How Did the Greeback Became A Standard Global Currency?

Washington's first ally in the continuous struggle to defend the sovereignty of the greenback was Israel. Most of us including the majority of Jews believed that the Tel Aviv's decision to launch preemptive attacks against Egyptian, Syrian and Jordanian troops along its borders in what came to be known as the Six-Day War of 1967 was driven principally by Israel's determination to protect its borders. Obviously, territorial expansion was the outcome at the end of that bloody week, but the Six-Day War also served another 'purpose'.

Arabs were humiliated and infuriated by the loss of their territories. Much of their anger was aimed at the United States; they knew that Israel could never succeeded without the American financial and political support, as well as the not-so-veiled threat that US troops were standing by in the unlikely event that Israel needed them. Few Arabs anticipated that Washington had motives that were far more selfish than defending the Jewish homeland or that the White House would 'turn Arab anger to its advantage'.

So, in response to the Six-Day War of 1965, Egypt and Syria simultaneously attacked Israel on Yom Kippur, the holiest of Jewish holidays. Knowing that strategically he was on shaky ground, Egypt’s President Anwar Sadat pressured Saudi Arabia’s King Faisal to strike against the United States (and therefore Israel) in a different way – by employing the ‘oil weapon’. Hence on 16 October 1973, Saudi Arabia and four other Arab states in the Persian Gulf announced a 70% increase in the posted price of oil; Iran in an act of Islamic solidarity joined them. During the ensuing days, Arab oil ministers, agreeing that United States should be punished for its pro-Israel stance, unanimously backed the idea of an oil embargo.

It was a classic game of international chess. President Nixon asked Congress for $2.2billion in aid to Israel. The next day, led by Saudi Arabia, Arab oil producers imposed a total embargo on oil shipments to the United States. At the time, few people perceived the cunning behind Washington’s move, or the fact that it was driven by a determination to shore up a weakened dollar.

The impact of the embargo was immense. The selling price of Saudi oil leaped to new records and by January 1974 it has soared to nearly seven times it price 4-years earlier. The media warned that the United States economy was on the verge of collapse. Long lines of cars formed at gas station across the nation, whilst economists expressed fears of the possibility of another 1929-themed depression.

As we know now that the corporatocracy played an active role in driving oil prices to these record highs. Although business and political leaders, including oil executives, feigned outrage, they were the puppet masters pulling the strings. President Nixon and his advisors realized that the $2.2.billion aid package to Israel would force the Arabs into taking drastic actions. By supporting Israel, the White House engineered a situation that generated what was the craftiest and most significant economic hit man deal of the 20th century.

The US Treasury Department contacted corporatocracy henchmen and formulate a 2 fold strategy whereby (1) is to ensure that OPEC would funnel the billions of dollars the United States spent on oil back to the US companies; and (2) to establish a new ‘oil standard’ that would replace the former ‘gold standard’. The key to any such plan and strategy to work will be to get Saudi Arabia on your side because it possessed more oil than any other country, it controlled OPEC; the Saudi ‘royal’ family was corrupt and highly vulnerable. Like other ‘kings’ in the Middle East, the Sauds understood the politics of colonialism. Royalty had been bestowed on the House of Saud by the British.

Saudi Arabia were arm twisted to agree on ‘3 important conditions’ (1) invest a large portion of its petrodollars in US government securities; (2) allow the US Treasury Department to use the trillions of dollars in interest from these securities to hire US corporations (e.g. Aramco) to westernize Saudi Arabia; (3) maintain the price of oil within limits acceptable to the corporatocracy. For its part, the US government promised to keep the Saud family in power.

However, there was an additional agreement, one that made few headlines but was crucial to the corporatocracy’s aim to maintain the greenback as the standard global currency. Saudi Arabia committed to trading oil exclusively in US dollars. With the scratch of a pen, the dollar’s sovereignty was reestablished. Oil replaced gold as the measure of a currency’s value.

A side benefit of the above allowed Washington to continue imposing a ‘hidden tax’ on every foreign creditor. Because the dollar reigned supreme, we bought goods and services on credit. By the time they used that credit to purchase oil (or something else) from our companies, the value of their funds had diminished, due to inflation, the difference between these amounts was cash-in-the-pocket for the corporatocracy- a tax without the need for tax collectors.