Over the last several weeks, there have been many news headlines containing the words "Iran" and "nuclear capability." If you listen closely, you can almost hear the drumbeats of a fresh war in the Middle East.
As an economist, I have been trained to view the world through the lens of incentives. (I am a "bottom line" kind of guy.) And just as every action is motivated by an underlying incentive, every decision has a related consequence.
This brief article details the actions, incentives, and related consequences that the United States has created through its attempts to maintain global hegemony through something known as the petrodollar system.
This article will begin with a look back at the important events of the 1944 Bretton Woods Conference which firmly established the U.S. Dollar as the global reserve currency. Then we will examine the events that led up the 1971 Nixon Shock when the United States abandoned the international gold standard. We will then consider what may be the most brillant economic and geo-political strategy devised in recent memory, the petrodollar system. Finally, we conclude by examining the latest challenges facing U.S. economic policy around the globe and how the petrodollar system influences our foreign policy efforts in oil-rich nations. The collapse of the petrodollar system, which I believe will occur sometime within this decade, will make the 1971 Nixon Shock look like a dress rehearsal.
If you have never heard of the petrodollar system, it would not surprise me. It is certainly not a topic that makes it's way out of Washington circles too often. The mainstream media rarely, if ever, discusses the inner workings of the petrodollar system and how it has motivated, and even guided, America's foreign policy in the Middle East for the last several decades.
|Personal Note: What I am going to explain in this article is something that I believe is vitally important for every American to understand. Since 2006, I have written dozens of articles onthe petrodollar system. I have appeared on many major news media outlets talking about the petrodollar system. I even wrote a best-selling book entitled Bankruptcy of our Nation that spent an entire chapter exposing the petrodollar system. I have spoken about this topic all over the world. Suffice it to say, I believe that understanding the petrodollar system is very important to your financial well being. I encourage you to print this article out and read it carefully. When you are finished with it, I encourage you to share it with your friends and neighbors. Share it on Facebook and Twitter. Help us get the word out so that the American public can stir from its slumber and begin preparing for what lies ahead.
Brief Overview of this article on the Petrodollar System.....