Dollar Crisis And The Coming Collapse Of US Global Hegemony

By Colin Todhunter

The US is bankrupt. Yet Uncle Sam continues to stride the world stage and can simply print more money to get by because the dollar is the world’s reserve currency. Remove it as the reserve currency, and the US will no longer be able to remain supreme or fund its wars by relying on what would then be a worthless paper currency. Today, more than 60 percent of all foreign currency reserves in the world are in US dollars, and the US will attempt to prevent countries moving off the dollar by any means possible.

When the US moved off the gold standard in the early 1970s, the dollar more or less became a de facto oil-backed currency. In return for protection and the purchase of US treasury bonds, among other things, oil-producing Arab states agreed to conduct their oil transactions in the US dollar. The dollar may no longer have been backed by gold, but its worth was guaranteed by the strength of the US economy and the fact that it was closely tied to another precious commodity, this time oil.

Since that time, the US has outsourced much of its manufacturing industry and economic policies have served to crank up a massive amount of debt – 16 trillion dollars worth. Paul Graig Roberts, former Assistant Secretary of the US Treasury, notes that much of the most productive part of the US economy has been moved offshore to increase corporate profits. According to Roberts, the US could revitalise its economy by bringing its corporations back home to employ people. The government could do so by taxing their profits abroad and via protective tariffs, but such moves would be contrary to the material interests (profits) of the ruling oligarchy, which dictates US politics anyhow.

A weak US economy inspires little confidence in the dollar, and trade in general and oil transactions in particular are moving off the currency. With little prospect of reinvigorating the economy at home, the US is responding by expanding into foreign markets and waging wars to maintain global allegiance to the dollar and US hegemony.

Over the past two decades, the US has extended its influence throughout Eastern Europe, many of the former Soviet states in central Asia and, among other places, in the formerYugoslavia, Libya, Iraq, Yemen, Afghanistan, Syria and Pakistan. And the issue of North Korea also has to be seen in this light. It has become a convenient whipping boy that is allowing  the US to beef up its presence in the Asia-Pacific region. As it did with Russia, the US is now effectively encircling China.

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