Cost, abuse and danger of the dollar
By Rudo de Ruijter,
use dollars outside the US continuously pay a contribution
to the US. It comes in the form of an inflation of 1.25
million dollars per minute. This is the result of the fast
increase of the US foreign debt. Half of all US’ imports are
simply added to the foreign debt and paid for by the foreign
dollar holders through inflation.
Moreover these dollar holders do not seem to realize, that
the dollar rate they are looking at, is nothing more than a
dangerous façade. If they don’t understand what is still
keeping it upright, the façade may hit them by surprise.
Meanwhile, well camouflaged, the dollar is at the center of
several US’ conflicts.
- World wide demand for dollars
- Free shopping for the US
- Bankrupt and still continuing
- Dollar reserves Japan and China
- Camouflaged conflicts
- How do you steal oil reserves?
- Euro versus dollar
- Green cancer cells
1. World wide demand for dollars
Up to 1971, each US dollar represented a fixed amount of
gold. The US disposed of enormous gold reserves, which
covered the total value of all issued dollars. When foreign
banks had more dollars than they wanted, they could exchange
it into gold. That was the main reason why the dollar was
accepted world wide.
In 1971 the gold guarantee for the dollar was lifted. In
fact, this was an emergency move of president Nixon: the
Vietnam war had cost more than the US could afford and more
dollars had been printed than the gold reserves allowed.
Since then, the value of the dollar is established by the
law of offer and demand on the exchange markets.
In the early seventies the US still produced enough oil for
its own consumption. To protect its own oil enterprises
against foreign competition, oil imports were limited. In
exchange for the lift of limitations, the OPEC countries
promised they would only accept dollars for their oil. The
dollar was the most used currency in the world trade. So
Since 1971 everyone who wants to import oil, has to buy
dollars first.  That is where the fun starts for the US.
Almost everybody needs oil, so everybody wants dollars.
Oil buyers from all over the world hand over their yens,
crowns, francs and other currencies. They receive greenbacks
in return. With those dollars they go and buy oil in the
OPEC-countries. The OPEC-countries will spend the money
again. Of course, they can do that in the US, but also in
all other countries in the world. Everybody wants dollars,
for everybody will need oil again.
2. Free shopping
this oil trade a huge amount of dollars is needed. Many
dollars will stay in the permanent money cycle outside the
US, that is to say between the OPEC-countries and other
Note: The US consumes 25 percent of the world oil
production. In 2004 it imported about half of its needs. Tendency quickly
deterioating: by 2006 it needed to import 60%.
At the start there were not enough dollars for this. They
had to be printed.  It cost the US paper and ink. But
then the enormous benefit arrives: there is only one way to
get those nice new greenbacks out of the country: the US
goes shopping abroad. And as these greenbacks remain abroad
permanently, the US never delivers something in return. So,
these shoppings are for free!
This free shopping did not only occur at the start. As soon
as more dollars are needed in the oil trade, by increase in
price or volume, that means free shopping for the US.
The same thing happens when the number of dollars in the
rest of world trade increases. Globalization, free world
trade, world wide privatisations of public services, like
gas, water and electricity supply, phone and transportation
companies, swallow enormous amounts of dollars. Each minute
more dollars disappear in every little corner of the globe.
And, in the first place, each time this means free shopping
for the US!
Of course those free shoppings create a debt for the US.
For, some day, the foreign countries could use those dollars
to purchase things in the US. Then, finally, the US has to
deliver “something” in return.
to avoid problems, the US should take care, that their
purchases and sales stay balanced. After 1971, when more
dollars were put into circulation, only in 1973 the US sold
more then it bought. Afterwards the situation declined, and
each year the US bought more foreign goods they never paid
In the year 2004 alone, the shortage on the trade balance
was $ 650 billion!  On a population of 300 million people
this means, that on average, each US-citizen purchased for $
2,167 of foreign goods they did not pay for!
In the same period, there were no improvements on the
balance of payments. So the foreign debt of the US raised
with $ 650.929.500.000 in one year. This is one and a
quarter million dollar per minute!
US’ trade deficits are the biggest with China ($162
billion), Japan ($ 76 billion), Canada ($ 66 billion),
Germany ($ 46 billion), Mexico ($ 45 billion), Venezuela ($
20 billion), South-Korea ($ 20 billion), Ireland ($ 19
billion), Italy ($ 17 billion) and Malaysia ($ 17 billion)
The exchange rate of the dollar
Each country which purchases more than it sells, will see
the value of its money diminish. If you can not do a lot
with a currency, demand decreases and its exchange value
goes down. But what is true for all other currencies, is not
true for the US dollar. As long as the whole world needs
dollars to purchase oil, there will always be demand.
consumes ¼ of world oil production. When the dollar rate
climbs, only the price for the other ¾ of oil consumers will
get higher. For the US the price stays the same.
When the oil-price climbs, more dollars are needed in the
cycle. If oil consumption remains the same, those extra
dollars can be printed and added to the cycle without
decline of the exchange rate. Since the US imports 1/8 of
world oil consumption, 7/8 of the extra dollars are needed
outside the US. This means that at each increase of the
oil-price, the US finances the increase with new greenbacks
and sells 7 times as many new dollars abroad. Free shopping
and making debts!
The US disposes of a wide range of tricks to influence the
exchange rate. Put more dollars in circulation when the rate
goes higher than wanted. Buy back dollars themselves when
demand decreases, for instance by issuing bonds.
However, this solution costs money: the interest. All those
interests together have reached such high levels, that new
loans have to be contracted each time to pay for them. US
debts increase faster each time!
3. Bankrupt and still continuing
http://www.courtfool.info/ US_Debt_Clock.htm you can
see the current debt and you can see how much it grows each
second… 45 % of it is to be paid back to foreign borrowers.
The foreign debt is that high, that the US cannot pay back
her debt anymore. The US is bankrupt.
Nevertheless dollars are still traded normally. For the
purchase of oil and gas they are still needed. And, misled
by an apparently healthy exchange rate, the world trade
continues to do its transactions in dollars. Business as
According to the usual logic of economics, a lower rate of
the dollar should lead to more exports from the US and less
imports by the US, as foreign importers can buy cheaper in
the US then. However, as long as foreigners are mad enough
to accept dollars, the US doesn’t find it a problem to issue
some more of these green debt bills.
Pay a bit more for Chinese socks and electronics from Japan?
No problem. The US just increases the imports and foreign
debt a bit harder. Paying more dollars for a product means
inflation. And one percent of inflation means that at the
same time the value of the tremendous foreign debt decreases
with one percent. So the US has no interest at all in
putting a break on its imports!
In the oil trade, generally, a lowering dollar rate does
have a logical consequence. Oil exporters will not accept a
lower return. When the dollar falls with 10 percent, they
will raise the oil price 10 percent, so the value remains
If US-dollars are no longer necessary to purchase oil, there
is no advantage for the rest of the world trade to use the
dollar - only disadvantages. The dollar does not represent
any weight in gold anymore and the enormous debt will lead
to the logical disastrous consequences. The dollar would
And when foreigners don’t accept dollars anymore, the US
cannot print dollars to shop on the expense of the rest of
the world. US could not pay its expensive army. It would
loose its influence.
Vanishing of the debt
The collapse of the dollar will have a miraculous side
effect for the US. When dollars are worth nothing, the
foreign debt will have disappeared too. This debt is
composed by dollars abroad. In the extreme case they will
become as worthy as old paper. Unfortunately, the collapse
will also be accompanied by the collapse of banks,
enterprises and international organizations, which have
coupled their destiny to the dollar.
4. Dollar reserves Japan and China
An important group of dollar purchasers is formed by the
central bankers in various countries. Central banks keep
strategic reserves. These are reserves with which they can
buy back their own currency, if large quantities of it are
offered on the exchange markets. This way, they prevent that
the rate of their own currency would drop.
These reserves are preferably held in the best accepted
currency in the world, so up to now in dollars. However, in
China and Japan, but also in Taiwan, South-Korea and other
countries, these dollar reserves have grown way above the
necessary strategic quantity. 
This is not because central banks like to hoard US-dollars
that much. On the contrary. Those countries export a lot and
that is why dollars flow in massively. They have to be
exchanged into local money to pay the workers and raw
materials. The strong demand for local money would normally
raise its rate, and then the products would become more
expensive for foreigners. So, in order not to endanger the
country’s export position, the local central banks try to
keep the rate of their money stable. They do so by buying
the inflowing dollars.
For these countries this is a big problem, because for all
these hoarded dollars the central banks issue local money.
So, in fact, the workers receive inflation of local money as
payment for their exported products. 
Over time they have exported many months of work and
material for nothing. At the central banks these dollars do
not make much profit. They can be exchanged into obligations
and US-bonds and offer a bit of interest. But even this
interest cannot really be called an earning. The US simply
pays the interest out of an spiralling increase of the
foreign debt, so, from the inflation of the dollar.
Meanwhile the value of the hoarded dollars is subject to the
variations in the dollar rate. On top of that, the risk of a
dollar collapse is never far away. The Asian central banks
are trapped between the necessity to lower their dollar
reserves, the need to buy dollars to keep their local
currency stable and eventually to buy dollars when its rate
is in danger to fall on the global currency markets.
Meanwhile the US lets its foreign debt increase faster and
faster. How long can this go on?
At the same time experts of the Asian Development Bank
think, that the rate of the dollar should decrease by 30 to
40 percent!  With such a decrease there is a big risk,
that banks and enterprises want to get rid of their dollars
as quick as possible and central banks will no longer be
willing, or able, to avoid the total collapse. Who sells his
dollars first is lucky, who waits has just bad luck.
5. Camouflaged conflicts
keep the permanent demand for dollars going, oil sales must
remain in dollars. That is why the US tries to keep as much
influence as possible, as well on the US owned IPE and NYMEX
world oil markets, as with the people in power in oil
exporting countries. By doing so the US secures its oil
supply at the same time. Beyond that, lucrative contracts
can be obtained from the local governments, and with these
contracts a maximum of benefits can be seized from the oil
Fear always wins over
when the local governments do not want to sell their oil in
dollars anymore, the US has a problem. Then, the
US-president will not explain how dependent the US is on the
dollar demand. The conflict is always camouflaged. And to do
so, always an emotional theme is chosen. In times gone by
this was the danger of communists, today it is the danger of
terrorists, fundamentalists and other popular bogies, like
“the enemy has weapons of mass destruction” or “the enemy
tries to make nukes.”
fact that there is, rationally, not a single proof for such
allegations, does not matter. The emotions always win. Even
the fact, that these accusations could be turned around and
then can be proved, is noticed by hardly anyone. There was
no proof Iraq had weapons of mass destruction, but the US,
the accuser, has weapons of mass destruction and has used
them. There is no proof Iran has intentions for nukes, but
the US, the accuser, has nukes and has used them, and,
afterwards, repeatedly threatened to use them again.
once again, at the moment accusations are loaded with
emotions, humans switch off their intelligence. Then, reason
is no argument for peace anymore. The theatre is only about
the launched accusations. And because, as a result, only
specialists of weapons of mass destruction or nukes are
called upon to give their opinion, nearly nobody finds out
what the conflict is really about.
In Venezuela, since many years, the US tries to pull down
president Chavez, pretexting he is a dangerous communist.
Chavez has nationalized the oil industry and has set up
Barter-deals to export Venezuelan oil in exchange for
medical care from Cuba and others. In Barter deals there is
no necessity for dollars and the US has no profit from the
Until 1990 the US maintained lucrative commercial contacts
with Saddam Hussein. He was a good ally. For instance, in
1980 he had tried to free the hostages at the US-embassy in
But in 1989 Saddam accused Kuwait of flooding the oil market
and making the oil price go down. The following year Saddam
tried to annex Kuwait. It led to an immediate turn around of
the attitude of the US. With the annexation Saddam would
dispose of 20 percent of world oil reserves. The Iraqis were
chased out of Kuwait by the US, with an alliance of 134
countries, and condemned to water and bread by a UN-embargo
that lasted ten years.
Although the US sought a way to re-establish its influence
in Iraq, Saddam’s switch to the Euro on November 6, 2000
, would lead to the US invasion. The dollar sank away and
in July 2002 the situation got that serious, that the IMF
warned that the dollar might collapse.  A few days later
the plans for an attack were discussed at Downing Street.
 One month later Cheney proclaimed it was sure now, that
Iraq had weapons of mass destruction.  With this pretext
the US invaded Iraq on March 19, 2003. The US switched back
the oil trade into dollars on June 5, 2003. 
There is a huge difference between trading Iraqi oil in
euros and trading it in dollars. This will be explained
below. (See: “How do you steal oil reserves?”)
The US is in conflict with Iran, since it was thrown out of
the country in 1979. According to the US, Iran is a
dangerous country of fundamentalists.
The geographical position of Iran, between the Caspian Sea
and the Indian Ocean, complicates US ambitions to control
the rich reserves of oil and gas on the East side of the
Caspian Sea. To transport this oil and gas to world markets
without crossing neither Russia, nor Iran, pipelines had to
be built through Afghanistan. Plans were made in the early
nineties, but the pipelines are still not there.
Meanwhile the US tries to frustrate all competing projects
of other countries.
Of course, this led to multiple conflicts of interest with
Iran. George W. Bush would pretext the presence of Osama bin
Laden to start a war against Afghanistan. 
In 1999 Iran publicly stated it wanted to accept euros for
its oil as well. Iran sells 30 % of its oil production to
Europe, the rest mainly to India an China and not a drip to
the US, as a result of an embargo established by the US
itself. In spite of Bush’ threatening tale, mentioning the
country in his famous “axis of evil”, Iran started to sell
its oil in euros from spring 2003.
After that, Iran wanted to establish its own oil-bourse,
independent from the IPE and NYMEX. It would start on 20
March 2006. Considering the very weak health of the dollar
at that time, a success of this bourse could have led to a
catastrophe for the dollar and thus for he US. That is why
tensions were very high at the beginning of 2006. 
Finally the opening of the oil-bourse was postponed. After
that Putin established an oil bourse in Russia as quickly as
possible, which took away the interest of the Iranian oil
bourse.   
The US accuses Iran of wanting to make nukes. Because the US
has not sufficient influence to switch back the oil trade
into dollars, it probably hopes that the Iranian nuclear
sites will be bombed once again , so Iran would have to
consume its oil instead of selling it in euros.
Moreover, a masterly plan has been conceived to take
possession of the world market for nuclear fuel, in concert
with a few other countries and using Iran as the pretext and
the test case. With this plan the demand for dollars would
be secured for a long time, even after the oil age. 
Since 8 June 2006 Russia too has turned its back to the
dollar.  By selling the dollar surpluses to central
banks, Putin took care that it had no influence on the
dollar rate. However, the basis for the world wide dollar
demand has decreased a lot. The US needs Russia for its
plans to take possession of the world market for nuclear
fuel, so a revenge by the US is unlikely.
6. How do you steal oil reserves?
There is still another aspect to the abuse of the dollar.
During the demonstrations against the US-invasion of Iraq, a
lot of demonstrators understood it was not about weapons of
mass destruction. Iraq has world’s second largest oil
reserves. Some demonstrators thought, the US was after the
oil. And that is also true. But how can you steal oil
reserves, which are in the ground and so huge you cannot
take them with you?
You do it with currencies. By imposing, that this oil can
only be traded in dollars, in one move the US becomes owner
of this oil. The US is the only country, which has the right
to print dollars and thus can dispose of the oil any time.
Other countries that want to buy this oil, have to buy
dollars first. In fact they pay their oil to the US at that
moment. The dollars they receive are rights to collect a
quantity of oil. (Just like when you go to Ikea to buy
furniture, you pay first and you receive a note, with which
you can collect your furniture at the shop’s back door.) So,
basically, dollars are rights to collect oil. And because
everybody needs oil, everybody wants these green notes.
So, Saddam’s switch to the Euro at the start of November
2000 was not just an attack on the rate of the dollar. The
switch implied at the same time the US could not dispose
freely of the oil anymore. The US would have to buy euros to
dispose of it.
Since switching back the dollar on 5 June 2003 , the US
has, financially, free disposal of the Iraqi oil again. Now
it is a matter of installing a strawman-government and to
prevent the Iraqi oil trade from switching away from the
dollar once again. That is easy to say, but turns out to be
more difficult than expected.
The dollar economy is not limited to the US. Oil reserves
traded in dollars belong to it too. Also enterprises, banks
and investments, anywhere in the world, belong to it when
paid with dollars. They are like small islands of the dollar
economy. Benefits and dividends are flowing back to the
owners. The value of the investments is influenced by the
rate of the dollar. Oil sellers, receiving their proceeds in
dollars, are actors in the dollar-economy and usually behave
like perfect representatives of the US’ interests. They
consider this as their own interest.
7. Euro versus dollar
Since January 1993 the Euro is quoted. In July 2005 the rate
is identical to what it was at its introduction: $ 1.22. The
new currency has experienced quite some fluctuations during
its short life. From the end of 1998 the Euro slides away,
until the moment Saddam Hussein switches to the Euro in
November 2000. Although the US switched the oil trade back
into dollars in June 2003, the Euro continued its rise.
Since spring 2003 Iran had started to sell oil in euros.
The Euro has become a small world currency. Between July
2004 and July 2005 the part of the dollar in world trade
went down from 70 percent to 64 percent. A bit less then
half of these 64 percent is related to US foreign trade. If
the Euro wants to become as mighty as the dollar, it has
still a long way to go.
In principle, the Euro contains the same risks as the
dollar. As long as there would be a motor for a permanent
demand for euros like, for instance, oil sales in euros, the
Euro zone could make debts and let it increase indefinitely.
To avoid such debts, the Euro zone would have to export the
equivalent of all euros needed outside its borders and keep
the same amount in foreign currencies in their central bank.
Why would they? The credit trick worked fine for the US
during more than 30 years!
When oil producing countries would sell oil in two or three
different currencies, like it has been considered in the
past, this simply means that the three involved countries
can do the same trick as the US does now. In the long run it
would multiply the problem by three.
The only solution for this problem would be that oil selling
countries accept all currencies on the market. Tehran has
already taken into consideration to accept more than one
currency and not just the Euro. Step by step.
8. Green cancer cells
Because the US let its “foreign debt” increase indefinitely
and even uses military power to keep the related advantages
going, we cannot speak of a normal foreign debt, like we
know it in trade relations among other countries of the
world. What the US does is robbery. You can also call it
swindle or an imperial tax imposed on the users of dollars.
But there is more.
Each dollar bill is an IOU of the US, a promise to give
something in return. Due to the gigantic quantities the US
has put into circulation, the country is not able to redeem
these debts. It is bankrupt. Only the rate of the dollar
keeps up the appearance, that nothing is afoot. The
obligation to pay gas and oil in dollars keeps a permanent
However, the rate is held in shape artificially, like by the
hoarding of the central banks in China, Japan, Taiwan and
other countries. Because these hoardings mean an
impoverishment of these countries and because the US speeds
up the debt building indefinitely, there will be a moment
that these central banks have to stop hoarding dollars. So
the question is not IF the dollar collapses, but WHEN.
Because traders are misled by the apparently healthy dollar
rate, many still accept these IOU’s, which nestle like green
cancer cells in all economies of the world. The result is
ineluctable. All infected banks, enterprises and economies
will be dragged along the day the demand for dollars sags
and the US-imperium collapses.
 Except oil imports from Iraq between November 6th 2000
and June 5th 2003, from Iran since spring 2003 and from
Russia since June 8, 2006
 “Printing dollars” is a way of speaking. Most dollars
only exist as numbers on bank accounts.
 Trade balances 1960- 2002
 Trade deficit 2004:
 Countries 2004:
http://www.census.gov/ foreign-trade/Press-Release/2004pr/ final_revisions/04final.pdf
NOTE: huge differences between US' and Chinese data for
 Washington Post:
http://www.washingtonpost.com/wpdyn/ content/article/2005/11/18/ AR2005111802635.html
 Epoch Times:
 Int. Herald Tribune:
 Iraqi oil in euros:
 IMF warning over dollar collapse:
 Downing Street Memo:
 How can the dollar collapse in Iran?
http://www.moneyfiles.org/deruiter01.html (See Iraq)
 Pipelines to 9/11:
 How can the dollar collapse in Iran?
 RTS announcement:
 RTS speeding up:
 RTS opening:
 Raid on Nuclear Fuel Market:
 Financial Times, 5 June 2003
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