Originally posted by whodey
So what has Obamacare given us? ........ I forgot to include the wars over seas. Why in the #@@@ are we still there? Anyone?
Its still fresh whodey from being posted in unemployment 10.1, and this is why its hard to xplain....
I know its a lot to read folks, but stay the course. Here's another look at US imperialism through the link of the US dollar to Saudi Oil.
From the article "What connects Iraq to Iran by Dr Bulent Gokay"
American “Dollar” Imperialism
Imagine this: you are deep in debt but every day you write cheques for millions of dollars you don't have -- another luxury car, a holiday home at the beach, the world trip of a lifetime.
Your cheques should be worthless but they keep buying stuff because those cheques you write never reach the bank! You have an agreement with the owners of one thing everyone wants, call it petrol/gas, that they will accept only your cheques as payment. This means everyone must hoard your cheques so they can buy petrol/gas. Since they have to keep a stock of your cheques, they use them to buy other stuff too. You write a cheque to buy a TV, the TV shop owner swaps your cheque for petrol/gas, stuff too. You write a chequeto buy a TV, the TV shopowner swaps yourcheque for petrol/gas, that seller buys some vegetables at the fruit shop, the fruiterer passes it on to buy bread, the baker buys some flour with it, and on it goes, round and round --but never back to the bank.
Since the US emerged as the dominant global superpower at the end of the Second World War, US hegemony rested on three unchallengeable pillars:
1) overwhelming US military superiority over all its rivals;
2) the superiority of American production methods and the relative strength of the US economy;
3) control over global economic markets, with the US dollar acting as the global reserve currency.
Of these three, the role of the dollar may be the greatest among equals. As a result of this situation, today America borrows from practically the entire world without keeping the reserves of any other currency. Because the dollar is the de facto global reserve currency, US currency accounts for approximately two-thirds of all official exchange reserves. America does not have to compete with other currencies in interest rates, and even at low interest rates capital flies to the dollar. The more dollars are circulated outside the US, the more the rest of the world has had to provide the US with goods and services in exchange for these dollars. The US even has the luxury of having its debts denominated in its own currency.
How does this work?
•The United States runs a balance of payments deficit by spending more money in other countries (buying their products, investing in them, or giving them dollars) than they spend in the United States.
•The extra dollars are held by the countries’ central banks. The banks do not ask the United States to redeem them for gold or another currency. As long as foreign banks accept and hold dollars as if they were gold, the dollars act as reserves.
The American Empire was born, in a real economics sense of the term, with Bretton Woods in 1945. After 1945, the dollar was not fully convertible to gold, but was made convertible to gold only to foreign governments. As a result of this, the dollar established itself as the global reserve currency. No one planned this development. It came directly from the fact that the US was the dominant world power: well over half of all international money transactions were financed in terms of dollar; the US produced more than half the world output; the US also owned a large section of the gold reserves in the world.
This became possible because during the Second World War, the US had supplied its allies with provisions, demanding gold as payment, thus accumulating significant portions of the world’s gold reserves. By 1945, the US had accumulated 80 percent of the world’s gold, and 40 percent of the world’s production. The aggressive policies of the 1960s, however, put an increasing pressure on the US dollar. The US economy experienced a cumulative reserve deficit. In particular, the dollar supply was relentlessly increased to finance America’s war in Vietnam. The US printed and spent more money than their gold reserves allowed. By 1963, the US gold reserve at Manhattan barely covered liabilities to foreign central banks, and by 1970 the gold coverage had fallen to 55%, by 1971 22%.
Before the Vietnam War, the US had $30 billion in gold reserves, but it spent more than $500 billion on the war alone. The dollar supply was relentlessly increased to finance America’s war in Vietnam. The US printed and spent more money than their gold reserves allowed. By 1963, the US gold reserve at Manhattan barely covered liabilities to foreign central banks, and by 1970 the gold coverage had fallen to 55%, by 1971 22%. Before the Vietnam War, By this time, the post-war reconstruction period had come to an end, and the European and Japanese economies had improved their economic position relative to the US, which had increased pressure on the US dollar. The situation reached a crisis point in 1970-71 when foreign central banks tried to convert their dollar reserves into gold.
In response to a massive flight from the dollar, the US government defaulted on its payment on 15 August 1971 by cutting the link between the dollar and gold. Because it was clear that the US government would not be able to buy back its dollars in gold. If governments and foreign central banks tried to convert even a quarter of their holdings at one time, the United States would not be able to honour its obligations. This was a serious crisis inspired by a significant loss of confidence in the dollar. As a result, the dollar was left ‘floated’ in the international monetary market, which weakened the position of the dollar as the hegemonic currency. From that point on, the US had to find a way convincing the rest of the world to continue to accept every devalued dollars in exchange for economic goods the US needed to get from others. It had to find an economic reason for the rest of the world to hold US dollars: oil provided that reason, and the term petrodollar became the crucial link in this.
A petrodollar is a dollar earned by a country through the sale of oil. In 1972-74 the US government concluded a series of agreements with Saudi Arabia to support the power of the House of Saud in exchange for accepting only US dollars for its oil. Saudi Arabia has been the largest oil producer and the leader of OPEC. It is also the only member of the cartel that does not have an allotted production quota.
It is the ‘swing producer’, meaning that it can increase or decrease oil production to bring oil draught or glut in the world market. As a result of this situation, Saudi Arabia practically determines oil prices. Soon after the agreement with Saudi government, an OPEC agreement accepted this, and since then all oil has been traded in US dollars.
Why is this important? Oil is not just the most important commodity traded internationally. It is the lifeblood of all modern economies. If you don’t have oil, you have to buy it, and if you want to buy it on the world markets, you commonly have to purchase it with dollars. Other countries buy and hold dollars like they buy and hold gold because they cannot purchase oil without dollars. This system of the US dollar acting as global reserve currency in oil trade keeps the demand for the dollar ‘artificially’ high. This enables the US to carry out printing dollars at the price of nothing to fund increased military spending and consumer spending on imports. As long as the US has no serious challengers and the other states have confidence in the US dollar the system functions.
Given this system in place, and I'm no economist, US banks and Insurance companies becoming insolvent as a result of the derivative/mortgage backed security crises probably meant there was a bubble of debt too big for the cozy little system to handle. Pumping money into it was the only solution, because the underlying system described above still works, and debt is nothing but an imperial tax to other holders of US currency, right?! It also xplains the war on two fronts.