Michael Hudson - Super Imperialism by The Origin & Fundamentals Of U.S. World Dominance

Author:The Origin & Fundamentals Of U.S. World Dominance
Language: eng
Format: mobi
Published: 0101-01-01T00:00:00+00:00

Part III

Monetary Imperialism and the

U.S. Treasury Bill Standard

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11

Financing America’s Wars with

Other Nations’ Resources,

1964–68

As the case stands, as it would ruin England to lose her Empire in India,

it is stretching our own finances with ruin, to be obliged to keep it.

J. Dickinson, The Government of India under a Bureaucracy

(London: 1853), p. 50

Since 1914 the world has been no stranger to the financing of one nation’s

war with other nations’ funds. War debts among the Allies of World War I

were of this character. There is therefore nothing basically surprising in

U.S. military actions in Korea, South Vietnam, Cambodia and Laos having

been financed by borrowings from other foreign countries. Nonetheless,

there are novel aspects to this transfer of the costs of U.S. aggression to other peoples. The fundamental difference between the American method of financing its wars out of other nations’ treasuries and the ways in which other countries financed their wars in earlier years lay in the structure of the world monetary system. The United States did not run into debt in the conventional sense of the term. It did not borrow abroad under the kind

of contractual conditions it had imposed upon the Allied Powers in World

War I, except in very limited instances. What it did primarily was to inject paper dollars into the world economy, creating debts that it did everything it could to avoid repaying.

As early as 1963, what Robert McNamara termed “the Columbia

University Group” cautioned that U.S. overseas military spending, even

in the absence of overt aggressive action, had become so massive as to

threaten the gold cover of the U.S. dollar.1 This group perceived that

overseas military spending by the United States and maintenance of the

gold cover were incompatible. The gold stock itself was threatened as the

legal limits upon money creation under the gold cover clause of U.S.

domestic law raised fears abroad that America might sooner or later

embargo gold payments. This apprehension caused draw-downs by

foreign central banks on the U.S. gold stock. The possibility of an embargo almost universally was denied in the United States, but lurked among the fears of Europeans.

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Super Imperialism

Foreign governments, particularly those of Common Market members,

began to reemphasize the role of gold as the soundest of international

monetary assets. They urged the United States to take steps to curtail its

overseas spending, especially since the major factors in the U.S. payments

deficits were overseas military operations and U.S. private capital investments in Europe. Although no serious trouble had yet developed, it began

to appear that the United States must slow its rate of monetary expansion

in order to curb its payments deficits.

American planners themselves were beginning to grow concerned about

the deficits, and when IMF quotas were increased by 50 per cent in 1959,

the U.S. Treasury was not above arranging a window-dressing stratagem

that called for the IMF to redeposit some $300 million of its gold in the

United States. This IMF gold became double-counted, appearing as an IMF

asset even while it continued to be included in U.

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