Not only does the dollar enable the US empire, but also protecting the dollar’s status is a major reason for US imperial wars. American financial and military strength is based upon the fact that the dollar is the world’s reserve and international trade currency, creating a global demand for dollars which allows the US to print as many greenbacks as it likes. It then pumps them into the overbloated finance capital system and uses them to fund its criminal wars…
…Although it has so far been unsuccessful, the idea of rebalancing the world monetary system is extremely threatening to the US, and goes a long way toward explaining recent US wars and warmongering, which may otherwise seem irrational. The line of NATO bases in Eastern Europe and the coup d’etat in Ukraine are attempts to split Europe from Russia, trying to keep a subordinated Europe in the US sphere, prevent a single Eurasian economic area, and isolate and destabilize Russia. The Transatlantic Trade and Investment Partnership has the same goal. Weakening Russia and China (and the BRICS in general) on a military, economic and political level, with a regime change in mind, is a fundamental part of the US strategy for maintaining dollar hegemony. The US therefore has surrounded them with bases and continues to try to destabilize them. The US presence in the Middle East serves not primarily to gain access to its oil and gas (the US has its own, especially since the fracking boom) or even to control access to them (the Chinese are already there), but first and foremost to protect the petrodollar, to ensure that the global fossil fuel markets continue to be denominated in dollars. Iran has been talking about wanting to de-dollarize its oil and gas trade for years – thus, it and the Shia crescent are in the US line of fire…
…This is exactly in the interests of US financial imperialism: to economically undermine any rivals that question dollar hegemony. It is absolutely unacceptable that one country should arrogate to itself the right to set a wildly loose money policy for years and then tighten it at whim, giving the rest of the world a violent thrashing. It is unacceptable that any one country control the world’s reserve currency. As the above quote says, because of the circumstances created by QE and the zero interest rate policy, today if the US economy does well, the global South suffers. It’s a zero-sum equation. This is throwing burning obstacles in front of their process of de-dollarization, and making them suffer. On purpose? Again, it would be difficult to impute too much individual agency behind these effects, but they are predictable, necessary and not unprecedented consequences of the imperial monetary policy waged by the US for years. The question of agency in this case is moot: these policies serve the empire. They go along with and have similar effects to the more obvious forms of financial imperialism such as sanctions. The US should be held accountable for the disasters it sows, and the world should remove its imperial privileges, through the creation of a neutral world reserve currency.
With the latest round of American and European news media outlets loudly announcing that President Obama is considering arming the neo-fascist Ukrainians to fight Eastern Ukrainian separatists, risking an escalating proxy war with Russia, it’s time we gained some broad perspective on this conflict. Each side is pointing fingers at the other, with few facts being spoken that both sides can really agree on. The US media-war-machine is vamping up the aggression of words as seen here: Fox[Obama Confirms Arming Ukraine on the Table if Diplomacy with Russia Fails ], USA Today[Obama Team Considers Arming Ukraine], NY Times[US Taking a Fresh Look at Arming Ukraine Forces] (no, going to all of those mainstream media websites was not a pleasant experience).
A tentative peace deal has been signed with leaders of Europe in attendance, with German Chancellor Angela Merkel leading the way in promoting a peaceful resolution to the conflict. Whether this truce will hold is uncertain, but with major national interests at stake and their strategy plays already set in motion, we are entering a phase in which the drivers behind the conflict must be payed bare. With all of this hate in the air, and pathetically little debate about the intricacies of the conflict, a number of questions need to be asked:
Why would the US risk setting off a proxy war with Russia and a potential nuke-firing, ’unthinkable’ World War III? Where is the intense demonization of Putin in Washington and its long arm in the media coming from? What is the US doing right on Russia’s doorstep using strong-arm tactics like sanctions and pursuing NATO expansion, including a new “rapid response force”  ready to be deployed along the boarder of Russia at a moment’s notice? We could flip the questions around for the sake of objectivity and ask: “why did Putin annex Crimea during the Maiden episode?” and also, “why would Putin arm and supply the East Ukrainians to fight the new Kiev government?”. The two powers are squaring off alright, but if we turn off the highly charged rhetoric that is being flung around in the narrative and look at the situation in terms of geopolitical power and national interests, we find a set of dominant forces that span the globe are being challenged right now, ones that American global hegemony just might be willing to risk World War III to protect.
I will eventually offer some links and facts about the current crisis, but first the scope of this conflict needs to be elaborated. Only then can we feel the weight of the conflict and answer those questions above. So, why are these powers willing to risk so much?
When Putin and other Russian politicos speak about their motives and relay messages to their US and NATO counterparts, they have repeatedly been saying that they no longer accept the US dominated world order as it is. [Putin Accuses United States of Damaging World Order]. They demand that the US stop interfering with affairs far away from their land and basically stop playing global policeman. America has been the overwhelming superpower ever since WWII (despite the Cold War) but it was with debt, money, and currency manipulations that the US achieved a imperial superiority over the rest of the world unparalleled in history. Few know how these mechanism work (and this was most likely intentionally obscured with the help of ideologically driven economist-speak), but it seems that Russia feels like it has regained enough of a footing in global politics to challenge US super-imperialism with its alliances and trade deals. The US in turn ratchets up the pressure with a series of sanctions and foments unrest right on Russia’s doorstep. If we take the longview on the Ukrainian conflict and tune-out the heated rhetoric we can see a major stand-off between the clear world hegemon desperately holding to its power and another large imperial nation who is refusing to bow down anymore.
This is what the Russians are talking about when they speak of the US-led world order whose rules they no longer want to play by:
America projects power thanks to its fortunately located continent away from other world powers in Europe and Asia (who have other competitive nations very close to them). They have control over much of the Earth’s maritime shipping routes with strategically placed Naval bases and keep the close nations located in the Americas from retaining the wealth of their natural resources, thereby keeping them more impoverished and, consequently, weaker. See this brief Caspian Report video on how the US geologically projects power:[Foundation of American Dominance]. While Cuba and Venezuela remain thorns in their side, much work is surely being done (as it has been accomplished already in its numerous interventions in its own backyard [7 Fascist Regimes Enthusiastically Supported by America]) to wrest away the profits of Venezuelan oil for American multi-nationals. Venezuela’s ability to keep the wealth generated from its vast oil reserves within its own national government has made it a target for regime change. [Venezuela, Regime Change, and the Hidden Hands of US Capitalism]. The Venezuelan government headed by Maduro is now claiming to have foiled a coup attempt by military officials on the anniversary of the student protests [Opposition Leaders Issued a Statement to Signal the Launch of the Foiled Coup].
But the real crux of American global dominance is performed via money and debt. In the system of global trade and finance, there is no standardized unit of account that levels-off the panoply of currencies engaging in importing and exporting with each other like the gold standard once did. Nixon took the US off of the gold standard in 1971, when Vietnam War expenditures rose so high that its gold reserves were rapidly being depleted. Currencies were left to float against each other or be pegged to one another, but US dollars were still needed by-and-large because America was by far the most productive economy and a trading partner to many nations. The US dollar gained the status of ‘reserve currency‘. Countries would still need dollars in reserve to buy oil and to cover losses from speculative raids, seeing as it is that the foreign exchange market (ForEx) allows currency holders to trade currencies at will and for speculative profit. The phenomenon of ’short selling’ is a major weapon that speculators use to devalue an entire nations economies by conspiring to lower the value of its national currency. Countries can peg their currency’s value to the dollar, but can still see capital flight and their doliar reserves depleted if they don’t set the peg exactly right. Basically everybody needs dollars to buy oil (thanks to the US/Saudi “Petrodollar” deal: [Confessions of an Economic Hitman]) and make sure their foreign and economic policy won’t lead to those dollars fleeing their own central banks, which usually means they must export more to the US than they import. The imperative for economies to “grow” by producing consumer goods and exporting them is largely an effect of debt payments they must meet and dollar reserves they must hold onto. For a more detailed analysis, read Ellen Brown’s Web of Debt, chapter 21, ’Goodbye Yellow Brick Road: From Gold Reserves to Petrodollars’. [Web of Debt]
The excess of imports into America means that US balance of payments is always negative, hence the US national debt perpetually rising at an astronomical rate. But the large US national debt is not a hindrance; since countries are required to hold dollars for oil purchases, other countries must export their goods to the US and usually import oil. With all of these dollars in circulation, central banks end up buying US treasury bills to get a return on those dollar reserves. This ensures that dollars are continually “recycled” back to America, with the US Treasury making its minimum debt payments on those bills and bonds as the total debt climbs ever higher. Thanks to the Federal Reserve system, the US Treasury must borrow from this private central bank in order to print its own national money. All of this ensures that demands of debt (as well as oil) are met at almost every step of the way: whether by countries who must accept onerous loans from the IMF to protect their own currency/dollar reserves to buy oil, or a US government that turns the global need for dollars into more debt of its own. Though, all together, the system is drastically beneficial for the US (that is, until people realize that its debt will never be completely payed off): it gets excessive imports and situates itself as a middle-man (via the dollar) between nations and their energy needs.
This video from Storm Clouds Gathering explains the Petrodollar system well: [The Geopolitics of World War III]
Now, this nefarious system is not accepted happily by those who understand it and feel the pressure it exerts upon them. The BRICS Bank enters as a challenger to Dollar Hegemony for its ability to offer development loans similar to the IMF but in currency besides the US dollar. Here is a Cursory overview of the BRICS Development Bank: [BRICS Set Up Bank to Counter Western Hold on Global Finance], and an Al Jazeera segment about the goals and motives of the BRICS alliance[Empire: BRICS: The New World Order] . With such a massive tool at their disposal, countries could break the need for dollars in purchasing oil, as Russia has tried to do with its currency swap deal with China: [Russia and China: The Dawning of a New Currency System]. Russia stopped trading their oil for dollars over a year ago and, if using dollars is absolutely necessary, they will immediately take those dollars and exchange them for gold – the value of gold being pushed down at a low price thanks to central bank policy. A more detailed look at Putin’s scheme to get around the petrodollar, by using artificially devalued gold and rubles: [Grandmaster Putin’s Trap: Russia Is Selling Oil and Gas in Exchange for Physical Gold].
I also highly recommend watching this debate between Michael Hudson and Leo Panitch about the significance of the BRICS Bank, where geopolitical and international banking dynamics are contrasted with a downer, “you’re either a Capitalist or a Socialist economy”, analysis: [Is The New BRICS Bank a Challenge to US Global Financial Power] and here is my take on the debate: [The BRICS Bank and Dollar Hegemony: The Importance of Geopolitics].
“Neoliberalism is not simply an economic philosophy. It’s interwoven with American foreign policy.” -Hudson.
According to Ellen Brown, Russia and other BRICS countries have a greater diversity in banking methods that would put them fundamentally at odds with Western private banking elite. She cites this article that glosses how the Russian banking system has changed its ways towards public financing following the 2008 financial crisis:[Financial Crisis Alters Russia Banks]. A vast network of smaller, state controlled banks offering low-interest rates puts Russia and the BRICS at odds with private banks of the west, who lend primarily for profit and operate at the behest of maximizing the returns to their shareholders. According to Brown, the unsung hero of China’s rapid growth in industry is its banking system that operates as a public service rather than as a parasite. The entire first section of her book, The Public Banking Solution is devoted to juxtaposing private and public banking models and how the BRICS nations exemplify the necessary measures that need to be taken to ward off the wealth siphoning machine of onerous debt and interest.
Speaking of financial tensions, there is also the lingering memory in Russia of the American intervention during the transition form communism to capitalism. Aid, support, and advice were continually given to Yeltsin, who in turn attacked the Russian parliament building, rammed through neoliberal shock therapy, and made sure a potential democracy became an oligarchy instead. I encourage everyone to read or reread Naomi Klein’s chapter 11 in The Shock Doctrine titled ’Bonfire of a Young Democracy: Russia Chooses the Pinochet Option’ in light of current events. Just a few excerpts:
“To provide ideological backup for Yeltsin’s Chicago Boys, the U.S. Government funded its own transitions experts whose jobs ranged from writing privatization decrees, to launching a New York-style stock exchange, to designing a Russian mutual fund market. In the fall of 1992, USAID awarded a $2.1 million contract to the Harvard Institute for International Development, which sent teams of young lawyers and economists to shadow the Gaidar [the head of Yeltsin’s economic reform team] team. In May 1995, Harvard named [Jefferey] Sachs director of the Harvard Institute for International Development, which meant that he played two roles in Russia’s reform period: he began as a freelance adviser to Yelstin, then moved on to overseeing Harvard’s large Russia outpost, funded by the U.S, government.” (p.281)“Despite the fact that Russia’s Constitutional Court once again ruled Yeltsin’s behavior unconstitutional, Clinton continued to back him, and Congress voted to give Yeltsin $2.5 billion in aid. Emboldened, Yeltsin sent troops to surround the parliament and got the city to cut off power, heat and phone lines to the White House parliament building.” (p.294)
He would eventually order Russian troops to burn down the parliament building, their own White House.
“… several of Yeltsin’s ministers transferred large sums of public money, which should have gone into the national bank or treasury, into private banks that had been hastily incorporated by oligarchies. The state then contracted with the same banks to run the privatization auctions for the oil fields and mines. The banks ran the auctions, but they also bid on them – and sure enough, the oligarch-owned banks decided to make themselves the proud new owners of the previously public assets. …the Russian people fronted the money for the looting of their own country.” (p.294)“…he [Sachs] now sees that there was something else at work: many of Washington’s power brokers were still fighting the Cold War. They saw Russia’s economic collapse as a *geopolitical victory*, the decisive one that ensured U.S. supremacy.” (p.315)
Putin has echoed this sentiment, proclaiming that the fall of the Soviet Union “was the greatest *geopolitical catastrophe* of the century.”. Seen from this geopolitical perspective and not the ideological one in which it is usually viewed, one major national power was crippled with the help of another major national power through military force and disastrous economic reforms. The oligarchy reigning in Russia (similar to the one reigning in America, as this scientific study found [US Is an Oligarchy not a Democracy, Says Scientific Study]) was fostered and supported by American neoliberals and is not simply the product of its own vague tendency for corruption.
Then there’s the New York Times running an article by Thomas Friedman openly questioning if the recent plummet of oil prices was not a ploy between US and Saudi Arabia to cripple Russia’s oil and gas economy [A Pump War?]. This would line up perfectly with the US tactic of weaponized financial mixed with control over oil markets.
During the Maidan protests as well, evidence has been accumulated that the US has been directly involved with putting known fascist party members into power. This video from Storm Clouds Gathering goes into this in detail: [The Ukraine Crisis: What You’re Not Being Told]. The hard evidence of leaked phone calls between US assistant secretary of state Victoria Nuland laying out the exact people she wants to see in power for the new post-coup Ukrainian government is tough to deny. The right sector leader in Kiev has been documented as rejecting the recently signed peace-deal: [Neo-Nazi Leader of the Right Sector Rejects Ukraine Peace Deal]. To top things off, fake pictures of Russian troops in Eastern Ukraine were brought before US congress as war propaganda last year by a US Senator: [US Senator Used Old Photos to Push Ukraine War Propaganda]. They have since been debunked.
On the financial hegemony side, we don’t have to go very far to see the negative effects of IMF’s monetary policy, it is apparent right there in the Ukraine. To finance Ukraine’s war with the separatists, the IMF has granted it loans that demand it privatize public sector industries and undergo austerity, even though the IMF is not allowed to give loans to countries at war. Here is Michael Hudson talking about Ukraine’s coming financial crisis: [Has the IMF Annexed Ukraine?]. Now Joe Biden’s son has even been appointed to the board of a Ukrainian oil and gas company with tremendous power in Ukraine. The $17 billion IMF loan to Ukraine is alleged by Hudson to be a New Cold War Loan meant to wrest away debt payments owed to Russia by Ukraine [Losing Credibility: The IMF’s New Cold War Loan to Ukraine].
So, facing all of this evidence that US power is in trouble and has been stirring up aggression right on Russia’s border, how can we go along with the narrative of Putin the aggressor, the demon? Russia invaded the formerly Ukrainian territory of Crimea and annexed it, which has been denounced ad nauseum as an act of aggression. Right after the event, a referendum was conducted in which the Crimeans voted overwhelmingly for annexation by Russia, with over 90% in favor. Recently, another poll was held by the Ukrainians themselves in which this sentiment was upheld, with ~93% in favor of Russia [Annexation of Crimea to Russia. Opinion Poll]. But the inflammation of this great geopolitical chess game is the consequence of no mere diplomatic misunderstanding or idle hands in the military-industrial complex, Russia is the greatest threat to the interest of the US because it is leading the way in establishing an alternative to the debt-based monetary policies that cripple nations and bolster US power around the Earth. An alliance of BRICS countries with a new development bank not under control of the IMF/World Bank/Bank of International Settlements is a threat to the hierarchy of order that has settled internationally, with the US on top. But we not simply side with the BRICS be their cheerleaders, there is a public banking movement going on in the US which is spreading the model at home.
In America, public consent is required (for the most part) before war is waged and the battleground of public opinion is crucial in determining how the military decisions will be made by the president. It is important that these fact of the US’s involvement in Eastern Europe be distributed and understood before we head into what would be a horrifying and devastating war to protect an order that already impoverishes so many people and nations as a whole. The private banking cartel that rules Washington with its revolving door of financiers and politicians keeps the vast majority of people from wealth, while ensuring that a few (the 1%, if you will) continue to profit off of assets that are already held like stocks, shares, property, and large businesses. Public banking models threaten the stability of the wealth generating machines that wealthy elites will fight tooth and nail to keep in motion, with the BRICS alliance raising the biggest alarm. There is no guarantee that the BRICS Bank will operate on a more benign model than the IMF does now, but the history and composition of public banks in those countries suggests they would be far more likely to restructure and cancel debts, make cheaper loans, and not apply harsh conditionalities that lead to austerity policies and privatization. Although, to be quite honest, we need a shake up of the dominant forces of the Earth in any case, and detaching the most important element from an economy (money: what we need to have and earn in order to survive more than any other thing in the present day) from oil (the thing most threatening to a flourishing planet when burned) would be a good start. Simply put, without the Petrodollar system, there is a whole lot more that countries could do.
I highly recommend looking into the idea of public financing and dig into the way monetary policy shapes the international composition of forces. Since you’ve made it this far, please check out all of the links I have provided in this essay to get the bigger picture. With an informed public, war and ecological devastation can be prevented and our present situation need not continue indefinitely. A new development bank headed by large capitalist nations isn’t exactly as glamorous as the notion of a global grassroots revolution, but these developments signify that the greatest powers at work on the surface of the Earth are facing an uncertain future. Understanding how these forces are deployed, who benefits, and who loses will allow us to more effectively withstand the on-coming media shocks.