Newt Gingrich Threatens WW3
December 29, 2006 11:43am CST
Newt Gingrich Threatens WW3 The US has dominated the globe since the end of WW2. It was during the two world wars that the US watched as other nations destroyed one another. Each time, the US was untouched by the war and arrived late anyhow. It was this which led to the downfall of the UK as an empire when it found it couldn't fight a war and hold onto its empire. The US, knows this and has never taken on a major military power and has even been beaten by very small states with few armaments. Following WW2, the US imposed dollar hegemony. At the same time, European nations put into plan the common market which led to the Eurozone and its single currency. The UK was fooled into this because its main trading bloc was the EU not the US so it signed up to the common market. The US rolled out the dollar during WW2 using the lend-lease programme to indebt other nations. They then had to earn dollars to pay off the loans. This was then followed by the Marshall Plan which loaned out more dollars to Europe and Asia. To buy exports from the US (the only major manufacturing region not devastated by war), these borrowers had to spend the money in the US. Part of 1944 Bretton Woods conference created the World (development) Bank to issue such loans. After the 1973 oil crisis, oil sold by OPEC and most notably the US imposed Saudi Arabian dictatorship, was denominated in dollars. Other nations importing oil had to acquire dollars and so also denominated their exports in dollars to earn them. The US had no need to earn dollars as it could print them. After the Nixon gold default in 1971, interest rates could then rise dramatically; over 20% in 1979. This resulted in debtor nations taking out new dollar loans just to pay the interest on their old ones. Some nations have paid off their original capital several times over and are still in debt. As with the Marshall Plan, loans from the IMF or WB debtors are forced to spend the money in the US. Often such loans would be offered only if US companies were used and the borrowing nation privatised their national industries so that US companies could acquire their business. Since the gold default, there has been a struggle by the US to maintain dollar credibility. As well as the high rates in 1979, there was the first oil crisis in 1973, the second in 1979 when gold soon rocketed to its all time high. Now the US dollar hegemony is under stress again. Oil exporters are rejecting the dollar. Russia, UK, Indonesia, Argentina and Brazil are all paying back their debts (probably whilst interest rates are low enough for them to pay back the capital as well as the interest). "Axis of Evil" states reject the dollar and "Outpost of Tyranny" states use barter agreements. All of these changes result in a reduced demand for dollars. Newt Gingrich has threatened World War 3 in order to defend the US's "right" to own anything that is denominated in dollars. The threat has some credibility too. Could it be that the US has not started a world war earlier because it was being kept acquiescent by other nations accepting dollars? Surely a nation of only 300m, 5% of the world total, would not be able to enjoy the standard of living which is reflected in a third of global GDP (not that the Gini Coefficient in the US is anything to boast about). The US just might be prepared to start WW3 and risk its own destruction in order to keep the scam going.