Coal was the black bread that powered the world economy during the 19th century and the international benchmark for value was the British Sterling Pound, because England was where more coal was produced and used.

Oil was the black blood that fueled the world economy throughout the 20th century. The United States was its main producer and exporter until 1970. It was then that the US dollar became the international benchmark for value. This was confirmed at the Bretton Woods Conference (1948) on the condition that the United States assumed a gold standard at the rate of $ 35 an ounce (28.3 grams) of gold. That worked while the US continued with its oil exports, when the oil exports ceased, the United States started to have a negative Balance of Payments.

In the 1960s, Texas oil wells showed signs of depletion and oil exports began to decline, as domestic demand for gasoline grew with the shift from rail traffic to gasoline-powered automotive transportation, internal combustion engines enjoyed greater autonomy. This greater autonomy had notable urbanistic consequences that fundamentally modified (North) American society in behaviour and even consumption patterns.

The new American society was more cosmopolitan and consumed far more imported goods than before World War II.

When they stopped exporting oil, with a negative Trade Balance, the gold standard that guaranteed the value of the dollar with which they paid for imports meant that, according to the old mercantilist philosophy viewpoint, which is still in force in the United States (just listen to Trump), having a negative trade balance by paying for imports with a dollar anchored in a gold standard, the United States was losing wealth.

That is why, in 1971, the United States reneged on its commitment signed at Bretton Woods to back the dollar with a gold standard so that it could be used as an international reference of value. The United States unilaterally abandoned the guarantee of the gold standard. With this, the dollar became only a worthless green paper without much usefulness. The price of the dollar fell sharply on all money exchanges.

To avoid its abandonment as a reference of value, it had to be given some use. That is why the United States created OPEC. An organization of oil-exporting countries that in international politics were all US vassals.

OPEC submitted to the US order not to list or sell oil with a Price reference value other than the dollar.

Because of the usefulness the dollar maintained to buy an oil that was essential to keep their national economies working, the countries that exported to the United States, the largest consumer market in the world, continued to export there despite the fact that they received in payment a currency that had no intrinsic value, but which served them to buy oil, the most secure source of energy they had available.

Even though these dollars had no intrinsic value, that allowed the Fed to issue worthless dollars to pay the trade deficit. And since those dollars were used mainly to buy oil, they were dubbed Petrodollars.

Since most of these oil-exporting countries were developing countries with markets that could not absorb the dollars they received to mobilize their economic activities (with the exception of Libya), the petrodollars returned as deposits to Western banks, which in turn has to lend that money to someone (banking business is lending); so they used those Petrodollars as low interest loans in the Third World, where, as usual, they were not invested in a reproductive way. Then the banks raised the interest and the Developing countries were unable to comply.

The banks found themselves in dire difficulties. The IMF and the World Bank took advantage of the Third World difficulties in returning the funds to the banks and came to their rescue (actually rescuing the banks) by offering low-interest loans with which to pay creditor banks. The loans from both Washington-based global financial institutions were conditional on the adoption by those countries of economic policies that complied with the Ricardian neoliberal recipes that “cured” every sort of economic illness because those policies orientate Washington's official economic policies as a universal example.

Since there was no more intrinsic value money available, the FED then began its operations with virtual money, a virtual money that was nonetheless US public debt, virtual money that was given away to banks in difficulties due to the mismanagement of their speculations.

This speculation was triggered because an excess of inorganic money sparked the bubbles that burst in 2008. The Fed and the ECB have continued to give money away to banks, whose agents rushed to exchanges to invest in the same types of papers without backing that had already busted in 2008.

It is clear that this continuous going from one financial crisis to another is due to the bubbles that feed on the Quantitative Easing – a gift of money to the banks practiced both by the FED and the ECB, which are the same beast with two names.

It is very clear that having the US $ as an international reference of value is the biggest international financial problem.

For this reason, to stabilize the world economy it is necessary to abandon the dollar, just as the United States unilaterally abandoned the gold standard.

China has once again become the main world economy. Replacing the US$ is a must so it is advisable to revisit the BANCOR proposal made at Bretton Woods by a discreet Sismondi follower (salaries = consumption = market) who became the best-known economist of the XX Century: John Maynard Keynes

Almeria 06/27/2021