Mike Whitney: 'Doomsday for the greenback'

Mike Whitney

A preemptive attack on Iran would "provoke other industrial nations to strategically abandon the dollar en masse"... "in an effort to thwart the neoconservatives from pursuing their desperate strategy of dominating the world's hydrocarbon energy supply." William R. Clark "Petrodollar Warfare; Dollars, Euros and the upcoming Iranian Oil Bourse"

The Federal Reserve is the financial headquarters for the cartel of multinational banking establishments. The confederation of banks in the Fed underwrites the exploitative activities of the world's main industries and sets rates in a manner that best serves their objectives. This is how the bankers perpetuate the system of economic hegemony and apply the shackle of debt and dependence to the planet's most destitute countries. The Federal Reserve is every bit as critical to the maintenance of the empire as its political counterparts in Washington or its blood-brothers in the US Military. It is the largest of the empire's three gears; economic, political and military, which mobilize the mighty wheel of state terror.

If we look carefully at the Iraq war, the main financial institutions stood squarely behind the hostilities and did their best to create a hospitable economic environment for aggression. The Federal Reserve dropped the prime rate to a paltry 1.5% just 6 months before the Iraq invasion to keep the American economy purring along while Bush dragged the nation to war. The bloody footprints for Iraq lead straight to the oak-panel doors of America's primary lenders even before they trail off to the bastions of America's energy giants.

There's a reason for this. The main impetus for the war was not petroleum, but greenbacks and the future of a currency that is underwritten by $8 trillion of debt. The only way to safeguard its dominance is to back up the listing dollar with boatloads of oil. And, that is exactly the plan.

The Capital of Empire

America's capital is not in Washington DC. In fact, it is not geographic location at all. It is the greenback, the epicenter of the global rule. The dollar is the cornerstone upon which the mighty pillars of empire rest.

At the same time, the greenback is the greatest swindle in human history; a worthless scrap of paper buried beneath a mountain of debt. It is only through the skillful mix of politics, diplomacy, and brute force that the grand deception is maintained. As America's fortunes grow more tenuous, the probability of attacks on the dollar will increase exponentially. Even now, nations are conspiring to knock the dollar from its towering summit and introduce a more equitable system.

At present, the greenback serves as the world's reserve currency, the main medium of exchange. This allows the US to pile up enormous debt while avoiding the pitfalls of skyrocketing interest rates or hyper-inflation. The $2 billion of borrowed wealth that props up the faltering empire every day comes primarily from the exporting powerhouses Japan and China. This means that America's profligate spending is financed by the labor of some of the most poorly paid workers in the world.

Ironically, sweatshop workers in Kwantung Province are now bankrolling the criminal occupation of Iraq by facilitating America's massive trade deficits.

Every greenback carries with it the accumulated weight of two centuries of war, slavery, and ethnic cleansing of Native Americans. It is the flaccid script that has fueled 50 years of covert activities, coup d'etats, and third-world death-squads. It churns through the arteries of the empire to the furthest most extremities where torture and abuse are carried out beneath the tri-colored standard. It is strewn across the empire like the myriad gulags that now speckle the planet. It is the heart of the beast; a venom-pumping organ with arteries strung across the globe like the concertina-wire that surrounds Falluja, Samarra and Tal Afar.

Eventually the stately images of Lincoln and Washington will be stripped from the currency; replaced with the looming specter of Guantanamo's gun towers or the iconic figure of an Abu Ghraib prisoner, hooded in sackcloth, arms outstretched in Christ-like submission, wires draped from his hands and feet. These are the freshly minted symbols of the new realm, the republic of terror.

As the empire extends its withering grip to the world's last resource-centers, the dollar is coming under increasing scrutiny. It is the dollar that facilitates the perennial war and the vast expansion of military force; just as it is the dollar that binds together the constellation of American colonies that function exclusively in the interests of their Washington overlords. The asymmetrical warfare that is approaching will put the greenback squarely in the crosshairs; the weal-link in America's coat of mail.

Hugo Chavez knows this, as did Saddam; that's why he switched to the euro 6 months before "Shock and Awe". Now, Putin is trading oil in euros and Iran will open an oil bourse in petro-euros in March. For Iran, its actions are tantamount to a declaration of war. Already, America's proxy Israel has threatened to attack in March. Is it merely coincidence that Iran's oil bourse is scheduled to open at the same time?

No, it's not.

The empire requires a steady diet of petrodollars to maintain its gluttonous appetite for debt. If the oil-producing nations switch to euros, the dollar would freefall like a wingless gull and America would be trapped in a bottomless vat of red ink.

America's prodigious dept has made the war for the world's remaining resources an existential struggle. A retreat from Iraq is no longer possible. If America's debt is not propped up with oil reserves the anemic dollar will crumble with the economy following right behind.

In William R. Clark's "Petrodollar Warfare; Dollars, Euros and the upcoming Iranian Oil Bourse", Clark outlines the problems the dollar faces if Iran proceeds with its plan to use a euro-based oil trading exchange. The new Iranian bourse would compete head-on with the New York Mercantile Exchange (NYMEX) and London's International Petroleum Exchange IPE) giving international buyers an option of "buying a barrel of oil $60 on the NYMEX or IPE or 45 to 50 euros via the Iranian bourse." Clark calls this the Federal Reserves "biggest nightmare" as it would precipitate a face-off between the dollar and the euro and would fundamentally change the dynamics in the world's largest market.

"In essence, the US will no longer be able to effortlessly expand credit via US Treasury Bills, and the dollars demand-liquidity will quickly fall." This will "challenge the hegemony currently enjoyed by the financial centers in both London and New York."

In other words; doomsday for the greenback.

Clark also notes that "both Russia and China significantly increased their central bank holdings of the euro, which appears to be a coordinated move to facilitate the anticipated ascendance of the euro as a second world reserve currency." This would effectively end the petrodollars hegemony as the "monopoly oil currency".

The world is preparing for a seismic shift in the global power-structure, but Washington believes it can forestall that change through military force.

The prospect of a competing Iranian oil-exchange greatly increases the likelihood of a unilateral attack by the US. Clark anticipates that this may "provoke other industrial nations to strategically abandon the dollar en masse"..."While central bankers throughout the world community would be extremely reluctant to 'dump the dollar'"... "They would likely move in tandem on the currency exchange markets in an effort to thwart the neoconservatives from pursuing their desperate strategy of dominating the world's hydrocarbon energy supply."

A strategy to "dump the dollar"?

Some variant of Clark's scenario will undoubtedly transpire pending an American attack on Iran. The world will not confront the empire militarily, but neither will they stand idly by while vital oil resources are put at risk. A coordinated assault on the dollar is an extreme, but probable consequence.

The vulnerability of the dollar, skittering atop an ocean of red ink, has become the Achilles heel of the empire. Washington may believe that its weakness is well-concealed behind a wall of high-tech weaponry and media propaganda, but potential adversaries will certainly know where to strike if they are forced to respond.

America's future has grown increasingly uncertain due to the reckless militarism of its leaders. An attack on Iran is sure to incite an asymmetrical war that will target the greenback; dislodging it from its lofty perch.

When the dollar collapses, the baling-wire of economic coercion that keeps the empire sewn together will quickly unravel.

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