Cost, abuse and danger of the dollar
Those who use dollars outside the US continuously pay a contribution to the US. It comes in the form of an inflation of 1.25 million dollars per minute. This is the result of the fast increase of the US foreign debt. Half of all USA's imports are simply added to the foreign debt and paid for by the foreign dollar holders through inflation.
Moreover these dollar holders do not seem to realize, that the dollar rate they are looking at, is nothing more than a dangerous facade. If they don’t understand what is still keeping it upright, the facade may hit them by surprise.
Meanwhile, well camouflaged, the dollar is at the center of several US’ conflicts.
World wide demand for dollars
Up to 1971, each US dollar represented a fixed amount of gold. The US disposed of enormous gold reserves, which covered the total value of all issued dollars. When foreign banks had more dollars than they wanted, they could exchange it into gold. That was the main reason why the dollar was accepted world wide.
In 1971 the gold guarantee for the dollar was lifted. In fact, this was an emergency move of President Nixon: the Vietnam War had cost more than the US could afford and more dollars had been printed than the gold reserves allowed. Since then, the value of the dollar is established by the law of offer and demand on the exchange markets.
In the early seventies the US still produced enough oil for its own consumption. To protect its own oil enterprises against foreign competition, oil imports were limited. In exchange for the lift of limitations, the OPEC countries promised they would only accept dollars for their oil. The dollar was the most used currency in the world trade. So nothing special?
Since 1971 everyone who wants to import oil, has to buy dollars first. That is where the fun starts for the US. Almost everybody needs oil, so everybody wants dollars.
Oil buyers from all over the world hand over their yens, crowns, francs and other currencies. They receive greenbacks in return. With those dollars they go and buy oil in the OPEC-countries. The OPEC-countries will spend the money again. Of course, they can do that in the US, but also in all other countries in the world. Everybody wants dollars, for everybody will need oil again.
Each country which purchases more than it sells, will see the value of its money diminish. If you can not do a lot with a currency, demand decreases and its exchange value goes down. But what is true for all other currencies, is not true for the US dollar. As long as the whole world needs dollars to purchase oil, there will always be demand.
To keep the permanent demand for dollars going, oil sales must remain in dollars. That is why the US tries to keep as much influence as possible, as well on the US owned IPE and NYMEX world oil markets, as with the locals in power. By doing so the US secures its oil supply at the same time. Beyond that, lucrative contracts can be obtained from the local power, with which a maximum of benefits can be seized from the oil production.
But when the locals in power do not want to sell their oil in dollars anymore, the US has a problem. Then, the US-president will not explain how dependent the US is on the dollar demand. The conflict is always camouflaged. And to do so, always an emotional theme is chosen. In times gone by this was the danger for communists, today it is the danger for terrorists, fundamentalists and other popular bogies, like “the enemy has weapons of mass destruction” or “the enemy tries to make nukes.”
The fact that there is, rationally, not a single proof, does not matter. The emotions always win. Even the fact, that these accusations can be turned around and then can be proved, is noticed by hardly anyone. The US has weapons of mass destruction and has used them; the US has nukes and has used them, and even threatened with them still in 2000.
But once again, at the moment accusations are loaded with emotions humans switch off their intelligence. Reason is no argument for peace anymore. The theatre is only about the launched accusations. And because, as a result, only specialists of weapons of mass destruction or nukes are called upon to give their opinion, nearly nobody finds out what the conflict is really about.
In Venezuela, since many years, the US tries to pull down President Chavez, pretexting he is a dangerous communist. Chavez has nationalized the oil industry and has set up Barter-deals to export Venezuelan oil in exchange for medical care from Cuba and others. In Barter deals there is no necessity for dollars and the US has no profit from the oil trade.
Until 1990 the US maintained lucrative commercial contacts with Saddam Hussein. He was a good ally. For instance, in 1980 he had tried to free the hostages at the US-embassy in Teheran.