The Federal Reserve, Oil and the War On Terror - History of an Unholy Trinity

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I wanted to create a thread where we can discuss geopolitics, monetary and commodity issues, currency warfare, terrorism and military inteventions and how all these aspects are interrelated with each other. Here's a little timeline of events concerning the US Dollar from the Nixon administration in particular with the scrapping of the Gold Standard Bretton Woods System to today. I also wanted to add a couple of clips where Ben Bernanke, former Chairman of the Federal Reserve (2006 - 2014) answers some questions. One is a BBC Interview from last year. The other is a Senate Joint Economic Committee hearing on monetary policy with Bernie Sanders back in 2011.

 

 

Part 1

The US dollar is a unique currency, in fact its current design and its relationship to geopolitics is unlike any other in history. Though it has been been the world reserve currency since 1944, this is not what makes it unique. Many currencies have held reserve status off and on over the centuries but what makes the dollar unique is the fact that since the early 1970s it has been, with a few notable exceptions, the only currency used to buy and sell oil on the global market.

Prior to 1971 the US dollar was bound to the Gold Standard, at least officially, according to the IMF. By 1966 foreign central banks held $14bn however the United States had only $3.2bn in Gold allocated to cover foreign holdings, translation: the Federal Reserve was printing more money than it could actually back, the result was rampant: inflation and a general flight from the dollar. In 1971 in what later came to be called the Nixon shock, president Nixon removed the Dollar from the Gold Standard completely, at this point the dollar became a pure debt-based currency.

 

With debt-based currencies money is literally loaned into existence. Approximately 70% of the money in circulation is created by ordinary banks which are allowed to loan out more than they actually have in their accounts, the rest is created by the Federal Reserve which loans money that they don't have, mostly to the government, it's like writing hot checks, except it's legal, for banks.

 

This practice, which is referred to as fractional reserve banking, is supposedly regulated by the Federal Reserve, an institution that just happens to be owned and controlled by a conglomerate of banks and no agency or branch of government regulates the Fed.

 

Now to make things even more interesting these fractional reserve loans have interest attached but the money to pay that interest doesn't exist in the system, as a result there is always more total debt than money in circulation and in order to stay afloat the ecoomy must grow perpetually, this is obviously not sustainable

 

How has the dollar mantained such a dominant position on the world stage for over 40 years if it's really little more than an elaborate ponzi scheme. Well this is where the dollar meets geopolitics.

 

In 1973 under the shadow of the artificial OPEC prices the Nixon administration began secret negotiations with the government of Saudia Arabia to establish what came to be referred to as the petrodollar recycling system. Under the arrangement the Saudis would only sell their oil in US dollars and would invest a majority of their excess oil profits into US banks and capital markets, the IMF would then have used this money to facilitate loans to oil importers who were having difficulties covering the increase in oil prices, the payment in interest for these loans would of course be denominated in US dollars.

 

This agreement was formalised in the US-Saudi Arabia joint commission on economic cooperation, put together by Nixon's then Secretary of State Henry Kissinger in 1974. Another document released by the Congressional Research Service reveals that these negotiations had a latch to it, as US officials were openly discussing the feasibility of seizing oil fields in Saudi Arabia militarily. The system was expanded to include the rest of OPEC by 1975.

 

Though it was presented as a buffer to the recessionary effects of rising oil prices, this arrangement had a hidden side effect, it removed the traditional restraints on US monetary policy. The Federal Reserve was now free to increase the amount of money supplied at will, the ever increasing demand for oil would prevent a flight from the dollar, while distributing the inflationary consequences across the entire planet

 

The Dollar went from being a Gold backed currency to an oil backed currency, it also became America's primary export. How was it possible for the US economy to be able to stay afloat while running multi billion dollar trade deficits for decades. How is it that the US holds such a disproportionate amount of the world's wealth when 70% of its economy is consumer based in the modern era?

 

In the modern era fossil fuels make the world go round, they have become integrated into every aspect of civilisation: agriculture, transportation, plastic, heating, defence and medicine and demand just keeps growing and growing. As long as the world needs oil and as long as oil is only sold in US dollars there will be a demand for dollars and that demand is what gives the dollar its value

 

 

 

 

[Roland Barthes]

Sadly this means that the environment is doomed. The last chance we had to save the planet is gone. Nature can't wait 4 years and the damages done won't be reversed. The environmental migration wave will be worst than the war & economic migration wave in years to come. 

Water is gonna cost more than oil at some point and since the United States already have problems with water in some parts of the country, water is gonna be the next geopolitical war.

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16 hours ago, Roland Barthes said:

Sadly this means that the environment is doomed. The last chance we had to save the planet is gone. Nature can't wait 4 years and the damages done won't be reversed. The environmental migration wave will be worst than the war & economic migration wave in years to come. 

Water is gonna cost more than oil at some point and since the United States already have problems with water in some parts of the country, water is gonna be the next geopolitical war.

 

This

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Part 2

For the United States this petrodollar system as opposed to the previously held Bretton Woods Gold Standard model proved to be a great deal, however for the rest of the world is a very sneaky form of exploitation, having global trade predominantly in dollars also provides Washington with a powerful financial weapon through sanctions. 

This is due to the fact that most large scale dollar transactions are forced to pass through the US. This petrodollar system stood unchallenged till September of 2000 when Saddam Hussein announced his decision to switch Iraq's oil sales off of the dollar to euros. This was a direct attack on the dollar, easily the most important geopolitical event of that year but only a couple of articles in the Western media even mentioned it. 

 

https://www.theguardian.com/business/2003/feb/16/iraq.theeuro

http://content.time.com/time/magazine/article/0,9171,998512,00.html

In the same month that Saddam announced he was moving away from the dollar a organisation called Project For A New American Century of which Dick Cheney just happened to be a member released a document entitled "Rebuilding America's Defenses. Strategy, Forces and Resources For a New Century".

This document called for massive increases in US military spending and a much more aggressive foreign policy in order to expand US dominance worldwide. However this documented lamented that achieving these goals would take many years, a catastrophic and catalysing event like a New Pearl Harbour, one year later they got it.

Riding the emotional reaction to 9/11 the Bush administration was able to invade Afghanistan and Iraq and pass the Patriot Act, all without significant resistance. There were no weapons of mass destruction in Iraq and it wasn't a question of bad intelligence, this was a cold calculated lie and the decision to invade was made in full knowledge of the disaster that would ensue, they knew exactly what was going to happen but in 2003 they did it anyway.

Once Iraqi oil fields were under US control, oil sales were immediately switched back to the dollar, mission accomplished. Soon after Iraq the Bush administration attempted to extend these wars to Iran, supposedly the Iranian government was working to build a nuclear weapon. After the Iraq fiasco Washington's credibility was severely damaged and as a result they were unable to muster international or domestic support for an intervention

Their efforts were further sabotaged by elements within the CIA and Mossad who came forward to state that Ura had not even made the decision to develop nuclear weapons much less begin an attempt, however the demonisation of Iran continued even into the Obama's administration

Since 2004 Iran has been in the process of organising an independent oil burse, they were building their own oil market and it wasn't going to be tied to the dollar, the first shipments of oil were sold through this market in July 2011. Unable to get the war that they wanted the US used the UN to impose sanctions against Iran. The goal of the sanctions was to topple the Iranian regime. While this did inflict damage on the Iranian economy these measures failed to destabilise the country. This was due in large to Russia's assistance in bypassing US banking restrictions.

In February of 2009 Gaddafi was named Chairman of the African Union, he immediately proposed the formation of a single state with a unified currency. It was the nature of that proposed currency that got him killed

 

 

In March of 2009 the African Union released a document entitled "Towards a Single African Currency". Pages 106 and 107 of that document specifically discussed the benefits and technicalities of running the African Central Bank under a Gold Standard. On Page 94 it explicitly states that the key to the success of an African Monetary Union would be the eventual linking of a single African currency to the most monetary of all commodities: Gold.

 

In 2011 the CIA moved in to train and back militant groups in their campaign to topple Gaddafi and the UN pushed through a no fly zone resolution to tip the balance with airstrikes. The presence of AlQaeda extremists among these rebels was swept under the rug, Lybia like Iran and Iraq had committed the unforgivable crime of challenging the US dollar 

The NATO intervention in Libya segwayed into a covert war on Syria. The armeries of the Libyan government were looted and the weapons were shipped via Turkey to Syria into the hands of rebel groups working to topple Assad. It was already clear at this point that many of these rebels had ties to terrorist organisations, however the US Security apparatus view all of this as a necessary evil, in fact the Council On Foreign Relations published an article in 2012 stating that the influx of Jihadis brings discipline, religious fervour, battle experience from Iraq, funding from Sunni sympathysers from the Gulf and most importantly deadly results, in short the Free Syrian Army needs AlQaeda now.

http://www.cfr.org/syria/al-qaedas-specter-syria/p28782

 In 2013 these same Alqaeda linked "rebel groups" launched two Sarine Gas attacks, this was an attempt to frame Assad and muster international support for military intervention

Fortunately they were exposed by UN and Russian investigators and the push for airstrikes completely fell apart when Russia stepped in to broker a diplomatic solution. The campaign for regime change in Syria and Lybia has been presented in terms of human rights, obviously this isn't the real motive

 

 

 

In 2009 Qatar put forth a proposal to run a natural gas pipeline through Syria and Turkey to Europe, Assad however rejected this and in 2011 he forged a pact with Iran and Iraq to run a pipeline eastward cutting Qatar and Saudi Arabia out of the loop completely.

Not surprisingly Qatar, Saudi Arabia and Turkey have been the most aggressive regional players in the quest to topple the Syrian government. But why would this pipeline dispute put Syria in Washington's crosshairs. Three reasons:

1. this pipeline arrangement would significantly srengthen Iran's position, allowing them to export to European's markets without having to pass through any of Washington's allies. This obviously reduces the US government's leverage.

2. Syria is Iran's closest ally, its collapse would inherently weaken Iran

3. Syria and Iran have a mutual defence agreement and a US intervention in Syria could open the door to open conflict with Iran

 

 

 

 

 

 

 

Sickening