Perpetual Geo-economic Strategic Machine

In the summer of 1944, an international geo-economic conference took place in Breton-Woods, New Hamphshire, where the Dollar was crowned the official currency of the world. The British pound became chief deputy to the dollar. All trade and commercial transaction were to be done in US dollars. In addition, all foreign currencies would be connected to the dollar. The dollar was convertible into gold at 35 dollars an ounce. The British pound had some role in the so-called Sterling Area composed of the British colonies and ex-colonies. The Swiss Franc had a unique function because of Switzerland being an international banking center. Dollar surplus countries had the choice of keeping their surpluses in US treasuries or in gold at the Federal Reserve Bank of New York. So through the dollar, the US became the Master of the World.

“Control the cash box and you control the world.” Immortal words spoken by the character Mr. Jorkin in the 1951 televised version of “A Christmas Carol” by Charles Dickens. The US, by owning the dollar, became the controller of the world. The dollar has been the ruler of the world since 1944. The USSR and its allies had to trade in dollars with foreign countries. The main reason for Cold War started by the US was to exhaust the USSR.

The USSR fell because Marxist ideology was alien to the Russian soul. The Khrushchov de-Stalinization of 1954 broke the myth of Soviet Mythology. People yearned to return to the ancient Slavonic values and the Greek Orthodox religion. It was only matter of time before the system would collapse. Before the 1st World War, Russia was the greatest producer and exporter of wheat in the world. By the 1970s it was an importer of wheat. The Soviet Union could have been reformed, but with leaders such as Gorbachov and Yeltsin was not possible. The Soviet Union was dissolved and the constituent republics were let go. It is not likely that the US would dissolve itself.

With the dissolution of the USSR, the US became the world’s absolute hegemon. The dollar’s position was enhanced as the reserve currency of the world. Debt was the modus operandi of US control.

The US economic system is based on debt, and it is flawed. Debt must grow for the system to be viable, but recently the growth of debt has slowed down; a bad sign.

Dollar debt has two components: external and Internal. External debt is the dollar debt of foreign countries which is the key factor. If the external component of debt is rising, then the dollar will be strong and bank profits will rise from interest payments and will keep indebted countries compliant. That is, they must follow instructions from Washington and Wall Street. If they refuse, they get punished with sanctions and or a coup d’état or military action. The growth of external debt keeps the system afloat. It is the very essence of our economic system.

Internal debt is no problem. After all “we owe it to ourselves.” Very Orwellian thinking, but it works as long as the rest of the world needs dollars for trade.

The rest of the world is experiencing an epiphany. More and more countries are trying to avoid the dollar. The perpetual geo-economic strategic machine is breaking down.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s