By Jim Miles
Train of Thought
To start with, here are some recent quotations that weigh heavily on the negative aspects of the US$ and its role as the global reserve currency, also known as the petrodollar.
One of the current global issues is refugees, in Europe and elsewhere:
These waves of migration – and the anti-immigrant backlash that has done so much to poison European politics – will not end while there are 37 million people displaced by these eight wars.
This will only happen when the wars themselves are brought to an end, as should have happened long ago, and the victims of the post-9/11 conflicts no longer believe that any country is better to live in than their own.
In the article ‘America’s War on Terror is the True Cause of Europe’s Refugee Crisis’ Patrick Cockburn focussed on Europe in the above article, but the same could well be used to describe all the provocations by the White House (present and past) in Latin America and Asia producing the same result: people who are escaping the mess made in their country by US overt and covert operations creating a dangerous corrupt and violent political leadership. The result is the refugees seeking access to the US to escape the same destruction of their home country.
This takes US military adventurism to its global level:
“…the truth that…the United States is the greatest purveyor of violence in the world and our society rests on keeping the poor poor and under the vicious thumbs of the rich.” (Seeking Truth in a Country of Lies – Critical and Lyrical Essays. Edward Curtin. Clarity Press, Atlanta, Georgia. 2020.)
This global violence is created because it is one of the main means to attempt to control the resources and people of the world, to maintain a position of global hegemony as the racially superior “indispensable” nation. It highlights the divide between the so-called developed countries and the rest of the world, and the divide between the rich and the poor domestically in many countries. Power and money become symbiotic partners with the military.
For change to come, systemic change must occur, a change in the role of the profits to be made domestically with the US$ and a change in the role in its power to control foreign affairs through its many affiliated transnational institutions.
“The underlying profiteering, to which we draw attention throughout this book, must be addressed if any real change or progress is to be made.” (Understanding the War Industry. Christian Sorensen. Clarity Press, Atlanta, Georgia. 2020.)
But underlying the military strength of the US and its control of the US$ along with those institutions is a position of weakness.
The petrodollar and a strong military has so far prevented the dollar from total destruction in the last 50 years.
The reasoning behind Greyerz’s position is the last century’s decline in the value of the dollar, now culminating in massive money printing to sustain the economy through the accumulation of massive unpayable debt.
Throughout its history, the US has used the military and the manipulation of the US$ in order to control its access to resources. It becomes a circular symbiotic relationship between oil, the dollar and the military establishment (the latter inclusive of politics and corporations). Without any standard other than the necessary purchasing of goods on the international market with the US$, the military was and remains necessary to support its dominance.
That accounts for the military and financial support given to Saudi Arabia and Israel. All the covert and overt operations in all of Latin America in order to bust any successful social democratic movement are there to support the US$ and international corporations extracting the wealth of any given country. Libya was getting ready to create a gold-backed African currency, and also having lots of oil resources, became a prime target for US intervention on a falsely concocted “right to protect” argument, now thoroughly discredited. Iraq also wanted to leave the US$ system and was against US foreign policy in the Middle East centered on Israel and oil. Syria, Iran, and Venezuela are current targets of the US for the same factors.
In the meantime, the US had to find a way to finance it all – and it became simply a matter of the Federal Reserve (a private banking consortium in spite of its name) printing more and more dollars. It is more complex than that but the bottom line is the use of the printing press – or more correctly now the computer keyboard – to create more and more US$.
Current Events and Inflation
Most current events can be analyzed in a similar manner by looking at the US$ and the US military and the growing disparities and poverty domestically in the US
Without reviewing all those current events, it comes down to the position where the US has incurred huge debts that cannot possibly be paid off through taxation or wealth creation at home. Russia and China have created and are expanding alternate systems to the US institutions in order to bypass the necessity of using the US$ – many other nations are signing up to these systems, wanting to be part of the new Belt and Road Initiative across Eurasia.
The largest industrial factor in the US, the largest financial support in the US, comes from industries related to the military: Raytheon, McDonnell-Douglas-Boeing, Raytheon, General Dynamics and on through many “security” corporations up to and including Facebook, Google, Microsoft and other digital corporations.
Otherwise, the US economy is on the brink of disaster – or more recently, is already heading into an era of inflation that will kill the value of the dollar as both a global and domestic currency.
Yes, currently the stock market is high, but all it signifies is how much richer the already rich are becoming. Yes, unemployment is technically low (about 8 percent as of this writing) but without all the statistical manipulations of the Bureau of Labour Statistics the real unemployment rate comes out at or above 25 percent. Most importantly, the US has created out of thin air, at the stroke of a keyboard, another 3 to 4 trillion in debt. This is added on to already enormous debt, and is in reality an extension of all the “quantitative easing” that the government pumped into its system in the 2007-08 economic crash.
The only support many of the US banks and corporations have is that of the free flow of near-zero interest rate dollars created by the Federal Reserve.
The US$ Triad
The first leg of the global hegemon’s triad is the military. The US’ wars will not end voluntarily through a US political decision: too much of their funding for re-election comes from corporations associated with the military; too many are involved in the revolving door syndrome between the military and industry; and the military corporations are widespread throughout different regions in order to present themselves as benefactors for employment and prosperity (in spite of their deadly product) making politicians susceptible to election pressures propagandized by the corporation.
Neither will a change in government from Trump to Biden change anything with foreign policy and the ongoing forever wars. Biden and the Democrats are on the same side as the Republicans when foreign military actions are considered.
The second leg of the triad is oil. It is still the main influence on global energy trade, and while some of it is now traded outside the US$ system – in particular between Russia and China, and Iran and China – the majority is still traded in US$ with the Saudis being the main supporters. That will not change anytime soon as the military will continue to spread its violence more intensely and over more regions of the world as a response to Chinese financial initiatives.
The third leg of the triad is the US$, and it is the potential and increasingly more likely fatal flaw in the system.
In spite of its military, in spite of its near control of global financial institutions (World Bank, International Monetary Fund, Bank of International Settlements, Society for Worldwide Interbank Financial Telecommunications – SWIFT; allowing the power of the sanctions now being forced on the international scene), the US$ is dying from inflation. Most pundits expect that to accelerate in the near future to hyperinflation to a degree experienced in Weimar Germany or Zimbabwe.
This is not to argue whether it will or not, but to indicate that the results of that are both bad and good, depending on which side of the world one is situated in.
This is where it gets tricky as no one can really foresee when and how quickly the US$ decline will occur. But it will occur as all previous fiat currencies in history have eventually collapsed or lost their global status and the US debt is so large it can never be paid off. Nor can anyone foresee what the potential effects are other than a large change in global affairs and US domestic affairs.
The best scenario of a collapsing dollar will be a combination of oil being priced in other currencies, traded between countries using agreed valuations of their own currencies. The impact on the military would be enormous.
While the military would not die immediately, it would not be long before several factors would severely weaken it: pay for the personnel; pay for necessary raw materials and the disruption of global supply lines; the limitations imposed by oil, of which the US economy is the largest per capita user and the US military is the largest institutional user in the world.
How can one bribe another government or opposition leader if the US$ is worthless? How can US businesses conduct operations when they no longer have the financial power to pay for necessary personnel, supplies, and transportation, most of which are currently paid through US credit/debit systems which would no longer be of significant worth? Would other governments remain loyal after the military loses its purchasing power for people and materials? Would Israel stay on board, or would they quickly jump over to the rising power of the Eurasian markets? Would the Euro collapse along with the US$ or would saner heads somehow begin stronger associations with Russia and China out of necessity if not ideology? Whither NATO? Would the U.S. literally go nuclear?
How it will end is pure speculation. The Federal Reserve will certainly have a few more tricks up its sleeves and many more trillions of dollars to type into the system while trying to sustain the US$. The world’s problems would not instantly be solved by this as there has been too much violence and damage perpetrated by the US to allow a smooth reset. Other problems, many created or exacerbated by the U.S. military-industrial-political complex – religious conflict, racial conflict, climate change and pollution, the loss of political freedom – will take a long while to sort out if the human condition will allow it.
The desired end for those facing the US as a violent global hegemon will be the collapse of the US$ and the resulting collapse of the US military and its ability to function overseas.
– Jim Miles is a Canadian educator and a regular contributor/columnist of opinion pieces and book reviews to Palestine Chronicles. His interest in this topic stems originally from an environmental perspective, which encompasses the militarization and economic subjugation of the global community and its commodification by corporate governance and by the American government.