Webdiary - Founded and Inspired by Margo Kingston

It doesn't matter (much), because, a) it's (mostly) already happened, and, b) we can't do anything about it, anyway.

Re: massive deficits; a) external trade and b) domestic, i.e. households.

If we ignore the snide remarks (tending to abuse) and the Oh, so frequent red-herrings (both of which solve nothing and only serve to illustrate the mental poverty of such posters), we still have a looming problem. (One? - Lots!)

a) external trade deficits. We import (far) more than we export. How? Unless we 'print' money, it's gotta come from somewhere. (Just printing money can cause inflation. Hmmm. Are asset bubbles (shares, housing, commodities) inflationary?) So a lot'a the 'where from' is selling our debt to foreigners. This has a more colloquial name, i.e. 'selling off the farm'.

In this article is a list of foreign ownership of US industries:

When Americans No Longer Own America by Thom Hartmann "Then came the flat-worlders[globalists], led by misguided true believers and promoted by multinational corporations. Do away with those tariffs, they said, because they "restrain trade." Let everything in, and tax nothing. The result has been an explosion of cheap goods coming into our nation, and the loss of millions of good manufacturing jobs and thousands of manufacturing companies. Entire industry sectors have been wiped out." [ICH]

(This should not be misconstrued as hinting that we need tariffs; no red-herrings, please!)

My chosen quote illustrates another factor: the shipping o/s of jobs. Yeah, yeah: Aus has 'low unemployment' statistics. (There are lies, damn lies and ...) The statistics don't count a) people who have given up looking or have been hidden on some sort'a retraining, disability pension or other 'welfare', b) 'quality' jobs being replaced by low, lower (how low can you go?) or outright unskilled jobs & c) conversion of jobs from permanent to temporary, full-time to part, etc.

b) domestic, ie. household spending is outstripping income by a wide margin; based as it is on credit, either outright credit cards or mortgage draw-down. I don't know anyone who says this sort'a process is sustainable; an' really, daaarlings, how could it be? But that's what we've got. Alan Kohler flashed up a graph illustrating this last week (pity such things don't often make it onto the AusBC website).

Here's one article discussing it:

Having fun while the credit lasts By John Legge: "There is, of course, an elephant in the front garden: Australia's net foreign debt is now more than $53,000 a household, or a bit over twice the median disposable household income. For two of the past 10 years, Australian families have been spending money that was borrowed, not earned." [theAge]

In general, there are the glass 'half-fulls' & the 'half-empties' - and people believe what they like. Based on my perusal of the local press, I have found far more often than not, that if I negate what the Australian says, I get something closer to the truth; ie. the proprietor said (back then) something like: [illegally] invading Iraq = $US25 per barrel for oil, bring it on!

What we've got at the moment is $US60+ oil.

You can find articles telling us that huge deficits don't matter (you could research it for yourself), but they mostly come from the same people who boosted B, B & H back then & still do now, in the face of the worsening Iraqi situation (can you say 'quagmire'?)

Oh, yeah: we can't do anything about it, anyway: Howard doesn't listen, doesn't hear (kiddies (not!) in the wardah, massive peace demos, AWB etc) - and the ALP is (terminally?) stuffed.

Michael Coleman: "Sooner or later, a USD will revert to the inherent value of the paper and ink".

The inherent value of the dollar is what the market makes it. The US dollar operates under a free floating currency. The dollar is worth today that which somebody will pay for it. Are you saying it will not be worth the paper it is written on? If so fair enough - don't buy US dollars - you might make a good currency trader, a brilliant one if you're right.

"The irony, IMO, is that the Chinese regime are now in a position to precipitate the collapse in value at a strategic time of their choosing."

They don't have a free floating currency. Are you suggesting the Chinese Government will soon be selling all dollars for Yuan? A brave call at this point in time. Calling this correct would also make you a genius currency trader.

Now why won't Iran or any other nation swap from US dollars to Euros? Reasons such as this known as "the man who broke the Bank of England." Could you imagine the damage inflicted up a nation such as Iran (oil only major product) if a group or, heaven forbid, the Fed Reserve attacked the currency of their choice? On top of this add the uncertainty of currency fluctuations that are known to happen from time to time. If I were looking for certainty I know where my faith would be. My opinion, of course.

The reason US dollars are preferred is still the same today as it was yesterday: they are the safest option. No other currency outside of the US would have been able to sustain either the shocks of 9/11 or hurricane Katrina as well as the US dollar did. Read about the Fed Reserve on the day of 9/11 and even you may be impressed.

"Please answer the critical question, Jay. What special economic insight do you have to justify your claim to have shown that Congressman Paul's argument is "complete nonsense"? So far you haven't shown anything of the sort, IMO".

It is not up to me to prove conventional wisdom correct, it is for you to prove it wrong. As yet I have seen nothing but a rambling speech by a person who frankly makes no sense at all.

Hi Tony: "Eliot Weinberger’s, What I heard about Iraq published by the London Review of Books. This has since been followed by What I heard about Iraq in 2005. The piece has been criticised, seemingly without irony, for containing inaccuracies and misrepresentations and being just a selection of grabs."

Sorry for delay in posting ... I don't get much time unfortunately ... but I was wondering if you could point me in the direction (links to ?) of the critics claiming inaccuracies etc in Weinberger's articles as I'm having a bit of a discussion elsewhere and have been asked to provide info regarding same. My google searches are not proving very successful! ... and heaven forbid, I'm starting to think that maybe you just included those lines to appease some on this board! (although, there must a critic somewhere! ... Where's Jay W when you need him! ... it's only a small attempt at some humour, Jay, no offence meant or implied.)

Many thanks and appreciation for any help that you can provide.

Cheers.

Michael Coleman: "Jay White, this argument has nothing to do with alternative fuels or Congressman Paul's views on free markets and minimal government intervention. The reason you give for Paul's engaging in what you call "conspiracy theory" is more absurd than your previous effort. You have my vote for the most ridiculous non sequitur in this debate".

Well, my way of thinking is that it has a lot to do with it. His entire speech is a doom and gloom prediction based on something that as I have attempted to show is a complete nonsense. Now this in itself would not be so bad if there were some moral to the story. However, this line:

"That is until the fraud is discovered, and the foreign producers decide not to take dollars nor hold them very long in payment for their goods. Everything possible is done to prevent the fraud of the monetary system from being exposed to the masses who suffer from it. If oil markets replace dollars with Euros, it would in time curtail our ability to continue to print, without restraint, the world’s reserve currency".

In other words, we are all going to hell in a hand basket unless we mend our ways. Now how does he propose mending those ways? With self-reliance, of course. Interesting that this subject is coming up when Alaskan oil drilling is so emotional to all sides of politics, no?

Personally, I am against all out drilling in a place I think is one of the last of nature's true wonders. However, economically I could see the benefits for the US. But judgement about this should be made either way on sound positions, not economic babble and plain old scaremongering.

Hamish: "Jay White on March 2, 2006 - 12:42pm: "Phil Kendall, I should have been clearer. I was referring to the bankruptcy statement."

This was actually an apology from not giving a direct question about the bankruptcy statement earlier. Also the post sometimes seem mixed up in the order they are posted. I guess people take things in different ways.

"Webdiary is a community where we debate and try to help one another by exchanging information and ideas, constructively criticising each other, If you have nothing but arrogance and insolence toward the humanity of others, go away".

Now, how actually asking a question of somebody to back up a statement claiming the US was bankrupt in 1971 is any of these things. I do not understand.

If the US was bankrupt and by changing its exchange rate meant this was the case. Logically I would ask was Australia bankrupt in 1986 when the Aus dollar was floated?

Hamish: Jay, I took an opportunity to make a general point. Apologies if it made things unclear, but please don't miss the point.

Will Howard "I always thought it was de Gaulle who 'called the bluff' on the gold standard, and demanded to redeem French dollar holdings in gold".

You are correct. The final straw that broke the camel's back was England getting in on the action. The final believer, so to speak, had become a unbeliever.

Jay White on March 2, 2006 - 12:42pm: "Phil Kendall, I should have been clearer. I was referring to the bankruptcy statement."

Dear Mr White, one might'a thunk, that you could'a done me the elementary courtesy, of actually reading my March 2, 2006 - 10:51am post, at least

«from»: "Part 2. US bankruptcy"

«to»: "QED,"

before firing off the above answer?

We thank you, in advance.

Hamish: Jay, I'm receiving a number of complaints about the way you operate on Webdiary. Might I suggest, to begin with, that if you choose not to engage with a person, then don't at all - that is - refrain from any reference or inuendo to them or their comments at all. If you do want to engage with someone's viewpoint, please read their material carefully, take care not to misrepresent them, and answer them directly and courteously by name. Webdiary is a community where we debate and try to help one another by exchanging information and ideas, constructively criticising each other. If you have nothing but arrogance and insolence toward the humanity of others, go away.

With John Howard's big 10th anniversary bash currently occurring it is not surprising that some of his more "controversial" relations with the truth are being brought up. And of course he's busy spinning out more waffle, redefinitions and general re-writings in order to place himself in a better light. The Children Overboard, dealt with elsewhere on Webdiary is one, and of course the propaganda surrounding the need to go to war on Iraq is another.

On this he plays the sincerity card, "I really believed the intelligence" (as with the AWB we are supposed to believe he was that incompetent) and everybody else did too.

Take this from the Today show, yesterday March 1

I regret that the information we were given didn't turn out to be accurate. I do not regret the decision. I genuinely believed the intelligence, so did, incidentally, the then Leader of the Opposition. He said Iraq had weapons of mass destruction. The argument at the time was not whether Iraq had weapons of mass destruction, everybody believed that. The argument at the time was how you dealt with it. Whether you went further through the United Nations process or whether you took military action. We decided with the Americans and the British to take military action.

Note slipping in the opposition leader, and also the quick rewrite of history that everyone accepted the WMD at the time. Everyone except some former UN Weapons Inspectors, most academic specialists in the area and some brave whistle blowers in the Australian, British and US intelligence communities that is. Oh and the Greens, and the French, and the Germans, and the Russians...

The line in 2002 and 2003 that he constantly used was that the information was "credible, very credible". He used this all the time when having that argument that apparently wasn't one, that the WMDs did or did not exist.

The reality of the actual decision was different as was pointed almost from the moment the crap started emerging. Moreover the evidence was rarely used outside of propaganda needs.

Note that, and this is important re the future writing of history:

"When historians in 30 years come to trawl through official cabinet documents covering the Howard Government's decision to join the US-led invasion of Iraq, they are likely to be sorely disappointed.

One of the extraordinary aspects of the Government's handling of the Iraq issue is that there were no substantial departmental policy documents prepared for cabinet ministers that canvassed the strategic arguments and risks of Australia's participation. None.

The key departments of Defence, Foreign Affairs and Trade, and Prime Minister and Cabinet were responsive to ministers' questions but refrained from delivering their own appreciation of the Iraq deployment from a national-interest perspective.

That direct Australian strategic interests were not uppermost in the decision to join the coalition is best shown by the nature of our deployment.

The defence force became involved in early 2002 in prewar planning with central command and the terms of our deployment was continually refined before hostilities began. The defence force went in with a modest but highly appreciated ground force contribution, then withdrew as soon as US forces entered Baghdad and the going got rougher.

The decision to go to war in Iraq was overwhelmingly political and flowed from the Government's view that the US alliance was absolutely paramount in shaping Australia's military posture. For cabinet, the decision to commit military forces was not a judgment based on top-secret intelligence. It did not stem from a careful analysis by our agencies of the risks posed by Saddam Hussein's weapons of mass destruction program." Patrick Walters, The Australian, 20 Sept 2003

What Howard never argued until the WMD was exposed as rubbish, but was argued from the beginning by Blair and Bush, was the human rights argument for overthrowing Saddam. But then the PM was busy abusing human rights here in Australia so even he may have been embarrassed to use that one.

Historical excursions can be very useful affairs and there is no reason why looking back over John's 10 years with an eye to his dissembling shouldn't be worthwhile. I think I might do some more of it in coming weeks.

A note to those on the thread arguing over the gold standard and notions of “real” money.

As I remember, the salient point about the gold standard was that the value of the money was not fixed to its exchange value in goods or other currencies, but to a specific amount of gold that actually existed in the reserve of the state backing the money. The currency was an actual promise to pay in gold. This was an attempt to set a physical limit to money supply whilst actually taking large amounts of gold out of the market.

Once Bretton Woods was abandoned the value of currency became either a government set value (again a promise of backing by the state in the final instance) or, if floated, an abstraction based on an assessment by buyers and sellers of the total value part future, part present, of the national economy in question. Though also a reflection of what the buyers and sellers thought other buyers and sellers might be going to do, and if they were big enough and the economy small enough, what they could manipulate the currency to do.

Oh, and someone brought up Marxist economics, there are lot of varieties of approach, as there are in classical and neo-classical, but Marxists do not reify exchange value, rather they refer to exchange value in the sense of "market forces" as a reification, ie. the turning of something that is no more than a product of human interactions into a thing in itself that dominates the interactions and obscures the human nature of them. A form of alienation and mystification.

Michael Coleman: "Jay White, Congressman Ron Paul is a Republican from Texas who has been endorsed by the electorate more than once. He has served on Congressional Banking and Finance committees, giving him access to information that you and I do not see. Your repeated accusation that he is peddling some crazy "conspiracy theory" is too absurd for words".

Perhaps you have not been reading Congressman Paul as closely as you should? Only hearing the things that appeal to you?

Now, why would Congressman Paul wish to peddle conspiracy nonsense about the American roof falling in? Perhaps for this reason:

"Paul also said expanded domestic oil drilling is the best immediate plan to reduce soaring gasoline costs". 

"I cannot agree that we need new taxpayer-funded programs to develop hydrogen and hybrid automobiles," Paul said. "Let these technologies sink or swim in the marketplace, without government assistance. Taxpayers should not be asked to pay for the development of technologies that later benefit private industry."

Not much of a alternate fuel sort of person now, is he? One would expect nothing else from a good Texan. Get them good Ole American pumps, a pumpen boys!

Phil Kendall "In addition, we already have 'asset bubbles' in both the share and house markets (other markets? Say, commodities?) Another name for 'asset bubbles' is inflation. Often, when people suspect their money may be in danger of being eroded by inflation, they seek protection - Ta ra! - in gold, for example; I wonder what the gold price is doing?"

Have you ever taken the time to view the direct correlation between the gold price and the Australian dollar? Should reserve banks world wide now be stocking the Aussie?

Phil Kendall, I should have been clearer. I was referring to the bankruptcy statement.

Phil Moffat: “Michael quotes that had something to do with the Yanks agreeing with OPEC to trade oil in USD in return for security, while Jay inquires if this is just an opinion. Could Jay answer this question?

Saudi Arabia agreed to supply oil in US dollars in 1975. The conspiracy theories as to why are all over the net. My opinion is that the Saudis chose to do this from basic commonsense. Simply put, the US was by far and away the largest economy (still is), the largest consumer of oil (still is), the most stable of world economies (still is), and the least likely to suffer political turmoil or foreign invasion (still is). Other OPEC nations had no other option but to follow or lose out.

By moving away from the US dollar, nations are gambling that the Euro will remain an equally stable currency and that nations outside of the USA (biggest customer by far) will continue to grow and consume at current rates (China, India). I also hope Europe is ready to take up the gas guzzling slack, forgetting even Kyoto and all that. A very large risk, I think. Not something that should have the European greenies jumping over the moon.

Now, naturally, Michael speaks of secret agreements and conspiracy theory because the USA is involved nothing can ever be as simple as the things I have outlined in some people's minds. Again, like all other conspiracy theories, there are articles all over the net supporting this theory and others. Unfortunately, like all other conspiracy theories, there is no documented evidence that I have seen, nor anyone involved in this things coming forward to admit this was the case. Another thing for one to make ones mind up on, I guess.

Now some basic facts. Any nation is allowed to ask for payment in any currency they wish. Australia tomorrow could if so desired begin asking for payment in Russian roubles. The most sensible option, however, would be to ask for payment in the most desirable currency. And that still is the US dollar. Still accepted anywhere and most likely even on Mars if man finds his way there.

Now addressing the point of how much somebody such as Iran or Iraq would affect the US by not selling in US dollars seems to be the talking point around here. Enough to go to war with somebody over?

World’s largest economies:

1 USA 10,208

2 Japan 4,149

3 Germany 1,847

4 United Kingdom 1,424

5 France 1,307

6 China (excluding Hong Kong) 1,159

7 Italy 1,089

8 Canada 700

9 Mexico 618

10 Spain 582

As you can see, adding together four of the Europeans biggest ones it still is not even half the size of the US economy. Would, for example, the European currency be able to withstand an economic shock such as 9/11 or hurricane Katrina in the same fashion as the US dollar?

See here for the world's largest export oil producers and net exporters.

Now, pay particular attention to the nations who are producers against those that are exporters. In simple language, some are not selling and others are. Surprise, surprise: who is holding? What in effect is happening is that those nations such as Iran need the hard currency a lot more than others. Running a tinpot regime hellbent on wiping other nations off the map is quiet costly.

Now go and look for the major importers of said oil. If I were running Iran about this time I might be saying as they do in Texas, dang! Mighty big customer base you could be pissing off here, bucko. Truth is, Phil, Europe is just not that big a customer compared to the big boy.

Now you may have noticed that China itself has many things on the list similar to the US. So this may well lead you to ask why, not denote oil currency in Yuan? I simply ask, would you invest your entire retirement fund in a mainland Chinese bank at moment?

I think perhaps, rather than Iran concerning itself with poor attempts at bothering the US over this issue, it perhaps should be concerning itself with places such as Alaska and West Africa. It may well end up in the future not the problem of Iran not wanting US dollars but the US not wanting what Iran is selling.

In truth, Iran will not be changing any time soon. Neither will Norway or any other nation. It is easier to huff and puff and delude oneself and supporters about being forced into staying under the boot of the evil US. The Iranian leader is a lot of things including a dog whistler and political manipulator of his people and possible lunatic, but a complete monetary ignorant dope? I think not.

Why do some in the West enjoy the dog whistle of the Iranian President? Simple: they would like to think that by the European Union and its currency taking over somehow the world will become a less capitalist, kinder, gentler place. Europe in its current shape will not be taking over anything soon. In fact, they have more problems than the US, but that is another topic. Truth is, socialist are not good at making or keeping money, and in the end that is what oil cash is really all about.

That is why the Iranian President will continue saying bad things and making threats. However, he will be a good boy and toe the economic line. He simply has no other option.

Jay White on March 1, 2006 - 8:02pm: "“Finally Nixon 'went off' gold for good in 1971, cutting the nexus (and not so incidentally, or so I've read, effectively declaring the US bankrupt).”

"Links and proof please?"

Part 1, Nixon going off gold.

Done, on March 1, 2006 - 9:44pm.

Part 2. US bankruptcy(**1).

C Parsons on March 1, 2006 - 7:02pm: "Have a look at Phil's waffle about gold being 'real' money as opposed to 'paper money'"

I did not waffle; I did some 'stage-setting'. And, gold was important, back in 1971.

So, let's look at "Parsons' gold": "3. A doubling or tripling of the dollar price of gold, toward which Arthur Burns has in the past inclined, is one response to a crisis, though it would be ineffective over any length of time and would be very damaging to those countries (such as Germany) which at our urging have held large quantities of dollars. Their governments would suffer sharp criticism from a U.S. policy that doubled or tripled the dollar value of the reserves of the gold countries, while the value of their own reserves remained stable." [state.gov]

Crisis? What crisis?

"167. Information Memorandum From Robert Hormats of the National Security Council Staff to the President's Assistant for National Security Affairs (Kissinger)/1/ Washington, August 13, 1971.

...

SUBJECT International Monetary Crisis

...

 The Problem

Throughout 1971 there has been an erosion of European confidence in the stability of the dollar. This has worsened since May, as it became apparent that the U.S. inflation was not being contained, that wage settlements in this country were extremely high, and that the U.S. balance of payments deficit was worsening. The latter is extremely important. Under the present system central banks of other governments purchase dollars when an over-supply of dollars causes the value of the dollar to drop below a given point, i.e. Britain will, if the value of the dollar falls below a specified point, buy up excess dollars and thereby raise the price of the dollar to within one percent of its established parity vis-a-vis the Pound. Thus European central banks have been taking in large amounts of dollars in order to keep the value of the dollar from falling vis-a-vis their own currencies. However, because Pounds, Marks, etc. must be spent by the central banks in order to purchase these dollars, the money supply of the major European countries has increased significantly, and severe inflationary pressures have resulted." [state.gov, ibid.]

Interesting, that in the "Parsons' gold" para they mention Germany, when according to this piece, it was the British who provided the 'last straw':

"What had happened? Well, what is generally known is that Nixon took the U.S. dollar off the gold standard in 1971. What is less well known is that Nixon's hand was forced by a quite unanticipated threat of gold redemption by the British. In mid-August 1971, the British ambassador quite literally walked into the U.S. Treasury Department to request that $3 billion be converted into gold." [dailykos]

"White's bankruptcy": If an entity can't - or won't - pay its bills, then it is, by definition, bankrupt.

The US couldn't - or wouldn't pay, so Nixon changed the rules; QED.

C Parsons: "Anything will do as long as its supply is comparatively stable in relation to demand"

I don't personally care, if 'money' is gold, fiat(**2) or sea-shells.

The point is something like: 'if handled responsibly'.

Nixon 'went off gold' - because he had to.

Reagan 'proved' that "deficits don't matter". (Cue Costello: "Haw, haw, haw!")

Now GW Bush is probing altogether new and desperate depths of deficits.

See, for example, this graph labelled Selling Paper [bopnews], noting that it only goes up to 2002.

One might suspect that GW Bush & Co are putting the world's monetary system under possibly unbearable pressure.

Just how 'responsible' is that?

It might be instructive, to review the cause of the 1971 crisis: confidence in the stability of the dollar - or, more exactly, the lack thereof (confidence, stability). Now check the size of GW Bush & Co's deficits, and the eventual cost of the illegal invasion of Iraq, estimated by Stiglitz et al to be Oh, say: 2US$Trio.

Web Results 1 - 100 of about 22,800 English pages for Stiglitz estimate final cost iraq war. (0.92 seconds)

Hit#1: War's stunning price tag - Los Angeles Times LAST WEEK, at the annual meeting of the American Economic Assn., we presented a new estimate for the likely cost of the war in Iraq. [latimes]

Not just BTW, the flight from the US$ has already begun: "...by currency shows that of the $13.588 trillion total of financial securities counted by the BIS's reporting central banks (which did NOT include China) at the end of 2004, 37.0% were denominated in U.S. dollars, while 46.8% were denominated in Euros. This is a dramatic reversal from when Bush took office. At the end of 2000, the BIS counted $5.883 trillion in financial securities, of which 49.6% were dominated in dollars, and 30.1% in Euros." [dailykos, ibid.]

China is holding an estimated US$800bio in 'cash'. If it drops its 'bundle' onto the FE market, the US$ will crash immediately.

In addition, we already have 'asset bubbles' in both the share & house markets (other markets? Say, commodities?) Another name for 'asset bubbles' is inflation. Often, when people suspect their money may be in danger of being eroded by inflation, they seek protection - Ta ra! - in gold, for example; I wonder what the gold price is doing?

Web Results 1 - 100 of about 34,900,000 English pages for the price of gold since 2003

Hit#2: What the Price of Gold Might be Telling Us Since 2003, when the Iraq war began, world equity markets have soared and ... My best guess is that the rising gold price may be the canary in the mine ... "Since early 2001 it's more than doubled in price from around $250 an ounce to around $550 ..."

[globalresearch] - 47k - 27 Feb 2006)

I reiterate: I don't care about gold per se, just what's going on.

There is no 'back-up' for a fiat currency, except 'trust' (or perhaps oil? - Disputed: "Even by the bizarre standards of the 'alternative analyses' of the whacko pseudo-Marxist Left, tying it exclusively to oil bourse prices must set a new standard of politicoeconomic-babble.")

If oil sales are migrated away from the $US and given the truly massive deficits, the real question then becomes just what 'value' would be left in the US$, and how far will the world 'trust' GWBush&Co?

PS

From Webdiary ethics:

"5. Robust debate is great, but don't indulge in personal attacks on other contributors."

Refs:

**1. bankrupt adjective (of a person or organization) declared in law unable to pay their debts: he committed suicide after going bankrupt. n figurative completely lacking in a particular good quality or value: their cause is morally bankrupt.

noun a person judged by a court to be insolvent, whose property is taken and disposed of for the benefit of their creditors. verb [with obj.] reduce (a person or organization) to bankruptcy: the strike nearly bankrupted the union. ORIGIN mid 16th cent.: from Italian banca rotta ‘broken bench’, from banca (see bank2) and rompere ‘to break’. The change in the ending was due to association with Latin rupt- ‘broken’.

The New Oxford Dictionary of English

**2. fiat money

fiat money, inconvertible money that is made legal tender by the decree, or fiat, of the government but that is not covered by a specie reserve. It is commonly understood to be of paper, although it may also consist of overvalued metal coins. The circulation of fiat money may lead to inflation, whereas money redeemable in gold or other securities is held much less likely to do so. Under conditions of proper monetary management, however, fiat paper money can be a stable currency. In fact, contemporary American money is essentially fiat money. All Federal Reserve notes and most circulating coins are money because the government says they are, not because they are backed by precious metals. Earlier, less stable examples of fiat paper money were the continentals issued by the American government during the Revolutionary War, the assignats issued during the French Revolution, and the greenbacks issued by the U.S. government during the Civil War. Most such issues were accompanied by severe price rises.

See W. C. Mitchell, History of the Greenbacks (1903, repr. 1960); F. Reinfeld, Story of Paper Money (rev. ed. 1960). [factmonster]

Thanks kindly Gareth, I will check out the links you provided and brush up on my understanding of the stuff that makes the world go round.

If I had my way I would substitute gold for sandstone or clay then we could all be rich ;-)

I wonder if the Chancellor at Sydney Uni would agree for he must be sitting on a gold mine.

Phil, I’ll do some groundwork for you mate. This is how I see it.

“Why is oil not traded in the currencies of the oil producers?”

In theory there is nothing preventing this, anyone (country or company) can demand payment terms of their choosing including the currency.

“Why is the USD the major trading currency for oil in the first place and how did we arrive at this decision?”

In practice a lot of oil is purchased via an exchange. The most active oil contracts are on the NYMEX (New York Mercantile Exchange) and the ICE (Intercontinental Exchange in London which used to be called IPE). Both these contracts are settled in USD. Now I’m not sure what ratio of oil is transacted via these exchanges, but these oil prices are used as benchmark for most oil transactions. Have a look at Wikipedia’s take on oil pricing for a better explanation (note: it has the incorrect name for the ICE, may be best to treat it as a guide only).

As for why USD, the NYMEX Light Sweet Crude (sounds tasty) is the most liquid oil contract in the world and has been for over one hundred years. I bet the main reason oil (and most commodities) are traded in USD, is because most of the big exchanges are based in the US and they were first into the game.

“I have read that up until WW2 an American dollar could be redeemed for the equivalent in gold. Why did they stop doing this just after the war?"

I believe the last true “gold standard” for the US was canned in 1933. I suspect the “gold standard” was partly to blame for the depression around that time. Basically the “gold standard” or the ability to exchange gold for paper money at a fixed rate was invented as a way to prevent a government or bank from “printing money” (back when private banks could print their own) and setting off inflation. Most of the major economies in the world have tried a gold or silver based standard in the past. The system almost works too well, because eventually as the economy grows, your ratio of gold or silver backing the paper money falls. As one way to maintain this ratio, central banks raised interest rates to entice investors out of gold into the currency (it is difficult to go and get more gold). This resulted in the reverse problem ie, deflation then recession and unemployment. Ultimately the supply of gold and silver is fixed, but the necessary money supply will increase with economic activity and population growth.

“If the dollar was backed by gold why did Nixon stop this in the 1970’s?”

I suspect you’re referring to the “Bretton Woods” system of fixed exchange rates. In hindsight this was never sustainable with a freely traded gold price and a fixed USD. The fixed rate of converting USD to Gold at the time was $35 an ounce. I can’t imagine that working to well now, American gold reserves would be either gutted in a day or interest rates and price/import controls would be lifted to extreme levels. The "Bretton Woods" system is huge topic all on its own, try the Wikipedia (I love the plain English writing you get for complex topics in Wiki) link above for a starting point.

“If and or when China’s GDP is the world’s largest should oil be traded in the Renminbi?”

I don’t think it matters what currency oil is traded in, as long as the currency is pretty liquid, not particularly volatile and trades freely (the Yuan is yet to be floated). China trialed an oil contract settled in Yuan recently, but it hasn’t been very popular. See story here.

Jay White: "“Finally Nixon 'went off' gold for good in 1971, cutting the nexus (and not so incidentally, or so I've read, effectively declaring the US bankrupt).” Links and proof please?"

Web Results 1 - 100 of about 568 English pages for nixon 1971 gold dollar site:.gov. (0.24 seconds) hit #1 Press Release for Volume III On August 15, 1971, President Nixon announced his New Economic Policy, which suspended the convertibility of the dollar to gold, imposed a 10 percent tax on ...

C Parsons: "But as for the rest of us, we went to school and then some."

Speak for yourself, CP. I didn't end up spending much time at school, the "then some" was the university SOHK where the Chancellor promised me letters. Letters that I could display after my name on graduation. R.I.P.

Also re "Ditto", thank you for pointing that out but would there be a need for nuclear proliferation if America and others got rid of their big bad bombs?

Phil Kendall: “Up to a certain point in our 'financial evolution', money was 'real' - let's say, actual gold“.

Gold is a yellowish shiny metal that is worth what somebody else is willing to pay for it.

“Then some clever-clogs found out they could substitute paper for gold; ie. 'promises to pay', as actual banknotes or just credits.“

Paper is just that. The stuff you are talking about has ink on it and is worth that which somebody else is willing to pay for it.

“Then, that they could make more (lots more!) paper than they had gold (one end result could be fractional reserve banking, another, inflation)."

Oh I think this was discovered a long time before the 70’s. Read up on the Weimar Republic one day.

“Finally Nixon 'went off' gold for good in 1971, cutting the nexus (and not so incidentally, or so I've read, effectively declaring the US bankrupt).”

Links and proof please?

“Now all that 'backs' the $US is oil, since the US has a monopoly by forcing oil to be traded only in $US. (Saddam's Iraq wanted to trade oil in Euros: blam! No more Saddam's Iraq.“

Economic witch doctoring nonsense and not one shred of proof to be found. Watch out, Norway, you're soon to be in a world of US invasion hurt!

“As a consequence of the US-petro-dollar, the US just prints money (going 'into hock'); almost as much as they like, limited only perhaps, by the willingness of other countries to soak up US debt.“

Oh my Lord, next you will be telling us all the banks make up money. They are limited by inflation and things such as trade deficits. Hence the reason the US dollar has been declining against some currencies in the last couple of years.

“One 'normal' result of just printing money could be inflation (or 'asset-booms', i.e. stock market, house prices). The US Fed is aware of this, hence (presumably) Greenspan's 'irrational exuberance' comment.“

Well, of course he was aware of it. That is why he raised rates. The “irrational exuberance” comment was to do with the tech boom. Not a oil comment amongst the entire speech.

“Long story short: the rest of the world must earn their dough (i.e earn their keep); the US just prints money.“

Absolute economically uneducated gibberish! The US, like any other nation, can print as much as they like. However, they will not be in charge of that which somebody is willing to pay for it. Yes money is a commodity the same as gold, oil, silver etc.

The reason that commodities were denoted in US dollars is one of simplification. At the time the US was seen as the safest economy and the least susceptible to currency shocks, hence commodity price shocks.

Now, irrespective of the wailing going on about the US in this thread, I have not yet seen any reason for a nation to revert to Euros. In my opinion, it can be down right risky. It was not so long ago that the Yen was spoken about in this way, so I wonder how anyone silly enough to go down this path would have fared?

The problem with the Euro is a simple one: it is made up of European nations. This should be enough said. The three major ones – Germany, England, and France – rarely agree on anything let alone monetary policy. Add to this a whole host of other nations and the beauty that is Italy. Oh politics! Everyone loves it except money markets!

Perhaps it is something Iran really needs to learn. No doubt the US will be blamed in some way irrespective.

Deb Wands asks if it is true that under Section 44(1) of the Constitution any Australian citizen can force John Howard to remove himself from Parliament. No, it isn't true.

First, it isn't true because, if it was, someone by now would have tried to do that.

Secondly the quotation you give from the Constitution is fictitious. I have no doubt you have copied it out accurately from some source but whoever wrote it was pulling his/her readers' legs.

Yours truly is an economic illiterate. Therefore, could the more economically astute among us help me out with the following:

Why is oil not traded in the currencies of the oil producers?

Why is the USD the major trading currency for oil in the first place and how did we arrive at this decision?

Michael quotes that had something to do with the Yanks agreeing with OPEC to trade oil in USD in return for security, while Jay inquires if this is just an opinion. Could Jay answer this question?

I have read that up until WW2 an American dollar could be redeemed for the equivalent in gold. Why did they stop doing this just after the war?

If the dollar was backed by gold why did Nixon stop this in the 1970’s

If and or when China’s GDP is the world’s largest should oil be traded in the Renminbi?

I have more questions but that will do for now.

CP writes: “The nuclear threat that the Americans claim to fear is more or less the same nuclear threat that the International Atomic Energy Agency, the European Union and Russia also claim to fear.”

Yes, but what actually is the perceived threat as shared by the above? And was not Iraq a nuclear threat according to the US and UK and agreed by others?

Are we dealing with fact, fiction, politics, or reality?

Michael Coleman, what utter complete nonsense and garbage that quoted statement really is. No wonder conspiracy theorists have taken to believing it.

"Gold no longer is the currency of the realm; paper is. The truth now is: “He who prints the money makes the rules”-- at least for the time being".

Utter crap. Any nation on earth can print money. In fact, Zimbabwe (what rules are they making?) are about to undertake a round of printing as we speak. He who prints too much of it outside of standard economic truths ends up with hyperinflation.

"Since printing paper money is nothing short of counterfeiting."

Utter radical hyperventilating nonsense.

"...the issuer of the international currency must always be the country with the military might to guarantee control over the system".

Garbage. I take it the Soviet Union currency was doing a brisk world trade, then? Military might and all that.

"The one problem, however, is that such a system destroys the character of the counterfeiting nation’s people - just as was the case when gold was the currency and it was obtained by conquering other nations. And this destroys the incentive to save and produce, while encouraging debt and runaway welfare".

Utter unproven conspiracy theory garbage. Again I refer to Eastern bloc nations such as the Soviet Union.

"Realizing the world was embarking on something new and mind boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence “backed” the dollar with oil. In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite the radical Islamic movement among those who resented our influence in the region. The arrangement gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as dollar influence flourished".

Proof of any of this, please? Or is this just an opinion?

"Most importantly, the dollar/oil relationship has to be maintained to keep the dollar as a preeminent currency. Any attack on this relationship will be forcefully challenged — as it already has been".

Why?

"In November 2000 Saddam Hussein demanded Euros for his oil. His arrogance was a threat to the dollar";

Why?

"There was no public talk of removing Saddam Hussein because of his attack on the integrity of the dollar as a reserve currency by selling oil in Euros".

I wonder why? Maybe because it did not matter. I have heard that one Nordic country is expecting to trade oil for euros in the not too distant future, wonder if the US is planning invasion, LOL.

By the way, when they caught Saddam didn't they grab him with a swag of greenbacks? Obviously he was not silly enough to believe his own publicity.

The US 'fiat' or 'petro' dollar.

Up to a certain point in our 'financial evolution', money was 'real' - let's say, actual gold. Then some clever-clogs found out they could substitute paper for gold; ie. 'promises to pay', as actual banknotes or just credits. Then, that they could make more (lots more!) paper than they had gold (one end result could be fractional reserve banking, another, inflation). Finally Nixon 'went off' gold for good in 1971, cutting the nexus (and not so incidentally, or so I've read, effectively declaring the US bankrupt). Now all that 'backs' the $US is oil, since the US has a monopoly by forcing oil to be traded only in $US. (Saddam's Iraq wanted to trade oil in EUROs: blam! No more Saddam's Iraq. Now, Iran wants to trade oil in EUROs...) As a consequence of the US-petro-dollar, the US just prints money (going 'into hock'); almost as much as they like, limited only perhaps, by the willingness of other countries to soak up US debt.

One 'normal' result of just printing money could be inflation (or 'asset-booms', i.e. stock market, house prices). The US Fed is aware of this, hence (presumably) Greenspan's 'irrational exuberance' comment.

Long story short: the rest of the world must earn their dough (i.e earn their keep); the US just prints money.

Michael Coleman's quoting of Ron Paul's "The End Of Dollar Hegemony" is a good start; thanks. Now, C Parsons, I'm gunna 'take some time' to prepare further explanations.

Thanks CP, my query was not about what we have discussed previously but what you had considered regarding the consequences of the occupation based on you current knowledge at the time.

I feel your courteous and informative reply has answered my query and thanks sincerely for taking the time.

On the Iran thing it would be courageous of me to make a prediction and my initial feeling about your question is to wimp out.

For what it is worth I do have some questions and observations that may indicate my concerns.

Is Iran really the nuclear threat that the Americans claim to fear? If so, what evidence do we have?

The boss guy in Iran has made some pretty inflammatory remarks about Israel. Is this (rhetoric) purely for the domestic market or were these remarks genuinely part of his ideology and future plans?

Could trading oil in Euros affect the American economy to the extent that many say it will?

Should America be considering the position of Pakistan (and their actual nuclear capabilities) in relation to military action against Iran? I think that Pakistan (not necessarily their leader) is at this point in time far more dangerous than Iran and would treat American military action with disdain. Just how stable is Pakistan at present? What do you think about this, CP?

Why should Iran not be allowed to develop nuclear capabilities (including weapons) such as many other countries bearing in mind North Korea already supposedly has that capability and the Yanks appear to be treating them with far more respect than Iraq (previously) and Iran (at present)? The Yanks appear to prefer negotiation over military threat in relation to North Korea, why is this so?

They are just a few queries I have in relation to the Iranian thing, but making predictions is a game fraught with danger as there are many things in relation to this topic I am sure I am unaware of. After all, I rely on the internet and the many commentators to assist with my concerns on this matter. However, I am aware of my own limitations in analysing their opinions and predictions.

Being a mere mortal is quite difficult and actions quite often do not pan out to meet expectations. I’m sure many world leaders (past and present) would agree.

That’s about the best I can do and I apologise if I have disappointed you. After all, asking questions is easy, asking the right questions is not so easy (possibly an art) and of course answering them can be just plain difficult.

Also, as the Americans are talking about using nuclear weapons as part of their military strategy, do you feel this is wise? Or will this simply encourage countries like Iran to follow the example set by North Korea?

Why don’t all countries with nuclear weapons simply get rid of them, for they are far too dangerous?

Please note that my earlier question to you was motivated for no other reason than curiosity and please feel free to ignore my above questions if you please. I’m sure time will eventually answer most of them and I am a patient sort of bloke.

PS. I rather like Catherine Zeta Jones. Do you plan on including her in your lunch box collection, if so put me down for a dozen. Anyway I’m off for an afternoon kip so look forward to catching up later on. Cheers mate.

I don't usually post such lengthy quotes as this, but the role of the petrodollar in US Middle East policy is often underestimated. US Congressman Ron Paul, Texas, recently wrote The End Of Dollar Hegemony. The whole essay deserves reading, but the following extracts are particularly pertinent to this debate.

Gold no longer is the currency of the realm; paper is. The truth now is: “He who prints the money makes the rules”-- at least for the time being. Although gold is not used, the goals are the same: compel foreign countries to produce and subsidize the country with military superiority and control over the monetary printing presses.

Since printing paper money is nothing short of counterfeiting, the issuer of the international currency must always be the country with the military might to guarantee control over the system. This magnificent scheme seems the perfect system for obtaining perpetual wealth for the country that issues the de facto world currency. The one problem, however, is that such a system destroys the character of the counterfeiting nation’s people-- just as was the case when gold was the currency and it was obtained by conquering other nations. And this destroys the incentive to save and produce, while encouraging debt and runaway welfare.

...

Realizing the world was embarking on something new and mind boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence “backed” the dollar with oil. In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite the radical Islamic movement among those who resented our influence in the region. The arrangement gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as dollar influence flourished.

This post-Bretton Woods system was much more fragile than the system that existed between 1945 and 1971. Though the dollar/oil arrangement was helpful, it was not nearly as stable as the pseudo gold standard under Bretton Woods. It certainly was less stable than the gold standard of the late 19th century.

During the 1970s the dollar nearly collapsed, as oil prices surged and gold skyrocketed to $800 an ounce. By 1979 interest rates of 21% were required to rescue the system. The pressure on the dollar in the 1970s, in spite of the benefits accrued to it, reflected reckless budget deficits and monetary inflation during the 1960s. The markets were not fooled by LBJ’s claim that we could afford both “guns and butter.”

Once again the dollar was rescued, and this ushered in the age of true dollar hegemony lasting from the early 1980s to the present. With tremendous cooperation coming from the central banks and international commercial banks, the dollar was accepted as if it were gold.

...

Most importantly, the dollar/oil relationship has to be maintained to keep the dollar as a preeminent currency. Any attack on this relationship will be forcefully challenged — as it already has been.

In November 2000 Saddam Hussein demanded Euros for his oil. His arrogance was a threat to the dollar; his lack of any military might was never a threat. At the first cabinet meeting with the new administration in 2001, as reported by Treasury Secretary Paul O’Neill, the major topic was how we would get rid of Saddam Hussein-- though there was no evidence whatsoever he posed a threat to us. This deep concern for Saddam Hussein surprised and shocked O’Neill.

It now is common knowledge that the immediate reaction of the administration after 9/11 revolved around how they could connect Saddam Hussein to the attacks, to justify an invasion and overthrow of his government. Even with no evidence of any connection to 9/11, or evidence of weapons of mass destruction, public and congressional support was generated through distortions and flat out misrepresentation of the facts to justify overthrowing Saddam Hussein.

There was no public talk of removing Saddam Hussein because of his attack on the integrity of the dollar as a reserve currency by selling oil in Euros. Many believe this was the real reason for our obsession with Iraq. I doubt it was the only reason, but it may well have played a significant role in our motivation to wage war. Within a very short period after the military victory, all Iraqi oil sales were carried out in dollars. The Euro was abandoned.

...

It’s not likely that maintaining dollar supremacy was the only motivating factor for the war against Iraq, nor for agitating against Iran. Though the real reasons for going to war are complex, we now know the reasons given before the war started, like the presence of weapons of mass destruction and Saddam Hussein’s connection to 9/11, were false. The dollar’s importance is obvious, but this does not diminish the influence of the distinct plans laid out years ago by the neo-conservatives to remake the Middle East. Israel’s influence, as well as that of the Christian Zionists, likewise played a role in prosecuting this war. Protecting “our” oil supplies has influenced our Middle East policy for decades.

But the truth is that paying the bills for this aggressive intervention is impossible the old fashioned way, with more taxes, more savings, and more production by the American people. Much of the expense of the Persian Gulf War in 1991 was shouldered by many of our willing allies. That’s not so today. Now, more than ever, the dollar hegemony-- it’s dominance as the world reserve currency-- is required to finance our huge war expenditures. This $2 trillion never-ending war must be paid for, one way or another. Dollar hegemony provides the vehicle to do just that.

For the most part the true victims aren’t aware of how they pay the bills. The license to create money out of thin air allows the bills to be paid through price inflation. American citizens, as well as average citizens of Japan, China, and other countries suffer from price inflation, which represents the “tax” that pays the bills for our military adventures. That is until the fraud is discovered, and the foreign producers decide not to take dollars nor hold them very long in payment for their goods. Everything possible is done to prevent the fraud of the monetary system from being exposed to the masses who suffer from it. If oil markets replace dollars with Euros, it would in time curtail our ability to continue to print, without restraint, the world’s reserve currency.

It is an unbelievable benefit to us to import valuable goods and export depreciating dollars. The exporting countries have become addicted to our purchases for their economic growth. This dependency makes them allies in continuing the fraud, and their participation keeps the dollar’s value artificially high. If this system were workable long term, American citizens would never have to work again. We too could enjoy “bread and circuses” just as the Romans did, but their gold finally ran out and the inability of Rome to continue to plunder conquered nations brought an end to her empire.

The same thing will happen to us if we don’t change our ways. Though we don’t occupy foreign countries to directly plunder, we nevertheless have spread our troops across 130 nations of the world. Our intense effort to spread our power in the oil-rich Middle East is not a coincidence. But unlike the old days, we don’t declare direct ownership of the natural resources-- we just insist that we can buy what we want and pay for it with our paper money. Any country that challenges our authority does so at great risk.

Deb Wands "Bush, Blair and Howard really do need to be forced to appear as war criminals before the international Court".

That's not a very nice thing to say on a day like this. It is John Howard's celebration of ten years as Prime Minister. The second longest serving PM in Australia's history, and still going strong if the polls are anything to go by. Perhaps he can become the longest?

Congratulations, John Howard! Best PM Australia has ever had by country mile. Keep up the good work!

C Parsons: "Phil: '4c) To prop up the US petro-dollar; to continue the US' free ride by simply printing money.'

Another thing I feel some think if repeated often enough it must make it true. A bit like saying Bush, Blair and Howard are war criminals. A bit like saying communism / socialism are still in vogue by pointing at Cuba etc."

One needs no proof to run a propaganda campaign.

Once again, the usual suspects busily twirl the cognitive kaleidoscope until they get the conclusions they want. No need to let any facts or the rational brain get in the way.

Imagine the revenue WD could raise from DUI offences!

...and we would all live happily ever after!

Bush, Blair and Howard really do need to be forced to appear as war criminals before the international Court.

Is this true that under Section 44(i) of the Australian Constitution, any Australian citizen can force John Howard to remove himself from Parliament? and pay monies to said citizen?

Until the Parliament otherwise provides, any person declared by this Constitution to be incapable of sitting as a senator or as a member of the House of Representatives shall, for every day on which he so sits, be liable to pay the sum of one hundred pounds [about A$250.00 per day in 2003] to any person who sues for it in any court of competent jurisdiction.

And because he issued the order deploying Australia's aircraft, John Howard will be up to his neck in very real multiple war crimes with his “friends” George and Tony.
            Fortunately, any Australian citizen can stop this terrible mess before it actually happens, by simply explaining to John Howard that he no longer has the right to sit in the Australian House of Representatives, and thus no longer has the right to be Prime Minister of Australia. You see, John Howard has violated the Australian Constitution, which overrides all “international treaties” or “agreements”, real or imagined, between Australia and external foreign powers

From Australia Suckered into War Crimes Trap - Prime Minister disqualifies himself from Australian Parliament.

Phil Moffat: "I can’t help but wonder what your predictions were on the outcome of Saddam’s overthrow, bearing in mind that many commentators and historians warned us that current events were absolutely predictable and expected."

Oh, hi Phil.

Could you link us to some of those "commentators and historians"?

Maybe, say, three of them? Thanks.

Also, I think we've been over this ground before, haven't we?

My actual expectation was there'd be a push for Kurdish regional autonomy, and possibly a Federal system of regional power sharing between the Sunni minority and the Shiite majority.

I was quite confident that the Iraqi people would respond well to the opportunity for elections, which they did in spades.

I realised, of course, that the Ba'ath fascist/socialist movement would offer resistance, which it does to this day.

Certainly their ruthlessness was never in question, and since Iraq was more or less a fabrication of the post-World War One carve-up of Messopotamia, I figured arriving at a dispensation for Iraq's future was going to be challenging at very least.

I have to admit, two things got me by surprise.

Al Qaeda's leading role in the "resistance", and the enthusiastic support the "resistance" (actually Ba'athist militias and Wahabist extremists) gets from western psuedo-intellectual leftists.

But then, if I'd thought back on the supine, cowardly track-record of the Left over the years, this latter point shouldn't have surprised me at all.

But it did.

Actually, while we're on that topic, this is interesting;

Shirin Ebadi, the first Muslim woman to win the Nobel Peace Prize, a lawyer, human rights activist and founder of the Association for Support of Children's Rights in Iran, has spoken in support of Iran's nuclear development programme.

On December 10, 2003, Ebadi was awarded the Nobel Peace Prize, becoming the first Iranian and the first Muslim woman to receive the prize.

Shirin Ebadi told reporters: "Aside from being economically justified, it (Iran's nuclear development programme) has become a cause of national pride for an old nation with a glorious history. No Iranian government, regardless of its ideology or democratic credentials, would dare to stop the program..."

There's a nice picture of Catherine Zeta Jones congratulating Shirin Ebadi at the Nobel Peace Prize concert in Oslo, December 11 2003.

Say, Phil?

Do you have any predictions about Iran?

C Parsons, I get the impression that you have always supported the overthrow of Saddam and the actions of the COW. It would also appear that your knowledge of history is enviable.

I can’t help but wonder what your predictions were on the outcome of Saddam’s overthrow, bearing in mind that many commentators and historians warned us that current events were absolutely predictable and expected.

Just wondering what your predictions were prior the war. Do current events mirror those predictions, or were you under the impression that the Iraqi people (including the Sunnis) would welcome their occupation as predicted by the neo-cons?

Tony Phillips: "The piece has been criticised, seemingly without irony, for containing inaccuracies and misrepresentations and being just a selection of grabs."

Here's a grab they missed, I bet;

"....There were reports of more Shiites fleeing or being cleansed from communities where they are outnumbered by Sunnis...."

- Sydney Morning Herald, today

Hey? Remember when they were the 'government'?

'Democratising' Iraq is 'the big lie' that they repeat over and over (sounds familiar?) - but all the while it is and always was, murder for oil.

Some of what we know now (most of which we knew back then):

1) There were no WMDs; they must'a knowed! We said so: leave it to Blix - that would'a been enough; Saddam 'could project no force, was contained', i.e. was no (external) danger at all. No one can blame anything on the intel ($US43bio p/a); the intel was 'being fixed'. (Oh, yeah; y'could blame the intel people, for their silence, errors and omissions.)

2) There was no Saddam to Al Qaeda link; they must'a knowed that too.

3) The wish to invade Iraq was present looong before '9/11'.

4a) The 90's US inspired UN sanctions against Iraq were unsustainable; they had to end sooner rather than later, then the US stood to lose out to competitors.

4b) They wanted to 'control' the oil; Saddam was moving / had already moved to the EURO.

4c) To prop up the US petro-dollar; to continue the US' free ride by simply printing money.

4d) To 'rule the world'; ever more permanent military bases - complete and utter thugs.

4e) To support the Israeli inhumanity vs. Palestine (and the rest of the Arab world).

4f) To 'ensure their access to oil' for their obese, greenhouse causing life-style incl. SUVs.

4g) To enrich their 'mates'; Halliburton and Co.

4h) Just because 'they could'.

[Have I missed any?]

'Regime change' to a) get rid of Saddam and possibly more seriously b) democratise the ME might'a been on, but as a very poor second place reason, always.

What might'a been justified was some sort'a 'police action', but never a mass-murdering illegal invasion; see the post-WW2 Nuremberg court.

It's all too easy to show, that in the 'ruling oligarchy' of the US are some of the biggest criminals on the planet, with many of the same in the UK and Aus as willing accessories.

Also, that the US' obscene lifestyle (5% of world's people, 25% of world's resources), with that of the UK and Aus in close competition, is ruining our once-beautiful planet.

Finally, that the main-stream press/media (MSM, incl. big bits of the AusBC) are allowing (some going so far as actively helping) our so-called 'leaders' to perpetrate the most mammoth of lies - along with their mass-murders.

So: who's willing to argue:

That it wasn't mass-murder for oil?

That it wasn't mass-murder for US$s?

That it wasn't mass-murder, full-stop?

Then: who's gunna stop it, the mass-murdering criminality?

(Oh, yeah, 'an who's gunna stop the greenhouse?)