by John Wilder
“Lawrence, Lawrence of Arabia. He was an English Guy. He came to fight the Turkish.” – The Hollywood Knights
I asked for a book on oil, and the librarian suggested the non-friction section. (you’ll be able to figure out which are my memes in this post)
This has been a very consequential week in American history, and though I see the seeds of (hopefully peaceful) revolt that will eventually end in a restoration, the other seeds I see this week show that rough times are up ahead. I’ll discuss Trump in conjunction with Monday’s upcoming Civil War 2.0 Weather Report, but today I’ll focus on a much more momentous development: the Collapse of the Dollar Empire.
This week several major moves happened, all of which are negative for the United States. Heck, someone did a meme of this – I’d quote them, but I just found this info snippet without attribution:
If there was a children’s book of Joe Biden’s Very Bad Terrible No Good Week, well, this would be it, but knowing Joe it would have to be a scratch and sniff.
The United States has had several things going for it in the Post World War II era:
- Lots of nuclear weapons,
- A monopoly on PEZ® dispenser licensing in the world’s biggest PEZ™ market,
- The premier military force in the world,
- The premier economy in the world, and,
- The reserve currency of the world.
The first one is self-explanatory. We even used that threat successfully several times, especially when Kissinger convinced the Soviets (with Nixon’s permission) that Nixon was unstable and often flew into rages and just might decide that he’d trade Moscow for the East Coast. To paraphrase Teddy Roosevelt, the idea is to “act insane and have a massive nuclear arsenal”, or, as it is also known, “my ex-wife’s divorce strategy”.
The second one is just a reflection of the cultural dominance that the United States had. There were McDonald’s® restaurants calorie dispensing units around the world, but the most prominent foreign restaurant most Americans know is the International House of Pancakes®, which I assume is from Bulgaria or some place. Plus no one else could make Elmer Fudd™ PEZ™ dispensers.
They also don’t like tank tops.
The United States also had the premier military in the world. Period. We spent trillions of dollars emulating the successful bits of the Wehrmacht, so we were totally ready to fight World War II part II, if everyone agreed. Only one country wanted to play (Iraq) so we showed them what we could do if an enemy gave us six months to prepare along with the previously pre-staged equipment in Saudi Arabia. Not content with that L, they went for a rematch.
We also built the best economy in the world. Sure, it had ups and downs, and American cars manufacturers were stunned by Japanese quality in the 1970s, but we really did catch up, and by the 1990s were producing stuff that didn’t suck. We led in technological and information systems. By many measures, though, we peaked in 1973, and then the decline started. I might add that was around the time the Hart Cellar Immigration and Nationality Act of 1965 started being felt.
Huh. Just a coincidence, I’m sure.
They hated Trump, yet the lines didn’t form up to head south . . .
More potent than nuclear weapons was the economic policy of the United States – it was called dollar diplomacy. Since the Soviet Union’s idea of diplomacy was sending burly Russian women to show foreigners how to use diesel tractor made in Tractor Collective Factory 231 that had all the charm of a T-34 tank and all the reliability of something made by workers that considered a hammer a precision instrument, who were fueled on vodka and cabbage. Obviously, a foreign head of state could choose those cool tractors that weighed in at 34 tons (45 kiloliters). That presented a problem. In no country that I know (outside of the Soviet Union) could you trade a behemoth tractor that could double as a tank for hot chicks and booze.
Foreign leaders therefore adopted the “take the Yankee money” attitude, because mistresses need more than what the Soviet tractor lubrication manual could provide.
The really weird and cool side effect of this dollar dominance is we could just print as many of these things as we wanted, send them overseas, and people would send us stuff. Heck, that was too much work, so we invented a computer payment system so that we could pretend we printed dollars, send people a receipt, and they’d send us booze, cars, compact disc players, and, well, anything. I hear cocaine was popular in the 1980s.
I’m no rube. I saw Scarface.
I was disappointed the first time I saw Scarface – he didn’t really know anything about scarves.
But there was one little, tiny thing that made the dollar so prominent. Oil.
That brings us to Saudi Arabia’s King Faisal. He got along okay with the West, hated commies, and tried to modernize (somewhat) Saudi Arabia. Faisal also led the Oil Embargo of 1973 and 1974 (related to U.S. support of Israel during the 1973 Arab-Israeli War). This generated a lot of money for the Saudis as well as economic chaos in the West.
Oddly, Saudi king Faisal was, um, ventilated by his American-educated nephew in 1975. And the new Saudi King agreed to buy and sell oil only in dollars.
Huh. Surely those things weren’t connected?
Likewise, through the 1980s, the Saudis sold lots and lots of oil cheaply at the request of Reagan to bankrupt the Soviet Union, make the dollar triumphant, and leave the United States as the sole superpower.
If Ice Cube and Snoop Dogg had a kid, would it be called Slush Puppy?
One major reason the dollar was the reserve currency of the world is that it was the only currency that oil was bought and sold in. It became the de facto settlement currency because of that and the highly developed financial systems that made the transfer of billions of dollars effortless and easy.
That’s the history lesson.
In 2017, one of Trump’s first official visits was to Saudi Arabia. They even had that weird moment where they put their hands on a glowing glow to power up some sort of Saudi CIA that would help fight terrorism. Relations were good.
In two years, Biden has conducted a stunning array of foreign policy missteps that has unwound all of the work done since 1973. One of the powers of the dollar as a weapon is that if you use it, maybe it isn’t so important, and if people feel really threatened?
I wonder if we’ll start calling our sanctions “Special Financial Operations”?
They’ll create a system where it won’t hurt them. Russia’s a case in point. Regardless of how their military is doing (I don’t trust either side to analyze this one) their economy really hasn’t been hurt in this conflict. It was hurt in 2014, but they planned for the disruption, and from the reports I’ve recently seen, they’re doing fine. For Russians, which wasn’t much to start with.
The point that Biden missed (and that your humble correspondent picked up on immediately) is that Russia doesn’t need dollars since they make their own stuff, with the exception of tracksuits, iPhones®, and porn. They can figure out how to make new Vodka-Pepsi® or Vodka-Starbucks™, but the world still needs their grain, fertilizer, oil, and natural gas.
Biden has done the near impossible in a little over two years as Resident of the White House.
- He’s pushed China closer to Russia.
- He’s pushed Saudi Arabia closer to Iran.
- He’s created a situation where large-scale trades are going to be conducted in currency other than the dollar on a regular basis.
- He’s drawn the Strategic Petroleum Reserve down levels not seen since 1984.
- He’s working on maximizing inflation while spending everything possible.
In Saudi Arabia, all the bike thieves say, “Look, Ma, no hands!”
But Joe has shown that a previous statement by Barack Obama to be correct:
“Don’t underestimate Joe’s ability to fuck things up.”
And he’s got 581 more days to the election. And we’ve got 656 days until the next inauguration.
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