Why Not Trade with Cuba?

Castro stepped down yesterday. His brother is taking his place so probably not much will change and that’s not good for the people of Cuba. There is a way to bring change to Cuba. What about the embargo we’ve had for all these years? What was the purpose? Did it work?

It was supposed to cause Cuba to give up communism. Did they? No. So, what if we lifted it? Cuban cigars would be legal here and our rice farmers could sell their product in Cuba. I’m sure lots of US businesses would line up to do business in Cuba.

Tourism would open up. Well, at least we could go there, even if Cubans weren’t allowed to come here. That would give people who are sheltered from interaction with the rest of the world a chance to rub shoulders with some who have more freedom. Tourism would also help some of these individuals have a better income.

China is communist but we do business with them even though they throw their military weight around a bit. Cuba hasn’t had an ounce of their own military weight to threaten anyone with. Especially since the Soviet Union came all apart. The Soviet Union was behind the Cuban Missile Crisis. Cuba couldn’t do squat on their own. They tell us a taste of capitalism will cause the Chinese government to lose control of the people and they could move toward democracy. If you believe that, why not trade with Cuba?

WE Have Had the World Over a Barrel

I don’t know where to start. This just blows my mind. I finally figured out that the folks who said we did not go into Iraq because of “weapons of mass destruction” were right and we didn’t go in to promote democracy with our bullets. Once I realized this sometime a year or two ago, I thought we did it to “protect our interests” in the Middle East. “Our interests” being a supply of oil. In a way, yes, that’s it. But it gets more complicated, or interesting, depending on your ability to get some mental and emotional distance from this. I’m finding it difficult right now.

According to Energy Bulletin, January 17, 2006, by Krassimir Petrov, Ph. D. (economics), we have dominated the world economically since the early 1900s. Our dollar was backed by gold, which kept the value stable. We began to print so many more dollars and ran up serious government deficits in the 1920s that our dollar could no longer be backed by gold. There were too many dollars and not enough gold. So, in 1932 President Roosevelt “decoupled” the dollar from gold.

Then in 1945, we made the dollar convertible to gold only when it concerned foreign governments. This set the dollar up to be the currency of the world. Then we did a lot of business with allies and we were paid in gold. That is how we wanted to be paid. Well, that gave the U.S. a huge supply of the world’s gold. Then in the 1960s, we ran up really bigger deficits with President Johnson’s social programs and the Vietnam War. So, the Feds printed more dollars. The dollars were flooding the world by now and were worth less and less because we were printing so many of them. This, in effect, was like an inflation tax on the whole world.

Well, people aren’t stupid and in 1970 and 1971, these foreign governments were fed up with this shabby treatment and began to demand payment in gold. The U.S. Government couldn’t pay up and defaulted on August 15, 1971. According to Dr. Petrov, this was not a “severing of the link between the dollar and gold” so much as it really was an “act of bankruptcy by the U.S. Government”.

Now this is where the oil comes in. We made an agreement with Saudi Arabia (in 1972/73) to buy oil in dollars only and established the dollar as the currency for the WORLD to buy oil. So, now instead of our dollar being backed by gold it is backed by oil. No one was strong enough to stand up to this. The dollar, remember, was and is being printed out of value. Guess what Saddam Hussein did in 2000? He said he didn’t want to deal in dollars anymore! He wanted Euros for his oil and other countries began to say the same thing; they didn’t want dollars either. Well, the others said it, but Saddam DID it. He traded oil for Euros. He was invaded as an example to other countries. After the invasion, the Iraqi Euro accounts were converted back to dollars.

Guess which other country is still talking of dropping the dollar as currency for their oil? Iran. Iran does not want to deal in our increasingly worthless dollars. In fact, they want to set up something called an Iranian Oil Bourse. I’m still learning about this but as best I can tell, it’s an oil exchange. And OPEC would all switch to Euros. So, Washington keeps trying to find a reason to beat the war drums. We have been fighting and dying to defend our DOLLAR not our country.

If the world does not buy oil using dollars, then China doesn’t need our dollars, Russia doesn’t need our dollars, India doesn’t need our dollars, Japan doesn’t need our dollars. Who does?? As long as Great Britain is on the pound and not the Euro, we still have two big oil exchanges dealing in dollars. One in the U.S. and one in London. If/when they switch, its lights out for the dollar. Or would we try to go to war with Great Britain?

Note: Dr. Petrov has his degree in economics from Ohio State University, and has taught macroeconomics, International Finance, and Econometrics at the American University in Bulgaria.