Sunday, September 04, 2005

Understanding why we are at war--the Petrodollar.

The mass media would have you believe that we are at war because Iraq is a hotbed for breeding terrorists and we are protecting our national interests by bringing democracy there. Common liberal thinking would have you believe that we are there simply for "oil" and that the war is wrong and it only serves the interests of the rich and greedy. While the war certainly does help the rich and greedy, that characterization is not entirely true... The answer is--and it is a simple one--we are at war with Iraq to protect our currency, and to protect our way of life. While the answer is simple, understanding why that is the answer takes a bit of explaining.

If you've read my blog or you read, you know that oil is traded in dollars. That means if anyone wants to purchase oil, be it a corporation or a nation, they must exchange whatever currency they use for US dollars. This policy was instituted in a deal with the US and OPEC shortly after the oil shocks of the 70s. During the late 20th century, The World Bank, under the direction of Robert Mcnamara from 1968-1981, "helped" 3rd world nations industrialize by floating them HUGE loans--in US dollars--so they could buy oil. Of course there was no way these countries could pay back these loans, but the investment in dollars created by this practice allowed the dollar to grow stronger and stronger and allowed us to carry a RE-GODDAMNED-DICOLOUS amount of debt. But as long as countries are buying dollars to buy oil, things were right and good--as there is demand for dollars.

Our currency remains strong not because we produce any exports of intrinsic value (aside from weapons), but because foreign investors were buying dollars left and right. In fact we started the practice of mass-outsourcing of physical goods production and jobs at about the same time as the "petrodollar" was created.

Basic economic theory says that the more something is demanded, the more it is worth. In the simplest terms, currencies work in the same fashion. Dollars are vaulable because there is a demand for them in the global marketplace. Once that demand is taken away, the value of our currency plummets, and we are stuck being with no choise but to devalue it. Trust me, while they are a bunch of fuckwads, the Bush administration has our best interests in mind in not wanting this to happen.

We invaded Iraq in 1991 shortly after they annexed Kuwait. They had just gained control of over another 1.5 million barrels of oil per day and Sadam Hussein wanted to trade this oil for currencies other than the dollar. So we blasted them into the stone age and slapped some sanctions on their ass for 12 years, granting contracts to US corporations to rebuild the country that we had destroyed. This not only kept the dollar strong and the rich happy, but it sent a message to all other oil-exporting nations--fuck with the petrodollar and we will blow you up a whole bunch. Problem solved... sort of. In 2003, those sanctions were lifted, and Hussein began trading oil for EUROs. So we made the of course false claim that Iraq is connected to Al Queda and that they were responsible for the 9/11 attacks and we had to kick their muslim asses.

The reason we attacked Iraq again? THEY WERE TRADING OIL FOR EUROs! This war was not a pre-emptive strike on our part. Hussein struck first--economically. This war is definitely about oil--but not for consumption--for profit. Without "people" buying dollars to buy oil, our country would sink into a MASSIVE depression. And ain't no prozac gunna help us outta that one. Haliburton would not stand for their shareholders' investments becoming worthless in a matter of a few months as the dollar lost value and inflated by hundreds upon hundreds of percents. I was in Russia during 1993 as their currency was devaluing. When I got there, the Rubel was trading 700:1 against the dollar. ($1 = 700 rubels). When i left--8 days later-- it was trading at 800:1.

I will be the first to tell you that this war is bullshit, we should not be there, war in general is wrong, violence is wrong. But trust me the devaluation of currency as I described in Russia above will happen in the US as well if we don't defend the "petrodollar."

The last thing we are interested in doing in Iraq is building democracy. It is not in their best interest to trade oil for dollars and they know it. So why would they continue to do so if they had free-will over their own government and fiscal policy?

So the real reason we are in Iraq--to defend our nation's economic security. To defend our national security. To defend our standard of living. To defend our god-given right as Americans (god bless america...) to consume. It's not so easy to be anti-war when you understand that we were attacked first--economically. We really are fighting for our lives.


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