An interesting conversation happened between an American friend of mine and myself. We started to talk about the dominance of the American Dollar in foreign markets and the hegemony that exists. With news that the Russians may start excepting the Euro as their new "oil" dollar and the fact that Iran has stated publicly that it will do so as well has caused fear to start rippling through the American banks, Investors, Corporations, and of course the Government. With American debt and spending so high, the weak dollar, and lack of leadership it is a fear that any informed American should take seriously.
Now my question is how will this affect Canada, and our finances. As I am not an Economist or really have any financial background I was wondering what this would mean for our economy. Some say that our dollar is growing in strength and that we will be fine. If the American dollar falls below ours, we will be even better off. So, maybe Canada should consider using the Euro as our "oil" dollar as well. I'm all for ending the dominance of the American dollar and in so doing weakening the power they wield over the rest of the world.
I asked my friend one time what he was most fearful of being an American. He answered, "At this point everything scares me. I can't get away from the media and their doomsaying, I can't get away from feeling that even though I'm far removed from the cities that our small town will be attacked. It's better to ask me what I'm not afraid of, that would be a much smaller list."
I thought to myself....How sad is that really. Here are some great articles on the American dollar hegemony.
THE INTERNATIONAL FORECASTER editor Bob Chapman writes: In a move that would have massive repercussions in the global balance of power, last week Russian President Vladimir Putin said Russia could switch its trade in oil from US dollars to euros.
This news has not appeared anywhere in the western media.
Mind you, the comments were made at a joint news conference with German Chancellor Gerhard Schroeder in Yekaterinburg, where the two leaders conducted two-day talks.
We believe this is the beginning of a move by European elitists to replace the US dollar as the world's reserve currency.
A Russian move in this direction would boost the euros gradually growing share of global currency reserves and could prove to be catastrophic for the US ... it would end the US license to do as it pleases throughout the world.
http://forums.canadiancontent.net/international-politics/34891-us-dollar-hedgemony.html
The End of Dollar Hegemony
Before the U.S. House of Representatives 02/15/06
By Ron Paul
02/16/06 "ICH" -- -- A hundred years ago it was called “dollar diplomacy.” After World War II, and especially after the fall of the Soviet Union in 1989, that policy evolved into “dollar hegemony.” But after all these many years of great success, our dollar dominance is coming to an end.
It has been said, rightly, that he who holds the gold makes the rules. In earlier times it was readily accepted that fair and honest trade required an exchange for something of real value.
First it was simply barter of goods. Then it was discovered that gold held a universal attraction, and was a convenient substitute for more cumbersome barter transactions. Not only did gold facilitate exchange of goods and services, it served as a store of value for those who wanted to save for a rainy day.
Though money developed naturally in the marketplace, as governments grew in power they assumed monopoly control over money. Sometimes governments succeeded in guaranteeing the quality and purity of gold, but in time governments learned to outspend their revenues. New or higher taxes always incurred the disapproval of the people, so it wasn’t long before Kings and Caesars learned how to inflate their currencies by reducing the amount of gold in each coin-- always hoping their subjects wouldn’t discover the fraud. But the people always did, and they strenuously objected.
This helped pressure leaders to seek more gold by conquering other nations. The people became accustomed to living beyond their means, and enjoyed the circuses and bread. Financing extravagances by conquering foreign lands seemed a logical alternative to working harder and producing more. Besides, conquering nations not only brought home gold, they brought home slaves as well. Taxing the people in conquered territories also provided an incentive to build empires. This system of government worked well for a while, but the moral decline of the people led to an unwillingness to produce for themselves. There was a limit to the number of countries that could be sacked for their wealth, and this always brought empires to an end. When gold no longer could be obtained, their military might crumbled. In those days those who held the gold truly wrote the rules and lived well.
That general rule has held fast throughout the ages. When gold was used, and the rules protected honest commerce, productive nations thrived. Whenever wealthy nations-- those with powerful armies and gold-- strived only for empire and easy fortunes to support welfare at home, those nations failed.
Today the principles are the same, but the process is quite different. Gold no longer is the currency of the realm; paper is. The truth now is: “He who prints the money makes the rules”-- at least for the time being. Although gold is not used, the goals are the same: compel foreign countries to produce and subsidize the country with military superiority and control over the monetary printing presses.
Since printing paper money is nothing short of counterfeiting, the issuer of the international currency must always be the country with the military might to guarantee control over the system. This magnificent scheme seems the perfect system for obtaining perpetual wealth for the country that issues the de facto world currency. The one problem, however, is that such a system destroys the character of the counterfeiting nation’s people-- just as was the case when gold was the currency and it was obtained by conquering other nations. And this destroys the incentive to save and produce, while encouraging debt and runaway welfare.
The pressure at home to inflate the currency comes from the corporate welfare recipients, as well as those who demand handouts as compensation for their needs and perceived injuries by others. In both cases personal responsibility for one’s actions is rejected.
When paper money is rejected, or when gold runs out, wealth and political stability are lost. The country then must go from living beyond its means to living beneath its means, until the economic and political systems adjust to the new rules-- rules no longer written by those who ran the now defunct printing press.
http://www.informationclearinghouse.info/article11946.htm
Some further information on the subject:
http://www.informationclearinghouse.info/article12346.htm
http://www.informationclearinghouse.info/article8411.htm
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