By John Pugsley
The First Casualty of War

" If any question why we died, tell them, because our fathers lied."
  -- Rudyard Kipling

As a student of revisionist history, I'm acutely skeptical of politicians' pronouncements about the reasons for wars. U.S. wars, including the Civil War and World Wars I and II, were fought for reasons other than what the public was told. The first casualty in war is truth, for citizens could never be induced to fight and die if politicians didn't lie.

Consider the war with Iraq. We are told it was necessary for two reasons: (1) Saddam is an evil tyrant with weapons of mass destruction (WMD) who is a threat to the world; and (2) Iraq is a sponsor of global terrorism.
Yet, in spite of months of U.N. inspections and the military occupation of much of Iraq, no hard evidence has surfaced supporting the charge that Iraq has WMD. Nor has any evidence been presented firmly linking Saddam to the Sept. 11, 2001 attacks.

Could Bush, et al., have other reasons to invade Iraq? How about Bush's family ties to the oil industry, his private vendetta against Saddam, and his desire to go down in history as a great president?  Improbable. It is naïve to believe that Bush has the power to launch a war for personal gain, lust for revenge or secure his place in history. Elected officials rise to power only by fulfilling the promises to their financial backers.

Revisionist history points to a single cause behind every war: the control of territory, natural resources and financial exchanges. During the Watergate investigation Deep Throat condensed the search for truth into three words: "Follow the money."

What is the money link to the war with Iraq? Analyst Geoffrey Heard argues that the United States is invading Iraq to block a growing move by OPEC nations to switch from pricing oil in U.S. dollars to pricing it in euros.
In late 2000, Saddam demanded euros in place of dollars for his oil and switched Iraq's US$10 billion U.N. reserve fund into euros. While the conversion of a few billion dollars into euros could not by itself affect the U.S. currency, the psychological effect added pressure to an overpriced dollar. Since Saddam's move, it has fallen 30 percent against the euro, netting Iraq billions in profits. Now, both Iran and Venezuela indicate they are considering switching from dollars to euros.

Is it coincidence that the U.N. debate over attacking Iraq was divided between nations benefiting from a strong euro, such as France and Germany, opposing the war, while nations outside the euro bloc, such as the United States, Britain and Australia, insisted on attacking?

Economic analyst John Mauldin disagrees with this conspiracy theory. He contends that the value of oil trades is a drop in the bucket relative to the overall currency markets, and that currency markets are far too large for central banks to control. Moreover, he suggests that the United States would prefer that the exchange value of the dollar fall to stimulate exports.

Agreed, currency markets are too large for central banks to control, and the volume of oil trades versus currency trades is small. And yes, export industries do benefit from a falling dollar. However, while exporters benefit, importers and consumers prefer the opposite, so politicians get lobbied in both directions.

I would "follow the money" back farther than the conflicting industry lobbying to the common desire of all banks and industries for easy credit and subsidies. All sovereign governments borrow to provide subsidies, and all central banks create money to supply easy credit to commercial banks and industry. Eventually, deficits and money creation lead to price inflation. The central conflict between modern economies is the game of keeping domestic inflation down, while keeping the money spigots open.

After President Nixon closed the "gold window" in 1971, currency values and asset prices moved back into balance. In the 1980s, the dollar recovered its position as the world's reserve currency, helped along by an agreement by OPEC countries to price oil in dollars. Thanks to foreign dollar demand, the United States was free once again to expand credit, with the result that both the dollar and dollar-based assets rose dramatically above their natural equilibrium prices.

While a strong dollar allowed the United States to inflate, politicians in Germany, France and other key European countries looked for answers to keep their printing presses rolling. Ultimately the majority of European countries merged their currencies into the euro, creating a currency to challenge the dollar. U.S. interests know that any loss of confidence in the dollar would precipitate an inflationary recession, while a dollar collapse could topple the U.S. economy.

The drive to oust Saddam is not an altruistic act to disarm a tyrant bent on world domination. The underlying motive is to maintain worldwide confidence in the U.S. dollar by installing friendly regimes in the oil-rich Persian Gulf region, specifically in Iraq, and eventually in Iran.

What does all this mean to you? The potential for serious inflation and a collapse in dollar-based assets is high.The only protection is to structure businesses, assets and personal affairs around foreign bank accounts, currency diversification, second citizenships, and international legal structures that insure privacy.