The bells are tolling for the dollar

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The bells are tolling for the dollar
(Taken from CubaDebate)

THE Empire dominated the world more through the economy and lies than by force. It obtained the privilege of printing convertible currency at the end of World War II; it had a monopoly of nuclear weapons; it had virtually all the gold in the world; and was the only large-scale producer of productive equipment, consumer goods, food and services at global level. However, it did have a limit on printing paper money: the backing of gold, at the constant price of $35 per troy ounce. That was the case for more than 25 years until, on August 15, 1971, via a presidential order from Richard Nixon, the United States unilaterally broke that international commitment by defrauding the world. I shall insist on repeating that. In that way it launched on the world economy its rearmament costs and military adventures - in particular the Vietnam war - which, in line with conservative calculations, cost no less than $200 billion and the lives of more than 45,000 young Americans.

More bombs were dropped on this little Third World country than all of those used in the last world war. Millions of people died or were mutilated. When the conversion rate was suspended, the dollar became a currency that could be printed at the will of the U.S. government without the backing of a constant value.

Treasury bonds and bills continued to circulate as convertible currency; state reserves continued nourishing themselves on those bills which, on the one hand, served to acquire raw materials, properties, goods and services from every part of the world and, on the other, privileged U.S. exports in the face of other economies of the planet. Time and time again, politicians and academics refer to the real cost of that suicidal war, admirably described in the film by Oliver Stone. People tend to make calculations as if the millions were the same. They do not usually take note of the fact that the millions of dollars of 1971 are not the same as the millions of 2009.

One million dollars today, when gold - a metal whose value has been the most stable throughout the centuries - has a price in excess of $1,000 per troy ounce, is worth approximately 30 times what it was worth when Nixon suspended the conversion rate. In 2009, $6 trillion is equivalent to $200 billion in 1971. If this is not taken into consideration, the new generations will have no idea of imperialist barbarism.

In the same way, when one speaks of the $20 billion invested in Europe at the end of World War II - in virtue of the Marshall Plan for reconstructing and controlling the principal European powers that had the necessary workforce and technical culture for the rapid development of goods and services - people usually ignore the fact that the real value of what was invested at that time by the empire is equivalent to a current value of $600 billion. They do not note that today, $20 billion would barely stretch to building three large oil refineries capable of supplying 800,000 barrels of gasoline per day, in addition to other oil derivatives.

The consumer societies, the absurd and capricious waste of energy and natural resources that are currently threatening the survival of the species, would not be explicable in such a brief historical period if one is unaware of the irresponsible manner in which developed capitalism, in its superior phase, has ruled the destinies of the world.

That astounding waste explains why the two most industrialized countries of the world, the United States and Japan, are indebted to approximately $20 trillion.

Of course the U.S. economy has an annual gross domestic product of $15 trillion. The crises of capitalism are cyclical, as the history of the system irrefutably demonstrates, but this time it is about something more: a structural crisis, as Professor Jorge Giordani, Venezuelan minister of planning and development, explained to Walter Martínez in the latter's Telesur program last night.

News agency reports circulated today, Friday October 9, add irrefutable data. An AFP cable from Washington notes that the budget deficit of the United States in the fiscal year 2009 is rising to $1.4 trillion, 9.9% of the GDP, "something unseen since 1945, at the end of World War II," it adds.

The deficit in 2007 was one third of that figure. High deficit figures are expected for the years 2001, 2011 and 2012. That huge deficit is fundamentally determined by the U.S. Congress, to save that country's major banks, to prevent unemployment rising above 10% and to pull the United States out of recession. It is logical that if they flood the nation with dollars, the large commercial chains will sell more merchandise, industries will increase production, fewer citizens will lose their homes, the unemployment tide will stop rising, and Wall Street shares will increase in value. However, the world can no longer return to what it was. The economist Paul Krugman, an eminent Nobel Prize winner, has just affirmed that international trade has suffered its greatest fall, worse than that of the Great Depression, and has expressed doubts on its recovery in the short term.

Nor can the world be inundated with dollars and think that those bills without backing in gold will maintain their value. Other economies, today more solid, have emerged. The dollar is no longer the hard currency reserve of all states; on the contrary, its holders wish to move away from that currency, while as far as possible avoiding its devaluation before they can get rid of it.

The European Union euro, the Chinese yuan, the Swiss franc, the Japanese yen - despite that country's debts - even the pound sterling, together with other hard currencies, have moved to take the place of the dollar in international trade. Gold metal is once again becoming an important international reserve currency.

This is not a capricious personal opinion, nor do I wish to slander that currency.

Another Nobel Prize winner in economy, Joseph Stiglitz, commented, according to one news agency, that the most likely thing is that the green bill will continue its decline. He stated this on October 6 at the IMF World Bank Joint Annual Meeting in Istanbul. Violent repression could be noted in that city. The event was greeted with broken windows in the commercial sector and fires from Molotov cocktails.

Other agencies talked of the fact that the European countries are fearful of the negative effect of the weakness of the dollar compared to the euro and the consequences of that on European exports. The U.S. treasury secretary stated that his country "was interested in a strong dollar." Stiglitz made fun of an official statement and stated, according to EFE: "In the case of the United States money has been squandered and the reason has been the multimillion rescue of the banks and defraying the cost of wars like that of Afghanistan." EFE reported that the Nobel Prize winner "insisted that instead of investing $700 billion to help bankers, the United States should have directed part of that money into helping the developing countries which, at the same time, would have stimulated global demand."

Robert Zoellick, president of the World Bank, raised the alarm a few days earlier, warning that the dollar could not maintain its status as a reserve currency indefinitely.

Kenneth Rogoff, an eminent professor of economics at Harvard, stated that the next major financial crisis will be that of "public deficits."

The World Bank declared that "the International Monetary Fund has demonstrated that the central banks of the world accumulated fewer dollars during the second half of 2009 than at any other point in the last 10 years and increased their euro holdings."

That very same October 6, AFP reported that gold reached the record figure of $1,045 per ounce, prompted by the weakening of the dollar and fears of inflation.

The Independent newspaper of London published that a group of oil producing countries were studying the possibility of replacing the dollar in commercial transactions with a basket of currencies including the yen, the yuan, the euro, gold and a new unified currency.

The news leaked or deduced with impressive logic was refuted by some of the countries presumably interested in that protection measure. They do not want it [the dollar] to collapse, but neither do they want to continue accumulating a currency that has lost its value thirty-fold in less than 30 years.

I must mention a cable from the EFE agency, which cannot be accused of being anti-imperialist and which, in the current circumstances, includes opinions of particular interest:

"Experts in economy and finance were in agreement today in New York in affirming that the worst crisis since the Great Depression has resulted in this country playing a less significant role in the world economy."

"The recession has led to the world changing its way of looking at the United States. Our country is now less significant than before and that is something that we have to recognize," affirmed David Rubenstein, president and founder of the Carlyle Group, the largest risk capital company in the world, addressing the World Business Forum."

"The financial world is going to be less centered in the United States... New York is never again going to be the world financial capital and that role will be shared with London, Shanghai, Dubai, Sao Paulo and other cities," he noted.

"...sort out the problems that the U.S. will confront when it comes out of the 'great recession,' which will probably go another month or two."

"...'enormous public debt, inflation, unemployment, loss in value of the dollar as a reserve currency, energy prices..."

"The government must reduce public spending in order to confront the debt problem and do something that it doesn't much like: increase taxes."

"Jeffrey Sachs, an economist at the University of Columbia and UN special adviser, agreed with Rubenstein that the economic and financial predominance of the U.S. 'is fading.'"

"We have left a system centered in the U.S. for a multilateral one..."

"...'20 years of irresponsibility by the first part of the Bill Clinton administration and then that of George W. Bush,' yielded to the pressures of Wall Street..."

"...the banks negotiated with 'toxic assets to obtain easy money,' Sachs explained."

"'The important thing now is to recognize the unprecedented challenge that supposes achieving sustainable economic development in line with the basic physical and biological rules of this planet'..."

On the other hand, the direct news from our delegation in Bangkok, capital of Thailand, was not at all encouraging:

"The essential issue being discussed - our minister of foreign affairs noted textually - is the ratification or not of the concept of shared but differentiated responsibilities between the industrialized countries and the so-called emerging economies, basically China, Brazil, India and South Africa, and the underdeveloped countries.

"China, Brazil, India, South Africa, Egypt, Bangladesh, Pakistan and the ALBA are the most active. In general terms, the majority of the Group of 77, are holding to firm and correct positions.

"Figures being negotiated for the reduction of carbon emissions do not correspond to those calculated by scientists for keeping temperature increases to a level below 2 degrees Celsius, 25-40%. At this point, negotiations are moving around a reduction of 11-18%.

"The United States is not making any real effort. It is only accepting a 4% reduction in relation to the year 1990."

In the morning of today, October 9, the world awoke to the news that the "good Obama" of the enigma explained by the Bolivarian President Hugo Chávez at the United Nations, has received the Nobel Peace prize. I do not always agree with the positions of that institution but I am obliged to acknowledge at this moment in time, that - in my view - it was a positive measure. It compensates for the setback that Obama suffered in Copenhagen when Rio de Janeiro and not Chicago was chosen as the venue for the 2016 Olympics, which prompted irate attacks from the extreme right.

Many people will say that he has not as yet won the right to receive such a distinction. We would like to see in the decision, more than a prize to the president of the United States, a criticism of the genocidal policy followed by more than a few presidents of that country, who have brought the world to the crossroads where it finds itself today; an exhortation to peace, and the search for solutions that will lead to the survival of the species.

Fidel Castro Ruz
October 9, 2009
6.11 p.m.

Translated by Granma International


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This page contains a single entry by writch published on October 13, 2009 3:51 PM.

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