It won’t be simple but the United States could persuade Israel that its security interests are better served by ensuring justice for the Palestinians and promoting regional goodwill, says Ronald Benjamin.
As US pressure on Iran mounts, there is one secret that the boardroom kingpins would rather keep to themselves.
by Mike Whitney
The Bush administration will never allow the Iranian government to open an oil exchange (bourse) that trades petroleum in euros. If that were to happen, hundreds of billions of dollars would come flooding back to the United States crushing the greenback and destroying the economy. This is why Bush and Co. are planning to lead the nation to war against Iran. It is straightforward defense of the current global system and the continuing dominance of the reserve currency, the dollar.
The claim that Iran is developing nuclear weapons is a mere pretext for war. The NIE (National Intelligence Estimate) predicts that Iran will not be able to produce nukes for perhaps a decade. So too, IAEA chief Mohammed ElBaradei has said repeatedly that his watchdog agency has found “no evidence” of a nuclear weapons program.
There are no nuclear weapons or nuclear weapons programs, but Iran’s economic plans do pose an existential threat to America, and not one that can be simply brushed aside as the unavoidable workings of the free market.
America monopolizes the oil trade. Oil is denominated in dollars and sold on either the NYMEX or London’s International Petroleum Exchange (IPE), both owned by Americans. This forces the central banks around the world to maintain huge stockpiles of dollars even though the greenback is currently underwritten by $8 trillion of debt and even though the Bush administration has said that it will perpetuate the deficit-producing tax cuts.
America’s currency monopoly is the perfect pyramid-scheme. As long as nations are forced to buy oil in dollars, the United States can continue its profligate spending with impunity. (The dollar now accounts for 68% of global currency reserves up from 51% just a decade ago) The only threat to this strategy is the prospect of competition from an independent oil exchange; forcing the faltering dollar to go nose-to-nose with a more stable (debt-free) currency such as the euro. That would compel central banks to diversify their holdings, sending billions of dollars back to America and ensuring a devastating cycle of hyper-inflation.
The effort to keep information about Iran’s oil exchange out of the headlines has been extremely successful. A simple Google search shows that NONE of the major newspapers or networks has referred to the upcoming bourse. The media’s aversion to controversial stories which serve the public interest has been evident in many other cases, too, like the fraudulent 2004 presidential elections, the Downing Street Memo, and the flattening of Falluja. Rather than inform, the media serves as a bullhorn for government policy; manipulating public opinion by reiterating the specious demagoguery of the Bush administration. As a result, few people have any idea of the gravity of the present threat facing the American economy.
This is not a “liberal vs. conservative” issue. Those who’ve analyzed the problem draw the very same conclusions; if the Iran exchange flourishes the dollar will plummet and the American economy will shatter.
This is what author Krassimir Petrov, Ph.D in economics, says in a recent article The Proposed Iranian Oil Bourse:
“From a purely economic point of view, should the Iranian Oil Bourse gain momentum, it will be eagerly embraced by major economic powers and will precipitate the demise of the dollar. The collapsing dollar will dramatically accelerate U.S. inflation and will pressure upward U.S. long-term interest rates. At this point, the Fed will find itself between …between deflation and hyperinflation-it will be forced fast either to take its “classical medicine” by deflating, whereby it raises interest rates, thus inducing a major economic depression, a collapse in real estate, and an implosion in bond, stock, and derivative markets, with a total financial collapse, or alternatively, to take the Weimar way out by inflating, whereby it pegs the long-bond yield, raises the Helicopters and drowns the financial system in liquidity, bailing out numerous LTCMs and hyperinflating the economy.
No doubt, Commander-in-Chief Ben Bernanke, a renowned scholar of the Great Depression…, will choose inflation. …The Maestro has taught him the panacea of every single financial problem-to inflate, come hell or high water. …To avoid deflation, he will resort to the printing presses…and, if necessary, he will monetize everything in sight. His ultimate accomplishment will be the hyperinflationary destruction of the American currency …”
So, raise interest rates and bring on “total financial collapse” or take the “Weimar way out” and cause the “hyperinflationary destruction of the American economy.”
These are not good choices, and yet, we’re hearing the same pronouncements from right-wing analysts. Alan Peter’s article, “Mullah’s Threat not Sinking In”, which appeared in FrontPage Magazine.com, offers these equally sobering thoughts about the dangers of an Iran oil-exchange:
“A glut of dollar holdings by Central Banks and among Asian lenders, plus the current low interest rate offered to investor/lenders by the USA has been putting the dollar in jeopardy for some time… A twitching finger on currency’s hair-trigger can shoot down the dollar without any purposeful ill intent. Most estimates place the likely drop to “floor levels” at a rapid 50% loss in value for a presently 40% overvalued Dollar.”
The erosion of the greenback’s value was predicted by former Fed-chief Paul Volcker who said that there is a “75% chance of a dollar crash in the next 5 years”.
Such a crash would result in soaring interest rates, hyperinflation, skyrocketing energy costs, massive unemployment and, perhaps, depression. This is the troubling scenario if an Iran bourse gets established and knocks the dollar from its lofty perch. And this is what makes the prospect of war, even nuclear war, so very likely.
“With economies so interdependent and interwoven, a global, not just American Depression would occur with a domino effect throwing the rest of world economies into poverty. Markets for acutely less expensive US exports would never materialize.
The result, some SME’s estimate, might be as many as 200 million Americans out of work and starving on the streets with nobody and nothing able to rescue or aid them, contrary to the 1920/30 Great Depression through soup kitchens and charitable support efforts.”
Liberal or conservative, the analysis is the same. If America does not address the catastrophic potential of the Iran bourse, Americans can expect to face dire circumstances.
Now we can understand why the corporate-friendly media has omitted any mention of new oil exchange in their coverage. This is one secret that the boardroom kingpins would rather keep to themselves. It’s easier to convince the public of nuclear hobgoblins and Islamic fanatics than to justify fighting a war for the anemic greenback. Never the less, it is the dollar we are defending in Iraq and, presumably, in Iran as well in the very near future. (Saddam converted to the euro in 2000. The bombing began in 2001)
There are peaceful solutions to this dilemma, but not if the Bush administration insists on hiding behind the moronic deception of terrorism or imaginary nuclear weapons programs. Bush needs to come clean with the American people about the real nature of the global energy crisis and stop invoking Bin Laden and WMD to defend American aggression. We need a comprehensive energy strategy, (including government funding for conservation projects, alternative energy-sources, and the development of a new line of “American-made” hybrid vehicles) candid negotiations with Iran to regulate the amount of oil they will sell in euros per year (easing away from the dollar in an orderly way) and a collective “international” approach to energy consumption and distribution (under the auspices of the UN General Assembly)
Greater parity among currencies should be encouraged as a way of strengthening democracies and invigorating markets. It promises to breathe new life into free trade by allowing other political models to flourish without fear of being subsumed into the capitalist prototype. The current dominance of the greenback has created a global empire that is largely dependent on debt, torture, and war to maintain its supremacy.
Iran’s oil bourse poses the greatest challenge yet to the dollar-monopoly and its proponents at the Federal Reserve. If the Bush administration goes ahead with a preemptive “nuclear” strike on alleged weapons sites, allies will be further alienated and others will be forced to respond. As Dr. Petrov says, “Major dollar-holding countries may decide to quietly retaliate by dumping their own mountains of dollars, thus preventing the U.S. from further financing its militant ambitions.”
There is increasing likelihood that the foremost champions of the present system will be the very one’s to bring about its downfall.