10: The Petropocalypse

This is Chapter Ten of my book, How to Dismantle an Empire. It concludes the third section on global economics called World on FIRE, which is the Michael Hudson acronym for the Finance, Insurance and Real Estate sector that’s replaced goods and services with merely making money from money.

I’ve read the other two chapters in this section previously, 08: Greece Lightning and 09: Libya: Swept Away by the Currency. I’ll include all three in the Section Three summary to come out next.

There are things of which I’m not as certain as when I researched them between 2012 and 2019, like oil reserves, Germany, the world wars, and the impact of fossil fuels on the planet. However, if I changed these, it would lessen the impact of the places where I was prescient—the BRICS, Iran, new monetary exchanges, oil bourse alternatives, and sovereign wealth fund petrodactyls preying on our towns. So, in the end, I chose to leave everything as it was, knowing that the conversation continues as the psyops unfold.

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Chapter Ten: The Petropocalypse

The only reason the dollar is high—
it’s a petro dollar, right? It’s been driven 
by the global demand for oil and gas 
to be sourced in Western Canada.
So if I had my preferences, as to 
whether we have a rapidly growing 
oil and gas sector in the west 
or a lower dollar benefitting Ontario, 
I’ll tell you where I’d stand: 
With the lower dollar.

–ONTARIO PREMIER DALTON MCGUINTY, 2012

Poverty is not wholly a personal failure.
It also represents the failure 
of an economic system. And the remedy
is not wholly one of charity,
but of political and economic action.
Poverty is a reflection also 
on those who are not poor.

—BROOKS ATKINSON

We are on the brink of losing 
our democracy for the sake 
of keeping our empire. 
Once a nation starts down that path, 
the dynamics that apply to all empires 
come into play—isolation, overstretch, 
the uniting of local and global forces 
opposed to imperialism, 
and in the end, bankruptcy . . . .
The American attempt to combine 
domestic democracy with such 
tyrannical control over foreigners is 
hopelessly contradictory and hypocritical. 
A country can be democratic or 
it can be imperialistic, but it cannot be both.

—CHALMERS JOHNSON

The dollar, the pound, the euro, and the franc are the alpha pack of global currencies. Of their home countries—the United States, England, Germany, and France—all but Germany are permanent members (P5) of the United Nations Security Council, formed from the victors of World War Two. Any one of the three can veto a UN Resolution no matter how much support it has from the Assembly of nearly two hundred countries. The P5 top the list in global military spending and, with Germany, are the six leading arms exporters.

The World Bank and International Monetary Fund (IMF) were established at the same time as the UN, with NATO—the North Atlantic Treaty Organization—following soon after. Together the US, the UK, France, and Germany are only 7.5% of the world’s population, yet through these financial and military institutions they write the rules for the entire world’s economy. Meanwhile UN “peacekeepers” and NATO-muscle back their monetary policies and trade sanctions.

The first two World Wars can be seen as struggles for dominance within the alpha pack, where the US dollar emerged to become top dog. But in the last decade, underdogs like Libya and Iran, and now the BRICS countries—Brazil, Russia, India, China, and South Africa—have tried to break away and start their own packs. Even the IMF itself attempted to go rogue. Let’s look at these, starting with the last.

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the sdr new deal

In early 2011 the President of the International Monetary Fund (IMF), Dominique Strauss-Kahn, gave a startling announcement. He introduced a plan to move away from the dollar as the world’s reserve currency and towards IMF Special Drawing Rights or SDRs. The SDR bonds would be backed by a basket of currencies, adding those of emerging markets and the BRIC nations to its current mix of the dollar, sterling, euro, and yen.

This would have reassured China, which now holds much of its $2.85 trillion reserves in US Treasuries and has been particularly nervous about the dollar’s volatility. The SDR-denominated bonds would contribute to a more stable international monetary system and reduce central banks’ dependence on US Treasuries. And assets, such as gold and oil, could be priced in SDRs.

His action therefore threatened the dollar, the US treasury, and the petrodollar in a triple sweep. He was also about to save Ireland by cutting €30 billion of its unsecured debt by a third until Timothy Geithner, US Secretary of the Treasury and former President of the NY Federal Reserve, forcibly intervened. In addition the IMF chief was showing his soft underbelly in a 2010 speech entitled “Human Development and Wealth Distribution:”

.... Adam Smith—one of the founders of modern economics— recognized clearly that a poor distribution of wealth could undermine the free market system, noting that: ‘The disposition to admire, and almost to worship, the rich and the powerful and ... neglect persons of poor and mean condition . . . is the great and most universal cause of the corruption of our moral sentiments . . . ’ Inequality is corrosive . . . it rots societies from within . . . it illustrates and exacerbates the loss of social cohesion . . . the pathology of the age and the greatest threat to the health of any democracy.

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petrosex scandal

Sentiments like these made Strauss-Kahn the popular favorite to win against Sarkozy in the French elections. But in May of 2011 Strauss-Kahn had just boarded a plane from the US to France when officers clambered onto the flight to handcuff and arrest him. They hauled him in front of a judge who denied him bail and sent him to Riker’s Island. There the head of the world’s money system mingled with hardcore criminals while awaiting trial.

On international media networks, chambermaid Nafissatu Diallo, flanked by prestigious lawyers, announced the charges for rape. She had gone in to clean the $3000-a-night suite, she stated, when a towel clad Strauss-Kahn burst out of the bathroom, chased her down the hallway, maneuvered her back into the bathroom and forced her to perform fellatio, with which she complied because she was afraid of being fired.

Liberal media outlets celebrated this triumph of justice: finally, sexual assault was getting the gravity it deserved and a poor immigrant woman from Ghana could take down one of the most powerful men in the world. It sounded almost too good to be true. Which it was.

Although charges were later dropped due to Diallo’s lack of credibility, Strauss-Kahn lost the Presidential nomination to Francois Hollande and was forced to resign his job at the IMF. But perhaps Strauss-Kahn should be glad he ended up at Rikers and not at the Hague or in the walk-in freezer, like the African leaders who took on dollar hegemony. White privilege still counts for something.

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kish of death for the dollar

Iran too is making its own end-run on the dollar. In 2003 Iran started accepting euros from its EU and Asian customers and talking about a petroeuro. By 2004, China had signed a US $70-100 billion oil and gas deal with Iran, possibly as a way of dumping dollars and supporting its million-barrel a day habit. This protected Iran because, if the US used military force against them, it would threaten US trade and debt with China. Checkmate.

In 2006 a US-led UN resolution passed sanctions against investments in Iranian oil, gas, or petroleum products like gasoline. In response, through 2007, Iran asked all of their petroleum customers to pay in non-dollar denominations, with which their buyers had complied by the end of the year. The US then expanded the sanctions to include a freeze on the assets of several Iranian banks.

In 2008 Iran announced that it would launch their Kish Oil Bourse, or oil exchange board, between February 1st and 11th, which would accept a basket of currencies for petrochemical products. Unlike its dollar-denominated predecessors, where everything went through a central clearinghouse, it would operate on a peer-to-peer trading model using the internet. But just prior to the launch, between December 23rd and February 4th, five underwater internet cables were mysteriously cut, disrupting 75% of communications between the Middle East, Asia, and the rest of the world. Conspiracy theories were ridiculed by Wired magazine, who couldn’t imagine what possible motive anyone could have.

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a yen for renminbi

Since then US-led sanctions have added penalties to other countries for supplying Iran with refined petroleum products, like gasoline, in addition to the ban on investment. The lack of refining capabilities was seen as the most effective tourniquet for economic strangulation. Foreign banks, shipping firms, and corporations that did business with Iran were also blacklisted and barred from access to US financial firms.

Yet these sanctions have had mixed results, if not completely backfired. Undeterred, China has made major investments in new Iranian oil fields. Iran’s domestic manufacturers have now developed most of the needed equipment for oil extraction, including the technology for deepwater drilling.

Gasoline and jet fuel have also made major strides. Formerly, Iran had imported 41% of its gasoline due to the lack of refining capability but by 2010 it was producing over 80% of its own needs while consumer demand was burgeoning. As the Persian Gulf Star Refinery has come on line, it will produce 37 million liters a day, making up the remaining five million daily liters of domestic consumption.

In a 2017 article entitled “Persia at the Pump,” the lifting of sanctions was credited with enabling the import of materials to build the gas condensate refinery. By July of 2018, the director of Petro Gohar Farasahel Kish announced that the country was now self-sufficient in gasoline and would be able to export 20 million liters a day in 2019 when the refinery is expected to be complete.

Iran’s oil has had no shortage of international buyers even with the US sanctions. These include heavy-hitters like China, Russia, India, Greece, South Korea, and Japan. Despite the ban, Venezuela advanced $4 billion in joint projects with Iran, including a common bank. Currently, none of Iran’s 2.4 million barrels of oil per day is traded in petrodollars; instead they receive a combination of yen, yuan, renminbi, rupees, rubles, euros, and gold.

They’ve even initiated barter with China so that Iranian oil is exchanged directly for Chinese exports, getting around all intermediary fiat currencies. Free trade—now there’s a subversive concept!

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petrodollar tsunami

With challenges to dollar hegemony coming from the Middle East, Africa, and even leaders of the IMF itself, and with Latin America and Asia undaunted by threats from the United States, what are the stakes? What would happen if the world’s reserve currency switched away from dollars?

In a 2008 Financial Times article, Stephen Jen, Morgan Stanley’s Chief Currency Economist, described the effect of “a petrodollar tsunami.” At $100 per barrel, he explains, there are $104 trillion of proven oil reserves in the world, which is roughly equal to the value of all publicly-traded equities and bonds. This amount is transferred from oil consumers to producers at the rate of $2.1 trillion per year.

Jen states that oil producers could invest their profits in domestic infrastructure, but it would overwhelm their economies since oil profits are equal to their countries’ entire gross domestic product. It would also make them more dependent on foreign products and increase their cost of living, harking back to the Dutch disease.

However, as Stephen Jen points out, petrodollar windfalls will generally not be spent domestically but will be “deployed in the global financial market.” The vehicles in which they’re deployed are called Sovereign Wealth Funds, or SWFs, which are mostly made up of petrodollars located in tax havens around the world.

Instead of investing in government bonds, he predicts that the SWFs will increasingly favor global equities, which are shares in US or international corporations, because their profits can be triple those of crude oil, converting underground wealth in oil to overground wealth in financial assets. He also predicts that these funds will hold 25% in “emerging market currencies” instead of either dollars or euros. Translated, this means that oil-rich caliphates will own pieces of other countries’ economies that are exporting more than they’re importing—and will make sure they stay that way.

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weapons of trade terrorism

Venezuela is a case in point: during Hugo Chavez’s life, he reminded his Cabinet that their most important job was fostering local cooperatives so they could be self-sufficient and leave the oil in the ground. Soon after Chavez’s death, Vice-President Nicolás Maduro was forced to again devalue Venezuela’s currency because the influx of oil revenues had diluted its value for internal trade. This has left him vulnerable to coup attempts and a disgruntled consumer class.

Under President Trump and Vice-President Pence [in Trump’s first term], this vulnerability was slashed open with so-called economic sanctions, a full-frontal media attack, and a military invasion “justified” by Maduro’s rejection of humanitarian aid, a ruse that didn’t fool some international aid organizations, who refused to be complicit. The revenue of Venezuela’s national oil company, Citgo, was frozen in US banks. When Maduro tried to withdraw some of Venezuela’s gold from the Bank of England to trade for food imports, the US convinced them to hold it for their chosen coup leader, Guaido.

The term “economic sanctions” implies that an authority is correcting a violation through financial means, like cutting up the credit card of your teenager. In reality, however, it’s an act of trade terrorism, inflicting the violence of starvation, deprivation, and lack of essential medicines on an entire population to incite them to overthrow their own elected government.

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holding gold hostage

What could Maduro have done differently? A blog called The Saker asked economist Michael Hudson this question. Hudson replied:

I cannot think of anything that President Maduro can do that he is not doing. At best, he can seek foreign support—and demonstrate to the world the need for an alternative international financial and economic system.

He already has begun to do this by trying to withdraw Venezuela’s gold from the Bank of England and Federal Reserve. This is turning into “asymmetrical warfare,” threatening to de-sanctify the dollar standard in international finance. The refusal of England and the United States to grant an elected government control of its foreign assets demonstrates to the entire world that U.S. diplomats and courts alone can and will control foreign countries as an extension of U.S. nationalism.

The price of the U.S. economic attack on Venezuela is thus to fracture the global monetary system. Maduro’s defensive move is showing other countries the need to protect themselves from becoming “another Venezuela” by finding a new safe haven and paying agent for their gold, foreign exchange reserves and foreign debt financing, away from the dollar, sterling and euro areas.

Hudson also stresses the need for Maduro to develop Venezuelan agriculture with rural credit, seed advice, state marketing, and price support, much like the New Deal of the 1930’s. And he described the international finance model that would support this:

An alternative also is needed to the World Bank that would make loans in domestic currency, above all to subsidize investment in domestic food production so as to protect the economy against foreign food-sanctions—the equivalent of a military siege to force surrender by imposing famine conditions. This World Bank for Economic Acceleration would put the development of self-reliance for its members first, instead of promoting export competition while loading borrowers down with foreign debt that would make them prone to the kind of financial blackmail that Venezuela is experiencing. . . .

Two international principles are needed. First, no country should be obliged to pay foreign debt in a currency (such as the dollar or its satellites) whose banking system acts to prevent payment.

Second, no country should be obliged to pay foreign debt at the price of losing its domestic autonomy as a state: the right to determine its own foreign policy, to tax and to create its own money, and to be free of having to privatize its public assets to pay foreign creditors. Any such debt is a “bad loan” reflecting the creditor’s own irresponsibility or, even worse, pernicious asset grab in a foreclosure that was the whole point of the loan.

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a brave new world, ordered

Another Michael Hudson article entitled “Trump’s Brilliant Strategy to Dismember US Dollar Hegemony” elaborated on all the ways that this real estate grifter, as he called Trump, was unwittingly hastening the end of a US-centric world order. Nervous European countries had joined China and Russia in a shadow bank-transfer system that wouldn’t leave them vulnerable to US sanctions. The next step may be a new international bank with its own court to enforce the rights of nations to their own reserves.

Trump seemed unaware that international organizations were a cover for US dominance—through the veto power of the Security Council over the UN, the stonewalling of the COP climate summits, the primary funding of NATO intervention, and controlling shares of the IMF and World Bank that allow the US to withhold credit if nations “go native” and prioritize their own interests. Instead, he pulled out like these were corporate deals with a stinky bottom line, and he’s the first President with a nose for business.

His National Security Advisor, John Bolton, in an adolescent fit of pique, had declared the International Criminal Court “dead to us” for daring to investigate US torture and war crimes in Afghanistan. By declaring treaties null and slapping sanctions back on Iran and Cuba, Trump had made clear to countries like North Korea that the word of the US is as good as gold. . . that was held hostage in a London or US Treasury basement.

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nations in glass houses shouldn’t throw brics

Brazil, Russia, India, China, and South Africa, known as the BRICS countries, are particularly keen to disengage from the dollar. In February of 2015 the Indian Cabinet announced that they would approve the New Development Bank and the BRICS Contingent Reserve Arrangement to help fund infrastructure and sustainable development projects in member countries and other developing nations, providing “a powerful instrument for increasing . . . economic cooperation.”

The bank is headquartered in Shanghai with its president rotating between the founding nations, and vice-presidents from each of the other four. In 2016 they issued their first “green financial bond” to fund climate change solutions or adaptations. It should be noted that, unless each country creates its own sovereign credit to put in the bank, these are still repaid with interest, extracting more than they put in. China’s domestic credit creation has allowed it to fund 10-year ecosystem regeneration projects, but also to be the export dragon guarding a mountain of dollars, at the expense of rural populations forced into factories.

By 2018 they received the global credit ratings to begin issuing financial products in the public and private sectors, and announced in 2019 that they would lend up to $40 billion to South Africa by 2022.

Together the BRICS nations account for 43% of the world’s population, cover more than a quarter of the globe, and have $4.4 trillion in combined foreign reserves. With interest rates near zero in the US, Japan, and Europe, already 20% of foreign direct investment is going to the BRICS. In The Hindu, Puja Mehra writes:

The TPP [TransPacific Partnership] is seen world-wide as the U.S.’s thinly-veiled attempt to carve out China, Brazil, India, and other emerging economies from global trade talks.

He urges that India should engage with the countries being excluded by US sanctions, such as Russia. Before the US plays hardball with Russia over Ukraine, reneges on deals with Iran, calls Venezuela a terrorist state, or throws the BRICS out of the TPP window, it should examine the fragility of its own glass house.

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worldwide asset grab

Decades of petrodollar hegemony have resulted in a surfeit of dollars floating around the world. More accurately, these dollars aren’t floating but have been taken out of circulation and concentrated in the hands of a very few people. These 7000 individuals worldwide, a generous estimate of those who write the rules by which the economy plays, are the global .0001% or one in a million.

The US has the fortune and misfortune of the domestic dollar being indistinguishable from the petrodollar. On the upside, petrodollar politics have enabled the international trade value of the dollar to be kept high even while the US runs a deficit. The US consumer therefore gets the benefit of cheaper foreign oil and mass-produced goods.

On the down side, petrodollars can readily buy up land and real estate in the US. Ownership of publicly traded corporations can be transferred to a small cartel of bankers and oil executives, assuming there are assets they don’t already own. Community water rights, public utilities, and services can be privatized. Even the rare US-made product could go elsewhere, in search of a more robust market.

If there are too many dollars in existence and no need for other countries to hold them, the value of the dollar could plummet suddenly, revealing the US’s dependence on imports. But the vast size of petrodollar holdings makes only the biggest targets worth the trouble. And unfortunately nature is the biggest target of all.

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milking mother nature

Antonio Tricarico is part of Re:Common, an Italian-based organization that challenges the financialization of nature. He explains why the scramble is on to monetize anything that can be pinned down:

The EU is badly affected by a crisis of capital accumulation. There is a massive amount of private wealth, and few sufficiently profitable assets to invest in ... so they’re creating new asset classes from which to extract more value.

One of the new places to invest is in the “ecosystem services market.” Ecosystem services is a fancy name for all the things that nature does for free—water filtration through root systems, dung burial by beetles, or carbon storage by forests, to name a few. In the late 1990s scientists methodically went through every natural process they could categorize and placed a value on it. Altogether they came up with $33 trillion as the wages due to mother nature, or twice the world’s GDP at the time. Then the EU got to work convincing society that it should pay for what it used to get for free. The Ecosystem Marketplace writes:

Once you really understand the problem, it is fairly easy to see where the solution lies—market forces must be realigned to invest in the production of both goods and services. If the global economy can be tweaked so that market forces reward investments in ecosystem services, a positive feedback loop will start in which increased investments in ecosystem services leads to increased production of ecosystem goods, eventually fueling both sustainable economic growth and ecological restoration.

This is closely aligned with the UN program REDD: Reduced Emissions from Deforestation and Degradation. A clever logo of an organization critical of REDD merges a forest with a barcode, symbolizing the commodification of nature.

guiding the invisible hand

Tricarico’s brief, “The Financial Enclosure of the Commons,” elaborates on the problem for capitalists:

Since the beginning of the past decade, after the ‘dotcom bubble’, financial capital has been seeking new asset classes in which to invest huge and growing private wealth. New key areas have thus emerged in which financialisation has started unfolding. These include natural resources (soft commodities such as coffee, corn, soya and fruit, and new commodities such as ‘carbon’) and public finance.

Concerning the latter, the financialisation approach is leading to a third wave of privatisation, with the first being the privatisation of public assets at a discounted value and the second the creation of public-private partnership (PPP) vehicles to help privatised companies finance new investments in infrastructure development. After the blatant failure of the PPP approach in many sectors, the third wave of privatisation is being conceived as the creation of a new financial system suited to capital markets.

Cliff DuRand puts this in global perspective in “NAFTA on Steroids: the TransPacific Partnership and Global Neoliberalism”:

As I said at the beginning, capitalism has needed a guiding hand from the state to protect it from its own self-destructive tendencies. And it has been popular struggles that have often compelled the state in that direction. But now that capitalism has become a global system, there is no state able to do that. In fact, the global governance structure being constructed by transnational capital is dedicated to the very neoliberal ideology that now threatens to be its nemesis. If we can stop that, not only can we save ourselves and the possibility for democratic politics, as ironic as it may be, we might even save capitalism from itself.

If DuRand is correct, the question for strategists is: do we want to?

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attack of the petrodactyls

Let’s look at how much money is at stake in controlling the future oil currency. At $100 a barrel for roughly $2 trillion per year, there are roughly 50 years of oil in the ground before they reach the $100 trillion of known reserves. Assuming, of course, that the planet lasts that long.

How much is $100 trillion? Imagine one billion dollars as a prehistoric flying reptile. Its twenty-foot wingspan is covered with ten million feathers of $100 bills. That’s just one billion dollars. One trillion dollars is a flock of one thousand of these billion-dollar petrodactyls. And $100 trillion is 100 flocks, each with 1000 billion-dollar petrodactyls gliding above the earth looking to swoop down on anything that moves, from which a few drops of blood can be extracted.

Each of the central banks of oil-buying countries now holds these “petrodactyls” in suspended animation, ready to send them across the sea in exchange for oil. Petrodactyls are the most valuable trade item on the planet: the oil-consuming nations all need them because the oil-producing nations all accept them and only them.

When the oil-producers get the petrodactyls, they send them back out to patrol for things of value. They snap up agricultural land in third-world countries. They can herd off a fledgling currency that’s trying to get started, propelling it higher and higher until, exhausted, it drops to smash on the rocks below. The keen-eyed financial observer might see flocks of petrodactyls along their migratory route—back to their US breeding ground to pick up weapons, then flying south to release them to predatory regimes. Petrodactyls are the shock behind the awe, the bullying power of the world. Without them, the US would be clawless and aweless. Or maybe just clawful and awful.

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the trojan petrodactyl

But what if oil traded in other currencies than the dollar? What if it bartered for goods without a currency at all? What would happen to the petrodactyls then? National banks would start releasing them into the wild, a few at a time, so as to not cause a panic. They would be hoping to trade them while they were still flying high, before they were weakened by too little prey. The bankers and oil barons, wary of these unwieldy, unstable birds, would be looking for a place they could land them. But more and more countries are refusing entry to the Trojan petrodactyl, aka the IMF-loan. Where will they go next?

As Bloomberg published,

Sovereign wealth funds [SWFs] from China to Azerbaijan, which pushed their real estate deal making to a record last year, are set to extend their buying spree as they seek alternatives to low-yielding bonds and volatile stocks. The funds made 38 property investments valued at almost $10 billion in 2012 ... Sovereign wealth funds, state-owned investment vehicles that manage their countries’ surpluses from exports such as commodities, have said they plan more purchases this year [2013], with the U.S. and Paris real estate markets among favorites.

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swf-boating the globe

Our resources, our real estate, and our infrastructure are all fair game for excess petrodollars looking for a lucrative place to land. The world’s biggest SWF in Norway spent over one petrodactyl on a Zurich office complex and now plans to “seek office complexes and malls in U.S. cities.” This means that US businesses will first need to pay rent to the richest people in the world before they can turn a profit.

Another $703 billion has fled the bond market and nabbed commercial real estate in London, Frankfurt, Paris, and Berlin. The bonds they were invested in were loans, mostly to governments and municipalities. This means that the money spent by governments is shrinking while corporate money (siphoned from consumer pockets) is being leaked out of nations in the form of tax-deductible business rents that go to international tax havens, a triple whammy to governments.

Singapore sent one petrodactyl to perch atop a glittering 48-story tower in San Francisco’s financial district—“the kind of trophy asset that every sovereign fund is looking for.” San Francisco office rates have already soared 27% in one quarter, and are set to rise another 8-12%. Major cities in the US and Europe are considered prime markets because they’re stable and high-income producing. By contrast, ten-year treasury yields were only 1.79% in 2012 compared to 4.6% office property yields in New York. It is, as they say, a no-brainer.

Petrodactyls: if oil-producers refuse ’em, oil-consumers unload ’em, and third-world nations shun ’em, there’s only one place that these overgrown chickens can come home to roost—the imperial countries that spawned the global currencies. The influx of one-time money will drive housing prices up but leave future generations at the mercy of corporate ownership. Future rents paid to foreign investors will drain the currency out of circulation, lowering income. The trade goods we’ve been able to access while producing nothing but dollars will go elsewhere. The extent to which we depend on invisible slavery, which is the elephant in the room, will be revealed.

Welcome to the brave new world of the petropocalypse.

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CHAPTER 10 EXERCISES

Using examples from the book, or from your own research, logic, and experience, comment on the following and what it means today:

Paradigm Shift #10

Only nations have the right to lend or spend their own money into existence, backed by the wealth of their land, properties, and infrastructures, and collected again in taxes to fund their domestic priorities.

To enable fair trade, a common repository—global bank—would need to hold the same value per person of each country’s currency. That country could decide how much they’d sell their currency for, which means the products of their labor, in the currency or labor of any other nation. If a country wanted to favor local trade, they’d price their currency higher if bought in another currency, allowing citizens to buy goods more cheaply than foreigners.

If a country needed to “borrow” money, it would price its currency temporarily lower if bought in other currencies. This would sell futures on the products of its labor, to be repaid with interest, i.e. more product.

A devalued currency, however, favors exports over domestic consumption and lowers the overall quality of life—widening the income gap between those who make products and those who make profits.

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Lexicon

Explain how the following definitions change the dialogue around social problems. What are examples to which the term might apply? Is there another word or phrase that better fits the concept? Is this concept used in discussion of the examples to which it applies? If not, how does this affect the potential solutions?

United Nations Security Council (UNSC): made up of five permanent members (P5) who were the victors in WWII—the United States, France, England, Russia, and China—who have the power to veto any Security Council Resolution, including admission of new members and candidates for Secretary-General. The other ten members are elected by region for two years terms. Only the Security Council can establish sanctions, send in “peacekeeping” forces, issue binding resolutions to UN states, or approve changes to the UN Charter. At the inception of the UN, other countries felt that the UNSC, and particularly the veto power, contradicted the concept of a democratic union. They were told that without the veto there would be no Charter.

North Atlantic Treaty Organization (NATO): consists of 29 members that together account for 70% of the world’s defense spending. It was brought about as a response to the Soviet Union but continued after the USSR disbanded. Although purportedly designed for mutual defense, the only time that an attack on domestic soil has been used to justify its military interventions was in response to 9-11. That ‘retaliatory attack’ was to a different country than the 9-11 ‘terrorists’ came from, even within the US media propaganda system.

Special Drawing Rights (SDR’s): a proposal of the International Monetary Fund (IMF) to use a basket of currencies for global exchange, including those of the BRICS countries and emerging economies, rather than one default currency like US Treasury bills.

BRICS nations: Brazil, Russia, India, China, South Africa. Together they account for 43% of the world’s population, cover a quarter of the globe, and own $4.4 trillion in foreign reserves.

Kish Oil Bourse: Iran’s peer-to-peer oil exchange bourse, accepting a basket of currencies, that was due to open in February 2008 before five underwater cables were cut, disrupting 75% of communications between the Middle East and the rest of the world.

fiat currency: fiat means “by order of the king” and refers to a unit of money whose value is higher than its intrinsic trade value, if made of metal, or has no intrinsic trade value in paper or digital form.

Sovereign Wealth Funds (SWF’s): state-owned investment vehicles that manage their countries’ surpluses from export commodities, resulting in petrodollars located in tax havens and invested in the global financial market, often in global equities and emerging market currencies.

trade terrorism: putting a country under siege by preventing imports from other countries or payments from exports. Used to inflict famine and deprivation on the civilian populations so they will rebel against their own government, saving the foreign military the trouble.

New Development Bank: established by the BRICS countries, it helps to fund infrastructure and sustainable development projects in member countries and other developing nations, increasing economic cooperation.

ecosystem services market: the commodification of natural processes such as filtration through root systems, dung burial by beetles, and carbon sequestration by forests, categorized and estimated at $33 trillion for everything nature does for free.

Reduced Emissions from Deforestation and Degradation (REDD and REDD+): A proposal introduced at the Conference of Parties in 2007 (COP-13) that “solves” the problem of carbon emissions by paying subsidies to governments and corporations for lowering their potential carbon impact related to destruction of forests. Can lead to evictions of indigenous communities, replacement of old-growth forests with industrial tree plantations, and payments to commercial logging operations. Was still under discussion at COP-23, with funding from either governments or private sources as “carbon credits” to balance out greater pollution elsewhere.

privatization: taking something out of public ownership and selling it to for-profit investors. It takes ownership away from the community of their own resources, infrastructure and services, extracting their labor to make the rich richer.

private-public partnerships (PPP’s): a joint venture between cash-strapped governments and investors that leaves the risk with the community and the profits with the wealth funds.

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Questions for Reflection and Discussion

How would you design the United Nations to be more equal? Could it be a more democratic structure, perhaps with one representative for each community of 10 to 15 million people? Would an International League of Mayors be a useful body to take action in the world, as some cities are doing on climate change? Should representation be limited or encouraged for the largest number possible?

How would you design an oil bourse? What would you use for the credit or currency in which the oil trades? Who has the ownership of the oil for sale and its profits: the corporation who mines it, the local government where it’s drilled, a country’s government, or the whole continent? Should there be a limit on how much trade credit a government can accumulate without distributing the trade benefit to the inhabitants? Should those most impacted by the drilling have veto power? Should distribution be contingent on matching efforts to reduce dependence on fossil fuels?

How could a “basket of currencies” be designed to foster internal production and protect against asset raids by petrodactyls? What laws could a country or continent adopt that would reduce transport risks? Should raw materials be exported and refined into products elsewhere? Should any product be exported with the same product imported? Should intracontinental consumers be given priority?

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Using the trojan horse of 'affordable housing,' 15-minute cities are really preparation for the Asian invasion—our cities have been hijacked for the Treasury debt to China. WEFfie YGL Gavin Newsom has mandated highrises on whole downtown blocks and every neighborhood. In Santa Cruz, 26 acres between downtown and the boardwalk are commandeered to fund a stadium no one wants. Here's the question we should be asking.

On Sputnik Radio's Faultlines, Jamarl Thomas asks, "Is Ukraine the Hegemon's Last Stand?" matching the title I'd already drafted. He cites that Putin has already surrounded the Donbass with 1700 Ukranian troops surrendering. His co-host Manila Chan quotes Rand Paul that the US needs to borrow from China the money to give Ukraine, and beg Saudi Arabia for the oil to give the EU. Meanwhile the Summit of the Americas is an embarrassment with Cuba, Venezuela and Nicaragua banned and others not bothering to attend. Caitlin Johnstone supplies stats on how many years of proven oil reserves are left: 1500+ for Venezuela, 300+ for Libya, 200+ for Iran and 11 for the US--which is better than Europe with none. I end with a strategy for what we want when this house of cards falls—microcurrencies that give us control over our properties and labor—and I imagine how that could look.

While we dance on the brink of nuclear war, NeoCons and ZioCons argue who we should provoke into annihilating the world. I look at geopolitics from Pepe Escobar, Fadi Lama, Chuck Baldwin, Cynthia Chung, Mike Renz and Oliver Boyd-Barrett.

What are the Russian terms for Ukranian peace? Could US economic sanctions on Russia backfire for the petrodollar? These are questions you won't hear discussed in either mainstream or liberal news. After I look at what Matt Taibbi & Caitlin Johnstone got right, I get the scoop on peace negotiations from Tom Ozimek of the Epoch Times, relayed through Robert Malone. Greg Palast reports on How Billionaires Picked Putin as 'Russia's Pinochet', and Pepe Escobar quotes Michael Hudson in Say Hello to Russian Gold & Chinese Petroyuan. Ends with socio-spiritual advice to enjoy the ride because we're about to enter the rapids.

Adds new info on Ukraine from Aaron Mate, the US Peace Council, Scott Ritter and Michael Hudson. Asks whether there were diplomatic options that Russia could have pursued but didn't. Examines Putin's strategy in having $650B of Russian gold in foreign banks subject to seizing and freezing. Was it a trap so he could repudiate the petrodollar? Has the US done him a favor by bankrupting the Russian oligarchs? What does this mean for Germany and France that they'll need to buy oil and gas in the petroruble? And how much trickle-down pain will there be when petroleum-based fertilizer factories shut down? Lastly, could this be a catalyst for taking back local economies and making them productive?

Is it a waste of time to talk about meaning and purpose with pandemics waning and Ukraine waxing? This episode applies ancient theological debates to capitalism. It looks at how leading geopolitical economist Michael Hudson views the Russia conflict along with U Chicago Professor John Mearsheimer, who Matt Taibbi says is quickly becoming infamous. Brings it back to why meaning matters.