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Iran’s Oil-exchange threatens the Greenback
By Mike Whitney
01/23/06 "ICH" -- -- The Bush administration will never allow
the Iranian government to open an oil exchange (bourse) that
trades petroleum in euros. If that were to happen, hundreds of
billions of dollars would come flooding back to the United
States crushing the greenback and destroying the economy. This
is why Bush and Co. are planning to lead the nation to war
against Iran. It is straightforward defense of the current
global system and the continuing dominance of the reserve
currency, the dollar.
The claim that Iran is developing nuclear weapons is a mere
pretext for war. The NIE (National Intelligence Estimate)
predicts that Iran will not be able to produce nukes for perhaps
a decade. So too, IAEA chief Mohammed ElBaradei has said
repeatedly that his watchdog agency has found “no evidence” of a
nuclear weapons program.
There are no nuclear weapons or nuclear weapons programs, but
Iran’s economic plans do pose an existential threat to America,
and not one that can be simply brushed aside as the unavoidable
workings of the free market.
America monopolizes the oil trade. Oil is denominated in dollars
and sold on either the NYMEX or London’s International Petroleum
Exchange (IPE), both owned by Americans. This forces the central
banks around the world to maintain huge stockpiles of dollars
even though the greenback is currently underwritten by $8
trillion of debt and even though the Bush administration has
said that it will perpetuate the deficit-producing tax cuts.
America’s currency monopoly is the perfect pyramid-scheme. As
long as nations are forced to buy oil in dollars, the United
States can continue its profligate spending with impunity. (The
dollar now accounts for 68% of global currency reserves up from
51% just a decade ago) The only threat to this strategy is the
prospect of competition from an independent oil exchange;
forcing the faltering dollar to go nose-to-nose with a more
stable (debt-free) currency such as the euro. That would compel
central banks to diversify their holdings, sending billions of
dollars back to America and ensuring a devastating cycle of
hyper-inflation.
The effort to keep information about Iran’s oil exchange out of
the headlines has been extremely successful. A simple Google
search shows that NONE of the major newspapers or networks has
referred to the upcoming bourse. The media’s aversion to
controversial stories which serve the public interest has been
evident in many other cases, too, like the fraudulent 2004
presidential elections, the Downing Street Memo, and the
flattening of Falluja. Rather than inform, the media serves as a
bullhorn for government policy; manipulating public opinion by
reiterating the specious demagoguery of the Bush administration.
As a result, few people have any idea of the gravity of the
present threat facing the American economy.
This is not a “liberal vs. conservative” issue. Those who’ve
analyzed the problem draw the very same conclusions; if the Iran
exchange flourishes the dollar will plummet and the American
economy will shatter.
This is what author Krassimir Petrov, Ph.D in economics, says in
a recent article The Proposed Iranian Oil Bourse:
“From a purely economic point of view, should the Iranian Oil
Bourse gain momentum, it will be eagerly embraced by major
economic powers and will precipitate the demise of the dollar.
The collapsing dollar will dramatically accelerate U.S.
inflation and will pressure upward U.S. long-term interest
rates. At this point, the Fed will find itself between …between
deflation and hyperinflation-it will be forced fast either to
take its "classical medicine" by deflating, whereby it raises
interest rates, thus inducing a major economic depression, a
collapse in real estate, and an implosion in bond, stock, and
derivative markets, with a total financial collapse, or
alternatively, to take the Weimar way out by inflating, whereby
it pegs the long-bond yield, raises the Helicopters and drowns
the financial system in liquidity, bailing out numerous LTCMs
and hyperinflating the economy.
No doubt, Commander-in-Chief Ben Bernanke, a renowned scholar of
the Great Depression…, will choose inflation. …The Maestro has
taught him the panacea of every single financial problem-to
inflate, come hell or high water. …To avoid deflation, he will
resort to the printing presses…and, if necessary, he will
monetize everything in sight. His ultimate accomplishment will
be the hyperinflationary destruction of the American currency …”
So, raise interest rates and bring on “total financial collapse”
or take the “Weimar way out” and cause the “hyperinflationary
destruction of the American economy.”
These are not good choices, and yet, we’re hearing the same
pronouncements from right-wing analysts. Alan Peter’s article,
“Mullah’s Threat not Sinking In”, which appeared in FrontPage
Magazine.com, offers these equally sobering thoughts about the
dangers of an Iran oil-exchange:
“A glut of dollar holdings by Central Banks and among Asian
lenders, plus the current low interest rate offered to
investor/lenders by the USA has been putting the dollar in
jeopardy for some time… A twitching finger on currency's
hair-trigger can shoot down the dollar without any purposeful
ill intent. Most estimates place the likely drop to "floor
levels" at a rapid 50% loss in value for a presently 40%
overvalued Dollar.”
The erosion of the greenback’s value was predicted by former
Fed-chief Paul Volcker who said that there is a “75% chance of a
dollar crash in the next 5 years”.
Such a crash would result in soaring interest rates,
hyperinflation, skyrocketing energy costs, massive unemployment
and, perhaps, depression. This is the troubling scenario if an
Iran bourse gets established and knocks the dollar from its
lofty perch. And this is what makes the prospect of war, even
nuclear war, so very likely.
Peter’s continues:
“With economies so interdependent and interwoven, a global, not
just American Depression would occur with a domino effect
throwing the rest of world economies into poverty. Markets for
acutely less expensive US exports would never materialize.
The result, some SME's estimate, might be as many as 200 million
Americans out of work and starving on the streets with nobody
and nothing able to rescue or aid them, contrary to the 1920/30
Great Depression through soup kitchens and charitable support
efforts.”
Liberal or conservative, the analysis is the same. If America
does not address the catastrophic potential of the Iran bourse,
Americans can expect to face dire circumstances.
Now we can understand why the corporate-friendly media has
omitted any mention of new oil exchange in their coverage. This
is one secret that the boardroom kingpins would rather keep to
themselves. It’s easier to convince the public of nuclear
hobgoblins and Islamic fanatics than to justify fighting a war
for the anemic greenback. Never the less, it is the dollar we
are defending in Iraq and, presumably, in Iran as well in the
very near future. (Saddam converted to the euro in 2000. The
bombing began in 2001)
There are peaceful solutions to this dilemma, but not if the
Bush administration insists on hiding behind the moronic
deception of terrorism or imaginary nuclear weapons programs.
Bush needs to come clean with the American people about the real
nature of the global energy crisis and stop invoking Bin Laden
and WMD to defend American aggression. We need a comprehensive
energy strategy, (including government funding for conservation
projects, alternative energy-sources, and the development of a
new line of “American-made” hybrid vehicles) candid negotiations
with Iran to regulate the amount of oil they will sell in euros
per year (easing away from the dollar in an orderly way) and a
collective “international” approach to energy consumption and
distribution (under the auspices of the UN General Assembly)
Greater parity among currencies should be encouraged as a way of
strengthening democracies and invigorating markets. It promises
to breathe new life into free trade by allowing other political
models to flourish without fear of being subsumed into the
capitalist prototype. The current dominance of the greenback has
created a global empire that is largely dependent on debt,
torture, and war to maintain its supremacy.
Iran’s oil bourse poses the greatest challenge yet to the
dollar-monopoly and its proponents at the Federal Reserve. If
the Bush administration goes ahead with a preemptive “nuclear”
strike on alleged weapons sites, allies will be further
alienated and others will be forced to respond. As Dr. Petrov
says, “Major dollar-holding countries may decide to quietly
retaliate by dumping their own mountains of dollars, thus
preventing the U.S. from further financing its militant
ambitions.”
There is increasing likelihood that the foremost champions of
the present system will be the very one’s to bring about its
downfall.
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