The Geopolitics of World War III
The U.S. 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 the world reserve currency since 194 this is not what makes it unique. Many currencies have held the 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 U.S. dollar was bound to the gold standard, at least officially. According to the IMF, by 1966, foreign central banks held $14 billion U.S. dollars, however the United States had only $3.2 billion 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 government.
Kind of 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 which just happens to be owned and controlled by a conglomerate of banks, and no agency or branch of government regulates the Federal Reserve.
This is obviously not sustainable.
Now you might be wondering how the dollar has maintained such a dominant position on the world stage for over forty 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 oil crisis, the Nixon administration began secret negotiations with the government of Saudi 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 U.S. dollars, and would invest the majority of their excess oil profits into U.S. banks and Capital markets. The IMF would then use this money to facilitate loans to oil importers who were having difficulties covering the increase in oil prices. The payments and interest on these loans would of course be denominated in U.S. dollars.
This agreement was formalized in the "The U.S.-Saudi Arabian Joint Commission on Economic Cooperation" put together by Nixon's Secretary of State Henry Kissinger in 1974.
Another document released by the Congressional Research Service reveals that these negotiations had an edge to them, as U.S. officials were openly discussing the feasibility of seizing oil fields in Saudi Arabia militarily.
In the United States, the oil shocks produced inflation, new concern about foreign investment from oil producing countries, and open speculation about the advisability and feasibility of militarily seizing oil fields in Saudi Arabia or other countries. In the wake of the embargo, both Saudi and U.S. officials worked to re-anchor the bilateral relationship on the basis of shared opposition to Communism, renewed military cooperation, and through economic initiatives that promoted the recycling of Saudi petrodollars to the United States via Saudi investment in infrastructure, industrial expansion, and U.S. securities.
The system was expanded to include the rest of OPEC by 1975.
Though presented as buffer to the recessionary effects of rising oil prices, this arrangement had a hidden side effect. It removed the traditional restraints on U.S. monetary policy.
The Federal Reserve was now free to increase the money supply at will. The ever increasing demand for oil would would prevent a flight from the dollar, while distributing the inflationary consequences across the entire planet.
The dollar went from being a gold back currency to a oil backed currency. It also became America's primary export.
Did you ever wonder how the U.S. economy has been able to stay afloat while running multibillion dollar trade deficits for decades?
Did you ever wonder how it is that the U.S. holds such a disproportionate amount of the worlds wealth when 70% of the U.S. economy is consumer based?
In the modern era, fossil fuels make the world go round. They have become integrated into every aspect of civilization: agriculture, transportation, plastics, heating, defense 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 U.S. dollars, there will be a demand for dollars, and that demand is what gives the dollar its value.
For the United States this is a great deal. Dollars go out, either as paper or digits in a computer system, and real tangible products and services come in. However for the rest of the world, it's a very sneaky form of exploitation.
Having global trade predominately in dollars also provides the 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 U.S.
This petrodollar system stood unchallenged until 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, and easily the most important geopolitical event of the year, but only one article in the western media even mentioned it.
In the same month that Saddam announced he was moving away from the dollar, an organization called the “The 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 U.S. military spending and a much more aggressive foreign policy in order to expand U.S. dominance world wide. However the document lamented that achieving these goals would take many years “absent some catastrophic and catalyzing event – like a new Pearl Harbor”.
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 any significant resistance.
There were no weapons of mass destruction in Iraq, and this 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 which would follow.
Soon after the invasion of 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 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 Iran had not even made the decision to develop nuclear weapons much less begin an attempt. However the demonization campaign against Iran continued even into the Obama administration.
Unable to get the war that they wanted, the U.S. used the U.N 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, the measures failed to destabilize the country. This was due in large part to Russia's assistance in bypassing U.S. banking restrictions.
In February of 2009 Muammar Gaddafi, was named chairman of the African Union. He immediately proposed the formation of a unified state with a single 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 discuss 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 the African Monetary Union would be the "eventual linking of a single African currency to the most monetary of all commodities - gold." (Note that the page number is different on other versions of the document that they released.)
In 2011 the CIA moved into Libya and began backing militant groups in their campaign to topple Gaddafi and the U.S. and NATO pushed through and stretched a U.N. nofly-zone resolution to tip the balance with airstrikes. The presence of Al-Qaeda extremists among these rebel fighters was swept under the rug.
Libya, like Iran and Iraq had committed the unforgivable crime of challenging the U.S. dollar.
The NATO intervention in Libya segued into a covert war on Syrian. The armories of the Libyan government were looted and the weapons were shipped via Turkey to Syrian rebels groups working to topple Assad. It was already clear at this point that many of these fighters had ties to terrorist organizations. However the U.S. national security apparatus viewed 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 fervor, battle experience from Iraq, funding from Sunni sympathizers in the Gulf, and most importantly, deadly results. In short, the FSA needs al-Qaeda now."
(Hat tip to theantimedia.org for catching this.)
Let's be clear here, the U.S. put ISIS in power.
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 Iraq and Iran 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 push to topple the Syrian government.
But why would this pipeline dispute put Syria in Washington's cross hairs? Three reasons:
1. This pipeline arrangement would significantly strengthen Iran's position, allowing them to export to European markets without having to pass through any of Washington's allies. This obviously reduces the U.S. government's leverage.
2. Syria is Iran's closest ally. It's collapse would inherently weaken Iran.
3. Syria and Iran have a mutual defense agreement, and a U.S. intervention in Syria could open the door to open conflict with Iran.
In February of 2014 this global chess game heated up in a new venue: Ukraine. The real target however was Russia.
You see Russia just happens to be the worlds second largest oil exporter, and not only have they been a thorn in Washington's side diplomatically, but they also opened an energy bourse in 2008, with sales denominated in Rubles and gold. This project had been in the works since 2006. They have also been working with China to pull off of the dollar in all of their bilateral trade.
Russia has also been in the process of organizing a Eurasian Economic Union which includes plans to adopt common currency unit, and which is slated to have its own independent energy market.
Leading up to the crisis in Ukraine had been presented with a choice: either join the E.U. under an association agreement or join the Eurasian Union. The E.U. insisted that this was an either or proposition. Ukraine couldn't join both. Russia on the other hand, asserted that joining both posed no issue. President Yanukovich decided to go with Russia.
In response the U.S. national security apparatus did what it does best: they toppled Yanukovich and installed a puppet government. To see the full evidence of Washington's involvement in the coup watch "The ukraine crisis what you're not being told"
Though this all seemed to be going well at first, the U.S. quickly lost control of the situation. Crimea held a referendum and the people voted overwhelmingly to secede from Ukraine and reunify with Russia. The transition was orderly and peaceful. No one was killed, yet the West immediately framed the entire event as an act of Russian aggression, and this became the go to mantra from that point on.
Crimea is important geostrategically because of its position in the Black Sea which allows for the projection of naval power into the Mediterranean. It has also been Russian territory for most of recent history.
The U.S. has been pushing for Ukraine's inclusion into NATO for years now. Such a move would place U.S. forces right on Russia's border and could have potentially resulted in Russia losing their naval base in Crimea. This is why Russia immediately accepted the results of the Crimean referendum and quickly consolidated the territory.
Meanwhile in Eastern Ukraine, two regions declared independence from Kiev and held referendums of their own. The results of which overwhelmingly favored self rule.
Kiev responded to this with what they referred to as anti-terrorist operations. In practice this was a massive and indiscriminate shelling campaign which killed thousands of civilians. Apparently killing civilians didn't qualify as aggression to the West. In fact the IMF explicitly warned the provisional government that their 17 billion dollar loan package could be in danger if they were not able to put down the uprising in eastern Ukraine.
While the war against eastern Ukraine was raging elections were held and Petro Poroshenko was elected president. It turns out that Poroshenko, was exposed by a leaked diplomatic cable released by wikileaks in 2008 as having worked as a mole for the U.S. State Department since 2006. They referred to him as "Our Ukraine insider" and much of the cable referred to information that he was providing. (A separate cable showed that the U.S. knew Poroshenko was corrupt even at that point.)
Having a puppet in place however hasn't turned out to be enough to give Washington the upper hand in this crisis. What does Washington do when they have no other leverage? They impose sanctions, they demonize and they saber rattle (or pull a false flag).
This isn't a very good strategy when dealing with Russia. In fact it has already backfired. The sanctions have merely pushed Russia and China into closer cooperation and accelerated Russia's de-dollarization agenda. And in spite of the rhetoric, this has not led to Russia being isolated. The U.S. and NATO have put a wedge between themselves and Russia, but not between Russia and the rest of the world (look up BRICS if you are unclear about this).
This new anti-dollar axis goes deeper than economics. These countries understand what's at stake here. This is why in the wake of the Ukrainian crisis China has proposed a new Eurasian security pact which would include Russia and Iran.
Consider the implications here as the Obama administration begins bombing in Syria which also has a mutual defense agreement with Iran.
This is not the cold war 2.0. This is World War 3.0. The masses may not have figured it out yet, but history will remember it that way.
Alliances are already solidifying and and a hot war is underway on multiple fronts. If the provocations and proxy wars continue, it's only a matter of time before the big players confront each other directly, and that is a recipe for disaster.
Does all of this sound insane to you? Well you're right. The people running the world right now are insane, and the public is sleep walking into a tragedy. If you want to alter the course that we are on, there's only one way to do it. We have to wake up that public. Even the most powerful weapons of war are neutralized if you reach the mind of the man behind the trigger.
How do we wake the masses you ask? Don't wait for someone else to answer that for you. Get creative. Act like you children's and grandchildren's futures depend on it, because they do.