Understanding the real factors behind the American economy

Despite the fact that the Bush administration has repeatedly denied that the war on Iraq was economically motivated or that oil was a motivating factor in the war in any way, it is evident that oil and economics are truly at the heart of the war in Iraq, not terrorism, a threat of weapons of mass destruction, or the liberation of the Iraqi people.

If this is about economics, then why exactly do we have a problem that has to be addressed with war?

For generations we have been told as Americans that the reason behind the success of the American economy is "hard work". I hate to say this, but that is a lie; out and out, it’s a lie.

What separates America from the rest of the world economically is not the hard work of American citizens. While Americans have worked more hours then most other modern nations since World War II, that is not the reason that the American economy has been so dominate over the other economies of the world. For one thing, people all over the world work hard, especially in underdeveloped countries where many workers are working in conditions similar to America and Europe during the Industrial Revolution, with high child labor rates, long working hours, 12 shifts, and virtually no labor rights. The people are working hard, that’s not the issue.

There are several key reasons why the American economy has dominated the world:

1) The abundance of natural resources in America

2) The relatively low population density of America

3) The development of a strong domestic market in America

4) The possession of the majority of the world’s gold (by the 1930s America possessed 75% to 80% of all the mined gold in the world due to gold deposits in America)

5) American investment in foreign countries higher than foreign investment in the US

6) The adoption of the US dollar as the international reserve currency

Of these reasons that the American economy is strong, reasons 5 and 6 are in jeopardy of being changed by current international events and international events that are likely to occur in the future unless military force is used to prevent them from happening. Reason 4 is no longer particularly relevant now that our currency is not directly backed by gold anymore, but fact number 4 played a strong role in the development of item number 6.

After World War II, due to the fact that America possessed over 80% of the gold in the world, and due to the fact that virtually every other developed country in the world had been devastated from the war aside from America, the American dollar became adopted as an international reserve currency. Just as all American dollars were "backed by gold" at the time, meaning that a specific amount of gold was held by the Federal Reserve Bank to represent of all the paper money in circulation, the countries of the world were going to back their money with our money.

This means that their reserve banks were going to hold American dollars, just as our reserve bank held gold. Effectively, American dollars became the "gold of the world".

After the war America became both the world's leading producer, and, due to the post war monetary agreements, the world's importer of preference. Because of the fact that many of the world's nations were dependant upon greenbacks for their economies, America became their dominate trading partner. 

Because the greenback was the international reserve currency, the dollar was adopted as the monetary unit used by OPEC, known as the petro-dollar. This makes foreign trade a much more favorable activity for the US than for other countries. Other countries of course want to enjoy this same advantage and so there is growing competition internationally to stop this practice and move to a system that is more fair to other countries. The euro is the monetary unit that is now taking on that role, as challenger to the current system.

The reason that the US economy is so powerful is because the US has gained control of the natural resources of third world countries, has prevented third world countries from developing internal markets, has controlled the economies of third world countries through foreign investment, has actively withheld support for population control measures in third world countries, and has established the US dollar as the dominate world currency.

There are many ways in which using the US dollar as the petro-dollar and international reserve currency has been good for the world, but at the same time the US has been the major beneficiary of this action, and as times have changed many global institutions are now ready to stop using the dollar.

The most reliable way to maintain the position that our economy has been built on is military force, and this is why the war in Iraq has been engaged in, and this is why the Bush administration has developed, and is perusing, a long term strategy of American global preeminence.

The status quo in America can only be maintained through force or deception, there is no long term solution that maintains the status quo in America without military force or deceiving people, it's not possible. Things will either have to change and the power and wealth of the establishment will be weakened, or else force and/or deception will have to be used to keep everything in line.

The Bush administration represents the interests of the establishment in America, the wealthy elite. These people's livelihoods are directly dependent on the maintenance of an existing system that gives the American economy an unfair advantage over the economies of the rest of the world.

That is why America is the richest country in the world, not because of hard work, but because of an unfair system that has been established by Americans that has given America significant advantages over the other countries of the world.

That's really what the Cold War was about, it's what the War on Drugs is about, it's what the War on Terrorism is about, its what American "foreign aid" is all about, it's what the Spanish-American war was about, and all the many wars of the early 20th century that America was involved in China, Nicaragua, Panama, Mexico, the Caribbean, and all over South East Asia were about.

In 1948 George Keenan, regarded as one of America's greatest foreign affairs specialists, wrote this:

Our political philosophy and our patterns for living have very little applicability to masses of people in Asia. They may be all right for us, with our highly developed political traditions running back into the centuries and with our peculiarly favorable geographic position; but they are simply not practical or helpful, today, for most of the people in Asia.

This being the case, we must be very careful when we speak of exercising “leadership” in Asia. We are deceiving ourselves and others when we pretend to have the answers to the problems which agitate many of these Asiatic peoples.

Furthermore, we have about 50% of the world's wealth but only 6.3% of its population. This disparity is particularly great as between ourselves and the peoples of Asia. In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity without positive detriment to our national security. To do so, we will have to dispense with all sentimentality and day-dreaming; and our attention will have to be concentrated everywhere on our immediate national objectives. We need not deceive ourselves that we can afford today the luxury of altruism and world-benefaction.

His paper actually covers many topics, including the American strategy in Europe and the possibility of enticing Britain into a "blue water" economic strategy instead of having Britain join with Europe.

The entire paper can be seen here, and is a must read for anyone trying to understand the real ideologies behind global economics and politics:


Now, getting back to this quote. When this was written, as Keenan stated, America possessed about 50% of the world's wealth and constituted about 6% of the world's population. Today the US continues to possess a largely disproportionate amount of the world's wealth, and makes up only 4% of the world's population.

For more on international economic disparity see:


Things that "President" George Bush claims about terrorism and why America is the target of terrorist aggression are lies. Terrorists do not target America because they are "evil", as George Bush states. They target America because they are desperate and because the actions that America has taken over the past 100 years to ensure its own success have been at the expense of the success of many other nations. America is not helping the world, that idea has just been a long standing propagandistic lie that has been feed to us, the American people, for generations.

As Keenan stated, the national objective has been to develop ways to maintain disparity, not to attempt to help others in ways that would minimize disparity.

I am not alone in this opinion either, Representative Ron Paul, a Libertarian turned Republican, from Texas delivered a speech entitled  Sorry, Mr. Franklin, “We’re All Democrats Now” (Note: The use of the word Democrats refers to its traditional usage, meaning the party that seeks to promote Democracy as opposed to Republicans who traditionally were supporting the Republic and opposed the idea of Democracy as the "tyranny of the majority")

In this speech that Paul delivered to the House of Representatives he stated:

"Excessive meddling in the internal affairs of other nations and involving ourselves in every conflict around the globe has not endeared the United States to the oppressed of the world. The Japanese are tired of us. The South Koreans are tired of us. The Europeans are tired of us. The Central Americans are tired of us. The Filipinos are tired of us. And above all, the Arab Muslims are tired of us.

Angry and frustrated by our persistent bullying and disgusted with having their own government bought and controlled by the United States, joining a radical Islamic movement was a natural and predictable consequence for Muslims.

We believe bin Laden when he takes credit for an attack on the West, and we believe him when he warns us of an impending attack. But we refuse to listen to his explanation of why he and his allies are at war with us.

Bin Laden’s claims are straightforward. The U.S. defiles Islam with military bases on holy land in Saudi Arabia, its initiation of war against Iraq, with 12 years of persistent bombing, and its dollars and weapons being used against the Palestinians as the Palestinian territory shrinks and Israel’s occupation expands. There will be no peace in the world for the next 50 years or longer if we refuse to believe why those who are attacking us do it.

To dismiss terrorism as the result of Muslims hating us because we’re rich and free is one of the greatest foreign-policy frauds ever perpetrated on the American people. Because the propaganda machine, the media, and the government have restated this so many times, the majority now accept it at face value. And the administration gets the political cover it needs to pursue a “holy” war for democracy against the infidels who hate us for our goodness.

Polling on the matter is followed closely and, unfortunately, is far more important than the rule of law. Do we hear the pundits talk of constitutional restraints on the Congress and the administration? No, all we ever hear are reassurances that the majority supports the President; therefore it must be all right."

I am going to refer to this speech again later and will address some of its other concerns as well. It is clear though that I am not alone in my assessment of this issue. I salute Mr. Paul for his willingness to stand up and speak out against what is going on here in America, and for standing up for what he believes is right instead of playing politics. Thank you Mr. Paul.

That is not to say that Americans have not done many things to help many people around the world, Americans have. There is a significant difference between the help that many Americans have given to other countries out of kindness and the overall geopolitical strategy of the Pentagon, the CIA, and American businessmen.

Major American leaders of the 20th century have all taken an America first strategy in foreign involvement, and in doing do they have undermined the sovernty of foreign nations and undermined the interests of the citizens of the world for the benefit of the American economy, in particular the interests of the wealthy American elite, people like George Bush and Dick Cheney and all of the Americans that were aiding the fascists to power prior to WWII, who's companies and families now dominate not only the American corporate landscape but the international corporate landscape as well.

Of course George Bush is supporting the elimination of estate taxes. He, and the rest of the wealthy elite, knows that the American economic status quo is being seriously threatened right now, and therefore they want to ensure that if the American economy does suffer long term stagnation or decline that at the very least their family fortunes can continue to be passed on from generation to generation. They know that the ability for people to develop new wealth in America is going to be seriously challenged in the years to come under their current economic strategies and thus they want to ensure that if new wealth cannot be earned it can at least be passed on and stay in the family.

They are just protecting their own interests, not those of the American people, and not those of the global community.

I want to return to the Keenan quote one more time.

We need not deceive ourselves that we can afford today the luxury of altruism and world-benefaction.

That is what our leaders tell us, that is what our media tries to reinforce, that is what our teachers tell us, that is what the religious leaders say in church. The fact is it's simply not true; it’s a lie. It’s a lie that has been carefully crafted by American leaders with an intent to deceive the public into supporting policy that the public would never support if the public were aware of it. That's it, period.

This paper written by George Keenan was a classified paper; its audience was not the American public. His audience was policy insiders, specifically the Secretary of State, but generally this was suitable for members of the Pentagon, the CIA, Presidents, etc. This paper alone is no smoking gun by any means, but any clear reflection on American foreign policy, especially covert foreign policy, shows that the ideology displayed here was the ideology that has been in practice for the CIA and other foreign policy makers and shapers over the past several decades. Clearly Henry Kissinger, Madeline Albright, and many other important foreign policy players in America have expressed similar sentiments over the years, and have in fact crafted foreign policy that is clearly not altruistic and have passed over opportunities for altruistic action when it presented itself because it did not serve American needs in any significant way.

I want to revisit the quote from James Thompson's 1968 paper on insider leadership and Vietnam:

As they see it, that endowment is composed of, first, our unsurpassed military might; second, our clear technological supremacy; and third, our allegedly invincible benevolence (our "altruism," our affluence, our lack of territorial aspirations). Together, it is argued, this threefold endowment provides us with the opportunity and the obligation to ease the nations of the earth toward modernization and stability: toward a fullfledged Pax Americana Technocratica.

As I said when I first referenced this quote, that critical third element of this equation is a lie. Therefore we are left with only unsurpassed military might and technological supremacy. That is what is really behind the Pax Americana that the Bush administration clearly endorses, just military might and technological supremacy, because our leaders are not altruistic.

There is a second side to all of this though.

What Bush claims, that the American way of life is something that we have to fight to protect, is true.

The truth is that America will pay a price for failure to maintain global military preeminence. Our leaders have gotten us into a situation that has no easy or good solution. Over the past 100 years, and particularly the past 50 years, the American economy has been supported largely through covert military operations and through the subversion of foreign governments. If we fail to maintain that position then our economy is going to be seriously hurt. What makes the situation so dangerous is that America is now in a situation where military force is the only reliable way to maintain the current balance of economic power. If we don't fight and we stick to a traditional capitalist economic model then our economy is going to go into a depression and the rest of the world is on the verge of seeing economic gain by breaking free from American control and developing internal markets.

That's why the war on Terror is so important for the Bush administration, because, like the War on Drugs, it gives the US government the ability to move funds to programs of covert military operation and to strengthen ties with leaders in foreign countries, such as Pakistan and Indian, by supplying them with money and weapons to buy allegiance to America and to continue to support American interests over the interests of their own people.

This has been going on for years, essentially the post WWII Communist movement was just a movement by under developed countries to break free from foreign interference, largely American and European interference. That's why the end of the Cold War had to see the beginning of a new war, the War on Drugs and the War on Terror. America has to be constantly at war because that is the only way to maintain the economy. By being at war it gives American agencies access to the funding that they need to maintain global preeminence.

This is what the issue was with Iran/Contra. Congress, not a full supporter of the schemes of the American wealthy elite at that time, pulled funding from the wars that the Reagan administration was trying to wage in the Middle East and South America to maintain American preeminence, so covert illegal action was taken because it was a war that the wealthy felt had to be fought to maintain the American economic position. It's why the CIA facilitated the sale of cocaine to American cities, to fund the wars that are required to maintain the American economy.

The truth is that the economic freedoms that we enjoy here in America, and the lifestyles that we all live, are a product of years of American global oppression. That's why there are terrorists in the world that hate America, and whether or not American citizens know it, the rest of the world knows it. This issue is not just an American issue though. This is an issue between all developed countries and underdeveloped countries, including countries like Australia, Japan, European countries, etc. America is just the largest offender, but there are many offenders.

More precisely it is an issue between wealthy international capitalists and the under privileged populations of the world.

The real way that American foreign investment works is this:

Wealthy American investors build factories, farms, oil wells, etc. in under developed countries where labor and resources are cheap.

The people eventually get restless and rebel against the foreign investors because of unfriendly business practices and the effort by business to maintain cheap labor and working facilities.

The American investors get support for a coup from the American government who employs any number of means to put an American business friendly leader into office in the country (overt war, covert war, funding of local loyalists, assassination, etc).

American banks, or the IMF, give loans to the country, which the American friendly leader agrees to take out, for things like the building of infrastructure, roads, railroads, shipping ports, etc. The rational is that this infrastructure will help the country develop economically. Of course the country is really paying to build things that serve the interests of the American investors.

America also agrees to train the police and military forces of the country so that the leader can protect his position.

America then pays "foreign aid" to the leader of the country in order to keep the leader loyal to American interests, as well as supplying the government with arms.

In addition, the American investors that are now doing business in the country also give payoffs to the local leadership to keep them loyal to the American business interests.

These countries do not have constitutions that grant significant rights to the people. The governments are loyal to America, not their own populations. As the people begin to fight for labor rights and improved working conditions and increased pay, the governments use the American supported military and police to oppress the population.

By doing this America has cultivated American loyalists in countries all over the world, who are loyal to American interests, not the interests of their own countries. America sees to it, or at least attempts to, that these American loyalists are who maintains political power in these countries.

Traditionally there have been two typical consequences of this since WWII. The people either move towards Communism or Islamic fundamentalism. This is for a variety of different reasons, but the main thing that both scenarios have in common is that radical leaders that oppose foreign control over the local government gain growing support as the people become increasingly more desperate to rid their country from oppressive foreign control.

The evidence for this type of behavior on the part of America goes all the way back to 1855 and what was termed Walker's War, which was waged in Nicaragua.

For a full listing of American military activity since the American Revolution see:


As this list shows, America has been far more militarily engaged them most people realize.

This is the type of behavior that General Smedley D. Butler toured the country to speak out against in the 1930s, and it is this type of activity that led to the anti-war sentiment of the 1930's as Americans learned of the unethical practices of international American businessmen and the American military. Ironically it was America's withdrawal of support for military activity due to the abuse of the military that led wealthy Americans to cooperate with the fascist powers of Europe.

In some cases since World War II the American military has ended up practically fighting itself because covert action is kept secret even from many branches of the government. Often the CIA and covert operations create problems that "peacekeeping" forces then have to go back in later and publicly resolve.

What we see here in the media is the public peacekeeping forces and are never told about the covert action that created the problems in the first place.

America is certainly not the only country that sponsors this type of activity. Three of the biggest players that do this are America, Britain, and Australia; all of course countries of British origin, but almost all of the developed nations do it to some degree or another.

This is because capitalism is dependant on this type of activity.

From the 1500's up through World War II the world was primarily divided into two groups, developed nations and colonial territory. The colonial territory is what sustained the economies of the developed nations. Britain and France had the largest Empires prior to World War II. The Communist movement of the early 20th century was an opposition to imperialism and the abuses of the wealthy "capitalists" of the Industrial Revolution. The Communist movement was born out of desperation for a better way of life because of the oppression of the developed industrialized world. "Communism" as it developed in practice though was largely just the abuse of the desires of the socialist masses by leadership that came to power by claiming to support the ideas of Marxist Socialism that the people wanted, while they actually just served their own desires for power and their own ideas of nationalism in ways contrary to the desires of the people who helped them gain power hoping that they would implement the true policies of Marxist Socialism.

The problems of the Industrial Revolution never affected America in the way that other countries were affected because of the relatively underdeveloped American economy that still had a lot to offer the people in America (even though it was already stronger than other economies it still had a lot of room to grow).

After World War II the global community decided that imperialism was wrong and an effort was made to wean the "civilized world" from its dependence on colonialism. At this time nearly a hundred new countries were created as developed nations relinquished official control over their territories. However, there are no easy solutions and the draw has been strong to maintain the colonial system covertly, which has been done by putting a new spin on things and using terms like "foreign aid" and "peacekeepers". This is all really just colonialism revised. The fact of the matter is that the economies of the developed world require colonialism in order to sustain their levels of wealth because their initial wealth was built on colonialism; it's that simple.

In addition, as Europe gave up its official hold on its territories, these locations became "fair game" for international competition, which the US quickly took advantage of by moving in on markets that had been recently released from colonial control; Vietnam is a classic example of an American attempt to move in on a territory that was released from foreign colonial control. Indonesia and Iran are other such examples.I n their attempt to keep themselves from being grabbed up by American corporate control many countries sought help from the Soviet Union, who happily provided them with weapons and other assistance. The real tragedy of the Cold War is that if the capitalist countries of the world, mainly the US, had not been so aggressive in their approach to the developing countries of the world in trying to exploit them they would never have turned to the Soviet Union for help in the first place.

Again I say that Vietnam is a perfect example because we have solid, solid, proof that the Vietnamese sought assistance from the United States in their desire to gain freedom and independence. The US denied that assistance and as a result they turned to the USSR, who did give them assistance. The US tried to puppet the Vietnamese and they didn't like it so they turned their back on the US, which resulted in war.

What Bush, and American leadership in general, is trying to do is to continue to hide these facts from us, the American people, and to try on their own to work out some solution that will still support the economies of the developed world as well as the interests of the wealthy elite. Right now that solution is war and a continuation of global military control.

This page is a part of This War Is About So Much More which was written in March and April of 2003. This document should be read in the order that it is presented. If you are coming to this page from an outside source, such as a search engine, and you are interested in how this information relates to Operation Iraqi Freedom, then please start at the Foreword. In addition, if you have been directed here from an outside search engine then you may want to re-search this website with the same criteria because it is likely that this website contains additional information on the same topics.
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