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Fri Feb 24 11:55:10 PST 2006

tax the rest of the world, the United States had to force the world to
continue to accept ever-depreciating dollars in exchange for economic
goods and to have the world hold more and more of those depreciating
dollars. It had to give the world an economic reason to hold them, and
that reason was oil.=20
In 1971, as it became clearer and clearer that the U.S Government would
not be able to buy back its dollars in gold, it made in 1972-73 an
iron-clad arrangement with Saudi Arabia to support the power of the
House of Saud in exchange for accepting only U.S. dollars for its oil.
The rest of OPEC was to follow suit and also accept only dollars.
Because the world had to buy oil from the Arab oil countries, it had the
reason to hold dollars as payment for oil. Because the world needed ever
increasing quantities of oil at ever increasing oil prices, the world's
demand for dollars could only increase. Even though dollars could no
longer be exchanged for gold, they were now exchangeable for oil.=20
The economic essence of this arrangement was that the dollar was now
backed by oil. As long as that was the case, the world had to accumulate
increasing amounts of dollars, because they needed those dollars to buy
oil. As long as the dollar was the only acceptable payment for oil, its
dominance in the world was assured, and the American Empire could
continue to tax the rest of the world. If, for any reason, the dollar
lost its oil backing, the American Empire would cease to exist. Thus,
Imperial survival dictated that oil be sold only for dollars. It also
dictated that oil reserves were spread around various sovereign states
that weren't strong enough, politically or militarily, to demand payment
for oil in something else. If someone demanded a different payment, he
had to be convinced, either by political pressure or military means, to
change his mind.=20
The man that actually did demand Euro for his oil was Saddam Hussein in
2000. At first, his demand was met with ridicule, later with neglect,
but as it became clearer that he meant business, political pressure was
exerted to change his mind. When other countries, like Iran, wanted
payment in other currencies, most notably Euro and Yen, the danger to
the dollar was clear and present, and a punitive action was in order.
Bush's Shock-and-Awe in Iraq was not about Saddam's nuclear
capabilities, about defending human rights, about spreading democracy,
or even about seizing oil fields; it was about defending the dollar,
ergo the American Empire. It was about setting an example that anyone
who demanded payment in currencies other than U.S. Dollars would be
likewise punished.=20
Many have criticized Bush for staging the war in Iraq in order to seize
Iraqi oil fields. However, those critics can't explain why Bush would
want to seize those fields-he could simply print dollars for nothing and
use them to get all the oil in the world that he needs. He must have had
some other reason to invade Iraq.=20
History teaches that an empire should go to war for one of two reasons:
(1) to defend itself or (2) benefit from war; if not, as Paul Kennedy
illustrates in his magisterial The Rise and Fall of the Great Powers, a
military overstretch will drain its economic resources and precipitate
its collapse. Economically speaking, in order for an empire to initiate
and conduct a war, its benefits must outweigh its military and social
costs. Benefits from Iraqi oil fields are hardly worth the long-term,
multi-year military cost. Instead, Bush must have gone into Iraq to
defend his Empire. Indeed, this is the case: two months after the United
States invaded Iraq, the Oil for Food Program was terminated, the Iraqi
Euro accounts were switched back to dollars, and oil was sold once again
only for U.S. dollars. No longer could the world buy oil from Iraq with
Euro. Global dollar supremacy was once again restored. Bush descended
victoriously from a fighter jet and declared the mission accomplished-he
had successfully defended the U.S. dollar, and thus the American Empire.

II. Iranian Oil Bourse=20
The Iranian government has finally developed the ultimate "nuclear"
weapon that can swiftly destroy the financial system underpinning the
American Empire. That weapon is the Iranian Oil Bourse slated to open in
March 2006. It will be based on a euro-oil-trading mechanism that
naturally implies payment for oil in Euro. In economic terms, this
represents a much greater threat to the hegemony of the dollar than
Saddam's, because it will allow anyone willing either to buy or to sell
oil for Euro to transact on the exchange, thus circumventing the U.S.
dollar altogether. If so, then it is likely that almost everyone will
eagerly adopt this euro oil system:=20
The Europeans will not have to buy and hold dollars in order to secure
their payment for oil, but would instead pay with their own currencies.
The adoption of the euro for oil transactions will provide the European
currency with a reserve status that will benefit the European at the
expense of the Americans.=20
The Chinese and the Japanese will be especially eager to adopt the new
exchange, because it will allow them to drastically lower their enormous
dollar reserves and diversify with Euros, thus protecting themselves
against the depreciation of the dollar. One portion of their dollars
they will still want to hold onto; a second portion of their dollar
holdings they may decide to dump outright; a third portion of their
dollars they will decide to use up for future payments without
replenishing those dollar holdings, but building up instead their euro
reserves.=20
The Russians have inherent economic interest in adopting the Euro - the
bulk of their trade is with European countries, with oil-exporting
countries, with China, and with Japan. Adoption of the Euro will
immediately take care of the first two blocs, and will over time
facilitate trade with China and Japan. Also, the Russians seemingly
detest holding depreciating dollars, for they have recently found a new
religion with gold. Russians have also revived their nationalism, and if
embracing the Euro will stab the Americans, they will gladly do it and
smugly watch the Americans bleed.=20
The Arab oil-exporting countries will eagerly adopt the Euro as a means
of diversifying against rising mountains of depreciating dollars. Just
like the Russians, their trade is mostly with European countries, and
therefore will prefer the European currency both for its stability and
for avoiding currency risk, not to mention their jihad against the
Infidel Enemy.=20
Only the British will find themselves between a rock and a hard place.
They have had a strategic partnership with the U.S. forever, but have
also had their natural pull from Europe. So far, they have had many
reasons to stick with the winner. However, when they see their
century-old partner falling, will they firmly stand behind him or will
they deliver the coup de grace? Still, we should not forget that
currently the two leading oil exchanges are the New York's NYMEX and the
London's International Petroleum Exchange (IPE), even though both of
them are effectively owned by the Americans. It seems more likely that
the British will have to go down with the sinking ship, for otherwise
they will be shooting themselves in the foot by hurting their own London
IPE interests. It is here noteworthy that for all the rhetoric about the
reasons for the surviving British Pound, the British most likely did not
adopt the Euro namely because the Americans must have pressured them not
to: otherwise the London IPE would have had to switch to Euros, thus
mortally wounding the dollar and their strategic partner.=20
At any rate, no matter what the British decide, should the Iranian Oil
Bourse accelerate, the interests that matter-those of Europeans,
Chinese, Japanese, Russians, and Arabs-will eagerly adopt the Euro, thus
sealing the fate of the dollar. Americans cannot allow this to happen,
and if necessary, will use a vast array of strategies to halt or hobble
the operation's exchange:=20
Sabotaging the Exchange-this could be a computer virus, network,
communications, or server attack, various server security breaches, or a
9-11-type attack on main and backup facilities.=20
Coup d'=E9tat-this is by far the best long-term strategy available to =
the
Americans.=20
Negotiating Acceptable Terms & Limitations-this is another excellent
solution to the Americans. Of course, a government coup is clearly the
preferred strategy, for it will ensure that the exchange does not
operate at all and does not threaten American interests. However, if an
attempted sabotage or coup d'etat fails, then negotiation is clearly the
second-best available option.=20
Joint U.N. War Resolution-this will be, no doubt, hard to secure given
the interests of all other member-states of the Security Council.
Feverish rhetoric about Iranians developing nuclear weapons undoubtedly
serves to prepare this course of action.=20
Unilateral Nuclear Strike-this is a terrible strategic choice for all
the reasons associated with the next strategy, the Unilateral Total War.
The Americans will likely use Israel to do their dirty nuclear job.=20
Unilateral Total War-this is obviously the worst strategic choice.
First, the U.S. military resources have been already depleted with two
wars. Secondly, the Americans will further alienate other powerful
nations. Third, 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. Finally, Iran has
strategic alliances with other powerful nations that may trigger their
involvement in war; Iran reputedly has such alliance with China, India,
and Russia, known as the Shanghai Cooperative Group, a.k.a. Shanghai
Coop and a separate pact with Syria.=20
Whatever the strategic choice, 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 Scylla and Charybdis-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.=20
The Austrian theory of money, credit, and business cycles teaches us
that there is no in-between Scylla and Charybdis. Sooner or later, the
monetary system must swing one way or the other, forcing the Fed to make
its choice. No doubt, Commander-in-Chief Ben Bernanke, a renowned
scholar of the Great Depression and an adept Black Hawk pilot, will
choose inflation. Helicopter Ben, oblivious to Rothbard's America's
Great Depression, has nonetheless mastered the lessons of the Great
Depression and the annihilating power of deflations. The Maestro has
taught him the panacea of every single financial problem-to inflate,
come hell or high water. He has even taught the Japanese his own
ingenious unconventional ways to battle the deflationary liquidity trap.
Like his mentor, he has dreamed of battling a Kondratieff Winter. To
avoid deflation, he will resort to the printing presses; he will recall
all helicopters from the 800 overseas U.S. military bases; and, if
necessary, he will monetize everything in sight. His ultimate
accomplishment will be the hyperinflationary destruction of the American
currency and from its ashes will rise the next reserve currency of the
world-that barbarous relic called gold.=20
------------------------------------------------------------------------
--------=20
Recommended Reading=20
William Clark "The Real Reasons for the Upcoming War in Iraq"=20
William Clark "The Real Reasons Why Iran is the Next Target"=20
About the Author=20
Krassimir Petrov (Krassimir_Petrov at hotmail.com) has received his Ph. D.
in economics from the Ohio State University and currently teaches
Macroeconomics, International Finance, and Econometrics at the American
University in Bulgaria. He is looking for a career in Dubai or the U. A.
E.=20
Also by this author=20
"China's Great Depression"=20
"Masters of Austrian Investment Analysis"=20
"Austrian Analysis of U.S. Inflation"=20
"Oil Performance in a Worldwide Depression"=20
=20

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<p class=3DMsoNormal><font size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;
font-family:Arial'><a =
href=3D"http://www.whatreallyhappened.com/oilbourse.php">http://www.whatr=
eallyhappened.com/oilbourse.php</a><o:p></o:p></span></font></p>

<p class=3DMsoNormal><font size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;
font-family:Arial'><o:p>&nbsp;</o:p></span></font></p>

<p class=3DMsoNormal><span class=3DSpellE><font size=3D3 face=3D"Times =
New Roman"><span
style=3D'font-size:12.0pt'>Krassimir</span></font></span> <span =
class=3DSpellE>Petrov</span>,
Ph.D. <br>
<st1:date Month=3D"1" Day=3D"15" Year=3D"2006">January 15, =
2006</st1:date> <o:p></o:p></p>

Abstract:
the proposed Iranian Oil Bourse will accelerate the fall of the American
Empire. <o:p></o:p>

I.
Economics of Empires <o:p></o:p>

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. <o:p></o:p>

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. <o:p></o:p>

For the
first time in history, in the twentieth century, =
<st1:country-region><st1:place>America</st1:place></st1:cou=
ntry-region>
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. =
<o:p></o:p>

Early in
the 20th century, the =
<st1:country-region><st1:place>U.S.</st1:place></st1:countr=
y-region>
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 =
<st1:place>Roosevelt</st1:place>
to decouple the dollar from gold in 1932. Up to this point, the =
<st1:country-region><st1:place>U.S.</st1:place></st1:country-region>
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. <o:p></o:p>

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 <st1:country-region><st1:place>United
 States</st1:place></st1:country-region> 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 =
<st1:country-region><st1:place>Vietnam</st1:place></st1:country-region>
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. <o:p></o:p>

When in
1970-1971 foreigners demanded payment for their dollars in gold, The =
U.S.
Government defaulted on its payment on <st1:date =
Month=3D"8"
Day=3D"15" Year=3D"1971">August 15, 1971</st1:date>. While the popular =
spin told
the story of &quot;severing the link between the dollar and gold&quot;, =
in
reality the denial to pay back in gold was an act of bankruptcy by the =
U.S.
Government. Essentially, the =
<st1:country-region><st1:place>U.S.</st1:place></st1:country-region>
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. <o:p></o:p>

From that
point on, to sustain the American Empire and to continue to tax the rest =
of the
world, the <st1:country-region><st1:place>United =
States</st1:place></st1:country-region>
had to force the world to continue to accept ever-depreciating dollars =
in
exchange for economic goods and to have the world hold more and more of =
those
depreciating dollars. It had to give the world an economic reason to =
hold them,
and that reason was oil. <o:p></o:p>

In 1971,
as it became clearer and clearer that the U.S Government would not be =
able to
buy back its dollars in gold, it made in 1972-73 an iron-clad =
arrangement with
Saudi Arabia to support the power of the House of Saud
in exchange for accepting only U.S. dollars for its oil. The rest of =
OPEC was
to follow suit and also accept only dollars. Because the world had to =
buy oil
from the Arab oil countries, it had the reason to hold dollars as =
payment for
oil. Because the world needed ever increasing quantities of oil at ever
increasing oil prices, the world's demand for dollars could only =
increase. Even
though dollars could no longer be exchanged for gold, they were now =
exchangeable
for oil. <o:p></o:p>

The
economic essence of this arrangement was that the dollar was now backed =
by oil.
As long as that was the case, the world had to accumulate increasing =
amounts of
dollars, because they needed those dollars to buy oil. As long as the =
dollar
was the only acceptable payment for oil, its dominance in the world was
assured, and the American Empire could continue to tax the rest of the =
world.
If, for any reason, the dollar lost its oil backing, the American Empire =
would
cease to exist. Thus, Imperial survival dictated that oil be sold only =
for
dollars. It also dictated that oil reserves were spread around various
sovereign states that weren't strong enough, politically or militarily, =
to
demand payment for oil in something else. If someone demanded a =
different
payment, he had to be convinced, either by political pressure or =
military
means, to change his mind. <o:p></o:p>

The man
that actually did demand Euro for his oil was Saddam Hussein in 2000. At =
first,
his demand was met with ridicule, later with neglect, but as it became =
clearer
that he meant business, political pressure was exerted to change his =
mind. When
other countries, like =
<st1:country-region><st1:place>Iran</st1:place></st1:countr=
y-region>,
wanted payment in other currencies, most notably Euro and Yen, the =
danger to
the dollar was clear and present, and a punitive action was in order. =
Bush's
Shock-and-Awe in =
<st1:country-region><st1:place>Iraq</st1:place></st1:country-region>
was not about Saddam's nuclear capabilities, about defending human =
rights,
about spreading democracy, or even about seizing oil fields; it was =
about
defending the dollar, ergo the American Empire. It was about setting an =
example
that anyone who demanded payment in currencies other than U.S. Dollars =
would be
likewise punished. <o:p></o:p>

Many have
criticized Bush for staging the war in =
<st1:country-region><st1:place>Iraq</st1:place></st1:countr=
y-region>
in order to seize Iraqi oil fields. However, those critics can't explain =
why
Bush would want to seize those fields-he could simply print dollars for =
nothing
and use them to get all the oil in the world that he needs. He must have =
had
some other reason to invade =
<st1:country-region><st1:place>Iraq</st1:place></st1:country-region>.
<o:p></o:p>

History
teaches that an empire should go to war for one of two reasons: (1) to =
defend
itself or (2) benefit from war; if not, as Paul Kennedy illustrates in =
his
magisterial The Rise and Fall of the Great Powers, a military =
overstretch will
drain its economic resources and precipitate its collapse. Economically =
speaking,
in order for an empire to initiate and conduct a war, its benefits must
outweigh its military and social costs. Benefits from Iraqi oil fields =
are
hardly worth the long-term, multi-year military cost. Instead, Bush must =
have
gone into =
<st1:country-region><st1:place>Iraq</st1:place></st1:countr=
y-region>
to defend his Empire. Indeed, this is the case: two months after the =
United
States invaded Iraq, the Oil for Food Program was terminated, the Iraqi =
Euro
accounts were switched back to dollars, and oil was sold once again only =
for
U.S. dollars. No longer could the world buy oil from =
<st1:country-region><st1:place>Iraq</st1:place></st1:country-region>
with Euro. Global dollar supremacy was once again restored. Bush =
descended
victoriously from a fighter jet and declared the mission accomplished-he =
had
successfully defended the U.S. dollar, and thus the American Empire. =
<o:p></o:p>

II. Iranian
Oil Bourse <o:p></o:p>

The
Iranian government has finally developed the ultimate =
&quot;nuclear&quot;
weapon that can swiftly destroy the financial system underpinning the =
American
Empire. That weapon is the Iranian Oil Bourse slated to open in March =
2006. It
will be based on a euro-oil-trading mechanism that naturally implies =
payment
for oil in Euro. In economic terms, this represents a much greater =
threat to
the hegemony of the dollar than Saddam's, because it will allow anyone =
willing
either to buy or to sell oil for Euro to transact on the exchange, thus
circumventing the U.S. dollar altogether. If so, then it is likely that =
almost
everyone will eagerly adopt this euro oil system: =
<o:p></o:p>

The
Europeans will not have to buy and hold dollars in order to secure their
payment for oil, but would instead pay with their own currencies. The =
adoption
of the euro for oil transactions will provide the European currency with =
a
reserve status that will benefit the European at the expense of the =
Americans. <o:p></o:p>

The
Chinese and the Japanese will be especially eager to adopt the new =
exchange,
because it will allow them to drastically lower their enormous dollar =
reserves
and diversify with Euros, thus protecting themselves against the =
depreciation
of the dollar. One portion of their dollars they will still want to hold =
onto;
a second portion of their dollar holdings they may decide to dump =
outright; a
third portion of their dollars they will decide to use up for future =
payments
without replenishing those dollar holdings, but building up instead =
their euro
reserves. <o:p></o:p>

The
Russians have inherent economic interest in adopting the Euro - the bulk =
of
their trade is with European countries, with oil-exporting countries, =
with =
<st1:country-region><st1:place>China</st1:place></st1:count=
ry-region>,
and with =
<st1:country-region><st1:place>Japan</st1:place></st1:country-region>.
Adoption of the Euro will immediately take care of the first two blocs, =
and
will over time facilitate trade with =
<st1:country-region><st1:place>China</st1:place></st1:country-region>
and =
<st1:country-region><st1:place>Japan</st1:place></st1:country-region>.
Also, the Russians seemingly detest holding depreciating dollars, for =
they have
recently found a new religion with gold. Russians have also revived =
their
nationalism, and if embracing the Euro will stab the Americans, they =
will
gladly do it and smugly watch the Americans bleed. <o:p></o:p>

The Arab
oil-exporting countries will eagerly adopt the Euro as a means of =
diversifying
against rising mountains of depreciating dollars. Just like the =
Russians, their
trade is mostly with European countries, and therefore will prefer the =
European
currency both for its stability and for avoiding currency risk, not to =
mention
their jihad against the Infidel Enemy. <o:p></o:p>

Only the
British will find themselves between a rock and a hard place. They have =
had a
strategic partnership with the =
<st1:country-region><st1:place>U.S.</st1:place></st1:countr=
y-region>
forever, but have also had their natural pull from =
<st1:place>Europe</st1:place>.
So far, they have had many reasons to stick with the winner. However, =
when they
see their century-old partner falling, will they firmly stand behind him =
or
will they deliver the coup de grace? Still, we should not forget that =
currently
the two leading oil exchanges are the <st1:State><st1:place>New =
York</st1:place></st1:State>'s
NYMEX and the <st1:City><st1:place>London</st1:place></st1:City>'s
International Petroleum Exchange (IPE), even though both of them are =
effectively
owned by the Americans. It seems more likely that the British will have =
to go
down with the sinking ship, for otherwise they will be shooting =
themselves in
the foot by hurting their own London IPE interests. It is here =
noteworthy that
for all the rhetoric about the reasons for the surviving British Pound, =
the
British most likely did not adopt the Euro namely because the Americans =
must
have pressured them not to: otherwise the London IPE would have had to =
switch
to Euros, thus mortally wounding the dollar and their strategic partner. =
<o:p></o:p>

At any
rate, no matter what the British decide, should the Iranian Oil Bourse
accelerate, the interests that matter-those of Europeans, Chinese, =
Japanese,
Russians, and Arabs-will eagerly adopt the Euro, thus sealing the fate =
of the
dollar. Americans cannot allow this to happen, and if necessary, will =
use a
vast array of strategies to halt or hobble the operation's exchange: =
<o:p></o:p>

Sabotaging
the Exchange-this could be a computer virus, network, communications, or =
server
attack, various server security breaches, or a 9-11-type attack on main =
and
backup facilities. <o:p></o:p>

Coup
d'=E9tat-this is by far the best long-term strategy available to the =
Americans. <o:p></o:p>

Negotiating
Acceptable Terms &amp; Limitations-this is another excellent solution to =
the
Americans. Of course, a government coup is clearly the preferred =
strategy, for
it will ensure that the exchange does not operate at all and does not =
threaten
American interests. However, if an attempted sabotage or coup d'etat fails, then negotiation is clearly the =
second-best
available option. <o:p></o:p>

Joint
U.N. War Resolution-this will be, no doubt, hard to secure given the =
interests
of all other member-states of the Security Council. Feverish rhetoric =
about
Iranians developing nuclear weapons undoubtedly serves to prepare this =
course
of action. <o:p></o:p>

Unilateral
Nuclear Strike-this is a terrible strategic choice for all the reasons
associated with the next strategy, the Unilateral Total War. The =
Americans will
likely use =
<st1:country-region><st1:place>Israel</st1:place></st1:coun=
try-region>
to do their dirty nuclear job. <o:p></o:p>

Unilateral
Total War-this is obviously the worst strategic choice. First, the =
<st1:country-region><st1:place>U.S.</st1:place></st1:countr=
y-region>
military resources have been already depleted with two wars. Secondly, =
the
Americans will further alienate other powerful nations. Third, major
dollar-holding countries may decide to quietly retaliate by dumping =
their own
mountains of dollars, thus preventing the =
<st1:country-region><st1:place>U.S.</st1:place></st1:country-region>
from further financing its militant ambitions. Finally, =
<st1:country-region><st1:place>Iran</st1:place></st1:country-region>
has strategic alliances with other powerful nations that may trigger =
their
involvement in war; =
<st1:country-region><st1:place>Iran</st1:place></st1:country-region>
reputedly has such alliance with =
<st1:country-region><st1:place>China</st1:place></st1:country-region>,
<st1:country-region><st1:place>India</st1:place></st1:country-region>, =
and =
<st1:country-region><st1:place>Russia</st1:place></st1:country-region>,
known as the Shanghai Cooperative Group, a.k.a. Shanghai Coop and a =
separate
pact with =
<st1:country-region><st1:place>Syria</st1:place></st1:country-region>.
<o:p></o:p>

Whatever
the strategic choice, 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 =
<st1:country-region><st1:place>U.S.</st1:place></st1:countr=
y-region>
inflation and will pressure upward =
<st1:country-region><st1:place>U.S.</st1:place></st1:country-region>
long-term interest rates. At this point, the Fed will find itself =
between
Scylla and Charybdis-between deflation and
hyperinflation-it will be forced fast either to take its &quot;classical
medicine&quot; 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. <o:p></o:p>

The
Austrian theory of money, credit, and business cycles teaches us that =
there is
no in-between Scylla and Charybdis. Sooner =
or later,
the monetary system must swing one way or the other, forcing the Fed to =
make
its choice. No doubt, Commander-in-Chief Ben Bernanke,
a renowned scholar of the Great Depression and an adept Black Hawk =
pilot, will
choose inflation. Helicopter Ben, oblivious to Rothbard's
<st1:country-region><st1:place>America</st1:place></st1:cou=
ntry-region>'s
Great Depression, has nonetheless mastered the lessons of the Great =
Depression
and the annihilating power of deflations. The Maestro has taught him the
panacea of every single financial problem-to inflate, come
hell or high water. He has even taught the Japanese his own ingenious
unconventional ways to battle the deflationary liquidity trap. Like his =
mentor,
he has dreamed of battling a Kondratieff Winter. To avoid deflation, he =
will
resort to the printing presses; he will recall all helicopters from the =
800
overseas =
<st1:country-region><st1:place>U.S.</st1:place></st1:country-region>
military bases; and, if necessary, he will monetize everything in sight. =
His
ultimate accomplishment will be the hyperinflationary destruction of the
American currency and from its ashes will rise the
next reserve currency of the world-that barbarous relic called gold. =
<o:p></o:p>

<p><font size=3D3 face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt'>----------------------------------------------=
----------------------------------
<o:p></o:p></span></font></p>

<p><font size=3D3 face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt'>Recommended
<span class=3DGramE>Reading <br>
William</span> Clark &quot;The Real Reasons for the Upcoming War in =
</span></font><st1:country-region><st1:place>Iraq</st1:place></st1:countr=
y-region>&quot;
<br>
William Clark &quot;The Real Reasons Why Iran is the Next Target&quot; =
<o:p></o:p></p>

About the
Author 
Krassimir Petrov (<a
href=3D"mailto:Krassimir_Petrov at hotmail.com">Krassimir_Petrov at hotmail.com=
</a>)
has received his Ph. D. in economics from the =
<st1:place><st1:PlaceName>Ohio</st1:PlaceName>
 <st1:PlaceType>State</st1:PlaceType> =
<st1:PlaceType>University</st1:PlaceType></st1:place>
and currently teaches Macroeconomics, International Finance, and =
Econometrics
at the <st1:place><st1:PlaceName>American</st1:PlaceName> =
<st1:PlaceType>University</st1:PlaceType></st1:place>
in =
<st1:country-region><st1:place>Bulgaria</st1:place></st1:country-region>.=
 He
is looking for a career in =
<st1:City><st1:place>Dubai</st1:place></st1:City> or
the U. A. E. <o:p></o:p>

Also by
this author 
&quot;<st1:country-region><st1:place>China</st1:plac=
e></st1:country-region>'s
Great Depression&quot; 
&quot;Masters of Austrian Investment Analysis&quot; 
&quot;Austrian Analysis of U.S. Inflation&quot; 
&quot;Oil Performance in a Worldwide Depression&quot; <o:p></o:p>

<p class=3DMsoNormal><font size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;
font-family:Arial'><o:p>&nbsp;</o:p></span></font></p>

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