A lack of patience

OPEC Nations are again discussing which currency should be used to pay for petroleum. The disagreement was revealed when a ministerial meeting last November, supposed to be in closed session, was accidentally broadcasted live to reporters.
The Iranian and Venezuelan ministers called for measures that are more radical and a specific mention of the effect of the dollar to be added to the draft declaration: specifically to change the OPEC currency from the dollar to the Euro. This is very significant because petroleum based on the dollar has been the “flywheel” of our economy, keeping it steadily moving through the world economy’s ups and downs.
The weapons for which the US and coalition partners invaded Iraq have not been found. Some U.S. officials cited claims of a connection between Saddam Hussein and al-Qaeda. No evidence of any operational or collaborative relationship with al-Qaeda has been found.
But all this was fine with President Bush. The USA had delivered Saudi Arabia “a clear picture” of what could happen in they abandoned the US Dollar for the Euro currency. Even Iran, who in 11 years could not destroy the Iraqi army, was suddenly mum on the dollar issue.
If international use of the euro were to continue to rise, the Fed would lose other important powers. In a financial crisis, central banks are supposed to act as “lenders of last resort”, printing money to prop up banks and reassure their depositors. This does not work in developing countries. People withdraw money anyway. Their fear is not that the government will let the banks collapse but rather that printing money brings inflation and depreciation. So, they exchange their currency for “hard currency”, undermining the putative powers of their central banks.

But what if Americans were to do the same, selling dollars for euros in a crisis? The Fed would become impotent. This is not science fiction. American investors have lately been pouring money into foreign bond funds at a record rate.

What about America’s political power in the world? A continuing fall in the dollar means a fall in the global purchasing power of all its foreign assistance, whether for humanitarian, economic, or military purposes.

But it means much more than that. The US has exploited the unique role of the dollar in international trade and investment to disrupt the financial flows of its adversaries, such as North Korea and Iran. If such transactions switched to euros and were funneled through institutions not doing business in the US, this power would be neutered. The US would likewise lose influence over both friends and enemies facing financial problems, as they would be looking increasingly to Europe for euros, rather than to America for dollars.

The irony of this is that the current administration has not learned from the Iraq fiasco: invading a country does not protect your currency. Fast forward to 2008 and now there’s talk of invading Iran. You will hear threats of nuclear proliferation being mentioned by the current President Bush. But in the end, it is always about money. Iran would be the next easiest target to again influence “our friends” the Saudi's to “stay the course of the dollar.”

Carlos T Mock MD wrote:

OPEC Nations are again discussing which currency should be used to pay for petroleum. The disagreement was revealed when a ministerial meeting last November, supposed to be in closed session, was accidentally broadcasted live to reporters.
The Iranian and Venezuelan ministers called for measures that are more radical and a specific mention of the effect of the dollar to be added to the draft declaration: specifically to change the OPEC currency from the dollar to the Euro. This is very significant because petroleum based on the dollar has been the “flywheel” of our economy, keeping it steadily moving through the world economy’s ups and downs.
The weapons for which the US and coalition partners invaded Iraq have not been found. Some U.S. officials cited claims of a connection between Saddam Hussein and al-Qaeda. No evidence of any operational or collaborative relationship with al-Qaeda has been found.
But all this was fine with President Bush. The USA had delivered Saudi Arabia “a clear picture” of what could happen in they abandoned the US Dollar for the Euro currency. Even Iran, who in 11 years could not destroy the Iraqi army, was suddenly mum on the dollar issue.
If international use of the euro were to continue to rise, the Fed would lose other important powers. In a financial crisis, central banks are supposed to act as “lenders of last resort”, printing money to prop up banks and reassure their depositors. This does not work in developing countries. People withdraw money anyway. Their fear is not that the government will let the banks collapse but rather that printing money brings inflation and depreciation. So, they exchange their currency for “hard currency”, undermining the putative powers of their central banks.
But what if Americans were to do the same, selling dollars for euros in a crisis? The Fed would become impotent. This is not science fiction. American investors have lately been pouring money into foreign bond funds at a record rate.
What about America’s political power in the world? A continuing fall in the dollar means a fall in the global purchasing power of all its foreign assistance, whether for humanitarian, economic, or military purposes.
But it means much more than that. The US has exploited the unique role of the dollar in international trade and investment to disrupt the financial flows of its adversaries, such as North Korea and Iran. If such transactions switched to euros and were funneled through institutions not doing business in the US, this power would be neutered. The US would likewise lose influence over both friends and enemies facing financial problems, as they would be looking increasingly to Europe for euros, rather than to America for dollars.
The irony of this is that the current administration has not learned from the Iraq fiasco: invading a country does not protect your currency. Fast forward to 2008 and now there’s talk of invading Iran. You will hear threats of nuclear proliferation being mentioned by the current President Bush. But in the end, it is always about money. Iran would be the next easiest target to again influence “our friends” the Saudi's to “stay the course of the dollar.”

Too convoluted for me to understand.

"Containment" didn't work so well against Japan, Germany or North Korea, did it?

Aaron wrote:

"Containment" didn't work so well against Japan, Germany or North Korea, did it?

First of all, Germany and Japan not only possessed strong military forces, but had long since embarked upon campaigns of imperalist expansionism before we finally decreed that "containment was not an option." Iraq's military had been practically destroyed during the first Gulf War effectively rendering the prospect of Saddam expanding beyond his own borders as nothing more than an elaborate pipe dream. Likewise, Iran has demonstrated neither the incentive nor capability to expand, and furthermore should only be countered in the incredibly unlikely event tha such imperialism has been initiated.

Clearly, the constrasts could not be more radical, and it shocks me that you can't tell the difference.

First, the price of war versus containment... In many respects, it definitely is difficult to nail down the cost American public. Hypothetically, let’s stick to vague dollar figures (without the figures). Now, compare that to the return to American companies... Marriot a potential multi-billion dollar deal. What drove the war? National strategy and interests... this war opened a closed society for American interests, er business oh and our military. Price is a very sticky topic for this war, the only one we fought without a tax increase. But we expect our troops to be safe… America needs an injection of realism.

Why did containment fail in North Korea? Containment fails when a culture’s only doctrine is live by the sword. A concept we can not begin to fathom, driving around in our Chevys, BMWs and eating fast food. Therefore, American logic cannot be proportionally applied to this problem. I recommend Sun Tzu. Saddam understood and exploited this weakness. Why did it work for the Soviets? Capitalism invaded the Soviet Union. Social collapse from within, due in part by corrupt politicians, expedited the downfall. Now, Russia is left grasping for national pride. One last containment counterpoint, did civil/women’s rights advocates stay at home and spend money on billboards?

With respect to the upcoming election, I recommend that we keep basic human rights in mind… we need to remember the people of Iraq. Failure to do so means we pay a larger tax on life with our grandchildren’s children. Stabilization is key to every party involved in this debacle.

The question is why Americans must pay the full cost of containment if it is a world problem. I say if the issue does not stir the United Nations to take action, it should not be an American only concern.

America is not a showplace of Democracy when the statistics poor, inadequate housing, medical, infrastucture, education, crime and drug problems is examanied in comparison to the Iraq society before the American preentive invasion.