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PETRODOLLAR WARFARE BY W.R. CLARK IS A MAJOR EXPOSE OF U.S.
FOREIGN POLICY DIRECTED TOWARD PROTECTING THE DOLLAR AS THE WORLD'S
RESERVE CURRENCY.
The following is from "petrodollar
warfare" on www.answers.com. See also U.S. Treasury
Secretary Paul O'Neill's testimony on 60 Minutes that we attacked Iraq to protect the U.S. dollar on world markets.
The phrase petrodollar warfare refers to a controversial hypothesis that a hidden, driving force of United States foreign policy over recent decades has been the status of the United States dollar as the world's dominant reserve
currency and as the currency in which oil is priced. The term was coined by
William R. Clark, who has written a book with the same title.
Supporters of this hypothesis believe that the value of the U.S. dollar is
determined by the fact that many key commodities (particularly oil and natural gas) are denominated in dollars. Supporters believe that if the denomination changes to another currency,
such as the euro, many countries would sell dollars and cause the banks to shift their reserves
because they would no longer need dollars to buy oil and gas. This would weaken the dollar relative to the euro (see
supply and demand). The core of the hypothesis is that U.S. administrations are
greatly motivated by fear of the consequences of a weaker dollar, particularly higher oil prices. This motivation is seen as
underlying and explaining many aspects of U.S. foreign policy, including the ongoing Iraq
War.
The phrase oil currency wars is sometimes used with the same meaning.
This view is controversial. At least one U.S. Representative, Republican Ron Paul of Texas,
has made very strong statements advancing similar views, using the phrase dollar
hegemony to describe U.S. policy and proposing related reforms.[1] Many
editorialists and bloggers have supported the theory. But the petrodollar warfare hypothesis has also been described as a
conspiracy theory. Opponents dispute virtually every economic claim underpinning the hypothesis, including the the theory's
emphasis on the dollar denomination of commodities and the physical location of the major oil exchanges, the claim that the U.S.
finances its current-account deficit by printing dollars, and so on. Opponents also sometimes point out that the Bush
administration has repeatedly called for China to stop propping up the dollar by holding very large dollar reserves, a stance seemingly at odds with the administration's supposed overriding interest in
maintaining a strong dollar.
Whether a falling dollar would actually hurt the American economy is disputed. A weaker dollar would lead to increased U.S.
exports and decreased imports, which would decrease the U.S. trade deficit and benefit
American manufacturers. On the other hand, imports would become more expensive for the U.S. across the board. Of particular
concern is America's dependence on foreign oil. Economists generally agree that higher oil prices pose a risk of inflation,
recession, or both.
Background
Since 1971, when the U.S. dollar ceased to be redeemable in gold, its value has not been explicitly linked to any
commodity.
In 2000, Iraq converted all its oil transactions under the Oil for Food
program to euros. When U.S. invaded Iraq in 2003, it returned oil sales from the euro to the U.S. dollar.
Iran planned to open an oil bourse denominated in euros. It was planned to open on
March 20 2006,
but the opening was postponed without future date
set. Proponents of this theory fear that it will give added reason for
the U.S. to topple the Iranian regime and close the bourse
or revert its transaction currency to dollars.
Project Censored Award 2004
The topic of oil currency warfare under the title U.S. Dollar vs. the Euro: Another Reason for the Invasion of Iraq won
Project Censored award in 2004. The essay was written
by the author of the book Petrodollar Warfare, William Clark.
M3 data reporting discontinued
From March 23, 2006 the United States Federal Reserve (the "Fed") stopped reporting the
M3 money supply data of the U.S. dollar. The Fed offers this brief note:
- Discontinuance of M3
- On March 23, 2006, the Board of Governors of the Federal Reserve
System will cease publication of the M3 monetary
aggregate. The Board will also cease publishing the following
components: large-denomination time deposits, repurchase agreements
(RPs), and Eurodollars. The Board will continue to publish
institutional money market mutual funds as a memorandum item in this
release.
- Measures of large-denomination time deposits will continue to be published by the Board in the Flow of Funds Accounts (Z.1
release) on a quarterly basis and in the H.8 release on a weekly basis (for commercial banks).
- M3 does not appear to convey any additional information about economic activity that is not already embodied in M2 and has
not played a role in the monetary policy process for many years. Consequently, the Board judged that the costs of collecting the
underlying data and publishing M3 outweigh the benefits.
The M3 money supply has been reported since 1959. Since M3 data was the main figure
informing about the amount of dollars that the Fed issued to markets, discontinuance of M3 data reporting created significant
amount of controversy amongst financial elites.
Representative Ron Paul (R-TX) has introduced HR 4892 IH to mandate the Federal Reserve to
continue to publish M3 on a weekly basis.
Full Press Issue: Source http://www.federalreserve.gov/Releases/h6/discm3.htm
See also
Further reading
- Clark, William R.: Petrodollar Warfare : Oil, Iraq and the Future of the Dollar,
New Society Publishers, 2005, ISBN 0-86571-514-9
- Peter, Phillips
(2003). The Top 25 Censored Stories: U.S. Dollar vs. the Euro: Another Reason for the Invasion of Iraq. New York: Seven
Stories Press.
- Engdahl, F. William, A New American Century? Iraq and the hidden euro-dollar wars, Current Concerns, No 4, June
2003
- Engdahl, F. William: A Century of War: Anglo-American oil politics and the New World
Order, Pluto Press, 2004, ISBN 0-7453-2309 X
Links
Background
Pro views
- The Attack on the U.S. Dollar and
Energy Needs by Alan Caruba. March 19, 2006. An editorial.
- The Rise of
the Petroeuro by Dan Adleman. The Republic of East Vancouver, July 20, 2006.
- Petrodollar Warfare by Ryan
McGreal, "Raise the Hammer", January 27, 2006. A review of William Clark's book.
- Talk in congress: The End of Dollar
Hegemony by Congressman Ron Paul, February 15, 2006
- Petrodollar Warfare
Interview (audio) with William R. Clark and Jim Puplava of the Financial Sense Newshour.
- Petrodollar Warfare:
Dollars, Euros and the Upcoming Iranian Oil Bourse by William R. Clark. Media Monitors Network, August 5, 2005.
- Petrodollar or Petroeuro? A
new source of global conflict by Cóilín Nunan, Feasta Review no. 2
- Battle Plans for Iran by Mike Whitney, OpEdNews, January 31, 2006.
- US Paper Money and Iran's Oil
Bourse an abstract of a speech by Congressman Ron Paul, February 17, 2006.
- Where will oil trade: New York? London? Tehran? by NeonTetra. Sandcastle in the tide Blog, February 27, 2006.
- Petrodollars and Nuclear Weapons Proliferation: Understanding the Planned Assault on Iran,
Centre for Research on Globalization, February 10, 2006.
- The Real Reasons for the
Upcoming War With Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth, Essay by William R. Clark, January
2004.
- U.S. Dollar vs. the
Euro: Another Reason for the Invasion of Iraq by Project Censored.
- Irans Oil Exchange threatens the Greenback by Mike Whitney, OpEdNews, January 23, 2006.
- The Proposed Iranian
Oil Bourse by Krassimir Petrov. Informationclearinghouse.info, January
19, 2006.
- Oil, Geopolitics, and the
Coming War with Iran by Michael T. Klare. Tom Dispatch, April 11, 2005.
- History of Oil video by
Robert Newman.
- The beginning of the end for
petrodollar
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