Greenspan and the Economy of Greed

As the Empire Slips

By PAUL CRAIG ROBERTS

Former Fed Chairman Alan Greenspan's memoir has put him in the news these last few days. He has upset Republicans with his comments on various presidents, with George W. Bush getting the brickbats and Clinton the praise, and by saying that Bush's invasion of Iraq was about oil, not weapons of mass destruction.

Opponents of Bush's wars welcomed Greenspan's statement, as it strips the moral pretext away from Bush's aggression, leaving naked greed unmasked.

It is certainly the case that Iraq was not invaded because of WMD, which the Bush administration knew did not exist. But the oil pretext is also phony. The US could have purchased a lot of oil for the trillion dollars that the Iraq invasion has already cost in out-of-pocket expenses and already incurred future expenses.

Moreover, Bush's invasion of Iraq, by worsening the US deficit and causing additional US reliance on foreign loans, has undermined the US dollar's role as reserve currency, thus threatening America's ability to pay for its imports. Greenspan himself said that the US dollar "doesn't have all that much of an advantage" and could be replaced by the Euro as the reserve currency. By the end of last year, Greenspan said, foreign central banks already held 25 percent of their reserves in Euros and 9 percent in other foreign currencies. The dollar's role has shrunk to 66 percent.

If the dollar loses its reserve currency status, the US would magically have to move from an $800 billion trade deficit to a trade surplus so that the US could earn enough Euros to pay for its imports of oil and manufactured goods.

Bush's wars are about American hegemony, not oil. The oil companies did not write the neoconservatives' "Project for a New American Century," which calls for US/Israeli hegemony over the entire Middle East, a hegemony that would conveniently remove obstacles to Israeli territorial expansion.

We are murdering millions to ensure that our economy....a house of cards built of fiat currency....does not collapse. How many countries will we have to occupy to prop up the dollar? Ducking, weaving, and invading won't work forever...at some point the crash will come.