Why the US is at War--The Petrodollar

deconstructionist

My most recent rant on the topic--comments/critique welcome. can be seen with links to relevant info included at the following url: http://tinyurl.com/9qsha
------------------------------------

The mass media would have you believe that we are at war because Iraq is a hotbed for breeding terrorists and we are protecting our national interests by bringing democracy there. Common liberal thinking would have you believe that we are there simply for "oil" and that the war is wrong and it only serves the interests of the rich and greedy. While the war certainly does help the rich and greedy, that characterization is not entirely true... The answer is--and it is a simple one--we are at war with Iraq to protect our currency, and to protect our way of life. While the answer is simple, understanding why that is the answer takes a bit of explaining.

If you've read my blog or you read www.museletter.com, you know that oil is traded in dollars. That means if anyone wants to purchase oil, be it a corporation or a nation, they must exchange whatever currency they use for US dollars. This policy was instituted in a deal with the US and OPEC shortly after the oil shocks of the 70s. During the late 20th century, The World Bank, under the direction of Robert Mcnamara from 1968-1981, "helped" 3rd world nations industrialize by floating them HUGE loans--in US dollars--so they could buy oil. Of course there was no way these countries could pay back these loans, but the investment in dollars created by this practice allowed the dollar to grow stronger and stronger and allowed us to carry a RE-GODDAMNED-DICOLOUS amount of debt. But as long as countries are buying dollars to buy oil, things were right and good--as there is demand for dollars.

Our currency remains strong not because we produce any exports of intrinsic value (aside from weapons), but because foreign investors were buying dollars left and right. In fact we started the practice of mass-outsourcing of physical goods production and jobs at about the same time as the "petrodollar" was created.

Basic economic theory says that the more something is demanded, the more it is worth. In the simplest terms, currencies work in the same fashion. Dollars are vaulable because there is a demand for them in the global marketplace. Once that demand is taken away, the value of our currency plummets, and we are stuck being with no choise but to devalue it. Trust me, while they are a bunch of Fark, the Bush administration has our best interests in mind in not wanting this to happen.

We invaded Iraq in 1991 shortly after they annexed Kuwait. They had just gained control of over another 1.5 million barrels of oil per day and Sadam Hussein wanted to trade this oil for currencies other than the dollar. So we blasted them into the stone age and slapped some sanctions on their ass for 12 years, granting contracts to US corporations to rebuild the country that we had destroyed. This not only kept the dollar strong and the rich happy, but it sent a message to all other oil-exporting nations--Fark with the petrodollar and we will blow you up a whole bunch. Problem solved... sort of. In 2003, those sanctions were lifted, and Hussein began trading oil for EUROs. So we made the of course false claim that Iraq is connected to Al Queda and that they were responsible for the 9/11 attacks and we had to kick their muslim asses.

The reason we attacked Iraq again? THEY WERE TRADING OIL FOR EUROs! This war was not a pre-emptive strike on our part. Hussein struck first--economically. This war is definitely about oil--but not for consumption--for profit. Without "people" buying dollars to buy oil, our country would sink into a MASSIVE depression. And ain't no prozac gunna help us outta that one. Haliburton would not stand for their shareholders' investments becoming worthless in a matter of a few months as the dollar lost value and inflated by hundreds upon hundreds of percents. I was in Russia during 1993 as their currency was devaluing. When I got there, the Rubel was trading 700:1 against the dollar. ($1 = 700 rubels). When i left--8 days later-- it was trading at 800:1.

I will be the first to tell you that this war is bullshit, we should not be there, war in general is wrong, violence is wrong. But trust me the devaluation of currency as I described in Russia above will happen in the US as well if we don't defend the "petrodollar."

The last thing we are interested in doing in Iraq is building democracy. It is not in their best interest to trade oil for dollars and they know it. So why would they continue to do so if they had free-will over their own government and fiscal policy?

So the real reason we are in Iraq--to defend our nation's economic security. To defend our national security. To defend our standard of living. To defend our god-given right as Americans (god bless america...) to consume. It's not so easy to be anti-war when you understand that we were attacked first--economically. We really are fighting for our lives.
_________________
UNLESS

I_Like_Plants

Beautiful post. Very good explanation of the system, we hate the game of dodgeball but we are required to play, and we don't get to choose our side....

Specop_007 · Expert Joined: Aug 12, 2004 Posts: 6278

Specop_007 · Expert Joined: Aug 12, 2004 Posts: 6278

deconstructionist

I_Like_Plants

I live here, was born here, and am not about to leave here. Rather than cut and run I will defend my country and my state from the immigrant invasion, and will hope and pray and WORK for my country to be self-sufficient so it does not need foreign wars. I pray for a modern day Henry Ford or Charles Lindburgh in office, and until then vote for the biggest right-wing mofos I can.

Where do you think you're going to go for more free gun laws? The US is the last hope for that freedom, unless you want to go to Africa or S. America where it's just a free for all, sure you're free to own a gun but there's nothing worth fighting for.

And in the comment about not getting to choose your side, I mean that I am a white American. That means, as you pointed out, I may admire Huga Chavez, but however much he's helping 'his' people, poor whites are not those people and I'd likely get the firing squad in his country no matter how much I admired him - I've got this white uniform on, you see.

The war sux and is stupid, but the situation with the petrodollar is a real one, I came to the conclusion the OP mentions 2 years ago, because oil is traded in petrodollars, we could experience a HARD step down if OPEC starts trading oil in say, Euros. Since my interest is in our downscaling being gradual and smooth, I have to be against this.

The OP's post is interesting in that, I didn't know the "petrodollar" was created that recently. Apparently it came into being in the early 70s which is pretty recent. The cabal running things on a world scale setting that up needs to hang, but meanwhile I'd rather see a gradual demand destruction and "swearing off of" foreign oil than a sudden dollar crash.

And frankly my concern about the Iraq war is for our boys from Iowa and Kentucky and the rest of red-state America, I want to see them get home safe and ASAP, and I don't want to see the war gear up into a true war against world Islam - there's more than one way to beat 'em and one way is to not give 'em anything to push against. Right now we're giving them something to push against. I honestly don't care how many Iraquis are wasted, I care about our guys and I care about the Israeli control over the US ending.

This can all be accomplished by a people's movement back to the land and the values of the land, and oil demand destruction so wars for foreign oil are no longer necessary, massive US support of Israel no longer necessary, a freer, less indebted US populace getting back more to the Jacksonian ideal, and the US becoming a constitutional republic again, with citizens, not subjects as presently.

So if you have a problem with that, fcuk you that's your problem.

Specop_007 · Expert Joined: Aug 12, 2004 Posts: 6278

deconstructionist

Kingcoal

Buying oil with Euros is easy. The price is denominated in dollars, so you simply take the dollar/Euro exchange rate and figure out how much you have to pay. At $72 per barrel, you'll need about 55 Euros to buy that barrel (at $1.30 per Euro.) Because of the cheap dollar, oil is expensive for Americans and not as expensive for countries with favorable exchange rates. Where is the harm in that? Where is the American conspiracy?

This issue has been debated ad infinitum on this site over the past year. Read up on those posts.

deconstructionist

Kingcoal

deconstructionist

the collapse of the dollar would hurt americans more than anyone else, no doubt. but as for how it hurts people other than americans--what's the death toll in iraq?
_________________
UNLESS

alexis · Tar Sands Joined: Apr 29, 2005 Posts: 26

sklump

As proud as you are of your currency, which has truly been dominant for the last half-century, nevertheless, it might be prudent to keep a hedge fund of, say, 10000 Euros somewhere nice and handy and dry.

You choose your side, but it's pretty clear to me that those with much more liquidity than any of us are building their lifeboats in Euros. When the moment is ripe, they will leave you holding a bag of worthless paper, like a shopping cart full of 1923 German marks printed on one side. At that point you will not be able to buy anything with them but more worthless currency.

Precious metals may be a hedge too, but opinion is varied.

Best of luck to all of us in these weirdhead times.
_________________
As Canadian as ... possible, under the circumstances

I_Like_Plants

Decon we'd probably get along fine! Heck it may not be obvious but I'm the first to think us whities should be willing to bring our "standard of living' WAYY down, I put the quotes since the idea of standard of living as it's measured is such a joke ..... someone who has a working small farm and shoots squirrels for dinner at times and poops in an outhouse but is a part of a stable community, is always fed OK and knows they will be fed OK, is considered to have a crap standard of living, while some urban hampster running in the wheel like crazy, making huge payments on a car and spending 2 hours a day commuting and has the microwave, vcr, dvd player, bigscreen, etc etc etc yadda yadda and never knows if their job will be there when they go to work is considered to have a good standard of living, which makes NO sense.

How did whites live say, 200 years ago? The vast majority of us were hardworking mofos. Look at the Amish, no slackers there. We really need to look at that example, or the example of Karala in India, as our example.

This endless hampster-wheel-running and making the 3rd world run one too to make all this STUFF, heck the creation of the 3rd world in the first place, this is all sick and wrong.