Alex Wallenwein,APRIL 2003 :
Forget about Bush's "axis of evil." Iran, Iraq, and North Korea are mere molehills in the current foreign policy landscape.
There is a groundswell of changing alliances in the making. It's already obvious manifestations are staring us right in the face - but we continue to talk and think as if the map of Europe was still composed of many differently colored splotches as it always had since WWII.
What formerly were friendly nations have become hostile elements of a newly emerging, competing power bloc. The major players in this regrouping of decades-old alliances are busily forming a new "axis", and after being publicly humiliated in the foreign policy arena for their blatantly pro-Saddam stance in the run-up to the US invasion of Iraq, they are about to turn the tables on the US, but this time on the economic battlefield.
The world has changed.
But it has not changed because of the US invasion of Iraq. Rather, the invasion and subsequent "liberation" of Iraq by coalition forces has only served to highlight the near-completion of a change that was in the making long before 9-11.
The international alliances most of us have grown up with and have learned to take for granted are now simply dead. They no longer exist, save in words only. Germany no longer is an ally of the United States. France probably never was, but now doesn't even feel the need to pretend anymore. Both countries now feel more sympathy and commonality with such benevolent regimes as Russia and China, with pre-war Iraq, Iran, Libya, Saudi-Arabia, and the Palestinian Authority, rather than with their old buddies, the US and Israel.
What changed them?
For one, these two European states are no longer "countries" in the classical sense. They have assumed a new, larger identity. They have divested themselves of key elements of their former national sovereignty, such as the power to determine who and what comes in and goes out of their borders, their own national currencies, and important trade decisions. They are now elements of what they perceive to be a pan-Eurasian axis.
As such, they feel they are destined for greater things in the world of men. No longer are they to chafe under the heavy burden of viewing themselves as having once been "saved" by the US from communist Russian aggression (in the case of Germany), or German aggression (in the case of France). Now, together, they are a force to be reckoned with, they think, a power of their own. As the saying goes: one finger can be broken, but five fingers make a fist.
They now have a super-currency, the euro, which further reduces any sense of national identity (and apparently causes widespread amnesia of their national histories as well).
Judging from the alliances they have forged, they apparently also lost any sense of who their natural allies vs. their natural predators are. As recent history shows, they are willing to embrace brutal, murdering dictators and totalitarian regimes, "trading with the enemy" so to speak, while acting and talking as if the US was their foe.
Well, in a way it is, although the word "foe" may be a bit too harsh. Let's say the word is "adversary" or "competitor."
But, competitor in what?
Power - and it's little brother: money. For their new common currency, the euro, has taken on a characteristic that puts it into direct conflict with the US dollar.
The dollar is a purely debt based currency with an adverse relationship to gold. Gold is the dollar's nemesis. When the gold price goes up, confidence in the dollar decreases and people start selling dollars.. It's usually a sign of impending or prevailing inflation.
The euro, on the other hand, has a "positive" relationship to gold. The European Central Bank, and all the euro member's central banks, value their gold reserves quarterly at actual market prices. That means, as the price of gold goes up, the value of their currency goes up as well, and by signing the "Washington Accord" in 1999 they have announced to the world that the dollar's gold-suppression jig is up.
The dollar is still hamstrung by being tied to an artificial, government-decreed, quasi-official price of gold at the whopping rate of $42.222 per ounce. [See Title 31, United States Code, Section 5117(b).] Obviously, with the market price of gold currently above $330, that "official price" has nothing to do with the realities of the gold market. It is actually a remnant of the gold standard days when every dollar was immediately convertible into gold on demand, at a stated rate.
Being thus tied down, the US government and banking elite can never afford to let the price of gold float freely according to actual market forces (yes, that old, worn-out "demand and supply" thingy. Gets you all the time!)
This little difference in the valuation of gold makes the euro the undisputed, hands-down future winner of the euro vs dollar conflict. Well, not really the future winner anymore. The euro has already delivered its knock-out punch. What you are witnessing is the agonizingly slow fall of the US dollar giant to the floor of the boxing ring. It's just too early for the count.
Without going into the intricate details of the relationship, the euro's guaranteed future success can best be explained this way: free market forces can never be violated with impunity for a very long time. They always reassert themselves - sooner or later.
The euro was constructed to take advantage of free market forces - especially the free market of gold. The dollar is anchored in a useless, repressive scheme that cannot allow market forces to prevail vis-a-vis gold.
Ergo, the dollar is doomed.
And that is precisely the cause for the cold shoulder central Europeans are currently showing the US. They know they got the dollar "bagged," and the dollar's past and current reserve-currency status makes it an extremely worthwhile target for them, indeed.
Once it is replaced as the world's reserve currency, the dollar - and with it the United States - will cease to be a world superpower. Such is the calculation of Europe, and that calculation drives it directly into the arms of Mother Russia.
Of course, mother Russia welcomes Germany and France. Soon mother Russia will swallow (uhhum, "join") greater Europe. When Russia and Europe merge, merge they surely will - but not in the way Europe anticipates. Russia will be the last one to laugh. She could not compete with Reagan's America militarily or economically. Now she simply sits back and watches Bush's America exhaust herself fighting the price of gold - a fight which strengthens the euro at every turn.
The more America struggles, the more the euro's noose tightens around her neck. And the Russian bear sits back, ready to devour the certain winner.
America is like a sheep, still oblivious of the euro-pean threat, grazing happily on the greenback's still-lush pastures. And Europe is like a splendid salmon in the river of economic life, swimming and jumping mightily toward what it believes to be its ultimate destination, blissfully unaware of the bear that waits, one paw raised, a frozen statue of cunning and death.
Alright, enough melodramatics. The bottom line is: when the euro defeats the dollar and America crumbles, Russia will devour Europe, China will devour Asia, and then both will probably fight over the scraps that remain of America.
And all of America's current military might will lay waste when the international currency reserve dollars return home, causing hyper-inflation and economic havoc. There will be no more financial power to pay for expensive military campaigns. All of her recent victories in Afghanistan and Iraq will be forgotten, unless ...
... unless Sir Alan "Greenspin" and George W. Bush wise up and take the lid off the gold price, let the dollar ride its inevitable ascent, and retain a chance to compete with the euro for world reserve currency status on a more even playing field.
It would truly be ironic if the US, the country that always harped on other countries' needs to adopt more "free market" strategies, should do itself in by fighting free market forces, while the "free gold" euro becomes the currency of socialist and totalitarian regimes of the world - and defeats the supposedly free-market, capitalist United States in the process.
Well, nobody could ever say that God doesn't have a sense of humor.
And who is the total, undisputed winner in this contest?
As the dollar crumbles and loses its control of the price of gold, the yellow metal will soar to heights theretofore unimagined. Nothing will stop it. All economic forces will aid it in its ascent to investment orbit, where it will stay for many years to come, cruising the outer ionosphere of the financial continuum because, at that time, gold will be favored by the money powers of the world including - of all creatures of the human mind - the world's most powerful central banks.
For then, a rising gold price will boost their collective reserves, and therefore their currencies' values, not undermine them as has been the case before the euro's advent.
Gold will be free, and the dollar will be dead: so be careful where you put your money !
April 30, 2003