An old canard and myth put out by people who are not economists or schooled in either economics or the actual ways of international currency and finance; thus they string disparate "facts" and impute meaning to them that correlates only because the authors draw their own misguided connections to them.
For instance: "In addition, prior to and during WWII, due to extreme political and economic upheaval, a considerable amount of gold from European countries was transferred to the U.S."
The reason was: The Europeans borrowed from United States banks to finance World War I and its aftermath, and then again to finance WWII. As a consequence, by the 1940s, Europe owed the United States far more than the United States total foreign debt. Given the weakness of European finances at the time, and with gold as the basis of monetary value (fixed rates backed by gold and/or silver) payments of Europe's war debts were made in gold.
"Thus, after WWII the U.S. had accumulated 80 percent of the world’s gold and 40 percent of the world’s production. At the founding of the World Bank (WB) and the International Monetary Fund (IMF) in 1944-45, U.S. predominance was absolute. A fixed exchange currency was established based on gold, the gold-dollar standard, wherein the value of the dollar was pegged to the price of gold—U.S. $35 per ounce of gold. Because gold was combined with U.S. bank notes, the dollar note and gold became equivalent, which then became the international reserve currency."
That was simply ignorance, myth and poppycock. The United States went on the Gold Standard in 1873 and the United States dollar replaced the British Pound as the "reserve" currency for international exchange in 1919, long before the World Bank and the IMF.
Initially, the U.S. had $30 billion in gold reserves. But the United States spent more than $500 billion on the Vietnam War alone, from 1967-1972. During these years, the U.S. had over 110 military bases across the globe, each costing hundreds of millions of dollars a year. These expenses were paid in paper dollars and the total number given out far exceeded the gold reserve of the U.S treasury. By then (1971-72), the U.S. Treasury was running out of gold and had only $10 billion in gold left. On August 17, 1971, Nixon suspended the U.S. dollar conversion into gold. Thus, the dollar was “floated” in the international monetary market.
More ignorance with conflating of unrelated facts.
By the beginning of the 1960s [b4 Vietnam], the $US 35 = 1 oz. Gold ratio was becoming more and more difficult to sustain. World gold demand was rising as economies across the world recovered and often used precious metals as the actual reserve behind their currency (like the US did). U.S. Gold reserves were falling (actually began in late 1950s) due to the ever increasing trade deficits which the U.S. continued to run with the rest of the world [post WWII spending boom and US demand far exceeded US supply, generating massive imports and huge trade deficits]. Shortly after President Kennedy was Inaugurated in January 1961, and to combat this situation [b4 Vietnam], newly-appointed Undersecretary of the Treasury Robert Roosa suggested that the U.S. and Europe pool their Gold resources to prevent the private market price of Gold from exceeding the mandated rate of $US 35 per ounce. Acting on this suggestion, the Central Banks of the U.S., Britain, West Germany, France, Switzerland, Italy, Belgium, the Netherlands, and Luxembourg set up the "London Gold Pool" in early 1961 [b4 Vietnam].
The Pool came unstuck when the French, under Charles de Gaulle, reneged on the agreement in 1963 and began to send back the Dollars earned by exporting to the U.S. [exports that helped rebuild France] and demanding Gold rather than Treasury debt paper in return. Under the terms of the Bretton Woods Agreement signed in 1944, France was legally entitled to do this [only until then its own debts to the US had previously exceeded its trade surplus]. The drain on U.S. Gold became acute, and the London Gold Pool folded in March 1968. But the world demand for Gold did not abate and its price appreciation together with the trade deficit ecsaserbated the stated value link of Gold to the dollar.
By the end of the 1960s, the U.S. faced the stark choice of eliminating their trade deficits or revaluing the Dollar downwards against Gold to reflect the actual trade situation. President Nixon decided to do neither. Instead, he repudiated the international obligation of the U.S. to redeem its Dollar in Gold just as President Roosevelt had repudiated the domestic obligation in 1933. On August 15, 1971, Mr Nixon closed the "Gold Window". The last link between Gold and the Dollar was gone. The result was inevitable. In February 1973, the world's currencies "floated". By the end of 1974, Gold had soared from $35 to $195 an ounce but world currencies remained stable.
Total U.S. government debt at its worst 1960s year [1968,Vietnam era] was no more than 3% of GDP [a historically not consequential figure], in an economy that was the largest in the world. The U.S. did not have a problem funding the war in Vietnam and the war's expenses were unrelated to the international financial agreements and trade issues that took the U.S. off the gold standard.
"The U.S. sought to protect its dollar strength and hegemony by ensuring that Saudi Arabia price its oil only in dollars. To achieve this, the U.S. made a deal, some say a secret one, that it would protect the Saudi regime in exchange for their selling oil only in dollars."
Fantasies of the left. There never was such an agreement and the US economy would actually improve if demand on the Euro was greatly increased. In fact the high Euro value now is one of the factors contributing to sluggish growth with economies most closely associated with the Euro. The higher Euro value hurts European exports and helps US exports. If that were to become an even greater element, US exports would soar. That is not a disadvantage to the US, but the myth of it continues, unabated.
"Oil can be bought from OPEC only if you have dollars. Non-oil producing countries, such as most underdeveloped countries and Japan, first have to sell their goods to earn dollars with which they can purchase oil. If they cannot earn enough dollars, then they have to borrow dollars from the WB/IMF, which have to be paid back, with interest, in dollars.
Stuff and economic nonsense. No wonder people are so ignorant. OPEC oil is PRICED in dollars. That is the OPEC stated price, stated as a dollar value per barrel. THAT DOES NOT MEAN IT IS SOLD ONLY FOR DOLLARS. The dollar is chosen because of its value stability. In the 1970s, Opec tried a price setting standard based on a basket of currencies known as Geneva I and later Geneva II. The instability of the underlying currencies resulted in traders often using the dollar equivalent of the Geneva I or II on the date of the trade. The trades for oil supplies are made through international financial trading outfits. When a "buy" order comes in for Saudi oil, the price is stated in dollars and the buyer must supply the equivalent in dollars OR IN THEIR currency, which is checked by the trading house conducting the trade for the Saudis, to be sure the actual dollar equivalent is provided. The dollar is used by Opec for its price stability, not to help create a demand for dollars. The writers would have you believe that the dollar demand is artificial (secret illuminati agreement between the US trilateralists and the Saudis) and therefore so is its value. But they have it backwards. The demand is on the result side of the equation and its stable value is on the cause side.
"For instance, in 2003 the current U.S. account deficit and external debt has been running at more than $500 billion. Put in simple terms, the U.S. will receive $500 billion more in goods and services from other countries than it will provide them. The imported goods are paid by printing dollar bills, i.e., “fiat” dollars."
More economic ignorance. The international trade of the U.S. is always in balance. Popular consumer reports in the news always speak of one-half of the trade equation - exports and imports of goods and services. What is not presented often enough is the "capital" accounts. The US "trade" deficit exists only because the US has a capital surplus. More companies from all over the world put so much brand new capital into the US that it far exceeds our capital outflow. The US "capital" accounts completely offset the export/import account. We can buy so many imports because we have so much foreign capital that comes here to invest in the United States private economy. Others export their capital to us, investing it here, and we turn around and buy their exports. There is no actual imbalance when the whole financial picture is understood.
"Thus, the U.S. effectively controls the world oil-market as the dollar has become the “fiat” international trading currency.
Thus the authors, ignorant of world finance deliver more mythmaking.
" If OPEC oil could be sold in other currencies, e.g. the euro, then U.S. economic dominance—dollar imperialism or hegemony—would be seriously challenged. More and more oil importing countries would acquire the euro as their “reserve,” its value would increase, and a larger amount of trade would be transacted and denominated in euros. In such circumstances, the value of the dollar would most likely go down, some speculate between 20-40" percent.
As already noted above; the authors are not economists and do not knw what they are talking about. You increase the Euro and you decrease European exports and increase American exports. It has already been happening, which is in part why so many Euro linked economies continue to lag the US.
All else in the authors rant is just more stuff and nonsense. Not worth the web space its taking up.
You seem to be full of misguided conspiracy theories. Judging by your choice of sources, we can't be surprised.
Whikle your reply appeared a rebuttal, a closer look only reveals that each of your points merely support what you tried to deny- except for this one:
"More economic ignorance. The international trade of the U.S. is always in balance. Popular consumer reports in the news always speak of one-half of the trade equation - exports and imports of goods and services. What is not presented often enough is the "capital" accounts. The US "trade" deficit exists only because the US has a capital surplus. More companies from all over the world put so much brand new capital into the US that it far exceeds our capital outflow. The US "capital" accounts completely offset the export/import account. We can buy so many imports because we have so much foreign capital that comes here to invest in the United States private economy. Others export their capital to us, investing it here, and we turn around and buy their exports. There is no actual imbalance when the whole financial picture is understood."
That's TOO funny, pal. What country owns the title on YOUR soul? Such a scenario would quickly have the entire country under foreign ownership- not entirely untrue, but to say it has countered the entire decimation of our manufacturing capability which Clinton nailed the coffin shut with his Chinagate and NAFTA policies is just silly.
What you are saying is that we are countering the consumer driven trade deficit by selling shares of America to the world- again I will concurr there is a truth to that- but you would promote that is a sustainable economic model?
"Fantasies of the left. There never was such an agreement and the US economy would actually improve if demand on the Euro was greatly increased"
I'll ask you this: Are you denying that after Desert Storm the Saudis discounted exports to the US by one dollar barrel to continue this protection you deny?
Furthermore your assertion about the Euro is silly, it would demand that the entire world economy was only comprised of the Dollar and the Euro, and that the EU needed something from us they could not get elsewhere.
The world is chomping at the bit to divest the US dollar, wake up and smell the disrespect and lack of gratitude for us saving the free world.