Why War?

          It is obvious that the wars are connected to oil; but we are not going to war just for oil companies’ profits.  We are going to war to make sure that oil is only sold for dollars. 

          If you look at the history of the oil wars a clear pattern comes to light.  In the 70’s the dollars convertibility to gold was ended.  Around the same time a deal was made with Saudi Arabia, the US supplied weapons to the royal family, and they agreed to sell oil only for dollars.  This ensured global demand for dollars, thus maintaining their value.  The dollar became the “world’s reserve currency.” 

          The US is fighting to maintain this dominant global economic position.  The invasion of Iraq followed Saddam selling oil for the Euro (ref 1).  The invasion of Libya was preceded by Gaddafi’s plan to sell oil for gold and establish a united African currency the gold dinar.(Ref 2)  Iran has made moves to sell oil for the Euro. (Ref 3)

The Price of Peace

          Activists need to come to terms with this reality and its consequences: ending the oil wars could result in a plunge in the value of the dollar.  Skyrocketing prices could lead to a complete breakdown of the economy.  Calls to end war must also address this possibility.   

          First let’s acknowledge who benefits from the petro-dollar system.  The masses receive some benefit through increased purchasing power; but this has led to a trade imbalance where we import more than we export.  The trade imbalance is offset by borrowing from foreign countries (most notably China) giving China massive dollar reserves and US massive debt.

          The strength of the dollar has also undermined our manufacturing base as countries leave for cheaper areas.  As manufacturing declines the service, financial and military industries rise.  Increasingly the benefits of the petro-dollar are accruing to the ultra rich as industries disappear causing a labor surplus. 

Who Controls the Money Supply?

          Now let’s look at who controls the money supply.  There are two commonly held myths about money:

Myth #1. The government prints our money.  Actually the Federal Reserve (the Fed) is not part of the US government.  The Federal Open Market Committee (FOMC) is the body responsible for expanding and contracting the money supply (by purchasing and selling government debt) and determining interest rates.  The FOMC is composed of seven Fed governors, and 5 Reserve Bank Presidents.  (Ref. 4)  The governors are appointed by the president of the US; the regional Federal Reserve Bank Presidents are elected by the board members of the 12 regional Federal Reserve banks (Ref 5); the board members of the 12 Federal Reserve banks are elected by the private member banks (Ref 6).  Therefore control of the FOMC, and consequently the money supply, is largely in the hands of private banks. 

Myth #2. Banks loan us money from deposits that they hold.  When banks make loans they essentially create the money using the “fractional reserve” system which requires them to retain in reserve only 10% or less of what they lend. 

Between the FOMC’s creation of money, and the private banks creation of credit, our money supply is almost completely in the hands of the private banks.  This massive power is abused, funding speculative gambling, real-estate bubbles, and war. 

Legislation for Peace and Prosperity

          How do we end the wars without destroying our economy?  The answer is twofold: we must reduce our dependence on oil and foreign goods; and we must produce goods for the global market that will generate demand for dollars.  These goals are not likely to be met while our monetary system is in the hands of bankers who refuse to invest in the real economy. 

          The beauty is that all we have to do to take back our economy is change it to the way that people already think that it is: restore the money creation power to the government; and require banks to lend only the savings that they hold.  Congressman Dennis Kucinich has submitted legislation that will achieve these goals: The National Emergency Employment Defense Act of 2011 calls for nationalizing money creation.  This will give the government the power to employ the whole nation to rebuild our infrastructure, fully fund education and healthcare, rebuild our manufacturing base, and convert to a sustainable economy.

What would this look like?  Congress would first print money to pay off the debt, saving taxpayers 352 billion in interest payments/yr.  The government would spend money into circulation and loan money to banks; expanding and contracting the money supply to stabilize prices.  So long as the money is used to grow the real economy inflation would not be a concern.  With 12% real unemployment and 12.5 trillion GDP, 1.7 trillion dollars could be printed to fully employ the nation (grow the economy 12%) without inflation.  (Ref. 7) We could easily transition to renewable energy and locally produced goods, ending our dependence on oil and foreign goods.  We could let freedom reign in oil producing nations, without collapsing the dollar.  Find out more at www.monetary.org.

Ref 1. CNN “UN to let Iraq sell oil for euros, not dollars” 10/30/2000

Ref 2. RT News “Saving the world economy from Giddafi” 05/05/2011

Ref 3. Global Research “The Real Reasons Why Iran is the Next Target: The Emerging Euro-denominated International Oil Marker” 10/27/2004

Ref. 4 http://www.philadelphiafed.org/education/teachers/resources/day-in-life-of-fomc/

Ref 5 http://www.federalreserve.gov/aboutthefed/bios/banks/default.htm

Ref 6 http://www.newyorkfed.org/newsevents/news/aboutthefed/2009/an090824.html

Ref 7. Ellen Brown “The Web of Debt”