Friday, March 31, 2006

Quintessentially Canadian

This has to be the all-time quirkiest, 'Canadianest' sentence I've read in a long time... comes from a Google search I was running on "mosque" "Toronto" "beautiful", credited to a magazine called The Atlantic Monthly, in an article called "The Toronto Circle"...

"Rushing to mosque after work in your Chevy, through ice and slush.."

Thursday, March 30, 2006

$9.4 million to destroy a nation

The Globe and Mail has a front-page story today concerning "a textbook entitled Let's Talk About Sovereignty at School, put together by a pro-sovereignty group".

The book contains 40 exercises tailored to everyone from preschoolers to university grads.

The exercises, however, might raise eyebrows in academic circles.

For example, Activity No. 1 is aimed at kindergarteners.

They are asked to make decorations for Quebec's national holiday on June 24, and the book's illustration is a child's drawing of a Quebec flag on a pole with the Canadian flag beneath it, ripped in half.

Grade-school pupils are asked: How many youth novels at $15 apiece could they buy if they abolished the position of the governor-general, which costs Quebeckers $9.4-million a year?

For high-school students, there's a proposed music class on Quebec sovereignty classics, including Canada is not my country by singer Mononc' Serge and Quebec, mon pays by legendary poet Raymond Lévesque.

College-level students are asked to trace the history of the federal sponsorship scandal, while university students are given the task of calculating how much money is wasted by federal "intrusions" into Quebec jurisdictions.

For fine-arts students, there are activities such as designing a Quebec stamp..."

So this is what it comes down to. Quebec sovereignty isn't about saving a generation from being used as cannon-fodder in some foreign war of imperialism, or about breaking free of laws that ban the French language or the practice of the Catholic religion, or about acquiring the right to vote and elect one's own governors, or any of the big issues one might expect of a movement predicated on destroying a nation hundreds of years and millions of lives in the making, with the promise of a decent life for millions yet to come, no. No, it's about figuring out how many books you could buy draining off the lifeblood of that nation. What pretty pictures you can think up to celebrate cutting it down. What symbols of mutual love, respect, and generations of toil and ideals you can teach your children to gratuitously urinate upon without a single thought to the feelings of others and all hard work that went before to give them what they have make them who they are in the world.

The people who wrote this book have the souls of salamanders, the hearts of crocodiles, and every driven urge of termites.

Sunday, March 26, 2006

Keeping the Rock in your heart (and head)

"Republic of Newfoundland".

Uh huh.

Saw this in a bar this evening. Gosh, why is it you always see stuff like this in, ohhh, Toronto? Calgary? Toronto? Vancouver? And, ohhhh... Toronto? Why is it all the Newfie flag plates I see on $40,000 Ford F-250s are always screwed onto plates that say ONTARIO? Makes you wanna go up to these guys and say, "Gee, when are you going home to the big job in the Great State of St. John's, b'y?" Republic of Newfoundland, yeah. Love us colonies, though.

C'mon, folks. Regional pride's great and all, but for Christ's sake, give the rest of us just a small break already.

Thursday, March 16, 2006

"We love Canada"

To all those who said we should have joined the war against Iraq, who argued that Arabs are animals who want to take over and destroy the world, that they have no discernment and that any Westerner was equally their target and that Canadians were living in a fool's paradise if we really believed we were safe...

Passport saved Canadian hostage
Held hostage at gunpoint by Palestinian extremists in the Gaza Strip, Mark Budzanowski feared for his life – until his captors discovered his passport and declared 'We love Canada'
From Thursday's Globe and Mail

JERUSALEM — Mark Budzanowski could almost feel his captors' mood sag when they rifled through his pockets and found his passport. The word Canada on the cover was a blow to the dozens of masked men who surrounded him in the nondescript basement somewhere in the Gaza Strip. They thought they had kidnapped an American.

At first, the men in the masks didn't believe their eyes, and questioned the 57-year-old aid worker about Canada and about specific shops near Mr. Budzanowski's residence on Carlton Street in Toronto.

When they were finally convinced that Mr. Budzanowski was not an American in disguise, he said, they started treating him more politely, and handling him less roughly.

"When they were certain I was Canadian, they were very disappointed. Then, they told me, 'We love Canada.' That's wonderful to hear when you have guns pointed at you," an exhausted Mr. Budzanowski said yesterday in a telephone interview shortly after he was released after almost 30 hours as a hostage.

"It's wonderful to have a Canadian passport because it changes people's minds. One of the guards kept asking me to say hello to Canada, so it does stand for something."

His former captors had taken a liking to him toward the end of the hostage-taking and one — the one who kept asking him to say hello to Canada — even gave him a phone number to call if he ever needed the help of the Popular Front for the Liberation of Palestine.

"I don't intend to use it, but I believe he meant it," Mr. Budzanowski said with a chuckle...

...Mr. Budzanowski's captors, members of the leftist PFLP, which Mr. Saadat leads, had been looking for an American or British hostage, someone they could potentially use as barter to get Israel to stop its attack on the jail...

...After a sleepless night, during which his captors kept flicking on the light to make sure he wasn't trying to escape, Mr. Budzanowski said, he was forced to record another video, then put back into a car and driven to what he assumed would be another hideout. Only when he saw a crowd of camera-wielding journalists, and then was greeted by French diplomats acting on behalf of the Canadian embassy in Tel Aviv, did Mr. Budzanowski realize that he was being freed.

But while the Canadian embassy had arranged safe passage for him to Tel Aviv, and then home to Canada if he wanted, Mr. Budzanowski decided to stay in Gaza City. After what he hoped would be a long sleep and a warm shower, the aid worker planned to be back at his desk at Jumpstart this morning.

Despite his lack of sleep, Mr. Budzanowski spoke passionately about the need to help Palestinians rebuild their economy and society. He said Jumpstart's projects — including the building of a polytechnic school on the ruins of a deserted Israeli settlement in Gaza and a "peace park" near the Rafah border crossing with Egypt — are too important for him to go home now.

Palestinian police were less sure he should stay, and posted guards outside his room in Gaza City last night. Mr. Budzanowski, however, wasn't worried.

"I find this work very exciting, this is tangible help we're giving, and there's no reason for me to go home because of an incident like this, no matter how unpleasant."

Monday, March 13, 2006

Opinions In the Trees

I received this in email recently and considered it an interesting impression. I decided to get in touch with the original writer and ask permission to quote the opinion. It was granted, and so here it is...

My Sunday mornings are usually spent in intellectual, rather than religious, pursuits. This involves reading the Toronto Sunday Star and the Saturday Globe-and-Mail editorial, insight, and commentary sections from front to back. Except when I'm sitting on the porch, I intersperse this marathon with flips around the dial to see what is on the "Sunday report" programs of the various networks. For the American channels, these discussions of the week's political and economic events have grown wearingly (and frighteningly) similar. Most consist of a panel composed of 1/3rd liberal (or right-of-centre anywhere else in the First World) and 2/3rd conservative (fascism with a bible) politicos and reporters who treat every subject as a shouting match where they beat up their opponents using jargon, trite statements, and emotional threats. Truth stands for little. Sober, intelligent reflection -- much less, cogent speech -- is completely unknown. It is depressing to see "intelligent" thought in the world's most militaristic nation having no more depth or lasting effect than a elementary school shouting match.

By luck, between diatribes on over the president's popularity or which political party covered itself with more merde in during the previous week, there was a passing discussion yesterday on the political snub to the United Arab Emirates concerning the port management contract and the its effect on America's oil-backed dollar. What was said was almost as fascinating as what wasn't. Would the Arab world ever stop buying American treasury bills? Of course not because, otherwise, "where would they get their fighter aircraft from?" The BBC speaker who suggested from European manufacturers was shouted down or ignored. The question why the Arab world would even need to kiss America's ass to get a 15% discount on a dozen jet fighters every 5 years went unanswered. Even more pointed was the fact that several speakers brought up the scenario of China, Europe, and most of East Asia dumping their American reserves. This was repeatedly dismissed by the glib comment that they wouldn't do that because "they need to buy from us". Buy what, I asked? Everything in view on the TV set, from the clothes everybody was wearing to the furniture they were sitting on, had either been manufactured or assembled outside of the USA. It was as if everyone was so isolated, they were still believed that it was the 1950's. The unspoken gaps in their worldview and on how economics and realpolitiks work was on a par with 1970's Albania. These people were so blinkered that you are forced to pity them.

You'd think that the end of the 3M reports would have been a cause for national concern amongst the intelligentsia. Apparently, nothing less subtle than outright ridicule can impinge on America's short-term attention span.

Uncle Sam better practice saying "gracias"

My, how times have changed...

Connecticut Latest State to Accept Venezuelan Oil
Friday, Mar 03, 2006

Caracas, Venezuela, March 2, 2006—Residents of Connecticut become the latest northeasterners to receive discounted heating oil from the Venezuelan owned oil company Citgo, after the state’s attorney general dismissed questions by the state governor that the program might be illegal.

Record crude oil prices in the wake of hurricanes Katrina and Rita contributed to the increase in heating oil prices. According to the US Department of Energy, 8.1 million of the country’s 103 million households use heating oil as their main heating fuel. Of these, 82 percent are in New England and the Central Atlantic States.

But the deals brokered, which in most cases give eligible low-income houses a 40 percent break on their heating bills, have not come without controversy. Critics of the program say that Venezuelan President Hugo Chávez, an outspoken critic of the Bush administration, is merely trying to gain political capital within the US or interfere in energy policy, a complaint which program proponents chalk up to sour grapes, since, as a major supplier of oil to the US, Venezuela is already a force in energy policy.

Others have gone so far as to question the legality of the program.

Republican Connecticut Governor M. Jodi Rell, for instance, raised questions to her state’s Attorney General, asking him to address the “legality of the state of Connecticut sanctioning participation in [the] program.”

Richard Blumenthal, Connecticut’s Attorney General, responded that the program was “consistent with [Connecticut’s] laws.”

Though Rell’s request appears to have been resolved, it echoes that of an ongoing inquiry into Citgo initiated by Rep. Joe Barton, R-TX, chairman of the House Energy and Commerce Committee, and Ed Whitfield, R-KY, chairman of the Subcommittee for Oversight and Investigations. Last month, the sent a letter to Citgo saying, “We want to understand whether the beneficiaries are being selected in an objective, equitable fashion, or whether this is merely part of a larger political agenda.”

In 2004, Barton received $224,398 in campaign contributions from oil and gas interests, the second highest of any candidate running for House of Representatives, and Whitfield received $15,500, according to the Center for Responsive Politics.

Larry Neal, deputy staff director for Barton's committee commented on the inquiry, saying, "The bellicose Venezuelan decided to meddle in American energy policy, and we think it might prove instructive to know how."

Felix Rodriguez, CEO of Citgo, had offered an explanation for the policy in January, at the opening of the Pennsylvania program. "After Hurricanes Katrina and Rita, oil companies were asked to help Americans in need. We are happy to respond, by offering people here in Philadelphia help this winter, and we hope that no one has to make sacrifices to stay warm," said Rodriguez.

Citgo’s offer came as Congressional attempts to elicit funds for discounted heating oil out of petroleum companies failed.

In response to one such request, Jim Mulva, the CEO of Conoco responded, "We feel it's not a good precedent for one industry to fund a program as such. We think that's a responsibility of the government."

However, the initial idea for selling discounted heating oil to the United States came from Venezuelan President Hugo Chávez, and pre-dated the hurricanes. In late August, Chávez first mentioned his intention to supply discounted oil to low-income US communities on a trip to Cuba. The next week, on his Sunday TV show Aló Presidente he reiterated his plan, saying, “There is a lot of poverty in the US…Many people die of cold in the winter…We could have an impact on seven to eight million persons.”

Originally, much of the negotiation between Citgo and those trying to broker the deal in the US was to ensure that all benefits of the program would go to intended recipients, rather than middlemen. Cities and states have worked this deal out in different ways. Connecticut’s Attorney General laid out the program was intended to work within his state, “Citgo has offered to sell—over a period of weeks—about 4.8 million gallons of heating oil to Citizens Energy, a Boston-based non-profit energy company, at a 40% discount from the wholesale price to Global Oil, a large heating oil wholesaler. Pursuant to its agreement with Citgo, Citizens Energy will use the profits from the sale of this oil to provide financial assistance to heating oil customers in Connecticut.”

According to New York Daily News, the average Massachusetts resident would save about $180 every three weeks. So, despite the political upheaval surrounding the program, recipients of discounted oil across the Northeast have been pleased.

“[Chávez’s] biggest crime is he's a socialist, but he's not a fascist” Elaine DeRosa, manager of a low-income child-care center in Massachusetts told the AP. "It's going to help a lot of low-income people who the U.S. government isn't talking about.”

Alan Francis, an ironworker, echoed her comments. “It felt like Christmas,” he told the AP. “This extra 53 gallons was awesome.”

Friday, March 10, 2006

The Blitz calling the kettle Krieg

There's a new documentary making the rounds right now called Why We Fight, a take-off on the WWII movie of the same name by Frank Capra. I haven't seen it yet, but it purports to be about the events that have seen the fulfillment of Dwight Eisenhower's prophetic speech on the rise of the military-industrial complex. In the course of reading reviews for the picture, I came across this eyebrow-raising comment by Steve Rhodes of Internet Reviews:

In a post-9/11 world in which the next terrorist attack on our homeland could well be a nuclear bomb, WHY WE FIGHT is a dangerously naive propaganda piece whose logical arguments are quite dated. Neville Chamberlain's England learned the real price of appeasing mad men, but this movie never comes to grips with its own conclusions.

I think the most poignant thing about this comment is that clearly, Steve Rhodes and people like him are so blinded by red, white, and blue, that they're incapable of stepping outside of their own circumstances long enough to glimpse the reality that their own country has, in fact, become the madman who now must be appeased. The Sudetenland, Poland, Paris, Stalingrad... Kabul, Baghdad, ...Tehran? Maybe it's time we all stood up to this year's madman. I think that's what the movie's about. Maybe Steve should watch the movie again without his hands over his eyes, singing as loud as he can, and, in his own words, come to grips with his own conclusions.

Wednesday, March 08, 2006

What the hell is going on down there? :(

State bill proposes Christianity be Missouri’s official religion

09:24 PM CST on Saturday, March 4, 2006
By John Mills, News 4

Missouri legislators in Jefferson City considered a bill that would name Christianity the state's official "majority" religion.

House Concurrent Resolution 13 has is pending in the state legislature.

Many Missouri residents had not heard about the bill until Thursday.

Karen Aroesty of the Anti-defamation league, along with other watch-groups, began a letter writing and email campaign to stop the resolution.

The resolution would recognize "a Christian god," and it would not protect minority religions, but "protect the majority's right to express their religious beliefs.

The resolution also recognizes that, "a greater power exists," and only Christianity receives what the resolution calls, "justified recognition."

State representative David Sater of Cassville in southwestern Missouri, sponsored the resolution, but he has refused to talk about it on camera or over the phone.

KMOV also contacted Gov. Matt Blunt's office to see where he stands on the resolution, but he has yet to respond.

Monday, March 06, 2006

The closing days of dollar hegemony: ?

This is one of the most eye-opening pieces I've ever seen on the nature of US dollar hegemony. The most jaw-dropping thing about it is that it wasn't written by some crank in a bunker somewhere, but was presented in the US House of Representatives in mid-February by a Congressman from Texas...


Published on 15 Feb 2006 before the U.S. House of Representatives.
The End of Dollar Hegemony
by Hon. Ron Paul of Texas

A hundred years ago it was called “dollar diplomacy.” After World War II, and especially after the fall of the Soviet Union in 1989, that policy evolved into “dollar hegemony.” But after all these many years of great success, our dollar dominance is coming to an end.

It has been said, rightly, that he who holds the gold makes the rules. In earlier times it was readily accepted that fair and honest trade required an exchange for something of real value.

First it was simply barter of goods. Then it was discovered that gold held a universal attraction, and was a convenient substitute for more cumbersome barter transactions. Not only did gold facilitate exchange of goods and services, it served as a store of value for those who wanted to save for a rainy day.

Though money developed naturally in the marketplace, as governments grew in power they assumed monopoly control over money. Sometimes governments succeeded in guaranteeing the quality and purity of gold, but in time governments learned to outspend their revenues. New or higher taxes always incurred the disapproval of the people, so it wasn’t long before Kings and Caesars learned how to inflate their currencies by reducing the amount of gold in each coin-- always hoping their subjects wouldn’t discover the fraud. But the people always did, and they strenuously objected.

This helped pressure leaders to seek more gold by conquering other nations. The people became accustomed to living beyond their means, and enjoyed the circuses and bread. Financing extravagances by conquering foreign lands seemed a logical alternative to working harder and producing more. Besides, conquering nations not only brought home gold, they brought home slaves as well. Taxing the people in conquered territories also provided an incentive to build empires. This system of government worked well for a while, but the moral decline of the people led to an unwillingness to produce for themselves. There was a limit to the number of countries that could be sacked for their wealth, and this always brought empires to an end. When gold no longer could be obtained, their military might crumbled. In those days those who held the gold truly wrote the rules and lived well.

That general rule has held fast throughout the ages. When gold was used, and the rules protected honest commerce, productive nations thrived. Whenever wealthy nations-- those with powerful armies and gold-- strived only for empire and easy fortunes to support welfare at home, those nations failed.

Today the principles are the same, but the process is quite different. Gold no longer is the currency of the realm; paper is. The truth now is: “He who prints the money makes the rules”-- at least for the time being. Although gold is not used, the goals are the same: compel foreign countries to produce and subsidize the country with military superiority and control over the monetary printing presses.

Since printing paper money is nothing short of counterfeiting, the issuer of the international currency must always be the country with the military might to guarantee control over the system. This magnificent scheme seems the perfect system for obtaining perpetual wealth for the country that issues the de facto world currency. The one problem, however, is that such a system destroys the character of the counterfeiting nation’s people-- just as was the case when gold was the currency and it was obtained by conquering other nations. And this destroys the incentive to save and produce, while encouraging debt and runaway welfare.

The pressure at home to inflate the currency comes from the corporate welfare recipients, as well as those who demand handouts as compensation for their needs and perceived injuries by others. In both cases personal responsibility for one’s actions is rejected.

When paper money is rejected, or when gold runs out, wealth and political stability are lost. The country then must go from living beyond its means to living beneath its means, until the economic and political systems adjust to the new rules-- rules no longer written by those who ran the now defunct printing press.

“Dollar Diplomacy,” a policy instituted by William Howard Taft and his Secretary of State Philander C. Knox, was designed to enhance U.S. commercial investments in Latin America and the Far East. McKinley concocted a war against Spain in 1898, and (Teddy) Roosevelt’s corollary to the Monroe Doctrine preceded Taft’s aggressive approach to using the U.S. dollar and diplomatic influence to secure U.S. investments abroad. This earned the popular title of “Dollar Diplomacy.” The significance of Roosevelt’s change was that our intervention now could be justified by the mere “appearance” that a country of interest to us was politically or fiscally vulnerable to European control. Not only did we claim a right, but even an official U.S. government “obligation” to protect our commercial interests from Europeans.

This new policy came on the heels of the “gunboat” diplomacy of the late 19th century, and it meant we could buy influence before resorting to the threat of force. By the time the “dollar diplomacy” of William Howard Taft was clearly articulated, the seeds of American empire were planted. And they were destined to grow in the fertile political soil of a country that lost its love and respect for the republic bequeathed to us by the authors of the Constitution. And indeed they did. It wasn’t too long before dollar “diplomacy” became dollar “hegemony” in the second half of the 20th century.

This transition only could have occurred with a dramatic change in monetary policy and the nature of the dollar itself.

Congress created the Federal Reserve System in 1913. Between then and 1971 the principle of sound money was systematically undermined. Between 1913 and 1971, the Federal Reserve found it much easier to expand the money supply at will for financing war or manipulating the economy with little resistance from Congress-- while benefiting the special interests that influence government.

Dollar dominance got a huge boost after World War II. We were spared the destruction that so many other nations suffered, and our coffers were filled with the world’s gold. But the world chose not to return to the discipline of the gold standard, and the politicians applauded. Printing money to pay the bills was a lot more popular than taxing or restraining unnecessary spending. In spite of the short-term benefits, imbalances were institutionalized for decades to come.

The 1944 Bretton Woods agreement solidified the dollar as the preeminent world reserve currency, replacing the British pound. Due to our political and military muscle, and because we had a huge amount of physical gold, the world readily accepted our dollar (defined as 1/35th of an ounce of gold) as the world’s reserve currency. The dollar was said to be “as good as gold,” and convertible to all foreign central banks at that rate. For American citizens, however, it remained illegal to own. This was a gold-exchange standard that from inception was doomed to fail.

The U.S. did exactly what many predicted she would do. She printed more dollars for which there was no gold backing. But the world was content to accept those dollars for more than 25 years with little question-- until the French and others in the late 1960s demanded we fulfill our promise to pay one ounce of gold for each $35 they delivered to the U.S. Treasury. This resulted in a huge gold drain that brought an end to a very poorly devised pseudo-gold standard.

It all ended on August 15, 1971, when Nixon closed the gold window and refused to pay out any of our remaining 280 million ounces of gold. In essence, we declared our insolvency and everyone recognized some other monetary system had to be devised in order to bring stability to the markets.

Amazingly, a new system was devised which allowed the U.S. to operate the printing presses for the world reserve currency with no restraints placed on it-- not even a pretense of gold convertibility, none whatsoever! Though the new policy was even more deeply flawed, it nevertheless opened the door for dollar hegemony to spread.

Realizing the world was embarking on something new and mind boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence “backed” the dollar with oil. In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite the radical Islamic movement among those who resented our influence in the region. The arrangement gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as dollar influence flourished.

This post-Bretton Woods system was much more fragile than the system that existed between 1945 and 1971. Though the dollar/oil arrangement was helpful, it was not nearly as stable as the pseudo gold standard under Bretton Woods. It certainly was less stable than the gold standard of the late 19th century.

During the 1970s the dollar nearly collapsed, as oil prices surged and gold skyrocketed to $800 an ounce. By 1979 interest rates of 21% were required to rescue the system. The pressure on the dollar in the 1970s, in spite of the benefits accrued to it, reflected reckless budget deficits and monetary inflation during the 1960s. The markets were not fooled by LBJ’s claim that we could afford both “guns and butter.”

Once again the dollar was rescued, and this ushered in the age of true dollar hegemony lasting from the early 1980s to the present. With tremendous cooperation coming from the central banks and international commercial banks, the dollar was accepted as if it were gold.

Fed Chair Alan Greenspan, on several occasions before the House Banking Committee, answered my challenges to him about his previously held favorable views on gold by claiming that he and other central bankers had gotten paper money-- i.e. the dollar system-- to respond as if it were gold. Each time I strongly disagreed, and pointed out that if they had achieved such a feat they would have defied centuries of economic history regarding the need for money to be something of real value. He smugly and confidently concurred with this.

In recent years central banks and various financial institutions, all with vested interests in maintaining a workable fiat dollar standard, were not secretive about selling and loaning large amounts of gold to the market even while decreasing gold prices raised serious questions about the wisdom of such a policy. They never admitted to gold price fixing, but the evidence is abundant that they believed if the gold price fell it would convey a sense of confidence to the market, confidence that they indeed had achieved amazing success in turning paper into gold.

Increasing gold prices historically are viewed as an indicator of distrust in paper currency. This recent effort was not a whole lot different than the U.S. Treasury selling gold at $35 an ounce in the 1960s, in an attempt to convince the world the dollar was sound and as good as gold. Even during the Depression, one of Roosevelt’s first acts was to remove free market gold pricing as an indication of a flawed monetary system by making it illegal for American citizens to own gold. Economic law eventually limited that effort, as it did in the early 1970s when our Treasury and the IMF tried to fix the price of gold by dumping tons into the market to dampen the enthusiasm of those seeking a safe haven for a falling dollar after gold ownership was re-legalized.

Once again the effort between 1980 and 2000 to fool the market as to the true value of the dollar proved unsuccessful. In the past 5 years the dollar has been devalued in terms of gold by more than 50%. You just can’t fool all the people all the time, even with the power of the mighty printing press and money creating system of the Federal Reserve.

Even with all the shortcomings of the fiat monetary system, dollar influence thrived. The results seemed beneficial, but gross distortions built into the system remained. And true to form, Washington politicians are only too anxious to solve the problems cropping up with window dressing, while failing to understand and deal with the underlying flawed policy. Protectionism, fixing exchange rates, punitive tariffs, politically motivated sanctions, corporate subsidies, international trade management, price controls, interest rate and wage controls, super-nationalist sentiments, threats of force, and even war are resorted to—all to solve the problems artificially created by deeply flawed monetary and economic systems.

In the short run, the issuer of a fiat reserve currency can accrue great economic benefits. In the long run, it poses a threat to the country issuing the world currency. In this case that’s the United States. As long as foreign countries take our dollars in return for real goods, we come out ahead. This is a benefit many in Congress fail to recognize, as they bash China for maintaining a positive trade balance with us. But this leads to a loss of manufacturing jobs to overseas markets, as we become more dependent on others and less self-sufficient. Foreign countries accumulate our dollars due to their high savings rates, and graciously loan them back to us at low interest rates to finance our excessive consumption.

It sounds like a great deal for everyone, except the time will come when our dollars-- due to their depreciation-- will be received less enthusiastically or even be rejected by foreign countries. That could create a whole new ballgame and force us to pay a price for living beyond our means and our production. The shift in sentiment regarding the dollar has already started, but the worst is yet to come.

The agreement with OPEC in the 1970s to price oil in dollars has provided tremendous artificial strength to the dollar as the preeminent reserve currency. This has created a universal demand for the dollar, and soaks up the huge number of new dollars generated each year. Last year alone M3 increased over $700 billion.

The artificial demand for our dollar, along with our military might, places us in the unique position to “rule” the world without productive work or savings, and without limits on consumer spending or deficits. The problem is, it can’t last.

Price inflation is raising its ugly head, and the NASDAQ bubble-- generated by easy money-- has burst. The housing bubble likewise created is deflating. Gold prices have doubled, and federal spending is out of sight with zero political will to rein it in. The trade deficit last year was over $728 billion. A $2 trillion war is raging, and plans are being laid to expand the war into Iran and possibly Syria. The only restraining force will be the world’s rejection of the dollar. It’s bound to come and create conditions worse than 1979-1980, which required 21% interest rates to correct. But everything possible will be done to protect the dollar in the meantime. We have a shared interest with those who hold our dollars to keep the whole charade going.

Greenspan, in his first speech after leaving the Fed, said that gold prices were up because of concern about terrorism, and not because of monetary concerns or because he created too many dollars during his tenure. Gold has to be discredited and the dollar propped up. Even when the dollar comes under serious attack by market forces, the central banks and the IMF surely will do everything conceivable to soak up the dollars in hope of restoring stability. Eventually they will fail.

Most importantly, the dollar/oil relationship has to be maintained to keep the dollar as a preeminent currency. Any attack on this relationship will be forcefully challenged—as it already has been.

In November 2000 Saddam Hussein demanded Euros for his oil. His arrogance was a threat to the dollar; his lack of any military might was never a threat. At the first cabinet meeting with the new administration in 2001, as reported by Treasury Secretary Paul O’Neill, the major topic was how we would get rid of Saddam Hussein-- though there was no evidence whatsoever he posed a threat to us. This deep concern for Saddam Hussein surprised and shocked O’Neill.

It now is common knowledge that the immediate reaction of the administration after 9/11 revolved around how they could connect Saddam Hussein to the attacks, to justify an invasion and overthrow of his government. Even with no evidence of any connection to 9/11, or evidence of weapons of mass destruction, public and congressional support was generated through distortions and flat out misrepresentation of the facts to justify overthrowing Saddam Hussein.

There was no public talk of removing Saddam Hussein because of his attack on the integrity of the dollar as a reserve currency by selling oil in Euros. Many believe this was the real reason for our obsession with Iraq. I doubt it was the only reason, but it may well have played a significant role in our motivation to wage war. Within a very short period after the military victory, all Iraqi oil sales were carried out in dollars. The Euro was abandoned.

In 2001, Venezuela’s ambassador to Russia spoke of Venezuela switching to the Euro for all their oil sales. Within a year there was a coup attempt against Chavez, reportedly with assistance from our CIA.

After these attempts to nudge the Euro toward replacing the dollar as the world’s reserve currency were met with resistance, the sharp fall of the dollar against the Euro was reversed. These events may well have played a significant role in maintaining dollar dominance.

It’s become clear the U.S. administration was sympathetic to those who plotted the overthrow of Chavez, and was embarrassed by its failure. The fact that Chavez was democratically elected had little influence on which side we supported.

Now, a new attempt is being made against the petrodollar system. Iran, another member of the “axis of evil,” has announced her plans to initiate an oil bourse in March of this year. Guess what, the oil sales will be priced Euros, not dollars.

Most Americans forget how our policies have systematically and needlessly antagonized the Iranians over the years. In 1953 the CIA helped overthrow a democratically elected president, Mohammed Mossadeqh, and install the authoritarian Shah, who was friendly to the U.S. The Iranians were still fuming over this when the hostages were seized in 1979. Our alliance with Saddam Hussein in his invasion of Iran in the early 1980s did not help matters, and obviously did not do much for our relationship with Saddam Hussein. The administration announcement in 2001 that Iran was part of the axis of evil didn’t do much to improve the diplomatic relationship between our two countries. Recent threats over nuclear power, while ignoring the fact that they are surrounded by countries with nuclear weapons, doesn’t seem to register with those who continue to provoke Iran. With what most Muslims perceive as our war against Islam, and this recent history, there’s little wonder why Iran might choose to harm America by undermining the dollar. Iran, like Iraq, has zero capability to attack us. But that didn’t stop us from turning Saddam Hussein into a modern day Hitler ready to take over the world. Now Iran, especially since she’s made plans for pricing oil in Euros, has been on the receiving end of a propaganda war not unlike that waged against Iraq before our invasion.

It’s not likely that maintaining dollar supremacy was the only motivating factor for the war against Iraq, nor for agitating against Iran. Though the real reasons for going to war are complex, we now know the reasons given before the war started, like the presence of weapons of mass destruction and Saddam Hussein’s connection to 9/11, were false. The dollar’s importance is obvious, but this does not diminish the influence of the distinct plans laid out years ago by the neo-conservatives to remake the Middle East. Israel’s influence, as well as that of the Christian Zionists, likewise played a role in prosecuting this war. Protecting “our” oil supplies has influenced our Middle East policy for decades.

But the truth is that paying the bills for this aggressive intervention is impossible the old fashioned way, with more taxes, more savings, and more production by the American people. Much of the expense of the Persian Gulf War in 1991 was shouldered by many of our willing allies. That’s not so today. Now, more than ever, the dollar hegemony-- it’s dominance as the world reserve currency-- is required to finance our huge war expenditures. This $2 trillion never-ending war must be paid for, one way or another. Dollar hegemony provides the vehicle to do just that.

For the most part the true victims aren’t aware of how they pay the bills. The license to create money out of thin air allows the bills to be paid through price inflation. American citizens, as well as average citizens of Japan, China, and other countries suffer from price inflation, which represents the “tax” that pays the bills for our military adventures. That is until the fraud is discovered, and the foreign producers decide not to take dollars nor hold them very long in payment for their goods. Everything possible is done to prevent the fraud of the monetary system from being exposed to the masses who suffer from it. If oil markets replace dollars with Euros, it would in time curtail our ability to continue to print, without restraint, the world’s reserve currency.

It is an unbelievable benefit to us to import valuable goods and export depreciating dollars. The exporting countries have become addicted to our purchases for their economic growth. This dependency makes them allies in continuing the fraud, and their participation keeps the dollar’s value artificially high. If this system were workable long term, American citizens would never have to work again. We too could enjoy “bread and circuses” just as the Romans did, but their gold finally ran out and the inability of Rome to continue to plunder conquered nations brought an end to her empire.

The same thing will happen to us if we don’t change our ways. Though we don’t occupy foreign countries to directly plunder, we nevertheless have spread our troops across 130 nations of the world. Our intense effort to spread our power in the oil-rich Middle East is not a coincidence. But unlike the old days, we don’t declare direct ownership of the natural resources-- we just insist that we can buy what we want and pay for it with our paper money. Any country that challenges our authority does so at great risk.

Once again Congress has bought into the war propaganda against Iran, just as it did against Iraq. Arguments are now made for attacking Iran economically, and militarily if necessary. These arguments are all based on the same false reasons given for the ill-fated and costly occupation of Iraq.

Our whole economic system depends on continuing the current monetary arrangement, which means recycling the dollar is crucial. Currently, we borrow over $700 billion every year from our gracious benefactors, who work hard and take our paper for their goods. Then we borrow all the money we need to secure the empire (DOD budget $450 billion) plus more. The military might we enjoy becomes the “backing” of our currency. There are no other countries that can challenge our military superiority, and therefore they have little choice but to accept the dollars we declare are today’s “gold.” This is why countries that challenge the system-- like Iraq, Iran and Venezuela-- become targets of our plans for regime change.

Ironically, dollar superiority depends on our strong military, and our strong military depends on the dollar. As long as foreign recipients take our dollars for real goods and are willing to finance our extravagant consumption and militarism, the status quo will continue regardless of how huge our foreign debt and current account deficit become.

But real threats come from our political adversaries who are incapable of confronting us militarily, yet are not bashful about confronting us economically. That’s why we see the new challenge from Iran being taken so seriously. The urgent arguments about Iran posing a military threat to the security of the United States are no more plausible than the false charges levied against Iraq. Yet there is no effort to resist this march to confrontation by those who grandstand for political reasons against the Iraq war.

It seems that the people and Congress are easily persuaded by the jingoism of the preemptive war promoters. It’s only after the cost in human life and dollars are tallied up that the people object to unwise militarism.

The strange thing is that the failure in Iraq is now apparent to a large majority of American people, yet they and Congress are acquiescing to the call for a needless and dangerous confrontation with Iran.

But then again, our failure to find Osama bin Laden and destroy his network did not dissuade us from taking on the Iraqis in a war totally unrelated to 9/11.

Concern for pricing oil only in dollars helps explain our willingness to drop everything and teach Saddam Hussein a lesson for his defiance in demanding Euros for oil.

And once again there’s this urgent call for sanctions and threats of force against Iran at the precise time Iran is opening a new oil exchange with all transactions in Euros.

Using force to compel people to accept money without real value can only work in the short run. It ultimately leads to economic dislocation, both domestic and international, and always ends with a price to be paid.

The economic law that honest exchange demands only things of real value as currency cannot be repealed. The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars or Euros. The sooner the better.

Friday, March 03, 2006


The Supreme Court has just ruled that the Sikh religious symbol, the kirpan, a ceremonial dagger, cannot be banned from the nation's schools. Basic religious freedoms trump security concerns.

I'm surprised, pleasantly, on a couple of scores here.

First of all, that at this point in post-9/11 time, the Court can make such a ruling. I think it speaks well of our confidence as a nation. We're not going to be cowed into putting paranoia over civility. We're not going to overreact. We're going to keep our perspective, remember who we are to one another, and focus on real threats -- not hermetically seal our culture off from any conceivable threat, smothering it to death in the attempt. I think this was the right decision.

...Which is the other thing that surprises me: that I think this is the right decision. When I was in my teens and early 20s, I would have been dead set against this decision. I would have seen it strictly as "I can't do that, why should he be able to?" But as I get older, I don't know... I'm less worried about absolute equality as practical equality. Now I can see the difference. This is something central to someone else's religious identity, not mine. For them, it's crucial. For me, it isn't. For them to carry a kirpan is a matter of who they are. For me, it would be nothing but a concealed weapon; there's no other reason for me to carry it. And now I can admit that those are not the same thing, not at all. I don't know when or how my attitude changed, but I do remember disagreeing with the ruling that let Sikhs wear turbans instead of hats in the RCMP. Now that seems small and petty to me.

I think Canada is a better place for this ruling. This was the right call.