics. It is through full employment at fair wages that all other economic inefficiencies can best be handled, through an accommodating monetary policy. Say's Law (supply creates its own demand) turns this principle upside down with its bias toward supply/production. Monetarists in support of Say's Law thus develop a phobia against inflation, claiming unemployment to be a necessary tool for fighting inflation and that in the long run, sound money produces the highest possible employment level. They call that level a "natural" rate of unemployment, the technical term being NAIRU (non-accelerating inflation rate of unemployment).

It is hard to see how sound money can ever lead to full employment when unemployment is necessary to maintain sound money. Within limits and within reason, unemployment hurts people and inflation hurts money. And if money exists to serve people, then the choice becomes obvious. Without global full employment, the theory of comparative advantage in world trade is merely Say's Law internationalized.

No single economy can profit for long at the expense of the rest of an interdependent world. There is an urgent need to restructure the global finance architecture to return to exchange rates based on purchasing-power parity, and to reorient the world trading system toward true comparative advantage based on global full employment with rising wages and living standards. The key starting point is to focus on the hegemony of the dollar.

To save the world from the path of impending disaster, we must:
# promote an awareness among policy makers globally that excessive dependence on exports merely to service dollar debt is self-destructive to any economy;
# promote a new global finance architecture away from a dollar hegemony that forces the world to export not only goods but also dollar earnings from trade to the US;
# promote the application of the State Theory of Money (which asserts that the value of money is ultimately backed by a government's authority to levy taxes) to provide needed domestic credit for sound economic development and to free developing economies from the tyranny of dependence on foreign capital;
# restructure international economic relations toward aggregate demand management away from the current overemphasis on predatory supply expansion through redundant competition; and
# restructure world trade toward true comparative advantage in the context of global full employment and global wage and environmental standards.

This is easier done than imagained. The starting point is for the major exporting nations each to unilaterally require that all its exports be payable only in its currency, so that the global finance architecture will turn into a multi-currency regime overnight. There would be no need for reserve currencies and exchange rates would reflect market fundamentals of world trade.

As for aggregate demand management, Asia leads the world in both overcapacity and underconsumption. It is high time for Asia to realize the potential of its market power. If the people of Asia are to be compensated fairly for their labor, the global economy will see its fastest growth ever.

Henry C K Liu is chairman of the New York-based Liu Investment Group.

http://www.atimes.com/global-econ/DD11Dj01.html

posted March 19, 2006 04:45 PM              

Do I have the power to delete threads.....do I ?

WOW.....I learn something every day.....

BTW....are you Mercury ruled by any chance ?

posted March 19, 2006 05:04 PM              

my recollection is that, during this thread you started, you asked that it be deleted by a moderator.....is that not correct?

So what are the rules? http://www.linda-goodman.com/ubb/Forum2/HTML/001820.html

here are the two threads that were on either side of it.....
http://www.linda-goodman.com/ubb/Forum2/HTML/001821.html http://www.linda-goodman.com/ubb/Forum2/HTML/001819.html

posted March 19, 2006 05:35 PM              

But of course I believe you, why wouldnt I.....and I will do the gracious thing and not allow that silly old "no I didnt etc"

I will not allow my ego to get the better of me Petron.

Are you a Virgo....My man is one of them....they aint never in the wrong are they....hahaha

Unfortunatley and much to my intense irritation, he isnt wrong.....most of the time....

No offence taken, I hope?

posted March 19, 2006 06:00 PM            

Henry Lui is, I believe right overall but if what he advocates were put into practice, it would result in more "Domestic" trade and an overall reduction in "global trade". That is true because the difference in values between nations currencies would make it impossible for many nations to pay for imported goods in the stronger/more valuable currency of the producing nations.

Of course, the United States could have the strongest currency/most valuable currency in the world simply by abolishing the Federal Reserve and fiat currency and going the Constitutional route: "Congress shall have the power to coin money and regulate the value thereof". There is plenty of silver with which to back that kind of money...Treasury Notes...Greenbacks.

Lui makes a small mistake by calling Federal Reserve Notes...Greenbacks. Lincoln was likely assassinated for causing the printing of Greenbacks during the civil war...taking the printing decisions and profits associated with issuing currency out of the hands of international bankers.

"Give me control over a nation's currency and I care not who makes its laws. The few who understand the system, will either be so interested from its profits or so dependent on its favors, that there will be no opposition from that class."
- Baron M.A. Rothschild -

"The bold efforts that the present bank has made to control the government and the distress it has wantonly caused, are but premonitions of the fate which awaits the American People should they be deluded into a perpetuation of this institution or the establishment of another like it... If the People only understood the rank injustice of our money and banking system there would be a revolution before morning!"
- President Andrew Jackson (1828) upon vetoing the Second Bank of the United States Charter -

"Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.... But if in the pursuit of the means we should unfortunately stumble again on unfunded paper money or any similar species of fraud, we shall assuredly give a fatal stab to our national credit in its infancy. Paper money will invariably operate in the body of politics as spirit liquors on the human body. They prey on the vitals and ultimately destroy them."
- President George Washington in a letter to J. Bowen, Rhode Island, Jan. 9, 1787 -

"Whoever controls the volume of money in any country is absolute master of all industry and commerce... And when you realise that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate."
- President James A. Garfield within weeks of his assassination -

"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance."
- President James Madison -

"The money powers prey upon the nation in times of peace and conspire against it in times of adversity. It is more despotic than a monarchy, more insolent than autocracy, more selfish than bureaucracy. It denounces, as public enemies, all who question its methods or throw light upon its crimes. I have two great enemies, the Southern Army in front of me and the Bankers in the rear. Of the two, the one at my rear is my greatest foe."
- President Abraham Lincoln -

"When, through the process of law, the common people lose their homes, they will become more docile and more easily governed through the strong arm of government applied by a central power of wealth under leading financiers. These truths are well known among our principal men who are now engaged in forming imperialism to govern the world. By dividing the voter through the political party system, we can get them to expend their energies in fighting for questions of no importance."
- 1924 edition of the American Banker's Association Digest -

"The real truth of the matter is, and you and I know, that a financial element in the large centers has owned the government of the U.S. since the days of Andrew Jackson. History depicts Andrew Jackson as the last truly honorable and incorruptible American president."
- President Franklin Delano Roosevelt, November 23, 1933, in a letter to Colonel Edward Mandell House -

posted March 19, 2006 08:35 PM              

jwhop said....

quote:

---

I like Ron Paul..on most issues Petron

---

Me too, jwhop...

PATRIOT Act is a Threat to Liberty

by Rep. Ron Paul - July 23, 2005

The USA PATRIOT Act and Terrorism Prevention Act (HR 3199) in no way brings the PATRIOT Act into compliance with the Constitution or allays concerns that the powers granted to the government in the act will be used to abuse the rights of the people. Much of the discussion surrounding this bill has revolved around the failure of the bill to extend the sunset clauses.

However, simply sunsetting troublesome provisions does not settle the debates around the PATRIOT Act. If the PATRIOT Act is constitutional and needed, as its proponents swear, why include sunset provisions at all? If it is unconstitutional and pernicious, why not abolish it immediately?

The sunset clauses do perform one useful service in that they force Congress to regularly re-examine the PATRIOT Act. As the people's representatives, it is our responsibility to keep a close eye on the executive branch to ensure it does not abuse its power. Even if the claims of HR 3199's supporters that there have been no abuses of PATRIOT Act powers under this administration are true, that does not mean that future administrations will not abuse these powers.

HR 3199 continues to violate the constitution by allowing searches and seizures of American citizens and their property without a warrant issued by an independent court upon a finding of probable cause. The drafters of the Bill Of Rights considered this essential protection against an overreaching government. For example, Section 215 of the PATRIOT Act, popularly known as the library provision, allows Foreign Intelligence Surveillance Courts, whose standards hardly meet the constitutional requirements of the Fourth Amendment, to issue warrants for individual records, including medical and library records. HR 3199 does reform this provision by clarifying that it can be used to acquire the records of an American citizen only during terrorist investigations. However, this marginal change fails to bring the section up to the constitutional standard of probable cause.

Requiring a showing of probable cause before a warrant may be issued will in no way hamper terrorist investigations. For one thing, federal authorities still would have numerous tools available to investigate and monitor the activities of non-citizens suspected of terrorism. Second, restoring the Fourth Amendment protections would in no way interfere with the provisions of the PATRIOT Act removing the firewalls that prevented the government's law enforcement and intelligence agencies from sharing information.

The probable cause requirements will not delay a terrorist investigation. Preparations can be made for the issuance of a warrant in the event of an emergency, and allowances can be made for cases where law enforcement does not have time to obtain a warrant. In fact, a requirement that law enforcement demonstrate probable cause may help law enforcement focus their efforts on true threats, thus avoiding the problem of information overload that is handicapping the government's efforts to identify sources of terrorist financing.

The requirement that law enforcement demonstrate probable cause before a judge preserves the Founders' system of checks and balances that protects against one branch gathering too much power. The Founders recognized that one of the chief dangers to liberty was the concentration of power in a few hands, which is why they carefully divided power among the three branches.I would remind those of my colleagues who claim that we must set aside the constitutional requirements during war that the founders were especially concerned about the consolidation of power during times of war and national emergences. My colleagues should also keep in mind that PATRIOT Act powers have already been used in non-terrorism related cases, most notably in a bribery investigation in Nevada.

HR 3199 does take some positive steps toward restoring respect for constitutional liberties and checks and balances that the original PATRIOT Act stripped away. However, it still leaves in place large chunks of legislation that threaten individual liberty by giving law enforcement power to snoop into American citizens' lives without adequate oversight. This power is unnecessary to effectively fight terrorism. Therefore, I urge my colleagues to reject this bill.

bold letters mine

Ron Paul is pretty cool....

posted March 20, 2006 04:57 AM              

An Interview with Dr Krassimir Petrov,Ph.D (Teaches Macroeconomics, International Finance & Econometrics at the American University in Bulgaria).

Afghanistan, Iraq and now Iran and potentially Syria on the cards for a military intervention, I was intrigued to find out what exactly is driving the neo-conservatives in the echelons of power at the Whitehouse and the few coalition allies to the U.S. to continue their strategy of potential military strikes despite what is universally accepted has been a disastrous foreign policy in Iraq.

I interviewed Dr. Krassimir Petrov who has recently wrote an article titled “The Proposed Iranian Oil Bourse” to enlighten me on this subject. The interview focused on two articles, namely the one cited above and by W.R. Clark titled “Petrodollar Warfare: Dollars, Euros & The Upcoming Iranian Oil Bourse.” The response is a combination of statements from the articles and Dr. Krassimir Petrov’s own opinions on the questions asked.

The questions were framed as a result of what the authors have highlighted is the setting up of a proposed Iranian Oil Bourse due to become operational from March 2006. The word “bourse” refers to a stock exchange for securities trading, and is derived from the French Stock Exchange in Paris. The Tehran Government has plans to begin competing with New York’s NYMEX and London’s IPE using a Euro based international oil trading mechanism. You may ask, why is this of any significance?

Well, in the year 2000, Iraq had decided that it was no longer going to accept dollars for oil being sold under the UN’s Oil For-Food Program and decided to switch to the Euro as Iraq’s oil export currency. The result was a military strike by the U.S. and it’s allies and subsequently in ample time the dollar was restored as Iraq’s oil export currency.

The authors feel that this was one of the main reasons for attacking Iraq to maintain the U.S. dollar as the monopoly currency for the critical international oil market. What this signifies is that without some sort of U.S. intervention and if the Iranian oil bourse goes ahead, the Euro is going to establish a firm foothold in the international oil trade market. Under the rubric of what is seen as the potential nuclear threat of Iran in future years, W.D. Clark states in his article that given the U.S. debt levels and taking into consideration the neo-conservative project of U.S. global domination, Tehran’s intentions “constitute an obvious encroachment on dollar supremacy in the crucial international oil market.” With international pressure mounting on the Iranian Government, it was under these circumstances that I posed the questions to Dr. Krassimir Petrov.

Q1/ In light of the above articles, are we witnessing a “new kind of warfare,” namely that of “economic warfare”?

Dr. Krassimir Petrov: War always has an economic stance to it. Nations would not go to war if they were not to benefit economically from their pursuits. Hence, why in my article I coined the phrase under economics of empires “a nation state taxes it’s own citizens while an empire taxes other nation sates.” As W.R. Clark succinctly states in his article “there are unspoken macroeconomic drivers underlying the second stage of petrodollar warfare, Iran’s upcoming Oil Bourse.” Dr. K. Petrov suggests that the imperial ability to tax has been at the core for building a stronger economy and consequently a better and stronger military. Economically, the American empire was born with Bretton Woods in 1945.

The U.S. dollar was not fully convertible to gold, but was made convertible to gold only to foreign governments. This established the dollar as the reserve currency of the world. Dr. K Petrov suggested that, historically taxation had always been direct, where the subject state handed over the economic goods directly to the empire, but for the first time in history, during the twentieth century, America was able to tax the world indirectly, through inflation fostering the creation of a new U.S. imperial tax. The guns-and-butter policy of the 1960's was an imperial one: the dollar supply was relentlessly increased to finance Vietnam and LBJ's Great Society.

In August 15, 1971, The U.S. Government had defaulted on its payments when foreigners demanded payment for their dollars in gold. The popular “spin” at the time was that the U.S. was severing the link between the dollar and gold, in reality the denial to pay back in gold was an act of bankruptcy by the U.S. Government in order to foster the aims of what it had declared as its empire. It had extracted an enormous amount of economic goods from the rest of the world, with no intention or ability to return those goods, and the world was powerless to respond- the world was taxed and it could not do anything about it. At that juncture, in order to sustain the American empire and continue to tax the world, the U.S. had to force the rest of the world to hold ever depreciating American dollars in exchange for economic goods. It had to give the rest of the world a viable reason to hold these ever depreciating dollars. The reason it gave was oil.

The answer Dr. K. Petrov gave to the first question was an overwhelming yes based on economic, military and imperialistic goals.

Q2/ The U.S. and Saudi Governments have previously signed a Iron Clad Agreement. If the Euro is successful as a currency for oil exportation, what other nations are likely to benefit in the future and could we witness a disenfranchisement in terms of the relationship the U.S. has with the House of Saud?

Dr. Krassimir Petrov: In 1971, as it became clearer and clearer that the U.S Government would not be able to buy back its dollars in gold, it made in 1972-73 an iron-clad arrangement with Saudi Arabia to support the power of the House of Saud in exchange for accepting only U.S. dollars for its oil. The rest of OPEC was to follow suit and also accept only dollars. Because the world had to buy oil from the Arab oil countries, it had the reason to hold dollars as payment for oil. Because the world needed ever increasing quantities of oil at ever increasing oil prices, the world's demand for dollars could only increase. Even though dollars could no longer be exchanged for gold, they were now exchangeable for oil.

The economic essence of this arrangement was that the dollar was now backed by oil. As long as that was the case, the world had to accumulate increasing amounts of dollars, because they needed those dollars to buy oil. As long as the dollar was the only acceptable payment for oil, its dominance in the world was assured, and the American empire could continue to tax the rest of the world. If, for any reason, the dollar lost its oil backing, the American empire would cease to exist. Thus, imperial survival dictated that oil be sold only for dollars. It also dictated that oil reserves were spread around various sovereign states that weren't strong enough, politically or militarily, to demand payment for oil in something else. If someone demanded a different payment, he had to be convinced, either by political pressure or military means, to change his mind.

Dr. Krassimir Petrov: The U.S Government has supported the Saudi government for many years both economically and militarily. If the Iron Clad Agreement was no longer viable, I am sure that the U.S Government would use all its economic and military power to restore its ascendancy in the region. The other nations that would benefit, would be the likes of China, Russia & the Asian countries. Many countries in the region would cherish the opportunity to curtail the U.S. monopoly in this area. Although many and I included would like to see the day when these oil rich nations disenfranchise themselves from the U.S. and the dollar, the likelihood of it happening in the foreseeable future is very minimal.

Q3/ Do you feel that nuclear proliferation agenda by Iran is being used as an excuse by the U.S. and it's coalition allies to achieve their economic and political goals in the region?

The man that actually did demand Euro for his oil was Saddam Hussein in 2000. At first, his demand was met with ridicule, later with neglect, but as it became clearer that he meant business, political pressure was exerted to change his mind. When other countries, like Iran, wanted payment in other currencies, most notably Euro and Yen, the danger to the dollar was clear and present, and a punitive action was in order. Bush's Shock-and-Awe in Iraq was not about Saddam's nuclear capabilities, about defending human rights, about spreading democracy, or even about seizing oil fields; it was about defending the dollar and the American empire. It was about setting an example that anyone who demanded payment in currencies other than U.S. Dollars would be likewise punished.

Many have criticized Bush for staging the war in Iraq in order to seize Iraqi oil fields. However, those critics can't explain why Bush would want to seize those fields. He could simply print dollars for nothing and use them to get all the oil in the world that he needs. He must have had some other reason to invade Iraq.

Dr. Krassimir Petrov: Dr K. Petrov started by referring to the above extract in his article with reference to what took place with Iraq previously. The notion that Iraq had weapons of mass destruction was in fact a great distortion of the real reason why military intervention was carried out. Dr. K. Petrov then reiterated the statement that history teaches us that an empire goes to war to either (1) defend itself or (2) benefit from war and the Iranian situation is no different. The situation in Iran is that they are 10 years away from potentially having nuclear weapons. Whereas, North Korea is many years ahead of Iran in terms of it’s nuclear agenda and we are not hearing any signals about a potential military reprisal against them. Based on recent evidence in Iraq, the current policy is merely a culmination of what has already passed with future projections of an attack on Syria also on the cards.

Q4/ Why was the Euro as a currency introduced into the global market?

Dr. Krassimir Petrov: The idea of introducing the Euro as a currency into the international financial markets

was given credence in the early 1990’s. The main reason was to establish a currency that could compete with the dollar in the global economy. By having a strong Euro

operating in the oil market will dramatically shift the balance of power as the main oil exporting countries will begin to evaluate their options in this market with the EU and in relation to their balance of payments.

Q5/ What is the realistic probability of the Iranian Bourse operating successfully from March 2006 onwards?

Dr. Krassimir Petrov:

According to the reports I have, there is nothing suggesting at this moment in time that the Iranian Oil Bourse will not become operational from March 2006 onwards.

Q6/ At this stage when pressure is being put on Iran by the UN Security Council and the U.S. Government, what compromise is there on a economic front with references to the Iranian oil bourse & preventing a potential military attack on Iran?

Dr. Krassimir Petrov: The U.S. and it’s international allies do not really wish to engage in a military battle with Iran at this juncture in light of what has happened in Iraq. However, when you suggest a compromise that would be beneficial to the U.S., the only viable compromise would be for the Iranian Oil Bourse not to go ahead. Otherwise, the repercussions as the precedent from Iraq shows is an increasing likelihood of a military reprisal. This is further reiterated in the opening statement of W.D. Clark’s article on “Petrodollar Warfare” where he cited the following passage from a speech made by President G.W. Bush “This notion that the United States is getting ready to attack Iran is simply ridiculous...Having said that, all options are on the table."

The End of Dollar Hegemony: Analysis of Congressman Ron. Paul’s speech before the U.S. House of Representatives.

During the interview, Dr K. Petrov also directed me to a recent speech by Hon. Ron Paul of Texas titled “The End of Dollar Hegemony” before the U.S. House of Representatives to endorse his findings over the years. Congressman Ron Paul gallantly presented his case underlying with relative precision how if the U.S does not change it’s ways in terms of the economic, diplomatic & military policies in certain parts of the world, the end of dollar hegemony could be on the cards as it is replaced by another currency or gold as the leading standard bearer in the global markets. The speech by R. Paul very much continues the legacy and the picture that has been painted by Dr. K. Petrov and W.D. Clark in terms of the policies and strategies that the U.S. has historically used to maintain the dollar as the dominant currency on the world markets. The “bullish” confidence that has formed the benchmark in preserving the dollar boasted well for financing extravagance by conquering foreign lands, which in return meant less strains on domestic labour and productivity as it reaped the benefits not only gold but slaves (cheap labour) all contributing towards the economic and military might of the American empire. These foreign excursions also provided more ample opportunities to tax people & nation states, all assisting in preserving the dominance of the empire. Based on this historical observation, R. Paul states that when the wealth of nations had been sapped and gold no longer could be maintained, the military prowess of the empire subsequently also plummeted. Today, the principles are the same but the process is different. Paper money has replaced gold as the currency of the realm, but the goals remain essentially the same, namely to “compel foreign countries to produce and subsidize the country with military superiority and control over the monetary printing presses.”

The Other side of the Coin

R. Paul suggests that since printing money is nothing short of counterfeiting, military ascendancy is paramount for its successful operation. However, the drawback is that such a policy tramples on the character of the counterfeiting nation depleting the incentive to save and produce, propelling increasing debts and welfare instability.

At the stage when paper money is rejected, or when gold runs out, wealth accumulation and political stability are lost. The term “dollar diplomacy” in the late 19th century was rephrased with “dollar hegemony” during the second half of the 20th century. The Federal Reserve System from 1913-1971, WW II created a simple formula, which was increasing the money supply of dollars and military might equalled a virtual monopoly on global economic trade with the dollar acting as the catalyst in the system. The 1944 Bretton Woods agreement had solidified this dominance making the purchase of dollars holding equal a footing as gold with a purchase power at 1/35th ounce of gold which was illegal for American Citizens to own. As R. Paul mentions, this was a policy that was destined to fail as in the following years the U.S. increased the supply of dollars without gold backing. This unseemly adventure came to an end on Aug 15, 1971, when Nixon closed the gold window.

Preserving the Dollar Hegemony

R. Paul’s article highlights how the U.S. agreement with OPEC to price oil in U.S dollars exclusively for all worldwide transactions gave the dollar a pivotal position in the global currency market as the dollar would now be extricable linked to oil. In exchange, U.S. protection was guaranteed towards the oil rich nations and the dollar gained in relative strength allowing the U.S. to export “monetary inflation” and buy oil and other goods at a discount rate fostering further the quest for dollar hegemony.

However, the key points that R. Paul highlights in the article is that the OPEC arrangement was not as strong and stable as the Bretton Woods arrangement or the gold standard of the late 19th century. This volatility was highlighted when in the 1970’s the dollar nearly collapsed and extortionate interest rates of 21% were required to bring stability back into the system. To this date, central banks and international commercial banks have preserved the strength of the dollar giving it similar footing to that of gold.

Economic Warfare: A New Kind of Warfare?

Congressman R. Paul points out that the artificial demand for the dollar along with the military might places the U.S. in the unique position to the rule the world without hindering its own domestic resources or deficits. This cosy relationship can’t last!

In the past 5 years, the dollar has been devalued in terms of gold by more than fifty percent. The above analysis has shown, that if anyone does challenge the status quo in terms of the link between the dollar and oil e.g. Saddam Hussein (2000), the powers that be will use all economic and military means to remove that challenge (regime change) at whatever costs, including at times illegitimate authorisation as in Iraq. In 2001, Venezuela’s ambassador to Russia spoke of Venezuela switching to the Euro for all their oil sales. This was immediately thwarted with economic pressure from the U.S.. The U.S. foreign policy in recent years has heightened tensions and increased resentment amongst majority Muslim nations around the world. This does not hold well when it comes to U.S. credibility and diplomacy in the international arena. R. Paul states that the $ 2.trillion never ending war must be paid for one way or another. Dollar hegemony provides the vehicle to do just that.

The key is to propel the dollar dependency among states, so that they remain “allies to the fraud” and hence keep the dollars artificial value high. If Iran does go ahead with the planned Iranian Oil Bourse from March 2006, if previous precedents is to go by, she will be subjected to the same economic and military pressures until a regime change has been put firmly in place in the region. As R. Paul highlights, using force to compel people to accept money without real value can only work in the short run.

Economic law is based on fiduciary exchange of goods with real value as opposed to the superficial values system the dollar hegemony project is promoting. It seems that the tide is slowly changing, when we will see the oil rich nations bartering in currencies other than the dollar. Although, the authors of the three main articles in this analyses would cherish seeing that day, the immediate likelihood is that the neo-conservative U.S. global economic dollar hegemonic project will continue using both political and military pressure to foster this global agenda.

Copyright© 2002-05 Independent Centre for Strategic Studies and Analysis (ICSSA).
http://mathaba.net/0_index.shtml?x=530850

posted July 02, 2006 03:35 PM              

TEHRAN, May 15 (UPI) -- Iranian President Mahmoud Ahmadinejad announced Friday that in July Iran will abandon dollar payments for its oil and natural gas exports in favor of euros.

The move comes amid a standoff between Tehran and Washington over Iran's nuclear fuel enrichment program. The Bush administration insists the program is cover for a nuclear weapons program, a charge that Iran denies.

All current international oil transactions on the New York Mercantile Exchange and London's International Petroleum Exchange are priced in dollars.

Middleeastforex.com reported May 13 that Ahmadinejad announced the change Friday during a visit to Baku, Azerbaijan.

Many political observers see the decision as an attempt to pressure Washington, which is attempting to line up other U.N. Security Council members to act against Iran for its nuclear policies.

Iran has also proposed establishing a euro-based Iranian oil bourse to compete with NYMEX and the IPE. The proposal was first put forward in the beginning of the Third Development Plan (2000-2005), and began to receive serious attention in 2005.

posted July 02, 2006 03:32 PM              

By Matthew M. Allen
7-01-06, 9:01 am

Iran is the second largest exporter of petroleum among the OPEC (Organization of Petroleum Exporting Countries) member states. Since 2005, Iran has been constructing an economic policy to create its own oil "bourse" or exchange. Iran would execute this by conducting petroleum transactions with euros instead of dollars.3 Why?

In value the euro (the consolidated currency of the European Union) is higher than the dollar. In "dollar" terms, the dollar only equals to about 83 cents of the euro compared to the "euro" value to the dollar being about $1.20. In economic terms and basic common sense- the euro has a higher value. If we turn the clock back to the year 2000, it will show us that Saddam Hussein began to sell oil to his contractors in euros. Many believe that this is the real reason why the U.S invaded Iraq 3 years later. Iraq, another OPEC member, had to be diverted from selling oil in euros as an effort to prevent the "domino theory" among other OPEC members. The invasion of Iraq was designed to undermine its position in OPEC and to revert back to the dollar for petroleum transactions.4

It is essential to understand the conjecture behind the war in Iraq in order to comprehend the implications behind Iran. Iran has been enforcing the euro exchange policy towards its European and ACU customers since 2003.5 According to Mostakhdemin Hosseini, head of the Iranian Stock Exchange, Tehran gave its approval to the new "bourse" that was expected to begin in late March of 2006. March has now past and the euro petroleum exchange has not officially opened. If Iran’s oil bourse comes to fruition, it would be widely accepted by several members of the international community. Particularly Russia, China, and India – as the former two already have euros in their central banks.
http://www.politicalaffairs.net/article/articleview/3740/1/194/

posted July 03, 2006 08:16 PM              

i guess the only thing that went CRASH!! BANG!! WALLOP!!! in june was the kindred spirits website.....