Sunday, March 26, 2006

War for Oil?

It's good to start the day with an "Aha!" kind of moment. Eleutheros, at How Many Miles from Babylon, describes the shift from the gold standard to the oil standard. I'm thinking "Why didn't I think of that?" and "Why am I not hearing this explanation from anyone else?" This is all stuff I know something about, but I've never put it together.

Skip over the history directly to the part where, for some reason, the world agrees, in the 80s, that all oil transactions will be made in US dollars and this stabilizes the dollar to a degree unknown since we stopped backing it with gold. Then cut to the day when Iraq announces that it intends to start selling oil in Euros. This is, naturally, terribly threatening to the US and we intend to prevent it. Meanwhile European countries, who would love to be able to buy oil in Euros, are understandably reluctant to support the US. As someone who's been searching for a real explanation for the war, this makes sense to me.

Then add this, from Eleutheros:
At the end of this month two important things happen:
1) Iran has declared that it is setting up a Euro based oil market.
2) The US Federal Reserve will no longer publish the M3 report revealing how many dollars are held by foreign interests.

If the US does not stop Iran from opening a world oil market outside the US monetary system, the countries around the world that are now holding US dollars as their only means of procuring oil will dump those dollars back on the market making the dollar devalue abruptly. You know what follows.

This helps me understand we used to support Hussein and now we don't. And why suddenly we're worried about weapons capability in Iran. It's not weapons capability we're worried about. It's dollars and oil.

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