Ending the dollar's tyranny

[Mr_Jefferson_24]

By Mike Whitney
Online Journal Contributing Writer

http://onlinejournal.com/artman/publish/article_1226.shtml

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The dollar’s strength however does not come from its comparative value to other currencies, but from its widespread use as the world’s reserve currency. As the reserve currency, the dollar defies the fundamental rules for determining “real value,” that is, the relationship between the nation’s credits and debits and the size and strength of its economy. Rather, the dollar’s extensive use is the result of America’s economic dominance since the end of the World War 2, the profitability of its markets, and its stranglehold on the oil trade.

If the dollar’s value were simply determined according to America’s national debt, the faltering dollar would sink like a stone. As it stands, foreign countries are still willing to take checks (dollars) from a nation that is drowning in $8.3 trillion of red ink.

Traditionally, American leaders have understood the great advantages of controlling the world’s reserve currency. It allows the Federal Reserve to create money out of thin air and pass it off to foreign countries for their valuable resources and manufactured goods. As one critic noted, “It’s like having a mint in your backyard.”

The system, however, has been thoroughly abused by the Bush administration which has borrowed trillions from the treasury for lavish tax cuts, “no bid” contracts, and endless wars. With a trade deficit currently running at $800 billion per year which is 6.4 percent of GDP, most of these expenses are being financed by countries in the developing world. The trade deficit with China alone was nearly $200 billion last year, which means that China unwittingly paid for two years of the war in Iraq!...