But wait! There's more....
The fundamental assumption in my previous post is
the protection of the hegemonic role of the dollar, which translates to the financial interests of the US. Contra the Rumsfeld-Wolfowitz group,
there is no immediate danger to the military stature of the US whatsoever.
Expanding on the terminology a bit: ideological hegemony is where the
dominant class endeavors to maintain political power by controlling public opinion that results in popular consensus. The dominant class imposes its worldview through religion, education and popular culture thoroughly that it becomes common sense. The hegemony of the ruling class is nearly omnipresent that it is virtually invisible, unperceivable.
The United States Empire is a brand new kind of animal, far different from the previous imperial empires of lore, since its might is predicated by
economics, not military. The US is foremost a financial and economic empire. This is substantiated by the fact that since the end of WWII in 1945, the US dollar has been the reserve currency that denominates loans, as well as serves as the 'oil currency.' All the US military superiority requires is how fast Greenspan can print as many dollars as needed.
However, since 2000, the threats to the dollar are the following tidbits:
- By mid-2001, the dollar was at its cyclical strongest at 0.84 per Euro. This did not last long, for the deterioration was rather quick that by late 2003, the rate went up to 1.30 per. The market suddenly developed happy feet and countries like Venezuela, Iran, Russia and Taiwan began to rock the boat by moving out of the dollar. Rich Arab sheiks dumped US stocks during july/august 2002 to October 2002. Saddam also transferred Iraqi reserves across-the-board. The US could not, nor would, simply tolerate this.
- OPEC oil exports of 30 million bbls per day translates to 380 billion per year interest free loan for the US that finances its deficits. In order to import its oil requirement, the US would require to earn approximately $160 billion per year (Euro or gold).
Ergo, these financial concerns are far more important than the military reasons, since military superiority would vanish abruptly if those who held 6 to 7 trillion of US liabilities sold out. Which leads to the supposition that the invasion of Iraq was done in order to protect the dollar and the US deficits. Iraq is located conveniently at where the major interests of the US lay, and Iran and KSA are right over there. Jalamdhara mentioned Japan, themselves sitting on 1.3 trillion of US liabilities. Well they are in the same boat due to their need of oil from the Middle East. The US's invasion of Iraq was chiefly due to defending its financial empire.
The US attempted to maintain its power through ideology and politics. However, since that relies on the goodwill and the respect of the world population these means were no longer an option. Since the economic strength relies less on popular good will it may be maintained by bolstering the dollar and financial markets by gaining a greater control of the oil markets. Once the oil supplies run low, the control will become even more crucial.
Upon further research there is substantial evidence supporting the profit incentive for the switch from the dollar to the Euro.
Link to chart
in this chart, the price of the Euro (or subsumed European currencies) is recorded from 1970 till the present. As the chart shows, the Euro has been on a steady upward climb versus the dollar within 16 year wave movements. The euro has peaked (or the dollar has bottomed) on the 11th/12th year of the wave, which makes the highs higher, and the lows, higher.
The low point of the Euro or the high point of the dollar in 2001 at .84 US cents is foreboding, since the slope of the Euro climb is now escalating, and the dollar's value continues to decline. If the trends hold, circa 2010 one Euro will be approximately worth 2.00 to 2.50 dollars.
The reasons why countries may not switch dollars is not strictly limited to economics:
- potential repercussions from the US in the political, financial or military aspect.
- an injury to the dollar will harm the US economic partners as well
- China, HK, Korea and Japan desire to keep the dollar stable with regards to their currencies. Their interests are at stake as well.
However, none of these reasons will be sufficient to prevent the dollar from collapsing, since some purport to blame the US, in particular their monetary, trade and other economic policies within the past 30 years.
