by Mark Owen ©, Feb. 2nd, 2005
The Federal Reserve is a system of private banks separate and distinct from the U.S. government. This banking system was originally conceived by John D. Rockefeller and J.P. Morgan. The FED, as it is known, is listed in the white pages along with Federal Express, the Federal Deposit Insurance Corporation, and other businesses. The bank produces Federal Reserve Notes. They use these notes/dollars to purchase government bonds. These notes are a fiat currency. Historically, all fiat currencies eventually crash due to hyperinflation from over-issuance. The supply of paper is limitless. There is no intrinsic value in paper currency after delinking from a gold standard. This is why they are referred to as bank notes. Legally, they can’t be referred to as ‘money.’ They are mere tickets/tokens. Forced tender laws were passed in order to give the paper currency legitimacy. The only thing giving bank notes value is TAXATION. Gold and silver have intrinsic value due to scarcity and the fact that it takes work to produce them (mining, smelting etc). This is why they have been used as money for 5000 years. Precious metals are a good store of value. They retain their value over time and aren’t subject to inflation. The fiat paper system is designed to create debt through inflation (devaluation of currency). Whenever there is an increase in the money supply without a corresponding increase in gold or silver backing, inflation results. Inflation is a subtle form of theft banks impose upon citizens.
In the 1960s Lyndon Johnson borrowed billions from the French Rothschilds so he wouldn’t have to raise taxes to finance the Viet Nam war. Rothschild agent Charles de Gaulle demanded repayment in gold, not greenbacks. When Richard Nixon was elected he noted that the treasury was almost depleted of gold and he removed the dollar from the gold standard. But the debt still stood. Nixon collateralized the debt with the mineral estate of the western U.S. and a land-for-debt swap was initiated. Much of the western States were given to the banks. This is when Nixon created the Environmental Protection Agency. Their mandate was/is to PREVENT American citizens from logging, farming, ranching or otherwise exploiting these lands being held for the banks. The Bureau of Land Management and other agencies are used to harass ranchers and farmers from the land.
So, what does the foregoing have to do with Middle East? Plenty.
All central banks of the world hold U.S. dollar reserves equivalent to the local currency in circulation to facilitate trade. The dollar is the biggest American export. It is impossible to overstate this. Also, when any country wishes to purchase oil, they must first convert their local currency to U.S. dollars and then purchase oil from the cartels. This is the arrangement hammered out between the U.S. and Saudi Arabia in 1974. The quid pro quo was that the U.S. armed the Saudis to the teeth.
In the last two years the euro currency has gained 30% relative to the U.S. dollar. The European banks are seeking to have the euro accepted as the new world reserve currency. Countries like China and Japan are sitting atop mountains of U.S. dollars that are being daily devalued. Since the U.S. dollar is printed by the FED at will and without restraint (and is not linked to gold), Americans are essentially getting the world’s oil for free (it costs the FED around 4 cents to print a one hundred dollar Federal Reserve note). France and Germany would like a piece of the free oil pie.
FED chairman Alan Greenspan is forced to feed the recovery myth or risk a panic sell-off of dollars. This past spring he tripled the money supply to $50 billion per week. This is making even seasoned economists nervous. In August, Morgan Stanley chief economist Stephen Roach predicted a stock market crash on the scale of 1987s Black Monday. “The funding of America is an accident waiting to happen,” he declared.
In speeches made outside of the U.S. (and only then) Greenspan has repeatedly warned of a possible ‘systemic collapse’ of the financial system. The printing of all of this paper is leading to massive inflation. All commodities have spiked from 10 to 90% over the last year. $15 dollar jeans available from Wal-Mart produced by slave labor in China somewhat disguise this fact. Another trick the money masters use to lull citizens is to periodically and surreptitiously ditch dinosaur industries from the DOW (like Kodak, this past spring) and supplant them with high-tech earners like Verizon, for instance. This is not to say that U.S. companies aren’t investing billions of dollars in new production; they are. It’s just that it’s in China, not Ohio. China’s quarter-trillion dollar export boom is America’s import deficit. The debt-based credit inferno must create ever larger volumes of debt (credit) to prevent a financial implosion. The entire world growth since 2003 depends on the record FED money supply. Total U.S. debt now stands at $34 trillion. The U.S. GDP is $11 trillion. This means that debt is 3 times GDP, greater even than the depression of the 1930s. But happily for American citizens, the Federal Reserve of Cleveland commissioned a study recently on ways to diffuse this massive debt bomb. Options discussed included:
Doubling payroll taxes from 15.3% of wages to 32% immediately and forever.
Raising income taxes by two thirds immediately and forever.
Cutting Social Security and Medicare by 45% immediately and forever.
Eliminating forever all discretionary spending on courts, highways and parks.
In November 2000 Saddam Hussein tried to barter Iraq’s oil directly for euros. This would have cut America out of its enormous subsidy and started a stampede of other OPEC members to embrace the euro. This simply would not stand. 9-11 was the pretext used to boot Saddam. Bush couldn’t get America’s moms to sacrifice their children for dollar hegemony and the terrorist bogey was activated. In March 2003 Iraqi oil war redenominated in US dollars. The war serves as a warning to other oil-producing countries on what to expect should they think of abandoning the dollar matrix.
Fourteen huge, permanent bases are currently under construction in Iraq, along with the world’s biggest embassy in Baghdad (3,500 employees, and counting). Bush will continue on a permanent war footing in the Middle East in order to protect U.S. dollar hegemony. There is no other option. All future wars will be run out of Iraq. Iran has been making noises lately about ditching the U.S. dollar in favor of the euro, as have the Saudis. They’re next. The U.S. will dismantle OPEC and surround Saudi Arabia, keeping their hand firmly on the oil spigot. This is the essence of the petro-dollar warfare that we are witnessing, in a nutshell….