On The Brink of World War Three

The reason for most wars is massive economic tensions between competing nations or a huge economic crisis of a single nation that tries to solve it with violence to the outside. After all, war has to be financed, and without the support of big business and the big banks, no major war could ever be fought. So there must be at least the promise of a big financial profit for high finance to make them support it. The reasons for the U.S. war against Iraq are certainly multifold, but those given by the U.S. government-humanitarian assistance for the Iraqi people and destruction of phantom-like weapons of mass destruction-can easily be dismissed as something that would certainly not open the wallets of Wall Street. So what economic reason drives the U.S. to destabilize an entire region, pushing the world to the brink of a global conflict? The following will argue that nothing less than a looming collapse of the Dollar and subsequently the danger of a collapse of the USA, as the last super power, is the driving force behind the desperate, but futile, attempt of the U.S. government to try to force the world to recognize its economy and its currency as the central market place on earth.

1. A Close Look at the US Economy

I will not deal here with inflation, the growth of the Gross Domestic Product (GDP), unemployment rates, interest rates, or similar parameters, which are all subject to various factors and-unless they show extreme values-do not really reveal anything about the shape of a country's economy. What is decisive in the context of this article, though, are the following factors:

1. Public debt in relation to GDP
2. Private debt and savings
3. Foreign trade balance over an extended period of time

1.1. Public Debt in Relation to GDP

Graph 1 shows the development of U.S. public debt in absolute figures and compared to the GDP, Graph 2 gives figures corrected for inflation. Graph 3 shows the GDP between 1940 and 2002 corrected for inflation (1996 dollars)

Graph 1: Public Debt of USA[1]

Graph 2: Real Public Debt of USA (based on 1990 dollars)

Hence, in 2002, the U.S. had a relative public debt of 60% of the Gross Domestic Product. Historically seen, the situation was much worse at the end of World War Two, when public debt was roughly equal to the GDP, but in the booming years thereafter, this ratio fell to a minimum in 1981 of just over 30%. What followed thereafter has become known as “Reaganomics”, that is, the governmental spending of huge amounts of money borrowed from the Federal Reserve Bank, which means it was created out of nothing. This tendency was slowed down under Clinton, but accelerated again in 2002 under Bush junior.

1.2. Private Debt and Savings

It is a well-known fact that Americans live on loans and mortgages. This is also reflected in the nation's accumulated private savings and private debts. Until 2000, private savings and investments rose steadily to a maximum of 1.8 trillion dollars. However, since 1998, private savings grew considerably slower than the GDP, and since 2000, private net savings actually decreased, to reach a low of 1.55 trillion dollars by the end of 2002, with the tendency of further reduction. Graph 4 shows the development of private savings in percent to the GDP. For decades, savings grew almost steadily, but since 1998, U.S. households as well as businesses spend more than they save. A similar trend can be seen in debts. In 2001, the average U.S. businesses had debts that were roughly 6.25 times higher than its yearly profits. Overall, the ratio between debt and available yearly income rose steadily from 80% in 1956 to over 170% in 2001, with a sharp increase of this ratio since 1998, see Graph 5.

Graph 3: Real Gross Domestic Product of USA (based on 1996 dollars)[2]

Graph 4: Private Savings in % of the GDP in USA[3]

Graph 5: Ratio of Private Debt to annual available income[3]

In total figures, private debts in the U.S. today amount to twice the GDP, or some 20 trillion dollars, compared to a total of private savings of only 1.55 trillion dollars.[4] Some 80% of these debts are covered by real estate, but consumer debts amount to some 2 trillion dollars.

1.3. Foreign Trade Balance

Having debts is not necessarily a bad thing. It all depends on who owes whom and if it is possible to pay it off. However, a look into the foreign trade balance of the U.S. reveals that the U.S. is not just dealing with Americans owing Americans, but with Americans owing foreigners. Graph 6 shows the accumulated trade balance of the US since 1940. The first year with a massive trade deficit (32 billion dollars) was 1983, which happens to be the same year in which public debt rose considerably for the first time since 1945. Ever since, the U.S. trade deficit has increased dramatically. Today, the U.S. owes almost 3 trillion dollars, or 30% of its GDP, to foreign nationals or nations.

1.4. The Consequences

Any company displaying such figures would have long ago gone bankrupt. But the United States of America is still functioning. The reason for this is that the world still has faith in the dollar. Most of the money that flows abroad as a result of the U.S. trade deficit comes back, by foreigners investing their profits mainly in U.S. government bonds, that is, by financing the public debt, which in turn fills the financial holes in the U.S. economy. This can, of course, work only as long as the worlds does not lose faith in the U.S. dollar and has no alternative to it.

2. The Euro, an Alternative to the US-Dollar?

2.1. Exchange rate to the Dollar

In 1999, the European Currency was introduced in 12 European countries. Since the participating countries are economically and politically very heterogeneous, it was assumed that this currency would not be very successful, but would steadily lose value compared to the US Dollar. Initially, this turned out to be true. The Euro reached its lowest point in late 2000 (1.20 € for 1 $). However, something decisive happened which made this trend turn around, see further down below, and the Euro started to rise steeply, reaching its highest value on March 11, 2003, with 90 €-cents for 1 $, see Graph 7.[5]

2.2. Europe's Economy Compared to the US Economy

Regarding unemployment, growth and public debt, Europe's economy is certainly not in a better shape than the U.S. economy. Whereas the public debt of the US is at 60% of its GDP, it is on average at 70% in the European countries.[6] But Europe has two advantages: it usually has a trade surplus-in 2001 of some 25 billion dollars[5]-and private savings and debts are basically balanced.[7] As a result of this, foreign nationals and entire nations owe Europe roughly one trillion dollars.[8]

Particularly interesting is a look into the economy of the economical motor of Europe, Germany. Plagued with all the major issues of basically all European economies-high unemployment, high public debt, low growth-it is still the second biggest exporting nation on earth after the US and has the biggest foreign trade surplus of all countries in the world, with a stunning 126.3 billion Euros in 2002, which was an increase of 45% compared to 2001 (87.1 Bill. Euros), after it had a fairly constant value of around 50 to 70 billion Euros over the last two decades.[9] Hence, it comes as no surprise that private savings in Germany are very high.

Graph 6: Accumulated trade balance of USA[2] and Germany[9] (values for 2003 extrapolated)

Graph 7: Euro exchange rates for the Dollar[10]

2.3. Japan is no Rival Anymore

Between 1991 and 2001, Japan's ratio of gross public debt to GDP rose from 61 per cent to 131 per cent, much the highest for any developed country, and it is growing quickly.[11] Total private debts in Japan are almost four times as high as its GDP, which is more than three times the factor of the US private debt. Those ratios in Japan are being made worse every month caused by deflation, which at perhaps 4% annually in Japan (measured in consumer prices) is the most pronounced in the world. The reason for this deflation is the huge overcapacity of Japan's industry.

Deflation aggravated the Great Depression in the U.S. in the 1930s, and this new one, with its current center in Japan can spread. End of April 2003, I accidentally heard a radio commercial in the US, in which Mitsubishi offered cars for negative interest with a slogan like this:

They give consumers money to have them buy their cars!

What if Japan devalued the yen, taking it from 133 to the dollar to 140 or 150? These Mitsubishis would then be even cheaper for U.S. customers.

At the same time Japan faces a debt bomb at home, it is also the world's largest creditor, which means that Japans savings are invested abroad, a result of decades of huge foreign trade surpluses. If its banks were panicked into calling in overseas loans, because the Japanese decide they have to pay back their private debts, an economic contraction would sweep America and the globe.[12]

In other words: After the economic crisis in East Asia in the late 1990s, Japan is at the brink of a collapse comparable to the Black Friday in the US in 1929. What holds the Japanese economy together is pure fear of the consequences and the hope that world economy will sooner or later pick up again, allowing Japan's over-capacity to be put into operation again.

3. The Euro, a Perfect Reason for War

3.1. Reactions to the Euro

What would it mean to the US economy if the Euro would be accepted by the world as an equal competitor of the US Dollar?

In the recently released book Behind the Invasion of Iraq, Indian economists have thoroughly analyzed the situation the U.S. finds itself in. I quote:[13]

“In the 1970s, there was no alternative to the dollar. On January 1, 1999, an alternative arose in the form of the Euro, the new currency of the European Union (EU). Of course, investors did not immediately flock to the Euro. The Euro stuttered at birth, falling 30 per cent against the dollar by the end of 2000. In the last year, however, it has picked up sharply, and in recent months has remained at parity with the dollar (i.e. about one Euro per dollar).

The Euro has become attractive for three reasons.

First, since the EU is a large imperialist economy, about the same size as the US, it is an attractive and stable investment for foreign investors.

Secondly, since foreign investors' holdings are overwhelmingly in dollars, they wish to diversify and thus reduce the risk of losses in case of a dollar decline: they are increasingly nervous at the size of the US debt mountain and the failure of the US government to tackle this problem.

Thirdly, certain countries smarting under American military domination sense that the rule of the dollar is now vulnerable, and see the switch to the Euro as a way to hit back.

Thus even in November 2000, when the Euro was 30 per cent down against the dollar, Iraq demanded UN approval to be paid in Euros in the UN oil-for-food programme. This despite the fact that the currency markets at the time did not see a rebound for the Euro and despite the fact that Iraq would make the switch at considerable immediate cost, losing 10 cents a barrel to compensate buyers for their currency conversion costs. Iraq also asked that the $10 billion in its frozen bank account in New York be converted to Euros. The UN, a plaything of the US, resisted the change until Iraq threatened to suspend its oil exports.[14]

Iran, which the US has now labelled, along with Iraq and North Korea, as part of an 'axis of evil', is also contemplating switching to the Euro. The Iran National Oil Company welcomed the launch of the Euro in 1998 itself, saying that 'This money will free us from the rule of the dollar', and we 'will adopt it'. The national oil company and other major Iranian companies have made it clear to both their European and Latin American oil partners that they would 'prefer the Euro'. While Iran continued using the dollar thereafter, there are indications it could follow Iraq's example. The Iranian government budget for the year to March 2002 was tabulated in dollars, but in December 2001 an oil ministry official said that 'could change in the future'. Iran News (12/29/01) called for a switch to the Euro for both oil and non-oil trade:[15]

Some in Saudi Arabia have called for switching to the Euro as 'a more effective punishment [than an oil embargo] for the United States, Israel's principal source of financial and political support'.[16]

At the Russia-European Union summit in May 2001:[17]

Another likely candidate for switching to the Euro is Venezuela, whose leader Hugo Chavez the US has been attempting to oust over the last year, without success (at the time of going to press). It is not only the oil economies that would make the switch (for example, North Korea too recently said it would convert its foreign exchange reserves to the Euro); but the shift of the major oil exporters to accepting payment in Euros would indeed have a major, potentially devastating, impact on the dollar.

The more countries that switch to the Euro, the more attractive would be the Euro.” End quote.

3.2. The Impact on the Dollar

What would happen if the Euro became an equal competitor of the US Dollar? The answer to this might be rather easy: with its imperialistic politics especially of the Post-Cold War era, the US has made so many enemies around the world that an acceptance of the Euro as an equal competitor would probably lead to a massive relocation of the world's monetary values to the Euro. This means that the US trade and public deficit could no longer be financed with incoming foreign investments and that a lot of older investments would be withdrawn. Hence, the consequence of a successful Euro would be nothing short of a total collapse of the US economy and thus the end of US imperialism, hegemony, yes, the demise of the United States as a super power, at least temporarily.

However, a collapsing United States would have a devastating effect on the entire world economy, leading to a worldwide economic crisis compared to which the crisis that started in 1929 would look like a breeze. After all, it is not only the U.S. economy that is built on sand. It might be the weakest link in the chain, but most industrialized nations are in deep financial trouble as well, caused by massive over-capacity and huge public and private debts.

Normally, one way out of an exploding trade deficit would be the devaluation of the nation's currency, to make imports more expensive and exports cheaper. Such a solution, however, would mean that the dollar becomes less attractive to foreign investors, again with the Euro as the winning currency. To keep investors in America, interest rates would have to rise, but this would throttle domestic consumption, which is already dangerously low. Hence, the USA finds itself in a no-win situation.

3.3. Backing the Dollar with Oil

Even though the US imports huge amounts of oil, it is far less dependent on these imports than other industrial countries in Europe and East Asia, thanks to its own natural oil resources. Being able to control prices and distribution of the Arab oil reserves be means of dictating the currency to be used for payment and by politically and militarily controlling this part of the world would not only stabilize the dollar, but would also put all the other competing industrial countries at the mercy of the USA. If, on the other hand, the Euro would be accepted as a currency in the oil trade, this would certainly mean general economic upheaval for the US. Since the oil exporting countries are also those who pioneer the idea of accepting Euro as payment for their oil-Iraq being the first to actually do it-nothing is more logical than trying to get those oil exporting countries to stick to the dollar, no matter what it costs. At stake is the mere existence of the US as a dominating power. Being able to control the oil market with its currency and with its military power is the only option left to the US. And since all peaceful attempts have failed, war seems to be the only solution left.

However, a war will only increase the world's hostility toward the US, hence also the inclination of many countries to switch over to the Euro, and it will furthermore increase the domestic economic problems of the US by massively increasing public debt. Hence, war will perhaps delay America's economical problems to surface for a short period of time, but it will not prevent the coming crisis.

4. Other Reasons for War-Real and Imagined

4.1. Religious Fundamentalism

In this situation, Israel plays an important strategic role in the Middle East as a country equipped with a huge arsenal of conventional weapons and weapons of mass destruction and the determination to use them. Israel will serve as a tool-with its own imperialistic and expansionistic agenda-to subjugate the Middle East.

On the other hand, the Jews in Israel and all Zionists around the world know pretty well that a major economic collapse of the US would mean the end of Israel in the long run. Therefore, Israel will be more than ready and happy to assist the US in its imperialistic conquest of any petrol exporting country in the Middle East.

As such, it cannot come to anybody's surprise that many of those individuals in the Bush administration and in the US media who pushed for or promoted the war are Zionist Jews, often euphemistically referred to as “neo-Conservatives,” as Chalmers Johnson,[18] Jason Vest,[19] Pat Buchanan,[20] and Congressman James Moran, a pro-Zionist Democrat,[21] and other individuals and oorganizations[22] have pointed out recently. As a result of his harmless remark, J. Moran is now strongly advised not to run for re-election,[23] which is evidence enough of the real power of the Jewish lobby.[24] Ironically, the leading Israeli newspaper Haaretz admitted shortly thereafter that Moran is right:[25]

But it should also be mentioned that some of the most ardent opponents of this war are Jews as well: Noam Chomsky[27] and Gore Vidal.[28]

Another contributing factor is Christian fundamentalism in the form of the Southern Baptist Church and the Pentecostals, two protestant denominations which dominate the southern parts of the U.S., the so-called “Bible Belt.” A considerable part of the U.S. Republican Party is strongly influenced by these groups, e.g., George W. Bush and Attorney General John Ashcroft are active members in them. Many of these Christians are fervent supporters of the Jewish right to defend and even expand the territory of their “Holy Land” with any means, and they generally have a very hostile, crusade-like attitude toward Islam as being an evil to be fought. These radical Christians do not shy away from risking a major war in the Middle East, because in their eyes this would just be the fulfillment of the New Testament's prophecy of the upcoming Battle of Armageddon and the second coming of Christ.

No need to say that Islamic fundamentalism is contributing to the tensions as well, meaning that not all accusations of civil right infringements leveled against Arab countries are totally unfounded. The problem is that Iraq is the most secular country of all Arab countries, and that there is no evidence that it ever supported Muslim extremists.

4.2. Weapons of Mass Destruction

In August 1945, U.S. bombers dropped two atom bombs on Japanese cities. During the Vietnam war, U.S. airplanes poured out thousands of tons of agent orange over thousands of square miles. And just recently, in the wake of the eternal war on terror, the U.S. administration declared publicly that it keeps its option open to use tactical nuclear weapons even against countries which do not have such weapons.

There is neither doubt that Iraq once owned and used weapons of mass destruction in its war against Iran, nor that it received those weapons or the supplies and technology to build them mainly from the United States and her allies. There has been plenty of speculation, however, whether or not Iraq has weapons of mass destruction today. The most stunning revelation about the bogus nature of claims made in this regard by the U.S. administration was broadcasted in early 2003 during the first issue of the political TV magazine Active Opposition by the American left-wing opposition TV station World Link TV, dispelling the myth that Iraq had any such weapons.[29] Fact is that during the first day of the war, CNN announced that Ariel Sharon, minister president of Israel, had remarked there would be no danger for his country because Iraq had no capabilities to attack Israel, which is revealing enough.

U.S. Rep. James Moran during his criticized speech on the Jewish role in pushing the U.S. into war against Iraq.

On the other hand, there can not be any doubt that other countries do possess weapons of mass destruction, starting with China, North Korea, Iran, Egypt, Pakistan, India, and many more.

Hence, when it comes to the amount of weapons of mass destruction accumulated, the history of its (ab)use, and the declared will to use it, the United States of America should be the first nation on earth to be declared war against, if any. This is not meant to encourage war against the U.S. I merely want to point out that the argument of having produced, abused, and declared to keep using such weapons can easily be turned around and used against the USA. So the U.S. administration should watch out what arguments they use to justify their wars.

4.3. Humanitarian Reasons

The ruling Baath party in Iraq rose to power after a putsch in 1963, which had been massively supported by the U.S. It was also the U.S. which pushed Hussein into the war with Iran after the Iranian fundamentalist revolution in 1979. As is generally known, the U.S. has repeatedly supported and even installed dictatorships all over the world, also by supporting putsches against democratically elected governments. Finally, there is a sheer endless number of non-democratic societies on earth, starting with all Arab nations, some of which are massively supported by the US (like Kuwait, Saudi-Arabia, Algeria, Egypt, Jordan…).

Furthermore, the current humanitarian crisis in Iraq is mainly a result of sanctions imposed on Iraq which, in the opinion of most countries of the world, are unfairly harsh. For example, the current sanctions do not even allow for the delivery of basic chemicals (Chlorine) to treat Iraq's water so that it is potable, to give just one example. Despite many protests by UN representatives, the sanctions are upheld mainly due to U.S. and British pressure. The despicable cynicism of U.S. politics toward the people of Iraq became more than obvious when the then U.S. Secretary of State Madeleine Albright, asked whether the death of 500,000 innocent Iraqi children that occurred between 1991 and 1996 would be worth continuing these cruel politics, cynically answered that she thought it was worth it.[30] In the meantime, some 2,000,000 Iraqis, half of them children, have died in excess of the normal death rate as a result of the imposed sanctions, which, according to Denis Halliday, humanitarian coordinator of the UN in Iraq, is nothing short of genocide.[31]

Of course, fighting a dictator who suppresses his own people is permissible. But who can still remember the lies invented prior to the first war against Iraq, claiming that Iraqi soldiers had ripped babies from incubators and killed them?[32] The whole story was invented, but played a major role in convincing the U.N. Security Council to vote for war. And who remembers the grotesquely exaggerated story about Hussein's army killing hundred thousands of innocent Kurds in the north of his country? It is still repeated today, with great effect but no supportive evidence.[33] It should also be pointed out that after the 1999 war against Serbia, the mass atrocities allegedly committed against the Kosovo Albanians turned out to have been massively exaggerated.

Truth is the first casualty of war. That has always been so, and just because the U.S. wages an allegedly just war doesn't change this old wisdom. So we may be up for some surprises about certain humanitarian claims with regards to the second war against Iraq as well.

Still, Saddam Hussein is no angel. But then again, if looking for crimes against indigenous populations by ruling governments, why not turn an eye to Israel that is currently ethnically cleansing its occupied territories from the Palestinians, that is, committing genocide? Or why not ask the questions why the U.S. sat and sits still while tribes in Africa kill each other in the hundreds of thousands? Or just look to Algeria, where the military dictatorship installed with the help of the U.S. is waging a cruel civil war against its own population with tens and hundreds of deaths daily? Or should we remind the reader of Pinochet, to name only one cruel dictator installed and kept in power by the U.S. for decades?

The truth is that humanitarian arguments are of interest to the U.S. government only when they are in line with their political agenda. Then they are emphasized, exaggerated, or even invented and used as arguments to convince the gullible public which is more than eager to accept humanitarian reasons as a justification to the mass murder called war. But a gigantic military apparatus financed with the help of corporate America and the high finance can hardly be convinced to go to war in order to install a (most likely unstable) democracy in a remote desert country or to (temporarily) enforce human rights. They have power and money on their minds, not civil rights and fair voting systems.

The long-term strategy for world domination exposed

4.4. World Domination

And that is where the last reason to go to war against Iraq comes from. On March 5, 2003, ABC Nightline's Ted Koppel presented a documentary entitled “The Plan,” which revealed how “neo-Conservatives” like Dick Cheney, Donald Rumsfeld, Paul Wolfowitz, Robert Zellic, Richard Perle, and John Bolton, to name only those who are now high up in the Bush administration, have been planning a U.S. world domination since 1997, including the replacement of Hussein in Iraq with a system friendly to the U.S. Their plan with the title “Project for the New American Century,” and a letter suggesting such politics, signed by 40 neo-Cons, was sent to Clinton in 1998, but obviously rejected.

In this blueprint for a more aggressive U.S. policy for world domination, it says, the process of transforming U.S. policies shaped by the Clinton administration would likely be a long one, provided there would not be some catastrophic and catalyzing event, like a new Pearl Harbor. If 9/11 wouldn't have happened, it reads as if it needed to have been created…

According to Bob Woodward,[34] it was only 30 hours after the 9/11 attacks that Rumsfeld asked the President, why shouldn't the US go against Iraq, not just al-Qaeda? At the Pentagon on September 13th, Wolfowitz, for the first time, alluded to that broader goal.

William Kristol, chairman of the Project for the New American Century, explained during this ABC Nightline documentary that North Korea and the removal of any other Arab dictatorship might be the next steps, which would also include the instable Saudi Arabian Monarchy-but probably not those dictatorships installed or massively backed by the U.S. in order to avoid hostile regimes, like Egypt, Jordan, or Algeria.

Though it is doubtful that the U.S. will go against North Korea with force-after all, there is no oil in North Korea and they do have nuclear weapons ready to be used also against the U.S. west coast-the concept of re-colonizing the entire Middle East becomes clearly visible, which brings it all nicely together: Israel/Jewish interests, securing of oil, enforcing the domination of the U.S. dollar, threatening the entire world with intervention in case of lack of compliance, and all of this behind the cover of spreading democracy and fighting terrorism and tyranny.

5. On March 18, 2003, World War Three Began

What we witness unfolding in Iraq is nothing more than the very beginning of World War III, of the Anglo-Saxon countries (USA, England, Australia) and Israel against the rest of the world. It is a desperate attempt of the Anglo-Saxon world to postpone the collapse of its world domination, and it is the desperate attempt of Israel to prevent its final demise.

But they can buy only some time. They may be able to subjugate Arabia and to scare the rest of the world away from the Euro, but they cannot prevent the collapse of the US economy in the long run, since this country's economy is rotten to the core. If it does not collapse this year, then perhaps next year. But it won't take very long before it comes crashing down. In other words: Even if the U.S. wins the war in Iraq—and there cannot be any reasonable doubt that they will—it will lose in the long run anyway.[35] And since the world can openly see the massive Jewish assistance in this ugly, bloody, imperialistic game, it spells disaster on them as well.

At the core of it all lies one country's economic superiority and political wit: Germany. Already World War One and World War Two were fought by the Anglo-Saxon countries with the assistance of Zionist lobby groups to crush this most dynamic and successful competitor. This time, Germany was very smart: It has merged itself into a framework of European nations, has given up control over its own currency, and has done nothing that would allow anybody to accuse it of being nationalistic, imperialistic, xenophobic, anti-Semitic, militaristic, or what have you. To the contrary: Germany is fiercely persecuting any individual or group that promotes anything which could and would be interpreted by certain lobby groups as being nationalistic, xenophobic, anti-Semitic, revisionist and so on.[36] But the Euro's Central Bank is in Frankfurt, Germany; its policy was and is shaped according to the successful model of the Deutschmark; and the driving engine behind Europe's economy is without any doubt Germany.

The only way the US has to gain back its currency monopoly would be by destroying the country that is at the heart of the Euro, that is, by waging a Third World War against Germany. But that it cannot do because Germany has been a good girl since 1945, and the nuclear power France is standing at Germany's side, encouraged by Russia and China in the background.

Notes