Skip to main content

From Gold Standard to Petrodollar: The Rise and Fall of the American Empire

Since Roosevelt's administration installed the designs of the New Deal era in the United States, the role of government in the lives of the American people has transformed. 

Over the course of World War II and the ensuing intra-Cold War conflicts, the War on Poverty, the War on Drugs, the space race, and the arms race, the United States accrued a tremendous pool of liabilities in order to fund these extravagant projects. 

Following World War II, the United States and the major market powers agreed to Bretton Woods, which established the United States dollar as the benchmark for the rest of the world's currencies. 

The United States dollar was then denominated in units of gold, redeemable at the request of the bearer of those reserves on the international scene. 

By this time, President Franklin Roosevelt had already issued an Executive Order 6102 outlawing personal ownership of gold as money or hoarding thereof, but the United States dollar still operated from this system on the international scale. 

By 1971, the United States had long abused its privilege by expanding its money supply, or issuing debt it could never repay, in order to satisfy the whims of over-promising administrations. 

At the time, President Nixon elected to temporarily close the gold window, all in response to the requests for redemption of gold by its international creditors. 

This was, contrary to popular belief, a moment in American history when the United States government effectively defaulted on its debts and admitted its insolvency. 

Shortly thereafter, in order to artificially prop up the United States dollar, Nixon negotiated a system of mutual advantage with the government of Saudi Arabia which would grant the Saudis arms and protections through United States defense while Saudi Arabian oil transactions would be exclusively denominated in United States dollars. 

Subsequently, OPEC espoused this system and the United States government was thus permitted further extravagance with its inflationary monetary policy, over which period of time the United States dollar experienced an expansion of supply on the magnitude of greater than twenty-fold, while the dollar price of gold has soared nearly 5700%. 



Over the course of the past two decades, the United States dollar's global reserve status has waned and its hegemony has been threatened by OPEC nations' refusal to accept further trade in United States dollars, while some of the United States' greatest creditors, including China, have declared their reluctance to hold or accumulate further United States treasuries. 

This imperils the stability of the United States dollar, which is, of course, the lifeblood of the American markets. 

Without this stronghold upon the petrodollar system, the United States dollar will surrender its global reserve status and will vacate its position in the international market as a mere facilitator of trade and exporter of inflation. 

This is the basis of the war efforts in the Middle East today and the impetus for the largely acceptable propaganda Americans regularly observe and accept.

Comments

Popular posts from this blog

Free Money: The Tech Secret Even Silicon Valley Doesn't Know

In July of 2015, Vitalik Buterin officially released the game-changing technology of Ethereum, an immediate competitor to its now-popular and relatively better-known counterpart Bitcoin. A cursory evaluation of the following chart might lead the reader to some wild conclusions, so continue reading to acquire a better understanding of the trajectory of this new-age abstraction of online currency that, despite its massive gains in recent weeks, hasn't remotely become a household name in even Silicon Valley, the tech capital of the world.


A variety of formal and informal polls suggest a lagging familiarity with the increasingly popular cryptocurrency giants. Those who claim awareness are most likely to recognize Bitcoin, while Ethereum has still flown largely undetected in even the heart of Silicon Valley. One might assume with a chart like this, with its major parabolic upswings and indefinite streams of free money, that awareness of the blockchain medium of exchange would have surg…

Hurricane Irma Reveals How Nationalistic America Really Is

It's interesting how the Weather Channel seems to treat the devastation of the Caribbean, even American territories, as precursors to what they have identified as the event, otherwise known as landfall upon the continental United States.

For the people presently facing Irma, the event is happening now.

The reason this is important is that it implies a lot about the way we view the world and its inhabitants.

Although the political map clearly illustrates borders between nations, views from the International Space Station reveal that these boundaries are mere imaginary lines drawn by history's political pundits whose self-interested motives altogether failed to represent the unanimous consensus of the time, and yet they fail even more miserably in that capacity today.


Notwithstanding the fact that we are all inhabitants of this earth, of the same species and familiar family dispositions, we are subliminally inculcated by political representations of this terrestrial world to ass…

Market Manipulation: Mirages in the Desert of Economic Despair

An article published today by MarketWatch, entitled The world is becoming desperate about deflation, reveals the astounding truth that interest rates would not have remained as low as they are today if the American economy had truly recovered from its most recent recession.

Economists of the political ranks tend to support lower interest rates and inflationary measures because they advance spending, boondoggles and measurable economic activity to the limited timeframes of their active administrations, at the real expense of future output and thoughtful investment that simply affords no benefit to present-day headline economic indicators and the intellectuals who wield them.

In an anemic economic climate, infrastructural change is the antidote to misinvestment, while monetary manipulation is the politically-convenient mirage in the desert of economic despair.


While wanderers across that desert perceive advantage in continuing to chase elusive returns and public policy tacitly rewards t…