"Global Credit Scam"

More from Stan Goff's highly recommended book Full Spectrum Disorder: The Military in the New American Century, this time on the "global credit scam" known as dollar hegemony, the bubble on which the whole world economy sits, and on which US power is entirely dependent:

The citizens of the United States are only indirectly paying for our military adventures. In fact, the source for funding U.S. wars is also the fountainhead of the U.S. standard of living. The true source of funding for American adventurism is to be found in the central banks of Europe, China, Japan, and elsewhere. They are paying for U.S. wars. Since the U.S. abandoned the gold standard in the wake of Vietnam (where U.S. gold reserves were depleted almost to their legal limit), these central banks—holding U.S. Treasury bonds, which are basically IOUs—have been tied to U.S. currency. The dollar is effectively shored up by oil state investments in dollar-denominated assets and slaked like a vampire by the external debts of ruined economies. No country can afford to wean itself without risking the collapse of the whole house of cards. The U.S. is in the unique position of being able to print as much money as it wants to cover current account deficits, which has indebted the U.S. to the point that they know, and their creditors know, that they will never pay it back.

In 1972, Saudi Arabia said it intended to buy up U.S. companies—productive capital instead of bonds. The U.S. showed its sword, telling the Saudis in no uncertain terms that this would be considered an act of war. The deal was subsequently sealed that the Saudis could invest as non-controlling stockholders and in Treasury bonds, in exchange for certain “security” arrangements. The Saudis helped establish the petro-dollar, and the U.S. was safe in the catbird seat.

Now Europe, for example, had to pay for its oil in dollars, loaning their own value, as it were, to the U.S. for dollar paybacks through Treasury bonds. Europe was being forced to maintain large reserves of dollars to defend themselves from currency speculators, after the U.S. also abandoned fixed currency exchange rates. But this meant that the U.S. could pay for oil in money that it could print, which it did—a practice that would normally devalue the currency in an open market, were it not for the fact that the same devaluation would now wipe out creditors like Europe. This catch-22 remains the basis of dollar hegemony, which is the basis of U.S. economic hegemony. And it means that the U.S. government's debt is now a kind of Mafia arrangement, where Europeans and all the rest are essentially being “taxed” by this practice. They know the U.S. will never pay back its debt, but if they try to sell off their Treasury bonds, the dollar will crash down around all of them, beginning with their own central banks. So they are making “loans” via Treasury bonds that they already know they'll never get paid for. This is what is financing U.S. militarism.