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Is ‘American Dream’ true anymore? 

By Don Aguiar

The American economic hegemony is on the wane, as its most important pillar, the strength of the US dollar, faces unfavorable circumstances induced by competition from other currencies and US profligacy. But the death blow, as the dice is being rolled in the ‘Great Game’, will be delivered by the much-demonized Russian President, Vladimir Putin, who has been meticulously planning to bring Russia back in the ‘Great Game.’

Though many would scoff at the dire predictions reserved for the economic giant that has ruled the roost since World War II, the developing geopolitics, seen through the prism of oil, has the potential to change opinions about the invincibility of the ‘land of the free’ and the ‘American Dream’ of the migrants.

There is a new cold war underway, driven by a massive geopolitical power shift to Russia that went almost unnoticed across the globe as the western world is losing control of the energy market.

Russia is in the midst of a rapid economic and geopolitical renaissance under the rule of Vladimir Putin, a tenacious KGB officer turned modern-day tsar. Understanding his rise to power provides the keys to understanding the shift in the energy trade from Saudi Arabia to Russia. This powerful new position threatens to unravel the political dominance of the United States once and for all.

Political coups, hostile takeovers, and assassinations have brought Russia to the center of the world’s energy market and Putin’s rise to power and how it has led to an upsetting of the global balance of trade. Russia toppled a generation of robber barons and positioned itself as the most powerful force in the energy market with Putin’s long-range plans and their potential impact on the United States and the U.S. dollar.

If Putin’s plans are successful, not only will Russia be able to starve other countries of power, but the BRIC countries (Brazil, Russia, India, and China) will replace the G7 in wealth and clout.

Putin is no democrat or hero, he is suspected of faking bombings in Moscow so he could build a case to go after the Chechnya rebellion. He is widely believed to have had a hand in the disappearance of journalists critical of his methods. He is ruthless and amoral in his dealings. But has long-term vision and clear goals for the future.

A need arises to take a hard look at what is to come in a new global energy market that is certain to cause unprecedented impact on the U.S. dollar and the American way of life.

Is it any more viable for our next generation or even those who have gone a decade ago to chase the ‘American Dream’? Do they have to look at other countries or stay put in India which is one of the BRIC countries that may replace the G7 in wealth and clout and reap the harvest and riding on this wave develop their ancestral properties into profitable businesses?

All trades in energy with Russia are no longer on the dollar. These efforts are to oust the petrodollar system, thus affect the economy of the US which controls the world economy. The cold war is still going. Many are yet to be witnessed. The White House is aware of this and does not admit it publicly. However, there are some important points that none of this is yet inevitable and still not too late for the US to avoid it.

Two specific events could concisely documents that made the US dollar the reserve currency of the world. One, after WW-II, the devastated countries in Europe agreed to pledge gold in lieu of dollars that they badly needed to rebuild much of Europe.

This system lasted nearly three decades before President Richard Nixon discontinued it in 1971, after the US economy suffered losses in confidence due to trade deficit and creeping inflation. Nixon, however, wasn’t done. To ensure the dollar remained the world’s reserve currency, he dispatched his secretary of state, Henry Kissinger, to Saudi Arabia, a country that was the largest producer of oil and gas at that time.

Kissinger offered to protect Saudi hydrocarbon assets from unfriendly neighbors like Iran and Israel. He also assured the Saudi family rule over the country in perpetuity. In return, Saudi Arabia would sell its petroleum products only in dollars and invest the surplus proceeds in US treasury bonds.

The agreement was signed in 1974 and, as Nixon had calculated, the rest of the oil producing and exporting countries fell in line and subsequently became partners in the deal. Thus, began decades of US dominance in not just the energy sector, but the entire world economy.

Now, the world was hungrier for energy than any time in the past, but needed reserve dollars to procure it. The demand for dollars across the world ensured that the US central bank could continue printing the greenback without any cost.

This afforded very high living standards for US citizens and ensured that imports remained cheap. However, as a result of cheap imports, the US economy soon became profligate, with its fiscal deficit touching 100 percent of its gross domestic product.

Nearly half of the country’s annual expenditure is now being funded by debt. The unsustainable consumption model is not only hollowing out the US economy, it’s making it unfit for the coming war.

And the war this time around promises to be colder, led by the former KGB (Russia’s equivalent of the CIA) spy Putin. Since his ascendance post the Cold War, Putin has solely focused on developing Russia’s vast natural resources, which include oil, natural gas and uranium. Even his post-graduate thesis reveals that he has always believed in natural resource-led supremacy to bring Russia back on the table reserved for world leaders.

Russia is already prepared with of its natural and acquired advantages in uranium mining and enrichment, a fuel needed in ever-more quantity for clean nuclear energy.

Putin built pipelines for feeding Europe’s energy needs, currently, most of Western Europe is dependent on Russia for nearly 30 percent of its energy needs. Russia has also built feeder lines and ship terminals through their eastern neighbor Georgia for transporting gas and oil to the ever-hungry China. Russia has managed to carve out a major chunk of the market share in the energy trade that previously belonged to West Asian countries.

With Russia already replacing the Gulf countries as the prime supplier of energy to the world, the hold of the dollar in the trade has been jeopardized. This is further threatened by a BRICS proposal to dump dollars and trade in a mutually acceptable currency. Some countries had already started doing it, albeit clandestinely, in their energy trade with Iran after the US had imposed sanctions on it.

The US dominance is a direct function of the dollar’s dominance. With the world ready to explore other options, it could spell disaster for the only existing superpower. It would lead to high inflation, as the world dumps its savings in US treasury bonds. A glut of dollars that suffers from depressed demand would inundate the US economy, making the country one among many others when it comes to world affairs.

The massive geopolitical power shift to Russia threatens the political dominance of the United States. It is both a nod to the comfortable polarities of Cold War and a reminder that our modern world is in some ways even chillier and less stable than the one it replaced.

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