America faces a serious economic and political dilemma, which grows by the day. But to understand it, one must first honestly delve into its origins:
In 1973, the United States left the Gold Standard. It was forced to because of international gold speculators. At the time, gold was tradeable on the open market, and its price fluctuated by the day. Sometimes it was expensive, and sometimes it was cheap. But nations on the Gold Standard pegged their currencies to a fixed price of gold, agreed upon by international treaties. And their currencies were exchangeable at any time for actual American gold, because that's what it means to have a gold-backed currency.
Gold speculators were therefore able to trade in their dollars for gold at lower rates in the United States, sell that gold at a profit on the open market, and then use that money to trade in for yet more American gold, draining the stockpiles at Fort Knox. Had it been allowed to continue, the United States would have been left with a currency -- and thus an economy -- backed by nothing.
So the Gold Standard was abolished, and replaced by what has become known as the "Petrodollar", which is the American currency backed by oil. It is far more abstract, and therefore far more fragile, but the logic for it was as follows: America agreed to protect OPEC member nations and their oil from foreign aggression, and in exchange OPEC agreed to reinvest a share of their oil profits exclusively in American-controlled markets. OPEC regimes were allowed to conduct their own affairs, regardless of their human rights records, and in exchange they reinvested a significant amount of their earnings in the American economy.
Following the collapse of the Soviet Union, nearly three decades of American supremacy ruled the world. And it was backed by the Petrodollar. But it was power based only on a political promise, and a faith in the American economy, as well as ultimately in America's sanity. And beginning at the dawn of the 21st century, that agreement began to break down.
The first two nations to threaten to withdraw from the Petrodollar were Iraq and Iran. The United States under the Bush Administration promptly invaded the former, and threatened the latter with nuclear war. It was a calculated gamble to scare the remaining OPEC member states into compliance. But it failed. They began to see the Petrodollar not as an agreement, but as an imperial decree, which was enforced at the point of a sword.
And so more nations began to question the post-Cold War international order. Libya, Syria, Egypt, Yemen, and countless smaller nations began to threaten withdrawal from the Petrodollar. As American power was predicated upon keeping the world investing in the American economy, the United States had very little choice but to militarily intervene in those nations as well.
The killing blow to the Petrodollar, however, came when Russia and the Commonwealth of Independent States announced their withdrawal. In retaliation, they were hit with crippling sanctions, which the Russian economy is now beginning to buckle under. But past a certain, when a person has chosen to turn their back on more and more acquaintances in their life, they find that it is they who have in the end truly been ostracized. And this is where America now finds itself: a growing pariah state of its own making, convinced that it enjoys more popularity than it truly does.
I will not pretend to know where we as a nation will go from here. I only know that we have shuffled ever closer to a precipice, and that once we reach it, and stare down into the endless abyss, we will face some of the most consequential choices we ever have or ever will make as a people. For without diplomacy, and without friends in this world, life becomes both extremely lonely, and mercilessly perilous.
Add new comment