With
collapse of
USSR and
end of
Cold War,
political and economic power relations that had been in place since
end of World War II were rendered obsolete. What we are observing today is a shift in
global power dynamics, which will eventually allign to a new axis of world order.Although
mainstream media channels all over
world have successfully managed to disinform
general public into believing that what has been taking place since
September 11 attacks is a “War On Terror”, a growing number of people are starting to suspect that there are other political and economic dimensions to
causes of
9-11 Attacks,
bombing of Afghanistan, and
current invasion of Iraq.
Ever since
Bretton Woods Agreement of 1944, which established
rules of commerce and financial relations among
major industrial states and
independent nation-states,
US has been enjoying an artificial privilage in
global economy through its ability to adopt
US dollar as
currency of global exchange. When President Nixon liberated
US from
gold standard in 1971,
dollar became
denominator of
world reserve currency, and
global economy became fully dominated by
US dollar at
expense of
rest. Although this fact has been known by those in financial and political circles, it is hardly ever mentioned in
media.
International institutions, such as
IMF and
World Bank, has been giving loans exclusively in dollars up to this day, and thus,
rest of
world has been forced to build their dollar reserves for repayment of debt and international trade for over sixty years. Today, over two thirds of
world trade is conducted in dollars conferring on
US an economic advantage.
However, as well as being an advantage,
same system has also created a very fragile US economy that is fully dependent on
faith
rest of
world has in
stability of
dollar. Analysts know perfectly well that, as strong as
US economy may appear, it could collapse very abruptly if
trust in
stability of
dollar is broken, or if there is an alternative means of pricing instead of
dollar.
When
US buys goods and services produced by other countries,
pricing and
payments are made in dollars. As
US does not have a corresponding need to accumulate foreign reserve, it enjoys
privilage of spending more than it earns, and can afford to run a trade deficit year after year, while
rest of
world earns more than it spends as a result of this artificial monetary system.
Currently,
huge trade deficit in
US indicates that
US economy has a “need” to “borrow” two billion dollars per day from
rest of
world to keep its economy from collapsing. Naturally, if
dollar remains
dominant global currency, there would not be any risks, and
US could continue to enjoy its privilage without any complications. On
other hand, any tendency to move away from
dollar towards another currency would spell disaster and would demolish
global hegemony that
US has been enjoying for nearly sixty years.