[Mb-civic] Iran-Euro

[Kevin Marcari]

http://www.whatreallyhappened.com/oilbourse.php
 
Krassimir Petrov, Ph.D. 
January 15, 2006 
Abstract: the proposed Iranian Oil Bourse will accelerate the fall of
the American Empire. 
I. Economics of Empires 
A nation-state taxes its own citizens, while an empire taxes other
nation-states. The history of empires, from Greek and Roman, to Ottoman
and British, teaches that the economic foundation of every single empire
is the taxation of other nations. The imperial ability to tax has always
rested on a better and stronger economy, and as a consequence, a better
and stronger military. One part of the subject taxes went to improve the
living standards of the empire; the other part went to strengthen the
military dominance necessary to enforce the collection of those taxes. 
Historically, taxing the subject state has been in various forms-usually
gold and silver, where those were considered money, but also slaves,
soldiers, crops, cattle, or other agricultural and natural resources,
whatever economic goods the empire demanded and the subject-state could
deliver. Historically, imperial taxation has always been direct: the
subject state handed over the economic goods directly to the empire. 
For the first time in history, in the twentieth century, America was
able to tax the world indirectly, through inflation. It did not enforce
the direct payment of taxes like all of its predecessor empires did, but
distributed instead its own fiat currency, the U.S. Dollar, to other
nations in exchange for goods with the intended consequence of inflating
and devaluing those dollars and paying back later each dollar with less
economic goods-the difference capturing the U.S. imperial tax. Here is
how this happened. 
Early in the 20th century, the U.S. economy began to dominate the world
economy. The U.S. dollar was tied to gold, so that the value of the
dollar neither increased, nor decreased, but remained the same amount of
gold. The Great Depression, with its preceding inflation from 1921 to
1929 and its subsequent ballooning government deficits, had
substantially increased the amount of currency in circulation, and thus
rendered the backing of U.S. dollars by gold impossible. This led
Roosevelt to decouple the dollar from gold in 1932. Up to this point,
the U.S. may have well dominated the world economy, but from an economic
point of view, it was not an empire. The fixed value of the dollar did
not allow the Americans to extract economic benefits from other
countries by supplying them with dollars convertible to gold. 
Economically, the American Empire was born with Bretton Woods in 1945.
The U.S. dollar was not fully convertible to gold, but was made
convertible to gold only to foreign governments. This established the
dollar as the reserve currency of the world. It was possible, because
during WWII, the United States had supplied its allies with provisions,
demanding gold as payment, thus accumulating significant portion of the
world's gold. An Empire would not have been possible if, following the
Bretton Woods arrangement, the dollar supply was kept limited and within
the availability of gold, so as to fully exchange back dollars for gold.
However, the guns-and-butter policy of the 1960's was an imperial one:
the dollar supply was relentlessly increased to finance Vietnam and
LBJ's Great Society. Most of those dollars were handed over to
foreigners in exchange for economic goods, without the prospect of
buying them back at the same value. The increase in dollar holdings of
foreigners via persistent U.S. trade deficits was tantamount to a
tax-the classical inflation tax that a country imposes on its own
citizens, this time around an inflation tax that U.S. imposed on rest of
the world. 
When in 1970-1971 foreigners demanded payment for their dollars in gold,
The U.S. Government defaulted on its payment on August 15, 1971. While
the popular spin told the story of "severing the link between the dollar
and gold", in reality the denial to pay back in gold was an act of
bankruptcy by the U.S. Government. Essentially, the U.S. declared itself
an Empire. It had extracted an enormous amount of economic goods from
the rest of the world, with no intention or ability to return those
goods, and the world was powerless to respond- the world was taxed and
it could not do anything about it.