We live in interesting times. That Euros-For-Oil article I noted a couple of weeks ago has found an echo in the Observer, which points out that if and when the UK and Norway join the Euro, then the Brent oil benchmark, which effectively calibrates the world’s oil prices, may have to switch to Euros.
Last year the former US Ambassador to Saudi Arabia told a committee of the US Congress: ‘One of the major things the Saudis have historically done, in part out of friendship with the United States, is to insist that oil continues to be priced in dollars. Therefore, the US Treasury can print money and buy oil, which is an advantage no other country has. With the emergence of other currencies and with strains in the relationship, I wonder whether there will not again be, as there have been in the past, people in Saudi Arabia who raise the question of why they should be so kind to the United States.’
George Monbiot thinks that a global switch from dollars to euros (and perhaps yauns) will come about through tacit multilateral collusion to resist US unilateralism. Which is certainly a possibility since the globalising institutions created by the US and the UK after WW2 (the IMF, the World Bank, the GATT/WTO) acted to enforce and promulgate the dollar hegemony. It seems that the current rulers in the US have forgot that such hegemony is an earned and hard-won thing, bought through careful decades of subterfuge, sabre-rattling, and strategy, and also a fragile thing. By projecting their imperial power with such gauche nakedness while forgetting the multilateral economic fundamentals that bankroll their extravagance, they risk precipitating an economic backlash that would unravel the 5-decades-old globalisation project of which they have been the primary beneficiaries. But nobody ever accused the protectionist, revanchist morons in the Bush Gang of economic savvy.
Of course, the wonderully named Ferdinand Lips pointed out in his book The Gold Wars that it’s a sadly predictable path from a trading confederation to a centralized Republic into a militarily expansionist Empire that seeks to open markets through force. And one economic imperative for aggressive Empires is that they always try to move their economies into a current account deficit financed by fiat money (paper or scrip) rather than tangible assets. Indeed, one sign of the decay of the Roman economic system was when Nero debased the coinage to pay for his ruinous and ill-fated Germanic military campaigns (and, of course, some plush debauch pads). The resulting inflation and disruption of the evergetism patronage system was one of the main reasons he became wildy unpopular and many of the anecdotal stories about him were in fact made up by political commentators as black propaganda. In a very real way, the millenia-long ban by the Roman Church on most forms of usury, loaning-for-interest, and deficit spending was an institutional reaction against what many Medieval writers saw in terms of a ban against wickedness but some few saw in terms of conservative fiscal policy. The Holy Roman Empire that grew out of the chaos of the collapse of the Roman Empire was determined not to repeat its financial mistakes. One sign that the modern era had begun was John Calvin’s rejection of the usury ban in 1536. Indeed, it was Switzerland’s quick adoption of Calvinist economics that led to its modern pre-eminence as a centre of banking and graft. Of course, maybe the culture in which John Calvin lived led him to imagine the riches that would await those brave Protestants who threw off the Roman Church’s conservative economic shackles.
I wonder will people make up stories about the wickedness of King Bush in future centuries? I see there is even dissent among his courtiers. Alas, though, the right-wing nutjobs are firmly in control.
Earlier here.
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