President of Iran Mahmoud Ahmadinehad recently used the following expression about the American currency dollar at the meeting with the oil producers in Saudi Arabia: “A worthless piece of paper”.
The American dollar has since the last global war (WW2) been substantial overestimated, because USA made an agreement with Saudi Arabia on oil extraction and on foreign and security policy on way home from the Jalta Conference 4-11 February 1945.
It developed further on and petro dollar kept its rate of exchange at a level higher than corresponding to USA’s ability to compete. The dollar was simply kept up, because an enormous amount of monetary units from the oil trade remained abroad and did not returned to USA to demand goods. Dollars was demanded everywhere after WW2.
This phenomenon has the American government aimed to reverse to get closer to its ability to compete in a globalizing world since 2000. In addition Iran was one of the first oil countries that replaced its oil trade to the European compulsory Euro in the Euro-Zone.
A lot of rumours are told – also in Denmark. On the anti-war front it is often reported that USA
is close to bankruptcy. Let me express it in this way: This rumour does distinctly not build on any insight at all. The war expenditures – that is mentioned in this connection – are mostly financed by government bonds. A substantial amount of those has been sold to among others China. This is a kind of safety net, ‘where the believers had hoped they had found a dead dog burried’. It’s just about the time to remember ‘Funny Ali’.
The war of interest-rates that actually has been fought across the Atlantic – as usual I am tempted to remark – has among other things the effect that EU with a strong oil trading currency has severe difficulties with getting the real economy of EU going toward a popular succes. They chose what we have called New-Merkantilism instead of making order on the home front. ‘Naturally it is quite different in Demark, as you might imagine or perhaps heard’. Anyhow we have explained earlier why the Euro is not a protection against international competition, and why the currency rate and speculation do not secure any dynamic capital creation that is the precondition for every responsible society in development, rather on the contrary.
That a new alliance between the Arabic countries and EU – the Mediterranean Process – is emerging might be overlooked by a few ‘weak-sighted’, even though the efforts has been held semi-secrete by the chosen ones and the European Elite. That is perhaps the reason why Iran uses this rhetoric. In addition there is still a lot of sanctions intact against Iran, and a continuing international claim of an effective control with its atomic program.
19 November 2007
J. E. Vig, M. sc. (Economics)
Denmark
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A new international monetary system shall be needed
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