The bells are tolling for the dollar
News agency reports circulated
October 9, add irrefutable data. An AFP cable from Washington notes that
the budget deficit of the United States in the fiscal year 2009 is
rising to $1.4 trillion, 9.9 percent of the GDP, ‘something unseen since
1945, at the end of World War II’, it adds.
Fidel Castro Ruz
The Empire dominated the world more through the economy and lies than
by force. It obtained the privilege of printing convertible currency at
the end of World War II, it had a monopoly of nuclear weapons, it had
virtually all the gold in the world, and was the only large-scale
producer of productive equipment, consumer goods, food and services at
global level.
However, it did have a limit on printing paper money. The backing of
gold, at the constant price of $35 per troy ounce. That was the case for
more than 25 years until, on August 15, 1971, via a presidential order
from Richard Nixon, the United States unilaterally broke that
international commitment by defrauding the world.
I shall insist on repeating that. In that way it launched on the
world economy its rearmament costs and military adventures, in
particular the Vietnam war, which, in line with conservative
calculations, cost no less than $200 billion and the lives of more than
45,000 young Americans.
More bombs were dropped on this little Third World country than all
of those used in the last world war. Millions of people died or were
mutilated. When the conversion rate was suspended, the dollar became a
currency that could be printed at the will of the US Government without
the backing of a constant value.
Treasury bonds and bills continued to circulate as convertible
currency; state reserves continued nourishing themselves on those bills
which, on the one hand, served to acquire raw materials, properties,
goods and services from every part of the world and, on the other,
privileged US exports in the face of other economies of the planet.
Time and time again, politicians and academics refer to the real cost
of that suicidal war, admirably described in the film by Oliver Stone.
People tend to make calculations as if the millions were the same. They
do not usually take note of the fact that the millions of dollars of
1971 are not the same as the millions of 2009.
Price in excess
One million dollars today, when gold, a metal whose value has been
the most stable throughout the centuries, has a price in excess of
$1,000 per troy ounce, is worth approximately 30 times what it was worth
when Nixon suspended the conversion rate. In 2009, $6 trillion is
equivalent to $200 billion in 1971. If this is not taken into
consideration, the new generations will have no idea of imperialist
barbarism.
In the same way, when one speaks of the $20 billion invested in
Europe at the end of World War II, in virtue of the Marshall Plan for
reconstructing and controlling the principal European powers that had
the necessary workforce and technical culture for the rapid development
of goods and services, people usually ignore the fact that the real
value of what was invested at that time by the empire is equivalent to a
current value of $600 billion.
They do not note that today, $20 billion would barely stretch to
building three large oil refineries capable of supplying 800,000 barrels
of gasoline per day, in
Sterling pound |
US Dollar bills |
addition to other oil derivatives.
The consumer societies, the absurd and capricious waste of energy and
natural resources that are currently threatening the survival of the
species, would not be explicable in such a brief historical period if
one is unaware of the irresponsible manner in which developed
capitalism, in its superior phase, has ruled the destinies of the world.
That astounding waste explains why the two most industrialized
countries of the world, the United States and Japan, are indebted to
approximately $20 trillion. Of course the US economy has an annual gross
domestic product of $15 trillion. The crises of capitalism are cyclical,
as the history of the system irrefutably demonstrates, but this time it
is about something more: a structural crisis, as Professor Jorge
Giordani, Venezuelan Minister of planning and development, explained to
Walter Martínez in the latter’s Telesur program last night.
News agency reports circulated today, Friday October 9, add
irrefutable data. An AFP cable from Washington notes that the budget
deficit of the United States in the fiscal year 2009 is rising to $1.4
trillion, 9.9 percent of the GDP, ‘something unseen since 1945, at the
end of World War II’, it adds.
The deficit in 2007 was one third of that figure. High deficit
figures are expected for the years 2010, 2011 and 2012. That huge
deficit is fundamentally determined by the US Congress, to save that
country’s major banks, to prevent unemployment rising above 10 percent
and to pull the United States out of recession.
It is logical that if they flood the nation with dollars, the large
commercial chains will sell more merchandise, industries will increase
production, fewer citizens will lose their homes, the unemployment tide
will stop rising, and Wall Street shares will increase in value.
However, the world can no longer return to what it was. The economist
Paul Krugman, an eminent Nobel Prize winner, has just affirmed that
international trade has suffered its greatest fall, worse than that of
the Great Depression, and has expressed doubts on its recovery in the
short term.
Hard currency
Nor can the world be inundated with dollars and think that those
bills without backing in gold will maintain their value. Other
economies, today more solid, have emerged. The dollar is no longer the
hard currency reserve of all states; on the contrary, its holders wish
to move away from that currency, while as far as possible avoiding its
devaluation before they can get rid of it.
The European Union euro, the Chinese yuan, the Swiss franc, the
Japanese yen, despite that country’s debts, even the pound sterling,
together with other hard currencies, have moved to take the place of the
dollar in international trade. Gold metal is once again becoming an
important international reserve currency.
This is not a capricious personal opinion, nor do I wish to slander
that currency.
Another Nobel Prize winner in economy, Joseph Stiglitz, commented,
according to one news agency, that the most likely thing is that the
green bill will continue its decline. He stated this on October 6 at the
IMF World Bank Joint Annual Meeting in Istanbul. Violent repression
could be noted in that city. The event was greeted with broken windows
in the commercial sector and fires from Molotov cocktails.
Other agencies talked of the fact that the European countries are
fearful of the negative effect of the weakness of the dollar compared to
the euro and the consequences of that on European exports. The US
treasury secretary stated that his country ‘was interested in a strong
dollar’. Stiglitz made fun of an official statement and stated,
according to EFE: “In the case of the United States money has been
squandered and the reason has been the multimillion rescue of the banks
and defraying the cost of wars like that of Afghanistan”.
EFE reported that the Nobel Prize winner ‘insisted that instead of
investing $700 billion to help bankers, the United States should have
directed part of that money into helping the developing countries which,
at the same time, would have stimulated global demand’.
Robert Zoellick, president of the World Bank, raised the alarm a few
days earlier, warning that the dollar could not maintain its status as a
reserve currency indefinitely. Kenneth Rogoff, an eminent professor of
economics at Harvard, stated that the next major financial crisis will
be that of ‘public deficits’.
The World Bank declared that ‘the International Monetary Fund has
demonstrated that the central banks of the world accumulated fewer
dollars during the second half of 2009 than at any other point in the
last 10 years and increased their euro holdings’.
That very same October 6, AFP reported that gold reached the record
figure of $1,045 per ounce, prompted by the weakening of the dollar and
fears of inflation.
The Independent newspaper of London published that a group of oil
producing countries were studying the possibility of replacing the
dollar in commercial transactions with a basket of currencies including
the yen, the yuan, the euro, gold and a new unified currency.
Collapse
The news leaked or deduced with impressive logic was refuted by some
of the countries presumably interested in that protection measure. They
do not want it (the dollar) to collapse, but neither do they want to
continue accumulating a currency that has lost its value thirty-fold in
less than 30 years.
I must mention a cable from the EFE agency, which cannot be accused
of being anti-imperialist and which, in the current circumstances,
includes opinions of particular interest: Experts in economy and finance
were in agreement today in New York in affirming that the worst crisis
since the Great Depression has resulted in this country playing a less
significant role in the world economy.
“The recession has led to the world changing its way of looking at
the United States. Our country is now less significant than before and
that is something that we have to recognize”, affirmed David Rubenstein,
president and founder of the Carlyle Group, the largest risk capital
company in the world, addressing the World Business Forum.
“The financial world is going to be less centered in the United
States, New York is never again going to be the world financial capital
and that role will be shared with London, Shanghai, Dubai, Sao Paulo and
other cities”, he noted.
“...sort out the problems that the US will confront when it comes out
of the ‘great recession,’ which will probably go another month or two.”
“...enormous public debt, inflation, unemployment, loss in value of
the dollar as a reserve currency, energy prices...”
“The Government must reduce public spending in order to confront the
debt problem and do something that it doesn’t much like: increase
taxes”.
“Jeffrey Sachs, an economist at the University of Columbia and UN
special adviser, agreed with Rubenstein that the economic and financial
predominance of the US ‘is fading”.
“We have left a system centered in the US for a multilateral one...”
“...20 years of irresponsibility by the first part of the Bill
Clinton administration and then that of George W. Bush,’ yielded to the
pressures of Wall Street...”
“...the banks negotiated with ‘toxic assets2 to obtain easy money,’
Sachs explained”.
“The important thing now is to recognize the unprecedented challenge
that suppose achieving sustainable economic development in line with the
basic physical and biological rules of this planet...”
On the other hand, the direct news from our delegation in Bangkok,
capital of Thailand, was not at all encouraging.
“The essential issue being discussed, our minister of foreign affairs
noted textually, is the ratification or not of the concept of shared but
differentiated responsibilities between the industrialized countries and
the so-called emerging economies, basically China, Brazil, India and
South Africa, and the underdeveloped countries.
China, Brazil, India, South Africa, Egypt, Bangladesh, Pakistan and
the ALBA are the most active. In general terms, the majority of the
Group of 77, are holding to firm and correct positions.
Figures being negotiated for the reduction of carbon emissions do not
correspond to those calculated by scientists for keeping temperature
increases to a level below 2 degrees Celsius, 25-40 percent. At this
point, negotiations are moving around a reduction of 11-18 percent.
Real effort
“The United States is not making any real effort. It is only
accepting a 4 percent reduction in relation to the year 1990”.
In the morning of October 9, the world awoke to the news that the
‘good Obama’ of the enigma explained by the Bolivarian President Hugo
Chávez at the United Nations, has received the Nobel Peace prize. I do
not always agree with the positions of that institution but I am obliged
to acknowledge at this moment in time, that, in my view, it was a
positive measure. It compensates for the setback that Obama suffered in
Copenhagen when Rio de Janeiro and not Chicago was chosen as the venue
for the 2016 Olympics, which prompted irate attacks from the extreme
right.
Many people will say that he has not as yet won the right to receive
such a distinction. We would like to see in the decision, more than a
prize to the president of the United States, a criticism of the
genocidal policy followed by more than a few presidents of that country,
who have brought the world to the crossroads where it finds itself
today; an exhortation to peace, and the search for solutions that will
lead to the survival of the species.
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