 |
PM |  | |
Quote | | |
Reply | | |
Full Topic | |
| Joined: | Mon Nov 21st, 2005 |
| Location: | California USA |
| Posts: | 6399 |
| Status: |
Offline
|
| Mana: |    |
However, the U.S. printed more dollars for which there was no gold backing. But the world was content to accept those dollars for more than 25 years with little question--until the French and others in the late 1960s demanded it fulfill its promise to pay one ounce of gold for each $35 they delivered to the U.S. Treasury. This resulted in a huge gold drain that brought an end to a very poorly devised pseudo-gold standard. On August 15, 1971, Nixon closed the gold window and refused to pay out any of the remaining 280 million ounces of gold; but not without devising a new system for the dollar hegemony to spread.
An agreement was struck with OPEC to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence "backed" the dollar with oil. In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement gave the dollar artificial strength, with tremendous financial benefits for the United States. In November 2000 Saddam Hussein demanded Euros for his oil. It was his arrogance that was a threat -- to the dollar; his lack of any military might was never a threat. At the first cabinet meeting with the new administration in 2001, as reported by Treasury Secretary Paul O'Neill, the major topic was how to get rid of Saddam Hussein