Petrodollar system.

Storchy, I'm a dumb homeless guy with a sweat stained mal-odorous shirt; however, that sure sounded like Petitio Principii ?

 

My Buddy Dan studied under Hans Morgenthau in the Chicago area, somewhere? He earned a PHD in Political Science, I think? I hope I spelled "Science" correctly!

 

No one is asking you to believe in a grand conspiracy to dominate the world. I'm showing you that there was a deal struck in the 70s between the U.S. and OPEC nations to accept only U.S. dollars for their oil. That deal was not made public. I've asked you and others to point me in the direction of where I might find the news concerning the U.S.'s deal with OPEC nations to accept U.S. dollars only for their oil in order to avoid the consequence of having its currency devalued after it defaulted on the Bretton Wood agreement after foolishly running up the debt to the extent that it didn't have the gold to convert the dollars held by those nations ravaged by the war. Just a newspaper article or news video from that time would suffice, but so far, you've not produced anything to that effect. So we can conclude that the Administration of that time decided to keep the details of that deal, and the reasons for it, out of the mainstream media and public view. In fact, in Nixon's televised address to the nation, he didn't mention anything about the devaluation of the dollar. He said he was closing the gold window to protect the dollar from speculators, when in reality, he was protecting the gold from those countries that had a legitimate claim to it. Wonder why.

As far as the consequences of OPEC nations accepting currencies other than the dollar for their oil, you seem genuinely unaware of what would happen to the U.S. economy should OPEC nations accept currencies other that just the U.S. dollar for their oil and other transactions. What happens when all of those dollars come back home because no one needs them anymore to buy oil anymore? Are you familiar with the term "inflation," or "hyperinflation"?

And you must believe that the timing of the invasion of Iraq, and the threats to the very same countries that announced their abandonment of the U.S. dollar is just kind of a coincidence. When the WMD accusation was seen for what it was--total bullshit--the cry was then for "Iraqi freedom." But that was just more of the same bullshit. Hundreds of thousands (who were not Saddam) were killed initially, and who knows the kind of grief and misery the survivors experienced . And of course bombing the shit out of the country created over 4 million refugees. So, any talk about U.S. altruism would be an insult to the intelligence of anyone with two braincells. Iraq doesn't have dependable electric service after all these years. But the one thing that we immediately did get busy doing was switching their currency for oil back to U.S. dollars. Gee, you don't think we invaded just to . . . nah, it's too crazy, never mind. It's all circumstantial evidence. Sure, the timing was awful suspicious, and quickly repricing their oil back to U.S. dollars was awful suspicious, and yeah, calling for regime change in the very countries who announced their decision to accept currencies other than the U.S. dollar was awful suspicious. In fact, it's kind of hard to not see the common denominator in all of that.

Do you think that the U.S. should threaten and invade countries that express a desire to accept other currencies for their oil? Is that just business in your estimation?

Got any thoughts on all of this?

I opened this thread because some ill informed people were under the mistaken impression that they haven't been believing whatever the CBS Evening News has been putting in front of them. After I posted information about how the petrodollar system works, you asked me to provide a source. You asked because you doubted that what I was saying is true. So I provided you with multiple sources. And that settles that. Balbus is stuck in some repeating loop in which he contends that all of my sources amount to mere opinion.

 

Oh I've backed up everything I've posted. Perhaps if you'd make known whatever it is that you disagree with, maybe we could compare notes and find out if you're really as dumb as you think you are. I can't do anything about your homelessness, though.

 

Uh Storchy that hurt! I thought everyone loves the Homeless persons!

 

"Interests" is such an ill-defined concept, though. Like, do we even know what our best interests are? How do we know for sure it's in our interests to piss of the middle east, and that there will never be a day of reckoning? Everything that happens is really only in the interests of those that stand to benefit. The wealthy don't send their kids off to war. "We did this in your best interests, now go out and die for it."

 

Always a judgment call. The concept of national interest, though, tries to distinguish what's in the best interest of the nation as a whole from the interests of particular groups within the nation, the preferences of public opinion, and the political interests of the politicians who occupy the White House. If the U.S. goes to war, for example, because an influential group (call them Neocons) thinks it would bring the blessings of democracy to the Middle East and make the world safe for Israel, or because a President wants to avenge his father for being targeted by a certain Middle East dictator, that would not be acting in the national interest. Nor would it be in the national interest to expend U.S. military force to protect the interests of United Fruit in Central America, nor to rally domestic political support for a forthcoming election by scoring a quick and easy victory against a weak country--call it Grenada.

 

Well, I wasn't around at the time, but from what I've read the United States was in quite the fix in the early 70s as chickens came home to roost after the Vietnam War and the U.S. economy became increasingly dependent on foreign oil imports. As you mentioned, the U.S. faced the difficulty of trying to cover the overseas dollars. Traders in foreign exchange markets, fearful the U.S. would devalue the dollar, responded by several runs on the dollar. Nixon responded in the summer of 1971 by abandoning the gold standard--a move that he justified as necessary to "protect the dollar from the attacks of international money speculators." A couple of things to note: this was "Tricky Dick" and it was the year before the 1972 election, for which he was campaigning for a second term. The move led the G-10 countries to agree to a new set of fixed exchange rates based on a devalued dollar--although that was insufficient to halt further speculation pressures. The U.S. experienced a major economic slowdown and rampant inflation during 1972-74. By this time, Watergate and impeachment hearings had become an issue, and Nixon was fighting for his political life--ultimately, unsuccessfully.

Enter the Yom Kippur War, and the decision of the U.S. to give aid to Israel. This brought about the double whammy of: (1) the Arab oil embargo against the United States and other countries supportive of Israel and (2) the quadrupling of oil prices by OPEC in a successful effort to weaponize petroleum. The U.S. stock market fell 45%. These countries weren't the least bit squeamish about putting it to us, and the U.S. economy was on the ropes. In a rather desperate Hail Mary pass, Nixon dispatched Kissinger and Treasury Secretary Simon on a "goodwill" mission to Saudi Arabia. The result was the petrodollar agreement--essentially trading U.S. military protection for the agreement to trade oil only in petrodollars. Why weren't the details of the negotiations made public? Probably for reasons similar to why Trump hasn't released his tax returns, or the details of his meetings with Putin, or your favorite restaurant won't release the details of its recipe for sausage. Nixon shook hands on the deal with King Faisal in June, 1974, and left office in August.

No one knows exactly "what happens", if they all come back. What would happen to the OPEC nations, or the Arab members thereof, if the U.S. collapsed? Would they be comfortable under the "protection" of their new partners--Russia, China and Iran? And maybe the U.S will go quietly, or start World War III, or come up with a Nixonian solution nobody has thought of yet. We've weathered serious onslaughts to our economy before, e.g,. the Arab oil embargo and OPEC price hike. And do I want these alternatives to happen? No, not any of them, but you asked what will happen.

Sarcasm doesn't transform a conspiracy theory into fact. Your case is, indeed, built on circumstantial evidence based on what--three cases? Yes, indeed, coincidences happen, and correlation is not causation. Before we conclude that petrodollars were behind it all, we have to look at the alternative explanations., and see if there are other things that the cases might have in common besides decisions to abandon the dollar in oil trading. Before Iraq, Libya, and Syria made moves on the dollar, they were already at odds with the United States for political reasons and the moves to replace the petrodollar were at least partly politically motivated. Saddam, Gaddafi and Assad were loose cannons in a region the U.S. was seeking to stabilize. Foreign policy in the Bush Administration was shaped by the Neocons--Cheney, Rumsfeld, Wolfowitz, and Pearl, who had a grandiose view of stabiliziing the Middle East by replacing dictatorships with democracies. After the Neocons came their counterparts in the Obama Administration, with more modest vision but still hostile to dictators. You may well be right that it was all about petrodollars, but in the absence of a smoking gun or direct evidence (some eye witness or document confirming that that was indeed the case) you need to provide more circumstantial evidence than you've produced so far to say this is more than a reasonable suspicion.

I'm afraid I share Balbus' view that your sources other than ones providing the bare facts about what petrodollars are, Nixon's departure from the gold standard, etc., are opinions--more accurately, theories, of a kind that aren't readily tested empirically. They're plausible theories, but you're putting them forward with such dogmatic fervor that one would think they must be revealed truth.

 

Storch

To repeat I don’t believe that US foreign policy is solely dictated by the petrodollar and nothing you have produced backs that up.

But the thing is that the US has been threatening and invading countries from almost its founding, I’m just amazed that you seem to have suddenly just realised that, I mean you are a bit late to that party. I’ve been critical of many aspects of US foreign (and domestic) policy since my teens and if you read my post on this forum you would know that.

I have also spent a lot of time explaining to people that the US is not exceptional to those that seem to think it is, thing is that many Americans believe (or used to) that the US is the ‘shining city on a hill’ without realising the person that said that (Reagan) had been involved in secretly selling arms to Iran to finance an illegal war in central America.

But one thing about been critical of something is to also try and think of solutions to the problems you see, something you don’t seem to have given any thought.

 

Okie

Just some musing on what you said

One problem with countries pursing self-interest is that in the past it ended up with empires (more difficult in the nuclear age) - you trade with somewhere then to protect that trade you have a war then you control a country but it’s threatened by a neighbour so another war happens and then you have two countries and the next thing you know you ‘own’ India.

Thing is a country can pursue self-interest while doing ‘good’ for example through foreign aid, or mutually advantageous trade agreements or trying to alleviate climate change.

Anyway in general democratic governments are meant to try and do the most ‘good’ for the most amount of people of the country they rule and not do ‘harm’ to others, and if they don’t the political faction in charge is thrown out in favour of another that will (or so is the theory).

But as I said before the problem can be the ‘beliefs’ of the ruling party as to what is in the best interests of the country. The anti-communism of the US was often used as camouflage to pursue the interests of political factions and wealth (you mention the United Fruit Company which is a good example of that).

The neo-con’s believed in US hegemony and so they wanted to overthrow Iraq and were calling for for the overthrow of Saddam (and before he stopped using dollars) because they thought they could build an US satellite state from which to dominate the Middle East - for the good of the US. And they were not above lying and cheating and using the emotional power of 9/11 to get their way - for the good of the US.

Another problem is that political factions can start to see their party’s interests as been more important than those of the people they rule so you get things like gerrymandering and voter suppression. Another example of this is the connection between the Tory Party and Brexit, a referendum was not in the UK best interests but was called by the leader of the Tory party to counter the threat from another right wing party (UKIP) and to try a silence the Eurosceptic faction within the Tory Party on the theory that Turkeys wouldn’t vote for Christmas that the British people would vote for such a mad thing as leaving the EU. Since the leave vote it has all been about faction fighting within the Tory party rather than trying to do what was best for the country.

But I digress (it’s on everyone’s mind over here).

What is needed is balance and that often does not come naturally it needs to be set up and regulated. For example we should all champion free speech but we should also understand that wealth can pay for a louder voice that can drown out other more truthful voices. We have talked about wealth sponsored Think Tanks but there is also hidden political funding and wealth owned media outlets. In Brexit the wealth owned right wing press has been dripping poisonous lie about the EU into the ears of the British people for years prior to the Brexit vote.

 

Your first paragraph is what I've already told you.

Your second paragraph is a confirmation of what I've already posted, with the exception of your answer to my question of why the petrodollar deal was not publicized. It was not publicized because the Administration wanted it kept from the public for obvious reasons.

Your third paragraph is your answer to the question of what will happen to the U.S. economy when all of those dollars that have been floating around the world finally come flowing back home. Basically, your answer to that is " We've weathered serious onslaughts to our economy before." The problem with your answer is that it does not address the issue of inflation or hyperinflation associated with the return of all those dollars.

Your fourth paragraph is your explanation as to why it is that the countries that have been invaded, and the one being threatened, just happen to be the very same ones that have decided to accept other than U.S. dollars for their oil. Sure. You offer the explanation that these countries were destabilizing the Middle East, and that something had to be done. Of course, flying in the face of your reasoning is the fact that the invasions and sanctions and threats have created nothing but destabilization and misery for the people of the Middle East. So that excuse goes out the window. You appear to have no knowledge of just how closely the U.S. worked with Iraq in its war with Iran. Saddam was our buddy. We helped him acquire what he needed to create chemical weapons to use against Iran. So who were the destabilizers, really?

But that's not what's at issue here. Your answer to the timing of these invasions of, and threats to, these oil producing nations is that it is just coincidence; that correlation is not causation. Right. No smoking gun, you say? Well let's see. Iraq begins selling its oil for currency other than the U.S. dollar. The U.S. accuses Iraq of having weapons of mass destruction, and claims to have evidence of these weapons, and invades and destroys the country, and immediately switches payment for Iraq's oil back to U.S. dollars. Oh, and no weapons of mass destruction. Hmmm . . .

And about your last paragraph. I'm not pushing any opinion or theory about what the petrodollar system is and how it works. The U.S. had accumulated great debt, and the nations who were promised a return of gold for their U.S. dollars were understandably anxious about the U.S.'s debt and its ability to make good on its promise. When the U.S.'s gold reserves were running low, it defaulted on its agreement and closed the gold window. What did that do to the dollar? Rhetorical question. So, to create an artificial demand for their dollars, the U.S. arranged for every nation to require U.S. dollars only for something no country can do without--oil. There is nothing hard about understanding what that means. So you go on believing that the destruction of Iraq, and the subsequent switching of the currency for oil payments back to the dollar is just a coincidence. I won't stop you.

 

I've been following this thread but I dont really want to comment on the petrodollar and storch's theory because I havent made up my mind yet

But I do want to interject and say - I dont think the goal of the US invasion of middle eastern countries was/is stability and democracy. Iraq was a stable country before US intervention. They were a relatively secular country too, compared to their neighbors, and less likely to breed islamic extremism. Syria was once a stable country too, although I realize there are many factors at play in Syria's destabilization besides US intervention.

(I realize Saddam and Assad were/are dictators, but a country can still be relatively stable with a dictator at the helm. Both countries had a functional government and infrastructure at one point, and relative religious freedom. )

And the idea that the US just wants to do the right thing and bring democracy to dictatorships is sort of laughable. Why is the US only concerned with oil rich nations in that case?

I think the goal of middle eastern intervention is not stability, but destabilization. Chaos.

The big question is why. The petrodollar theory honestly sounds as plausible to me as anything else, but I havent done much research into it so I dont really know. The big sticking point for me would be - who stands to lose if oil was traded in another currency, and how much would they stand to lose? Enough to start wars and sacrifice lives?

 

Stoch

When did Saddam start selling his oil in Euro’s? Well the Euro only began in 1999 and I believe Saddam then announced his intention in 2000 and it began [mainly] in 2001.

But in 1998 the Project for a new American Century sent a letter to Clinton calling for the overthrow of Saddam and I believe it was a popular idea in neo-con circle before then and especially in PNAC.

Of the twenty-five people who signed PNAC's founding statement of principles, ten went on to serve in the administration of U.S. President George W. Bush, including Dick Cheney, Donald Rumsfeld, and Paul Wolfowitz the last two and John Bolton were actually amongst the signatories to that letter to Clinton.

Is it strange then that when in government and they got the opportunity they followed through with what they were calling for in 1998?

 

Mel

Basically the neo-cons were imperialists for them it was about US hegemony - they would talk of stability and democracy – but the reality behind that was the desire for control - to ensure another American century.

Here is something from John McGowan, professor of humanities at the University of North Carolina

Frank neoconservatives like Robert Kaplan and Niall Ferguson recognize that they are proposing imperialism as the alternative to liberal internationalism. Yet both Kaplan and Ferguson also understand that imperialism runs so counter to American's liberal tradition that it must ... remain a foreign policy that dare not speak its name ... While Ferguson, the Brit, laments that Americans cannot just openly shoulder the white man's burden, Kaplan the American, tells us that "only through stealth and anxious foresight" can the United States continue to pursue the "imperial reality [that] already dominates our foreign policy", but must be disavowed in light of "our anti-imperial traditions, and ... the fact that imperialism is delegitimized in public discourse"... American Liberalism

*
I'd alkso recommemnd -

Imperial Life in the Emerald City by Rajiv Chandrasekaran

Imperial Life in the Emerald City - Wikipedia

And the last few chapters of The Silk Road: A new history of the world by Peter Frankopan - which is a good overview on European and US imperialism in the Middle East.

https://www.amazon.co.uk/dp/B00XN8UG3C/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1

 

Iraq itself was stable enough, but the Middle East was, from a Neocon perspective, less stable with Saddam in it. Before invading Kuwait, he was engaging in a massive military buildup, including his vaunted big cannon; and he dangerously violated a basic norm of international law by using poison gas on his Kurdish citizens. The United States is a "status quo" power, meaning that any challenge to the status quo, particularly in a geopolitically sensitive region like the Middle East, will call for action. And as Neocon Richaed Perle,put it, "there was a larger, more ambitious plan, too, to remake the Middle East; that establishing a democracy in Iraq would be an important change in the world order." Why War? - A Necessary War? | Truth, War And Consquences | FRONTLINE | PBS As Balbus says, the Neocons were actively promoting U.S. hegemony, but Clinton Democrats had a less hegemonic version of the same reflex. Looking for simplistic explanations like petrodollars is tempting, but there have been excellent case studies by knowledgeable experts that do not rank petrodollar high on the list. For example the "performative war theory":the challenging of a hegemon’s authority—as occurred on 9/11—generates a need to assert hegemony and demonstrate strength to a global audience."https://www.tandfonline.com/doi/full/10.1080/09636412.2019.1551567 or a multi-factor "perfect storm" the absence of any one of which might have meant no invasion.Why Did We Invade Iraq? | National Review For other multi-factor analyses, stressing the role of the top decision makers, the Neocons, and including the Israel lobby, see, especially, Cramer and Thrall, eds, Why Did the United States Invade Iraq?

 

Here is a good explanation of what I'm talking about. The information is not theory.

$ Collapse in Iran

 

Wow! For some reason, you're leaving out the part about the U.S. exporting the necessary components to Iraq to make chemical weapons, despite the country’s known record of using chemical weapons. Did you know that, or is this your first time hearing it? They didn't put that on the CBS Evening News, did they?

 

Wow! What was I thinking? Maybe that the "necessary components" (specifically thiodyglycol ) were exported there illegally by a U.S. company Alcolac in 1988 in violation of a ban by the U.S. Export Administration and the offending company pled guilty and was prosecuted. And that Germans who supplied equipment for the operation were arrested in 1990. And that this happened before the Persian Gulf War of 1990-91. Or were you thinking of something else? I guess I didn't see how that fit into the larger narrative of the G.W. Bush Administration's decision to invade Iraq. from 1980-88, during the Iran-Iraq war, the U.S. was officially neutral, but viewed secular Iraq as a counter to the forces of Islamic extremism unleashed by the Iranian Revolution. That changed after the war, when Saddam began a massive military buildup and became the largest importer of arms in the world. Hodding Carter, former Carter Administration State Department Assistant Secretary, described U.S. involvement with Iraq in the 80s as "a complicated story of miscalculation, deceit and greed." Then came the Persian Gulf War and its aftermath.

 

Oh I'm sorry, but since you mentioned Saddam's use of poison gas against the Kurds as part of your assessment of the destabilizing influence of the guy, I thought I'd mention how the Reagan and Bush Administrations’ Commerce Departments allowed US companies and the US Centers for Disease Control and Prevention to export chemical and biological agents as well as other dual-use items to Iraq, despite Iraq's known record of using chemical weapons. So what individuals from those Commerce Departments were arrested and convicted?

My point being that it's a bit shortsighted to include the use of chemical weapons as justification to invade Iraq when the invaders helped him acquire them.

 

Also, the export of the following occurred between October 1, 1984 and October 13, 1993.

Bacillus Anthracis, cause of anthrax.
Clostridium Botulinum, a source of botulinum toxin. It was sold to Iraq right up until 1992.
Histoplasma Capsulatam, cause of a disease attacking lungs, brain, spinal cord and heart.
Brucella Melitensis, a bacteria that can damage major organs.
Clotsridium Perfringens, a highly toxic bacteria causing systemic illness, gas gangrene.
Clostridium tetani, highly toxigenic.
Also, Escherichia Coli (E.Coli); genetic materials; human and bacterial DNA.
VX nerve gas.
Pralidoxine, an antidote to nerve gas which can also be reverse engineered to create actual nerve gas. This was sold to Iraq in March 1992, after the end of the Gulf War.
Chemical warfare-agent production facility plans and technical drawings.
Chemical warfare filling equipment.
Missile fabrication equipment.
Missile system guidance equipment.
Graphics terminals to design and analyze rockets.
Machine tools and lasers to extend ballistic missile range.
Computers to develop ballistic missiles and nuclear weapons.
___________________________________________________________________________

The 1994 investigation also determines that other exports such as plans and equipment also contributed significantly to Iraq’s military capabilities. “UN inspectors had identified many United States manufactured items that had been exported from the United States to Iraq under licenses issued by the Department of Commerce, and established] that these items were used to further Iraq’s chemical and nuclear weapons development and its missile delivery system development program . . .

Donald Riegle​