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Is the World Dumping the American Dollar as its Global Currency?
Robert Fisk of the Independent is reporting today:
In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years
Several factors may have led to this major turn of events:
- The ever-declining value of the U.S. dollar, rock-bottom interest rates, reduced prospects for growth (in large part from its present economic downturn), and seemingly out-of-control U.S. spending deficits. These have led many countries to question the underlying future stability of the U.S. currency – one for which they’d rather not sell their products.
- China’s growing financial dominance and expanding influence in the region, where more than 10% of every Middle Eastern country’s imports originates from China. The Chinese appear to have spear-headed the move away from the greenback. Over the last decade, China became heavily invested in U.S. treasury bonds and other dollar-denominated assets – invested from its extraordinary trade surpluses. The Chinese essentially underwrote Bush’s tax cuts for the wealthy, the Iraq War, and are now funding America’s bank-bailouts, and recession-recovery spending. It would like to ween itself off this current conundrum – thereby allowing itself to diversify its dependencies on the dollar. But it must do so gradually, or risk devaluing its own U.S. dollar holdings, which currently accounts for much of its wealth (China is the world’s biggest holder of U.S. Treasuries). For this reason, the group has set a date of 2018 (nine years) to complete the transition from the U.S. dollar to a basket of other currencies.
- Couple China’s new financial dominance with growing bitterness of the Arab states over US policies (Israel, Iraq, and, in particular, its power to interfere in the financial markets) and you’ve got yourself a global monetary coup d’etat. Brazil and India have also expressed interest in completing their oil deals in non-dollar denominations.
How did the current global financial system become dollar-denominated in the first place?
Ever since the Bretton Woods agreements – the accords after the Second World War which bequeathed the architecture for the modern international financial system – America’s trading partners have been left to cope with the impact of Washington’s control and, in more recent years, the hegemony of the dollar as the dominant global reserve currency.
The Chinese believe, for example, that the Americans persuaded Britain to stay out of the euro in order to prevent an earlier move away from the dollar. But Chinese banking sources say their discussions have gone too far to be blocked now. “The Russians will eventually bring in the rouble to the basket of currencies,” a prominent Hong Kong broker told The Independent. “The Brits are stuck in the middle and will come into the euro. They have no choice because they won’t be able to use the US dollar.”
Upon the very release of this news in today’s Independent, the U.S. dollar nosedived towards year lows against the Yen and the Euro.
A Chinese Banker at the G20 Summit had this to say:
These plans will change the face of international financial transactions. America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate.
The Associated Press reports:
Officials in several of the countries either denied talks or said they had no knowledge. But the denials did not stop the dollar sell-off.
Fisk reminds us that the motivation for wars most often boils down to dollars and cents (in this case, literally):
Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq.
Considering the impact a global desertion of the greenback would have on the American economy and its standard of living, it certainly seems plausible.
Israel Minister Cancels UK Trip Fearing Arrest for War Crimes
The legal ramifications of Israel’s 22-day pummelling of Gaza – resulting in the deaths of 1,400 Palestinians – continue to be felt by its leaders:
Israel’s vice Prime Minister Moshe Yaalon recently cancelled a planned trip to London over fears that he could be put on trial for alleged war crimes, his spokesman said on Monday.
British activists seek his arrest for the role he played in the Gaza military assault as well as for his role in the killing of 15 people in 2002, which included a leader of Hamas and fourteen civilians (eight of which were children).
The Truth About Democracy: It’s Only as Reliable as Our News Programming
Whenever the people are well-informed, they can be trusted with their own government.
–Thomas Jefferson
The first decade of this new century will be remembered by many as a time when a significant segment of our society became incapable of differentiating news from propaganda. This phenomenon has endangered the very fabric of our democracy. The founding fathers of our country worried incessantly about a misinformed electorate, which led many—most notably, Thomas Jefferson—to advocate for a public education system. He hoped this would serve as a form of insurance policy for our fledgling democracy, whereby the masses could be counted on to formulate rational, well-informed opinions, which would propagate into the public square, and ultimately shape our national legislative agenda.
If only they could see us now—here, in the 21st Century—where a significant percentage of citizens rely on the likes of the Fox News Channel for their news information. I suspect Jefferson would like a chance to revisit and remedy the incongruencies which exist between unrestrained freedom of speech and a viable, sustainable Democracy.
It’s perfectly acceptable for news commentators to lean right or left, and to even articulate and promote their own personal opinions to the masses. Spirited political discourse is essential to the democratic process, because it fosters competition between opposing ideologies in our so-called ‘marketplace of ideas’. When this competition is waged in an honest manner—meaning their opinions are supported by facts—then the different ideologies can be fairly contrasted, and a majority of the public will likely draw rational conclusions.
But what happens when a self-proclaimed ‘news network’ consistently lies to its viewers as a means of promoting its own rigid political ideology? These viewers—whose numbers have proven decisive in elections past—are not exposed to a marketplace of ideas, but propaganda. Lies—being reported as facts—are indeed perilous to our democracy, because they often prohibit the best ideas from becoming policy. A mislead citizen cannot be counted on to participate rationally in the democratic process. Over the last decade, this phenomenon has jeopardized both the national security and the fiscal health of the United States.
University of Maryland’s Program on International Policy (PIPA) conducted a study on public misperceptions, from January 2003 through September of 2003, leading up to and beyond the invasion of Iraq. The study revealed that those who identified Fox News as their primary news source were significantly more likely to have misperceptions (80%), while those who signified NPR or PBS were least likely (23%). 55% of both CNN and NBC viewers held misperceptions, as did 47% of those who relied primarily on print sources.
Shockingly, nearly half of all Fox News viewers incorrectly believed that evidence existed which linked Iraq to Al Qaeda. This helps to explain the grand illusion held by many at the time that Iraq was complicit in the 9-11 attacks. And as one might predict, the study showed a direct correlation between misperceptions and support for the Iraq war. Only 23% of those who held no misperceptions supported the invasion of Iraq, whereas 53% of those who held one misperception supported it, 78% of those with two misperceptions supported it, and 86% of those with three misperceptions supported it. Thus, the most misinformed citizens largely supported the invasion of Iraq, while the best informed citizens opposed it. This misinformation campaign used to sell the war has cost us dearly: thousands of American lives, hundreds of thousands of Iraqi lives, nearly a trillion dollars in U.S. national debt, thereby surpassing the entire expense of Vietnam.
We now find our nation engaged in another major policy debate: how to reform our broken health care system. Fox News commentators have, for months now, been fueling some of the most outlandish lies in an effort to sabotage the President’s plan. The most egregious one being the allegation that the President was proposing ‘death panels’ to kill off our elderly in an effort to reduce health care costs. And, once again, their viewers appeared to swallow these new lies—hook, line, and sinker. The question we must all confront is this: How can our democracy work in an environment where lies—espoused by those entrusted to report news—continue to sway our nation’s course of action on issues as important as these?
I propose we grant the Federal Communications Commission new oversight responsibilities—ones which empower it to investigate the validity of ‘facts’ being reported by news broadcasters. They already police broadcasters for programming obscenities. Give them the authority to review dubious statements made by news personalities—as flagged by viewers and listeners—to render judgment about the truthfulness of these statements, and to force the offending news broadcasters to correct their misinformation during their next broadcast. Could there be a better deterrent against propaganda masquerading as journalism?
Commentators’ opinions—no matter how extreme—should remain immune from oversight. This isn’t about silencing dissenting opinions. But news information being reported as ‘facts’, should in fact be, … well, facts! Our country needs a public, non-partisan news fact-checker more than ever.
Our goal, as a nation, should be to create a healthier and more sustainable democracy. Only when presented with truthful information, can the U.S. electorate be relied upon to make rational choices which serve our nation’s best interests. Considering the dishonest discourse which now dominates our airwaves, is it any wonder our country has lost its way?
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