History of US Dollar and it’s possible future, Video
February 17, 2014 · 0 Comments
By Nikolai Starikov, interview, Russian
Transcript of the Video, English
Nikolai Starikov is an economist, historian, and socio-political writer
Author of over 10 books:
Chaos and Revolution as The Dollar’s Weapons
Solution to The Riddle of The Russian Revolution
Nationalization of The Ruble as The Way to The Freedom of Russia
and more
Author of over 10 books:
Chaos and Revolution as The Dollar’s Weapons
Solution to The Riddle of The Russian Revolution
Nationalization of The Ruble as The Way to The Freedom of Russia
and more
Appeared as an expert in documentaries:
Parvus of the Revolution
The Storm of the Winter Palace. The Refutation.
Parvus of the Revolution
The Storm of the Winter Palace. The Refutation.
To understand the financial system of today we should go back in time and bring to memory the stages of its establishment. And here, interestingly, we see an apparent historical co-incidence – or not a co-incidence? In my opinion, it is not a co-incidence by any means. I mean that the stages of creation of today’s financial system mysteriously overlap with the two World Wars that happened in the first half of the XXth century.
In December of 1913 the Federal Reserve System (a private organization emitting the only reserve currency of the world – the American Dollar) was created. And practically immediately, in August of 1914, breaks out World War I. As a result of it, not simply several empires are destroyed, but several Gold-based currencies, several financial systems are destroyed. The American Dollar and the British Pound become the strongest world currencies as a result. That was the first stage of formation of the modern financial system.
In December of 1913 the Federal Reserve System (a private organization emitting the only reserve currency of the world – the American Dollar) was created. And practically immediately, in August of 1914, breaks out World War I. As a result of it, not simply several empires are destroyed, but several Gold-based currencies, several financial systems are destroyed. The American Dollar and the British Pound become the strongest world currencies as a result. That was the first stage of formation of the modern financial system.
The second stage was World War II. At the end of the WWII the dollar became what it had been until now. In 1944 in Bretton Woods, USA, was conducted a conference. The results of the war were quite clear at the time. The winners were building the post-war world. The Soviet Union’s delegation also took part in this conference. At the conference the decision about the American Dollar becoming the only world-wide currency was adopted.
What did this mean in reality? It meant that from that point on, all of the world-wide trade would be conducted in dollars exclusively. But that was not all. The American dollar would be the only currency that was based on gold. All other world’s money would tie into the dollar through the fluctuating courses of the countries’ national currencies. These agreements were designed to fix the dominance of the dollar and the dominance of the US economy.
But in 1945, when the war was over, the Soviet Union refused to ratify these agreements. It is precisely due to this position of Stalin, and not to some ideological differences, that the West put down the Iron Curtain. USSR refused to ratify the Bretton Woods agreement in December of 1945, and in March of 1946 Churchill went on the air with his famous Fulton speech. This is how the confrontation started. Please note, the confrontation was not initiated by Russia, it was not initiated by the Soviet Union. It wasn’t us who divided the world into the two camps, but the West. This was the second stage of how the modern financial system was getting established.
What did all this bring to? All of the world’s trade was conducted in dollars. A certain gold-base equivalent of the American dollar was fixed. But as time went by, Americans started to release dollars, let’s put it this way, in the quantities far exceeding the Gold Reserve of the United States. It was complicated to check what amount of dollars was being released.
In 1966 the President of France at the time Charles de Gaulle caused definite complications in the financial world, which denoted the third and final stage of modern financial system formation.Charles de Gaulle collected a large quantity of the US dollars France possessed at the time and asked the US to exchange them into gold at the pre-set rate. There was a problem: if all of the world’s holders of a dollar were to act the same way, the United States would not have enough gold for everyone, and the US economy would be in default. Charles de Gaulle was put under certain pressure, but he didn’t deviate; moreover, he left NATO and kicked out its military structures from the French territory. That’s why they moved closer, to Brussels, very near by. They were in Paris before that. France did exchange its dollars into gold. Germany and Japan did the same thing behind the curtains. The United States realized the process would be endless and – against its will – had to announce that beginning in 1973 the dollar has no gold content any more. Thus happened the “untying” of the dollar from any material value; the dollar became “the thing in itself”.
Now imagine: there is a country on the planet that can print the absolute treasure – the dollar – in any quantity. The printing of the treasure is not limited by anything; it is only tied down to the needs of this country. That’s what the economy of the modern world we live in is, in all its strangeness and absurdity.
A lot of time went by since 1973. Utilizing its monopoly on printing dollars, the United States cranked the printing press to its maximum power. The quantity of over-printed dollars is what the so-called “debt” of the United States is today. It grows astronomically fast and today’s equals to 14.5 trillion dollars, whereas only ten years ago the number was about 2.5 trillion. You can see how fast it grows.
So what is this “debt of the United States” simply put? United States emits money that is not based on anything, and a private enterprise called the Federal Reserve System loans the money to the State. Quite the complicated system is created, but the essence of it is rather simple: if the US budget doesn’t have enough money for the new aircraft carriers, for supporting some “young democracies” abroad, for paying out the benefits and allowances to their people, or for anything else, the United States – unlike the rest of the planet’s states – don’t have to work to make that money. They simply borrow it from the Federal Reserve System. Then this money gets in the budget so that US can execute its spending’s, but! The problem is, world’s economy now has a great quantity of not backed by gold (or anything else, really) dollars that need to be somehow sucked back out of the world’s economy.
This is what a whole system of so-called “Independent Central Banks” is for. These banks are, in fact, branches of the Federal Reserve System in all countries. Please note what the main function of these “independent” central banks is: allegedly, they serve to provide stability of their countries’ financial systems. In reality, their main function is to buy out Treasury Notes of the United States. Our Central Bank (Central Bank of Russian Federation) does just that. The Central Bank buys dollars entering Russia with rubles and invests the said dollars into the Treasuries of the United States. Thus, the “extra” dollars US printed to pay for their trading operations return back into the US. In other words, this huge mass of the over-printed dollars becomes neutralized. The main function of the Central Banks of all other countries is dollar support, and not support of the financial systems of their respectful states.
But all this huge enterprise only works while all other world countries agree and keep buying Treasuries of the United States, and if all of a sudden the demand for the US Treasuries drops, an unavoidable collapse follows. That is why the main guarantee of the American dollar is not the American gold reserve or the American industry, as liberal economists will have you believe, but the American military. The American military is a huge enterprise of compulsion, that can come crushing down on anyone who refuses to live according to the plans American imposed on the rest of the world. The foundation of today’s prosperity of the American state is its military.
This financial system comes to a halt today. China, Russia, and other countries are less eager to buy the American treasure notes… As an alternative to a dollar Euro emerges… the Yuan strengthens its position… The world simply doesn’t have the huge quantity of money needed to keep buying out American treasury notes. An astronomically fast increase of the American debt comes to a point, where even if the rest of the world were to pump the oil 24/7, process it, produce something, sell it to each other, there will still be not enough money in the world to keep buying the treasury notes US keeps producing. So there is a problem here. The system needs a re-boot. And now let’s think back how the dollar was established. Twice world wars helped the US to come out of the crisis and take one more step towards the world dominance. Now Americans need a war on a global scale again. The war will bring exclusive pluses for the American economy.
First of all, weapons production makes up a significant portion of the American industry (they do not just make burgers and develop services), so there will be a high demand for American weapons.
Second, in case Americans are successful in provoking conflicts they do not fight in, they will assume the position of a judge, which will increase their political weight and influence in the world. They will be the ones to decide who is right and who is wrong, who is a “bloody dictator” and who is a “democratic rebel”. Besides, using a “war conflict” and a “crime against humanity” excuses they will get an opportunity to interfere in any region they deem necessary. We see it happening now already: Americans entered the strategically positioned Afghanistan, they entered Iraq, they tried to enter Iran, today they walked into Libya, tomorrow they want to walk into Syria; in other words, their plans are vast. A war started in any region gives them complete cart-blanch and unties their hands. The United States will be able to do anything they want to without losing face.
At this point the economy of the United States practically exhausted itself. The large State’s debt, not only of the United States, but of other countries as well, is just an above-water part of an iceberg we are viewing. The problem is that “Bolivar” cannot feed and keep up such high life standards for so many people any longer. The decline of living standards is inevitable. The expenses of the Western world must be brought in accordance with its income, which means people’s salaries and other incomes will be decreasing, the benefits and allowances will be decreasing; life will be getting worse. Life there simply cannot be getting better any longer.
This economy exhausted itself. That’s why a good explanation is needed now to justify why people are getting less and less well-off. The war and difficulties associated with war were always the best explanation of it in human history. Presently people may be unhappy with their government because they don’t have a second hamburger and because they cannot exchange their car after three years since the company they work for is having difficulties. Well, if a global war starts, people will be praising their government for the fact that they do have their one hamburger and that they have gas for their old car. The war will allow them to “write off”, if I may say so, the high living standards.
Those same high living standards that they once used as a bait to catch the people of the Soviet Union. We ruined our country exclusively out of the desire to live just as nice as the western shop windows we were shown looked. But what’s done is done. The circus left. And now – even though not too well – we must live on.
/Translated by Svetlana V. Nuss
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Note form the translator: Please help us translate more articles from our site into English and other languages. We can help with editing. Thank you!
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