Smoke and mirrors

I don't understand much about finances. My government and my creditors are happy enough with that. What I think I do understand though, is that money is a symbol of a bizarre illusion that somewhere along the line people agreed to use, and no longer has any basis in reality. It's an idea that is manipulated by a few people, and the rest of us agree to play along. It's "Monopoly" money. We have a certain amount of this symbolism floating through our lives, and it has no basis in anything substantial (physical, real).

And I think I understand a little why the rest of the world doesn't just pull out of dealing with us (aside from the nuclear annihilation thing). Because, through a history of successfully manipulating the illusion, the dollar controllers have seen to it that if we (they, actually) crash, everybody crashes. We've managed to embed the illusory petrodollar securely into the whole world's economy. And now everybody's trapped in the same net.

There is no longer anything tangible behind the Federal Reserve Note -- no links to gold or silver since 1971 -- only the full faith and "credit" of the United States of America.

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Now that's scary.

Money supply is defined in terms of "M’s." The M1 refers to the printed currency and all deposits in checking accounts (demand deposits), and unredeemed/outstanding travelers checks. The M2 picks up the M1 components plus all time-related deposits -- savings deposits, small CD’s and non-institutional money market funds. The M3 picks up the M2 components plus all large time deposits, institutional money-market funds, short-term repurchase agreements, along with eurodollar holdings.

In January 2001, the M3 stood at $7,249,900,000,000; at the end of June 2004 the M3 stood at $9,283,700,000,000 ... by printing currency, loosening credit, and "buying" government securities, the Fed has "created" $2,033,800,000,000 additional dollars for Uncle $ugar -- in three and a half years!

This doesn’t mean that Americans (or American businesses) have that much more money in their mattresses, bank accounts, or billfolds. The bulk of that whopping increase was added to outstanding reserve currencies. A reserve currency is one that is held by other governments and institutions as part of their foreign exchange reserves. They’ve accumulated that much because this nation buys so many more goods/products/services than we sell; and consumes so much more capital than we generate -- an infusion of one and one half billion dollars a day is presently required.

...The trillions of petrodollars (US$ earned from the sale of oil) give oil producing nations the ability to do serious shopping in these United States -- stocks, bonds, real estate, corporations, partnerships, government securities, etc.

We don't produce much in the way of goods for them to buy, but they can buy up our capital.

And in case you have forgotten....here's the real reason Saddam was a threat to the United States:

The US$ is the "official" currency of OPEC. If you are a nation who needs OPEC oil, those purchases are priced/denominated in dollars. You are forced to pay in dollars, or in your currency’s spot dollar valuation at the closing. Think of this as a US$ monopoly within the OPEC oil cartel -- hence, more and more dollars accumulate in the oil producing nations’ treasuries.

In November 2000, Saddam Hussein broke that US$ monopoly by denominating Iraqi oil pricing/sales in Euros. Saddam was even lobbying other OPEC members to do likewise.

I've got some links on my webpage (Smoking Gun) to more articles explaining this unspoken reason for invading Iraq. This one in particular is quite detailed: Revisited - The Real Reasons for the Upcoming War With Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth

Think about it; if the rest of the world could ever disentangle itself from dollars and trade in euros, if petroleum trade were handled in euros, where would we be? Just another reason that a strong European Union is not in the economic interests of America. Perhaps that's why the Neocons were so eager to press a divide between "Old Europe" and "New Europe", eh?

....but hey, do what you want....you will anyway.