EU/Germany parting of the ways?

EU/Germany parting of the ways?

February 12, 2021

By Francis Lee for the Saker Blog

From its inception the European Union was an ambitious strategy to build an economic bloc which would serve as a counter-weight to the US’s global economic dominance. (1) One of the primary conditions of this overall construction involved the creation of a single strong currency, the euro, that could become the rival to the US$. This was not just a political question, it also involved financial, economic and possibly even geopolitical dimensions. The Germans in particular were involved in the EU blueprint ever since the initial Treaty of Rome or EEC Treaty, as it was called, brought about the creation of the European Economic Community (the EEC). The treaty was signed on 25 March 1957 by Belgium, France, Italy, Luxembourg, the Netherlands and (West) Germany, and it came into force on 1 January 1958. At the outset Germany was on board the launch and prepared to give up her much beloved Deutschmark (DM) in order to eventually adopt the euro. A European super-state was envisioned complete with its own currency and act as a counterweight to the US Leviathan.

EXORBITANT PRIVILEGE

Since the end of the Bretton Woods system in 1971 the US dollar had become the global currency – a pure fiat currency without any gold backing – and had been used widely and routinely by other states as international reserves; as monies circulating in the dollarized countries; and as a means of payment in international trade. Ever since the US had allowed its currency to float freely the US trade balance has been negative. Surplus European countries, but which also included Japan, had earned US dollars which at one time had only been redeemable in gold payments by the US. But this arrangement ended when Nixon took the dollar off the gold standard in August 1971. From this time on the surplus countries could only swap their dollars for US Treasury Bills, that is to say, American debt.

In this way the US has appropriated real goods and services from the surplus countries and exported debt back to those same countries.

In the trade this is called seigniorage.

‘’This term was used to describe the right of the medieval lord, or seigneur, to coin money and keep for himself some of the precious metals from which it was made. About $500 billion of US currency circulated outside of the United States, for which foreigners have had to provide the United States with $500 billion for real goods and services.’’ (2) This was an exchange of real value as embodied in goods and services, for fictitious value contained in little green paper substitutes. Nice little racket. Who says you can’t get something for nothing! This didn’t go down at all well in the European mainland and was described by the French politician Valery Giscard D’Estaing as being an ‘exorbitant privilege’. Monsieur D’Estaing certainly had a point.

The evolution of the euro has emerged as the only real challenger to the US$’s seigniorage. The preconditions to any such challenge rested on a dual criteria: The euro had to represent a real currency on the same scale as that of the United States, and, in addition, it had to be a strong currency, it needed to be strong even at its design stage. The birth-pangs of the euro underwent a long pregnancy, and it was not until 1999 that the EU monetary authorities announced the birth of the new currency. It should be pointed out that not every country in the European Union was/is a member of this currency union; some countries kept their own national currencies – e.g. the UK, Sweden, Denmark, and most of Eastern Europe, and that remains the case even today.

Germany was of course the key player in this process. The euro was to be a hard Teutonic currency which mirrored Germany’s powerful position as a globally competitive manufacturing base. It was envisioned that the euro currency would be extended to other parts of the eurozone. (3) However, the euro was unwisely broadened to include peripheral countries which were far from the levels of productivity – and thus of international competitiveness – needed to contribute to making the euro a strong currency. This was particularly the case in Europe’s southern periphery. These nations simply could not compete with Germany since their unit costs were too high and productivity levels were lower than Germany’s (and for the rest of the northern European bloc). Moreover, the get-out-of-jail ‘solution’ by Greece, Spain, Ireland, Portugal, and the Baltics, of a currency devaluation was closed since these states were all members of the Eurozone who had abandoned their old currencies and now used the euro.

In passing it could be argued that devaluation is not necessarily an optimal economic policy. Certainly, devaluation makes exports cheaper, and provides a breathing space for indebted states; but the obverse side of this practise is that it also makes imports more expensive. Imports which include strategic commodities such as oil, foodstuffs, drinks and tobacco, motor vehicles, chemicals, machinery and transport equipment, mineral fuels, and lubricants. The rise in prices in these imported goods and services may well lead to imported cost-push inflation.

Thus Europe’s southern periphery attempted to skirt around the devaluation problem with what became known as a policy of internal devaluation. This involved engineered austerity, whereby a country seeks to regain competitiveness through lowering wage costs and increasing productivity and not reducing the external value of the exchange rate. This enforced policy has resulted in what can only be described as a disaster as country after country in the southern bloc clocked up larger and larger trade deficits whilst the North European bloc including both members and non-members of the euro, e.g., Sweden and Denmark, clocked up big trade surpluses with the Eurozone in the southern periphery. In any case Germany had pre-empted this internal depreciation by its own earlier competitive devaluation as contained in the Hartz reforms.(4)

TRANSITION STATES

Things were not much better on the Eastern periphery. Present current growth figures for Czech Republic 0% Poland -0.1% Croatia N/A Hungary 0-1% Bulgaria -1.6% and Romania -4.4% all struggle with trade deficits.

At some stage during the 1990s, it became common to refer to these Eastern European countries as “transition states” or the ‘New Europe’ an interesting description by Donald Rumsfeld (See below).This implied an optimistic future, a linear progression, a transformation from a failed communist past to a stable western European future. Surely one of the most obvious lessons from the financial crisis and recession of recent years, however, is that the idea of such a transition is misplaced. If the societies of central-eastern Europe are indeed in transition, the mode of transit is that of the covered trailer, haphazardly attached to a juggernaut, driven by remote political and economic forces. And it is very unclear what the destination will be, given the continued economic upheavals and displacement across the whole of Europe.

The result of the transition so far seems to have been the creation of a low-wage hinterland, a border economy on the fringes of the highly developed European core, and this has had wider political and social ramifications for the entire European project – in effect shifting the goalposts of what it means to be European.

It is worth pointing out that, as is always the case, not everyone lost out. Shock therapy had its domestic supporters, people entranced by the ideas of neoclassical and Hayekian economics. Sometimes this was based on genuine intellectual engagement, as neoliberal western economists gained fervent followers in the universities and colleges of Warsaw, Prague, Bucharest, and Budapest. More often, however, the new disciples of neoliberalism were cynical converts from communism, the prospectors of a new capitalist order. Through incorporation into western institutions, such as NATO/EU, some of the new capitalists hoped to entrench their situations as the primary political arbitrators, a new elite of western-influenced reformers. All very reminiscent of the Yeltsin years. (5)

THE US INTERVENTION

US Defence Secretary Donald Rumsfeld’s ‘New Europe’ involved a geopolitical incorporation whereby the ex-soviet republics, and Warsaw Bloc allies were enrolled into the EU and more importantly were brought into NATO. Membership of the NATO was mandatory for all new EU entrants. Rumsfeld opined that “You’re thinking of Europe as Germany and France. I don’t. I think that’s ‘old Europe … If you look at the entire NATO Europe today, the centre of gravity is shifting to the East. And there are a lot of new members. And if you just take the list of all the members of NATO and all of those who have been invited in recently — what is it, 26, something like that? [But] you’re right. Germany has been a problem, and France has been a problem.”

If this was not a blatant intrusion into European affairs I stand to be corrected. This was the creation of a geopolitical beach-head militarily primed and ready to go; its purpose was to prevent any modus vivendi crystallising between Europe as a whole, and, in particular Russia. Central to this strategy …

‘’There was an overarching strategic concept of sorts in the double enlargement – strategic and economic – it was a strategy for Americanising the social structures of Europe within the NATO security perimeter whilst Americanising the hinterland beyond the perimeter. Firstly the Central European and Eastern Countries (CEECs) have become and will continue to be a significant middle-class market for western multinationals grabbing market share there at will, using the Single Market Rules embodied in the European Agreements to legitimise their market domination. Secondly, the CEECs will offer a limitless supply of cheap labour for western multinationals to use for the labour-intensive parts of the production circuits. Thirdly these attractions will be used by big capital in Western Europe to threaten to exit eastwards unless Western Europe Americanises its labour markets and turns the welfare state into minimal safety nets and allows British and American levels of social inequality, poverty, urban decay, and prison populations. Western Europe will then be distinguishable from the USA only by the virulence of its internal racist, neo-fascist, and xenophobic movements. (6)

WITHER GERMANY?

At the present time and at the beginning of a new and even bigger crisis in the global economy the future of the EU depends on the interests of the different factions of the German ruling elite. This is nowhere better instanced than in the Nordstream-2 episode. One faction, German big business, which has extensive investment in Russia together with other financially strong countries wants to reorientate its long-term strategies seeking an expansion of Germany toward China and Russia. There are several reasons for this;

‘’Firstly Both Russia and China have immense resources and reserves of raw materials. Secondly, the level of China’s economic growth and the size of its market are way above those of the EU. Thirdly, Germany’s technological superiority is the ideal condition for intra-trade appropriation of Chinese surplus value. Fourthly, if bi-lateral trade relations were to continue at the current pace Beijing will become Germany’s main trading partner by 2021. Fifthly, for China, Germany is the European state with the most optimal investment opportunities; China is the second largest non-European investor in Germany after the United States. Finally, China’s ultimately likely goal is to lessen US influence in Europe by forging its own close ties to the EU – and Germany is China’s strategic foothold in Europe. These are ideal conditions for German expansionism to scale down its interests in Europe and redirecting its attention to the East.’’(7)

The other faction in Germany are the geriatric Atlanticists, political, security (BND) and military elites, with the Greens in tow of course, who are apparently still fixedly stuck in an Americo-centric NATO bloc not knowing which way the wind is blowing and on which side their bread is buttered. The Nordstream-2 issue is crystallising these fault-lines among the German ruling elites with Frau Merkel being pulled hither and yon between Germany’s reactionaries and its more forward-looking business class which is enamoured of the pro-China-Russia siren songs. Moreover, given the centrifugal drift within the Eurozone there seems sufficient reason to believe that a new bloc of northern European states, grouped around Germany, Holland, Scandinavia, and possibly including the Tax Havens of Switzerland, Luxembourg, and Liechtenstein, could coalesce around the establishment of a new Northern Euro. This delinking from the ‘weak’ euro by the Northern bloc could well be the strategy that Germany, that is to say, its business elite, pushes – or at least does not oppose – the default of the weaker countries in the south and the east so that they leave the Eurozone.

At the present time this is conjecture, but the slow but inexorable economic and geopolitical underground shifts make change inevitable.

NOTES

(1) It should be noted in passing that this was never intended to take on the contours of a European geopolitical alternative to the American continental hegemon. That came later. At the time there was a school of thought that held the creation of a European alliance to act as a third force based upon social-democratic and unaligned neutrality which would act as a buffer between US imperialism and Russian communism, and as an alternative to the two heavily armed super-states. Alas that was not to be. The collapse of the Soviet Union was regarded in Anglo-American right-wing circles and their euro proxies – the UK, Poland, and the Baltics – as a wonderful opportunity to punish and over-run the prostrate and weakened Russian state. It almost succeeded as an enlarged NATO gobbled up ex-soviet republics pushing right up to Russia’s western borders.

(2) Barry Eichengreen – Exorbitant Privilege 2018 – pps3/4

(3) The Eurozone is composed of 19 out of 27 European States. The following use the euro as their currency: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Portugal, Slovakia, Slovenia, Spain

(4) The Hartz Reforms. These reforms involved the restructuring of Germany’s internal labour markets involving a lowering of labour costs and introducing ‘mini’ jobs wage and welfare cuts. So the reduced share of unemployed in the German work-force was achieved at the expense of the real incomes as those in work. Fear of low benefits if you became unemployed, along with the threat of moving businesses abroad into the rest of the Eurozone or Eastern Europe, combined to force German workers to accept exceptionally low wage increases whilst capitalists reaped an excessively big profit expansion. Real wages in Germany have fallen during the Eurozone era and are now below the level of 1999. This whilst real GDP per capita has risen nearly 30%.

(5) The accession states of Eastern Europe are simply an entrenched euro version of a US/Mexico periphery grouping on the border of the US southern states. These maquiladoras have certain tax advantages which make them attractive to US businesses. These US businesses can capitalize on a cheaper labor force in Mexico and also receive the benefits of doing business in the U.S. The presence of maquiladoras contributed significantly to the industrialization of the Mexican-American border.

(6) Peter Gowan – The Global Gamble – p.317.

(7) Guglielmo Carchadi – From Crisis of Surplus Value to Crisis of the Euro – A Global Analysis of Marx’s Law of Profitability. – p.419

What Wall Street fears

January 30, 2021

What Wall Street fears

By The Ister for the Saker Blog

The origin of modern banking can be found in the early days of the gold trade. In the Middle Ages, goldsmiths accepted deposits of gold in return for paper notes, which could be exchanged for the deposits at a later date. Because these paper notes were more convenient for commercial use than physical metal, they were usually not redeemed for gold right away. The goldsmiths noticed their customers’ deposits could be used in the meantime to generate interest and began surreptitiously lending out the savings of their depositors. Over time fractional reserve banking developed from this tendency of lending out money in excess of the actual reserves being held.

Goldsmith became banker, and from this early monetary system, banking families emerged. Prior to the existence of modern financial institutions, these houses were the entities which could be relied upon for large amounts of credit. A reputable surname gave confidence to depositors that their gold was in good hands, and from the intergenerational accumulation of wealth grew large pools of loanable capital. As nobles required weapons and pay for their armies, the conflicts of medieval Europe were fueled by families such as the Medici, Fuggers, and Welsers. Today, it is the Federal Reserve which finances America’s enormous military and conquests abroad.

To truly understand banking, the concept of free markets must be cast aside. Just as oil is a strategic resource for the real economy capitalist, gold and silver are strategic resources for the financial capitalist. Physical bullion is the basis from which all other lines of credit extend; we know this because the same central banks which publicly proclaim gold to be a barbarous relic still feel the need to maintain enormous hordes in their vaults.

As in oil markets, pricing is not influenced primarily by a large number of producers and buyers but by concentrated cartel dynamics. So while we witness yet another energy battle between OPEC and Russia unfold, it should be understood that similar dynamics are at play in the upper echelons of the monetary world as bankers seek to fix prices and control physical bullion flows in a manner which is beneficial to their interests.

A key difference from oil is that while the pump leads to the refinery and the refinery to the end-user, bankers do not generally like to part with their gold. Accordingly, markets have been designed so that prices are determined not by physical delivery but by the trading of unbacked or fractionally backed “claims” on the underlying metal: certificates, ETFs, and futures. We can be certain that there is not enough physical bullion to cover all these paper metal claims, just like the medieval goldsmith did not hold his deposits in full.

These paper markets set the price, although bars rarely leave the vault

Where is the vault? While Fort Knox claims the largest holdings, the price is set by the London Bullion Market Association and CME Group which together account for around 70% and 20% of global trading volume respectively. The London Bullion Market began in 1850, when N. M. Rothschild and Sons and several other banking families created a cartel to oversee the operations of the global gold market, including the establishment of the “London good delivery” list which created trading standards for size, dimensions, shape and fineness of bullion; today trading on London markets requires a high purity and being between 350-450 ounces.

This domination of the world’s gold market was not achieved through peaceful means: look into the forces behind the conquest of Transvaal’s gold mines, for it bears a direct parallel to America’s invasions of oil-rich nations today. Another similarity with oil markets is that military interventions have a habit of “liberating” the target nation of their gold: just ask Muammar Gaddafi.

The price of such a strategic resource could not be determined by an open market, thus alongside good delivery standards the “gold fix” was established in 1919 and was held in the offices of New Court until 2004, when its operations were passed on to a cartel of bullion banks such JP Morgan and HSBC. Ever since, these banks have been investigated and convicted countless times of manipulating and spoofing the prices.

How do we know that there isn’t enough gold to cover physical deliveries? Back in the 1970s the dollar was under a lot of pressure and Western banks maintained secret gentlemen’s agreements not to request delivery of bullion. In 1971 Dutch central bank chief Jelle Zjilstra ignored these formalities and planned to convert $600 million of the Dutch dollar reserves to gold, prompting Federal Reserve chair Paul Volcker to fly out to the Netherlands and warn him: “you’re rocking the boat.” Shortly after Zijlstra refused Volcker’s pressure and continued with the purchase, the US decoupled from the gold standard.

Abandonment of the gold standard risked a reduction in dollar demand, so Nixon enlisted Wall Street scion Gerry Parsky to negotiate with oil exporting Arab nations. After discussion, the Saudi state agreed to sell oil priced exclusively in dollars and to invest the proceeds of oil sales in America.

To those who say dismissively that the dollar is now backed by “nothing,” I say it is backed by oil and the threat of the US military.

Look at the somber fates of those that tried to ditch the dollar for gold or the Euro: Libya in a state of permanent civil war; starving Syrians picking through landfills in search of food only miles from occupied wheat fields.

So maintaining confidence in our reserve currency requires the undermining of confidence in gold, as its reemergence would unnecessarily democratize the international monetary order. Confidence is undermined first by price suppression, which is accomplished by the manipulation of precious metals futures markets. While it would be hugely wasteful for a private individual or consortium to manipulate such a market with their own money, that is where the unlimited fiat available at central bank trading desks come in: and we know central banks are secretly trading precious metals futures due to leaked documents from CME Group.

Leo Melamed, chairman of CME Group and the putative father of modern commodity futures markets noted in his book Escape to the Futures that CME’s Globex system was inspired by the original London gold fix:

Sandner, Kilcollin and I were in London with the chairman of the Rothschild Bank seeking his advice on how to bring the “gold fix” to Chicago. From the heated debate that followed one would have concluded that Kilcollin knew more about the subject than the legendary Rothschilds, the people who had founded the concept ages before.

What we can see from this is that strategic commodities such as gold and oil are far from a free market: recall my previous article The Empire is Losing the Energy War which described how the Saudi state functions as a price-suppression weapon against Russia’s oil exports. This global commodity suppression schema allows the importation of the planet’s finite resources at a fraction of the true cost in return for theoretically unlimited currency. Recall Fed governor Kevin Warsh’s comments in December of 2011 when gold hit an all time high that banks were:

“finding it tempting to pursue financial repression- suppressing market prices that they don’t like”

There are signs, however, that the thin pool of physical bullion which exists to maintain confidence in paper markets is drying up. In March of 2020, CME Group had to relax its own requirement of 100oz bars to allow 400oz London good delivery bars to be shipped from overseas and used for trade settlement. Some would say: if price suppression exists then why has the gold price gone up over the last few years?

The middle ground between setting the price to very low or very high levels, say, $100 or $10,000, is that the prices are set high enough to minimize outflows from vaults, while at the same time using futures to hammer down the prices at psychologically important levels and initiating margin calls on those who are long gold using leverage. Those who have watched gold for a long time can attest to the sudden and inexplicable drops which originate in the futures market and which occur every time the gold price appears *just* ready to break out.

It’s a very complicated charade for the bullion bank cartel. Allow the price per ounce to go too low and you risk running out of the gold necessary to facilitate markets. At the same time, if the price rises too high it attracts international attention and risks gold reemerging in monetary policy. Notice how as soon as the supply shortages became apparent in March 2020 the bankers were forced to reset gold from $1230 to over $2000 in order to stem the outflows of physical delivery.

Putin is intentionally exacerbating this drought of physical gold in Western banks by expanding the Russian central bank’s purchases of gold. For the past few years Russia has been the number one global purchaser of bullion, having spent over $40 billion to bring Moscow’s reserves to the highest level in history: a sum close to the annual military budget because it is a strategic asset.

Just last week, Russia’s gold reserves passed its dollar reserves for the first time reaching a sum of $583 billion, highlighted by the central bank as part of Putin’s de-dollarization agenda. Given that purchases have grown at roughly 15% per year we can predict that even if the price does not rise, the value of these holdings will be around $1 trillion in three years. Read the anxious commentary about these purchases in Bloomberg and Forbes, and remember the nervousness in the business press when Germany demanded its gold back in 2013, which would only exist if behind-the-scenes physical gold flows were disjointed and there was internal muttering in the financial world as to whether the demand could be fulfilled.

To any who doubt that this is an overt move, in the pre-WW2 monetary system the mass accumulation of gold was well understood among central bankers as an aggressive act intended to starve competitor states of their ability to create credit. For example, French and American hoarding resulted in hyperinflation for Germany and forced Britain’s pound sterling off the gold standard.

Russia’s acquisition of precious metal is a direct threat to the financial system. How funny that the system is so fraudulent that it is an act of aggression to simply demand in physical form what one has paid for in full on an open market; an act which the designers of the system cannot protest lest they reveal their own bankruptcy. Just as it did in the 1920s, the hoarding of gold in the East will eventually limit the West’s ability to extend credit, it is simply unfolding on a longer time frame.

So why is a tiny stock like GameStop causing billionaire Leon Cooperman to cry on CNBC, and why is the SEC threatening small-time investors?

Simply, the financial markets are being revealed as a highly illiquid house of cards. Retail investors from Reddit began trolling short-sellers by rapidly buying small stocks and causing hedge funds to blow up from expensive margin calls. The losses are now estimated at around $70 billion, and as these small-time investors funnel their unemployment and stimulus checks into their aggressive trades they have fought wealthy investors in a more effective way than Occupy Wall Street ever did. They have now turned their eyes to the small and illiquid silver market…

Look at the fate of the Hunt brothers fortune: they were oil billionaires who tried to exercise their legal right to take physical delivery of a large volume of silver futures contracts and had CME pull the rug out from under them before it could be achieved. CME Group defeated the Hunt brothers by instituting Silver Rule 7 which limited the dollar amount of physical silver that an individual investor could buy. But how will that stop the hordes of young low net worth traders who are now telling one another to purchase physical bullion and intentionally strain the rigged silver market?

This arcane financial system is doomed to fail because it is based on ever-higher and more unstable abstractions of underlying wealth: CDOs squared and cubed, dark pool derivatives markets totaling trillions of dollars, and so on: all of which depends on the financial sector sucking as much money as possible out of a shrinking global economy through securitization. Now that people are demanding the underlying assets themselves, change is beginning.

What an interesting timeline: where Russia and unemployed youths have come to the same conclusion for how to defeat the banks.


The Ister is a researcher of financial markets and geopolitics. Author of The Ister: Escape America

America Escalates its “Democratic” Oil War in the Near East

January 05, 2020

by Michael Hudson exclusively for the Saker Blog

The mainstream media are carefully sidestepping the method behind America’s seeming madness in assassinating Islamic Revolutionary Guard general Qassim Suleimani to start the New Year. The logic behind the assassination this was a long-standing application of U.S. global policy, not just a personality quirk of Donald Trump’s impulsive action. His assassination of Iranian military leader Suleimani was indeed a unilateral act of war in violation of international law, but it was a logical step in a long-standing U.S. strategy. It was explicitly authorized by the Senate in the funding bill for the Pentagon that it passed last year.

The assassination was intended to escalate America’s presence in Iraq to keep control the region’s oil reserves, and to back Saudi Arabia’s Wahabi troops (Isis, Al Quaeda in Iraq, Al Nusra and other divisions of what are actually America’s foreign legion) to support U.S. control o Near Eastern oil as a buttress o the U.S. dollar. That remains the key to understanding this policy, and why it is in the process of escalating, not dying down.

I sat in on discussions of this policy as it was formulated nearly fifty years ago when I worked at the Hudson Institute and attended meetings at the White House, met with generals at various armed forces think tanks and with diplomats at the United Nations. My role was as a balance-of-payments economist having specialized for a decade at Chase Manhattan, Arthur Andersen and oil companies in the oil industry and military spending. These were two of the three main dynamic of American foreign policy and diplomacy. (The third concern was how to wage war in a democracy where voters rejected the draft in the wake of the Vietnam War.)

The media and public discussion have diverted attention from this strategy by floundering speculation that President Trump did it, except to counter the (non-)threat of impeachment with a wag-the-dog attack, or to back Israeli lebensraum drives, or simply to surrender the White House to neocon hate-Iran syndrome. The actual context for the neocon’s action was the balance of payments, and the role of oil and energy as a long-term lever of American diplomacy.

The balance of payments dimension

The major deficit in the U.S. balance of payments has long been military spending abroad. The entire payments deficit, beginning with the Korean War in 1950-51 and extending through the Vietnam War of the 1960s, was responsible for forcing the dollar off gold in 1971. The problem facing America’s military strategists was how to continue supporting the 800 U.S. military bases around the world and allied troop support without losing America’s financial leverage.

The solution turned out to be to replace gold with U.S. Treasury securities (IOUs) as the basis of foreign central bank reserves. After 1971, foreign central banks had little option for what to do with their continuing dollar inflows except to recycle them to the U.S. economy by buying U.S. Treasury securities. The effect of U.S. foreign military spending thus did not undercut the dollar’s exchange rate, and did not even force the Treasury and Federal Reserve to raise interest rates to attract foreign exchange to offset the dollar outflows on military account. In fact, U.S. foreign military spending helped finance the domestic U.S. federal budget deficit.

Saudi Arabia and other Near Eastern OPEC countries quickly became a buttress of the dollar. After these countries quadrupled the price of oil (in retaliation for the United States quadrupling the price of its grain exports, a mainstay of the U.S. trade balance), U.S. banks were swamped with an inflow of much foreign deposits – which were lent out to Third World countries in an explosion of bad loans that blew up in 1972 with Mexico’s insolvency, and destroyed Third World government credit for a decade, forcing it into dependence on the United States via the IMF and World Bank).

To top matters, of course, what Saudi Arabia does not save in dollarized assets with its oil-export earnings is spent on buying hundreds of billion of dollars of U.S. arms exports. This locks them into dependence on U.S. supply o replacement parts and repairs, and enables the United States to turn off Saudi military hardware at any point of time, in the event that the Saudis may try to act independently of U.S. foreign policy.

So maintaining the dollar as the world’s reserve currency became a mainstay of U.S. military spending. Foreign countries to not have to pay the Pentagon directly for this spending. They simply finance the U.S. Treasury and U.S. banking system.

Fear of this development was a major reason why the United States moved against Libya, whose foreign reserves were held in gold, not dollars, an which was urging other African countries to follow suit in order to free themselves from “Dollar Diplomacy.” Hillary and Obama invaded, grabbed their gold supplies (we still have no idea who ended up with these billions of dollars worth of gold) and destroyed Libya’s government, its public education system, its public infrastructure and other non-neoliberal policies.

The great threat to this is dedollarization as China, Russia and other countries seek to avoid recycling dollars. Without the dollar’s function as the vehicle for world saving – in effect, without the Pentagon’s role in creating the Treasury debt that is the vehicle for world central bank reserves – the U.S. would find itself constrained militarily and hence diplomatically constrained, as it was under the gold exchange standard.

That is the same strategy that the U.S. has followed in Syria and Iraq. Iran was threatening this dollarization strategy and its buttress in U.S. oil diplomacy.

The oil industry as buttress of the U.S. balance of payments and foreign diplomacy

The trade balance is buttressed by oil and farm surpluses. Oil is the key, because it is imported by U.S. companies at almost no balance-of-payments cost (the payments end up in the oil industry’s head offices here as profits and payments to management), while profits on U.S. oil company sales to other countries are remitted to the United States (via offshore tax-avoidance centers, mainly Liberia and Panama for many years). And as noted above, OPEC countries have been told to keep their official reserves in the form of U.S. securities (stocks and bonds as well as Treasury IOUs, but not direct purchase of U.S. companies being deemed economically important). Financially, OPEC countries are client slates of the Dollar Area.

America’s attempt to maintain this buttress explains U.S. opposition to any foreign government steps to reverse global warming and the extreme weather caused by the world’s U.S.-sponsored dependence on oil. Any such moves by Europe and other countries would reduce dependence on U.S. oil sales, and hence on U.S. ability to control the global oil spigot as a means of control and coercion, are viewed as hostile acts.

Oil also explains U.S. opposition to Russian oil exports via Nordstream. U.S. strategists want to treat energy as a U.S. national monopoly. Other countries can benefit in the way that Saudi Arabia has done – by sending their surpluses to the U.S. economy – but not to support their own economic growth and diplomacy. Control of oil thus implies support for continued global warming as an inherent part of U.S. strategy.

How a “democratic” nation can wage international war and terrorism

The Vietnam War showed that modern democracies cannot field armies for any major military conflict, because this would require a draft of its citizens. That would lead any government attempting such a draft to be voted out of power. And without troops, it is not possible to invade a country to take it over.

The corollary of this perception is that democracies have only two choices when it comes to military strategy: They can only wage airpower, bombing opponents; or they can create a foreign legion, that is, hire mercenaries or back foreign governments that provide this military service.

Here once again Saudi Arabia plays a critical role, through its control of Wahabi Sunnis turned into terrorist jihadis willing to sabotage, bomb, assassinate, blow up and otherwise fight any target designated as an enemy of “Islam,” the euphemism for Saudi Arabia acting as U.S. client state. (Religion really is not the key; I know of no ISIS or similar Wahabi attack on Israeli targets.) The United States needs the Saudis to supply or finance Wahabi crazies. So in addition to playing a key role in the U.S. balance of payments by recycling its oil-export earnings are into U.S. stocks, bonds and other investments, Saudi Arabia provides manpower by supporting the Wahabi members of America’s foreign legion, ISIS and Al-Nusra/Al-Qaeda. Terrorism has become the “democratic” mode of today U.S. military policy.

What makes America’s oil war in the Near East “democratic” is that this is the only kind of war a democracy can fight – an air war, followed by a vicious terrorist army that makes up for the fact that no democracy can field its own army in today’s world. The corollary is that, terrorism has become the “democratic” mode of warfare.

From the U.S. vantage point, what is a “democracy”? In today’s Orwellian vocabulary, it means any country supporting U.S. foreign policy. Bolivia and Honduras have become “democracies” since their coups, along with Brazil. Chile under Pinochet was a Chicago-style free market democracy. So was Iran under the Shah, and Russia under Yeltsin – but not since it elected Vladimir Putin president, any more than is China under President Xi.

The antonym to “democracy” is “terrorist.” That simply means a nation willing to fight to become independent from U.S. neoliberal democracy. It does not include America’s proxy armies.

Iran’s role as U.S. nemesis

What stands in the way of U.S. dollarization, oil and military strategy? Obviously, Russia and China have been targeted as long-term strategic enemies for seeking their own independent economic policies and diplomacy. But next to them, Iran has been in America’s gun sights for nearly seventy years.

America’s hatred of Iran is starts with its attempt to control its own oil production, exports and earnings. It goes back to 1953, when Mossadegh was overthrown because he wanted domestic sovereignty over Anglo-Persian oil. The CIA-MI6 coup replaced him with the pliant Shah, who imposed a police state to prevent Iranian independence from U.S. policy. The only physical places free from the police were the mosques. That made the Islamic Republic the path of least resistance to overthrowing the Shah and re-asserting Iranian sovereignty.

The United States came to terms with OPEC oil independence by 1974, but the antagonism toward Iran extends to demographic and religious considerations. Iranian support its Shi’ite population an those of Iraq and other countries – emphasizing support for the poor and for quasi-socialist policies instead of neoliberalism – has made it the main religious rival to Saudi Arabia’s Sunni sectarianism and its role as America’s Wahabi foreign legion.

America opposed General Suleimani above all because he was fighting against ISIS and other U.S.-backed terrorists in their attempt to break up Syria and replace Assad’s regime with a set of U.S.-compliant local leaders – the old British “divide and conquer” ploy. On occasion, Suleimani had cooperated with U.S. troops in fighting ISIS groups that got “out of line” meaning the U.S. party line. But every indication is that he was in Iraq to work with that government seeking to regain control of the oil fields that President Trump has bragged so loudly about grabbing.

Already in early 2018, President Trump asked Iraq to reimburse America for the cost of “saving its democracy” by bombing the remainder of Saddam’s economy. The reimbursement was to take the form of Iraqi Oil. More recently, in 2019, President Trump asked, why not simply grab Iraqi oil. The giant oil field has become the prize of the Bush-Cheney post 9-11 Oil War. “‘It was a very run-of-the-mill, low-key, meeting in general,” a source who was in the room told Axios.’ And then right at the end, Trump says something to the effect of, he gets a little smirk on his face and he says, ‘So what are we going to do about the oil?’”[1]

Trump’s idea that America should “get something” out of its military expenditure in destroying the Iraqi and Syrian economies simply reflects U.S. policy.

In late October, 2019, The New York Times reported that: “In recent days, Mr. Trump has settled on Syria’s oil reserves as a new rationale for appearing to reverse course and deploy hundreds of additional troops to the war-ravaged country. He has declared that the United States has “secured” oil fields in the country’s chaotic northeast and suggested that the seizure of the country’s main natural resource justifies America further extending its military presence there. ‘We have taken it and secured it,’ Mr. Trump said of Syria’s oil during remarks at the White House on Sunday, after announcing the killing of the Islamic State leader, Abu Bakr al-Baghdadi.” [2] A CIA official reminded the journalist that taking Iraq’s oil was a Trump campaign pledge.

That explains the invasion of Iraq for oil in 2003, and again this year, as President Trump has said: “Why don’t we simply take their oil?” It also explains the Obama-Hillary attack on Libya – not only for its oil, but for its investing its foreign reserves in gold instead of recycling its oil surplus revenue to the U.S. Treasury – and of course, for promoting a secular socialist state.

It explains why U.S. neocons feared Suleimani’s plan to help Iraq assert control of its oil and withstand the terrorist attacks supported by U.S. and Saudi’s on Iraq. That is what made his assassination an immediate drive.

American politicians have discredited themselves by starting off their condemnation of Trump by saying, as Elizabeth Warren did, how “bad” a person Suleimani was, how he had killed U.S. troops by masterminding the Iraqi defense of roadside bombing and other policies trying to repel the U.S. invasion to grab its oil. She was simply parroting the U.S. media’s depiction of Suleimani as a monster, diverting attention from the policy issue that explains why he was assassinated now.

The counter-strategy to U.S. oil, and dollar and global-warming diplomacy

This strategy will continue, until foreign countries reject it. If Europe and other regions fail to do so, they will suffer the consequences of this U.S. strategy in the form of a rising U.S.-sponsored war via terrorism, the flow of refugees, and accelerated global warming and extreme weather.

Russia, China and its allies already have been leading the way to dedollarization as a means to contain the balance-of-payments buttress of U.S. global military policy. But everyone now is speculating over what Iran’s response should be.

The pretense – or more accurately, the diversion – by the U.S. news media over the weekend has been to depict the United States as being under imminent attack. Mayor de Blasio has positioned policemen at conspicuous key intersections to let us know how imminent Iranian terrorism is – as if it were Iran, not Saudi Arabia that mounted 9/11, and as if Iran in fact has taken any forceful action against the United States. The media and talking heads on television have saturated the air waves with warnings of Islamic terrorism. Television anchors are suggesting just where the attacks are most likely to occur.

The message is that the assassination of General Soleimani was to protect us. As Donald Trump and various military spokesmen have said, he had killed Americans – and now they must be planning an enormous attack that will injure and kill many more innocent Americans. That stance has become America’s posture in the world: weak and threatened, requiring a strong defense – in the form of a strong offense.

But what is Iran’s actual interest? If it is indeed to undercut U.S. dollar and oil strategy, the first policy must be to get U.S. military forces out of the Near East, including U.S. occupation of its oil fields. It turns out that President Trump’s rash act has acted as a catalyst, bringing about just the opposite of what he wanted. On January 5 the Iraqi parliament met to insist that the United States leave. General Suleimani was an invited guest, not an Iranian invader. It is U.S. troops that are in Iraq in violation of international law. If they leave, Trump and the neocons lose control of oil – and also of their ability to interfere with Iranian-Iraqi-Syrian-Lebanese mutual defense.

Beyond Iraq looms Saudi Arabia. It has become the Great Satan, the supporter of Wahabi extremism, the terrorist legion of U.S. mercenary armies fighting to maintain control of Near Eastern oil and foreign exchange reserves, the cause of the great exodus of refugees to Turkey, Europe and wherever else it can flee from the arms and money provided by the U.S. backers of Isis, Al Qaeda in Iraq and their allied Saudi Wahabi legions.

The logical ideal, in principle, would be to destroy Saudi power. That power lies in its oil fields. They already have fallen under attack by modest Yemeni bombs. If U.S. neocons seriously threaten Iran, its response would be the wholesale bombing and destruction of Saudi oil fields, along with those of Kuwait and allied Near Eastern oil sheikhdoms. It would end the Saudi support for Wahabi terrorists, as well as for the U.S. dollar.

Such an act no doubt would be coordinated with a call for the Palestinian and other foreign workers in Saudi Arabia to rise up and drive out the monarchy and its thousands of family retainers.

Beyond Saudi Arabia, Iran and other advocates of a multilateral diplomatic break with U.S. neoliberal and neocon unilateralism should bring pressure on Europe to withdraw from NATO, inasmuch as that organization functions mainly as a U.S.-centric military tool of American dollar and oil diplomacy and hence opposing the climate change and military confrontation policies that threaten to make Europe part of the U.S. maelstrom.

Finally, what can U.S. anti-war opponents do to resist the neocon attempt to destroy any part of the world that resists U.S. neoliberal autocracy? This has been the most disappointing response over the weekend. They are flailing. It has not been helpful for Warren, Buttigieg and others to accuse Trump of acting rashly without thinking through the consequences of his actions. That approach shies away from recognizing that his action did indeed have a rationale—do draw a line in the sand, to say that yes, America WILL go to war, will fight Iran, will do anything at all to defend its control of Near Eastern oil and to dictate OPEC central bank policy, to defend its ISIS legions as if any opposition to this policy is an attack on the United States itself.

I can understand the emotional response or yet new calls for impeachment of Donald Trump. But that is an obvious non-starter, partly because it has been so obviously a partisan move by the Democratic Party. More important is the false and self-serving accusation that President Trump has overstepped his constitutional limit by committing an act of war against Iran by assassinating Soleimani.

Congress endorsed Trump’s assassination and is fully as guilty as he is for having approved the Pentagon’s budget with the Senate’s removal of the amendment to the 2019 National Defense Authorization Act that Bernie Sanders, Tom Udall and Ro Khanna inserted an amendment in the House of Representatives version, explicitly not authorizing the Pentagon to wage war against Iran or assassinate its officials. When this budget was sent to the Senate, the White House and Pentagon (a.k.a. the military-industrial complex and neoconservatives) removed that constraint. That was a red flag announcing that the Pentagon and White House did indeed intend to wage war against Iran and/or assassinate its officials. Congress lacked the courage to argue this point at the forefront of public discussion.

Behind all this is the Saudi-inspired 9/11 act taking away Congress’s sole power to wage war – its 2002 Authorization for Use of Military Force, pulled out of the drawer ostensibly against Al Qaeda but actually the first step in America’s long support of the very group that was responsible for 9/11, the Saudi airplane hijackers.

The question is, how to get the world’s politicians – U.S., European and Asians – to see how America’s all-or-nothing policy is threatening new waves of war, refugees, disruption of the oil trade in the Strait of Hormuz, and ultimately global warming and neoliberal dollarization imposed on all countries. It is a sign of how little power exists in the United Nations that no countries are calling for a new Nurenberg-style war crimes trial, no threat to withdraw from NATO or even to avoid holding reserves in the form of money lent to the U.S. Treasury to fund America’s military budget.

Michael Hudson

  1. https://www.axios.com/trump-to-iraqi-pm-how-about-that-oil-1a31cbfa-f20c-4767-8d18-d518ed9a6543.html. The article adds: “In the March meeting, the Iraqi prime minister replied, ‘What do you mean?’ according to the source in the room. And Trump’s like, ‘Well, we did a lot, we did a lot over there, we spent trillions over there, and a lot of people have been talking about the oil.’” 
  2. Michael Crowly, “‘Keep the Oil’: Trump Revives Charged Slogan for new Syria Troop Mission,” The New York Times, October 26, 2019. https://www.nytimes.com/2019/10/26/us/politics/trump-syria-oil-fields.html. The article adds: “‘I said keep the oil,’ Mr. Trump recounted. ‘If they are going into Iraq, keep the oil. They never did. They never did.’” 

IMF who? Lagarde shows ECB is the top dollar job in QE age

July 17, 2019

by Ramin Mazaheri for the Saker blog (cross-posted with PressTV by permission)

IMF who? Lagarde shows ECB is the top dollar job in QE age

(Ramin Mazaheri is the chief correspondent in Paris for Press TV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea, and elsewhere. He is the author of “I’ll Ruin Everything You Are: Ending Western Propaganda on Red China.”)

Christine Lagarde just quit her top post at the International Monetary Fund in order to run the European Central Bank. This shows just far the euro has come (and central bankers), and represents either a historic step backwards or a leap of faith forward in the fight against the global domination of the US dollar.

The dollar’s dominance is what allows Washington to impose murderous, illegal sanctions on countries like Iran, Cuba, Korea and elsewhere, which is why many are so keen to end it.

The dollar’s imposition began after World War II, when the war-ravaged powers were forced to accept equating US paper with (but actually above) gold, a move which Charles de Gaulle bitterly referred to as the “exorbitant privilege” of the United States. The logic is simple: a $100 dollar bill cost Washington only the price of a piece of paper, whereas everyone else still had to mine, barter, earn or steal $100 worth of gold (or its equivalent in goods) to acquire that banknote.

The expensive US failure in Vietnam caused Richard Nixon to end this policy in 1971, but QE – printing money out of thin air – was opposed back then, so a replacement tool had to be quickly found in order to maintain US empire. The solution to effectively maintain the Bretton Woods system was found with the petrodollar” agreement of 1973: every barrel of Saudi oil sold to anyone had to be purchased in dollars, and surplus Saudi profit would be invested in US banks and in US debt securities (“petrodollar recycling”, per Henry Kissinger).

Washington had no qualms about propping up the ruthless, reactionary House of Saud to maintain US economic hegemony. The system expanded to other oil producers to the point where: no dollars? No oil.

The petrodollar keeps money flowing into the US and allows the US to “print gold” – it finances their huge budget deficits, high demand for the dollar fights off their inflation, it gives their banks a source of income for which they do zero genuine work, and the US themselves can buy “as much oil as they can print” from the Saudis. This is obviously a tremendous bargain for the US – the only reason the Saudis accept it is because they know they have absolutely zero legitimacy and would be deposed instantly without US arms and military support.

But the great deal is only for some in the US, as they are rabid neoliberal capitalists: from 1980 onwards the US elite funnelled these huge monies into Wall Street and other asset classes which only their fellow elite can touch, as opposed to intelligently and patriotically using the income to improve the overall conditions of their own nation, or even just raising wages (neoliberals call these concepts “socialism”).

Pick your poison: the US or the IMF?

The IMF, which is always led by a European, has long-pushed something to end this scam that weakens everyone for the US’ benefit, via the concept of the SDR (special drawing rights): a basket of international currencies which could replace the dollar as the world’s backing currency. Who needs the Fed when the SDR can provide international liquidity and financial stability? It wasn’t a great system, but it was closer to the IMF’s original aim of having an international monetary system, instead of the current US empire system of (petrodollar) tribute, which is no different from the Roman era.

The Great Recession pushed the superiority of the SDR to the fore – in 2009 China publicly supported, for the first time, that an international reserve currency be based on the SDR and be run by the IMF. The immorality and business failures of US bankers caused the Great Recession – it was only logical that the Americans lose their banking primacy.

The IMF was thus poised to become top banker, and one of their own was even about to be democratically elected.

In 2011 then-current IMF chief Dominique Strauss-Kahn, a major backer of the SDR basket, was outpolling Nicolas Sarkozy 2 to 1 to head the world’s 5th-largest economy and the neo-imperialist master of North and West Africa. He was certain to win, but on American soil he was accused of attempted rape of a hotel maid, dooming his presidency. The charges were dropped, but Strauss-Kahn admitted the liaison. People screamed “conspiracy” – I always found it highly coincidental that Strauss-Kahn found a maid whose native language was French in a country where seemingly all the cleaning women are Latinas? Conspiracy theorists assumed Sarkozy was behind it, with few noting how the IMF, the SDR and Strauss-Kahn threatened US economic hegemony.

QE means the US’ 1% never have to pay for their crimes

The US pushed back the IMF with one arm while the other arranged the current global financial regime – Quantitative Easing.

QE has been a total failure for the average person worldwide, but nowhere more so than in Europe. Incredibly, 1.5 years after it became official, PressTV and I remain one of the very few people to write about the statistical reality of Europe’s “Lost Decade”. I saw it happening in painful slow-motion, being PressTV’s chief correspondent in Paris.

The reason the Mainstream Media doesn’t want to talk about the failure of QE to provide broad economic growth is because their pro-capitalist media are owned by the same billionaires who get all the profit from QE.

The printing of trillions of paper money (which are certainly not backed by trillions in newly-mined gold) has, just like the oil-produced fruits of the petrodollar, gone to remake the same asset bubbles which sparked the Great Recession.

Once again, only the wealthy are profiting from shady capitalist practices: Housing Bubble II, new stock market records despite the endemic failure of the “real-economy” (evidenced by the Lost Decade), and absurd records in the prices of absurd luxury goods like MBS’ purchase of a da Vinci painting – this has all been paid for by the neoliberal-neoimperialist policy of QE which has failed the average Western citizen and continued the economic misery of the developing world.

But QE has proven one thing: governments are the most powerful forces in society, not bankers. This is something which socialist-inspired democracies are based on, but which only the 1% appear to take advantage of in Western liberal democracies.

Lagarde moving from the IMF to ECB would have been thought of as a step down pre-QE, mainly because nobody imagined that the head of the ECB could create several trillions of dollars simply by tapping a keyboard, as her predecessor Mario Draghi did. The IMF has a lot of money, but they do not have the power to create money.

Lagarde: More bad news for Europe’s 99%

When Lagarde was announced as the new head of the ECB the Western mainstream media provided – of course – none of this background, nor any perspective which fairly criticises the record of neoliberal thought and practice. Instead, their leading media justified Lagarde on one criterion – gender. The New York Times’ article was, “In Tense Times, ‘Call in the Woman’: Lagarde Will Lead the E.C.B”.

The Times championed Lagarde’s own claim that she deserved the job because she was not a male: “As I have said many times, if it had been Lehman Sisters rather than Lehman Brothers, the world might well look a lot different today.”

Such a claim is preposterous and shows how little Lagarde understands the principles and practices of neoliberal economics. However, everyone can quickly see that it also denies the existence of empresses, queens, Thatchers and Clintons; it also denies that women have played any role in shaping the positive and negative aspects of our modern world; it is a justification entirely based on divisive, distracting “identity politics” instead of a class-based true feminism.

Certainly, nobody would claim that simply being a male would be all that is necessary to head the ECB. And yet, such nonsense is all it takes in 2019 – we must all cheer simply because the new boss is female. This is what works with the average American today.

But the ECB is not American – why Lagarde?

The Times repeated the same misleading claim – that Lagarde is an “antitrust lawyer by training” : she worked for the world’s biggest law firm, based in Chicago (the Qom of neoliberal capitalist thought), meaning that she likely worked to manipulate the law in order to maintain trusts, not to dismantle trusts. The Times was forced to acknowledge that she has no experience as a central banker and will thus have a “steep learning curve”.

The West continues to put people in power based on the most absurd pretences of qualification for public service, even when such posts are unelected.

Investopedia had the same assessment as The Times: “However, the absence of an economics background or a discernible opinion on monetary policy means she would have to rely on financial technocrats a fair amount. Lagarde, who says she faced sexism and discrimination in her professional life….”

Lagarde clearly does not have the background required – just like The Times, Investopedia ignores this to assert her “gender qualifications”.

Pity the poor European Mainstream Media reader: Largarde is only a shiny tool whose ascension will do nothing but put an unqualified person in charge of the QE money-printing scheme. She will obviously kowtow to “technocrats” who insist that QE will eventually, one day stop creating Lost Decades.

Lagarde thus got the job not her qualifications but her ideology: it is not Islamic, nor socialist, nor moral – she believes in phony technocratism, because for Lagarde and her ilk “technocrats” are synonymous with “the 1%”. I know Lagarde well from covering the Tapie Affair in France: she was found guilty of negligence and misuse of public funds in a case where she got Sarkozy’s friend Bernard Tapie a hugely controversial 400-million euro payout from the French public coffers.

She only doesn’t have a criminal record and didn’t go to jail, which would seemingly have disqualified her for the ECB Post because…because Frances judicial system is not independent but totally corrupted by 1% influence – the judge simply decided to let her go scot-free, despite her guilt.

Negligence, misuse of public funds, payouts for millionaires – now we understand why Lagarde is considered to be “qualified” to run the ECB, and their QE scam, and to continue the phony “the 99% must work their nation out of debt” justification for austerity policies. More “Western-style leadership”…..

The leap of faith forward I mentioned at the start is this: the ECB runs the world’s largest macro-economy – it is possible they could decouple themselves from the dollar’s decades of exorbitant privilege, and the Chicago school of (neoliberal) capitalism, and start pursuing policies which do not flood the 1% with cheap credit to buy cheaply the lives of people across Europe.

However, the legal structures of the EU and the Eurozone are written in post-1989 language which is even more typically American than what underpins the system of the US itself. Therefore we can have little basis for faith that the cabal of bankers and public-into-private national finance minsters which is the Eurogroup, which runs the Eurozone with zero democratic accountability or even transparency, is going to start caring about the 99% in any of their respective nations.

The selection of the French Lagarde illustrate that Europe is no longer sovereign, but content to be a tool of US economic hegemony.

The BRICS countries hold out hopes for ending the petrodollar-fuelled US global finance domination, but they have effectively lost Brazil via the US-orchestrated coup against Dilma Roussef, and they have foolishly not offered to make it BRIICS, with the second ‘I’ standing for Iran. No need, really: China, Russia and Iran continue to make the most headway against the dollar, via the Belt and Road Initiative but especially the unstoppable petroyuan.

Cryptocurrency is another unstoppable way for countries to oppose US control over the global financial system, which is why The New York Times and the US treasury secretary just screamed, “Cryptocurrencies Pose National Security Threat, Mnuchin Says”. Cryptocurrency was indeed created in order to end the US petrodollar and QE schemes, which is why they are so wonderful and why they must be supported.

Lagarde leaving the IMF for the ECB is definitely a historic shift in the (Western) priority rankings. It is simply tragic for the West’s billion of innocents that unaccountable, unelected central bankers and their ineffective, corrupt cronies have become their political elite. This, of course, has equally lamentable consequences for those nations suffering under neoimperialism, illegal sanctions and other Washington-based policies.

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