by Kevin Barrett (News & Analysis, Crescent International Vol. 50, No. 11, Jumada' al-Ula', 1443)
John Perkins, author of Confessions of an Economic Hit Man, has observed that the US empire is the first in history whose primary weapon and control mechanism is riba (usurious debt). Perkins argues that the international bankers, the real rulers of the empire, deliberately saddle Global South nations with unpayable debt in order to seize control of their natural and human resources.
The empire rules not only as a creditor, but simultaneously as a debtor as well! This, too, is historically unprecedented. In the past, nations that ran deficits were at the mercy of their creditors. Weimar Germany, for example, owed so much war reparations debt that its currency and economy collapsed, leading to Hitler’s rise, debt repudiation, and war.
How does the US profit from being the world’s biggest borrower? As J. Paul Getty said, if you owe the bank $100, that’s your problem; if you owe the bank $100 million, that’s the bank’s problem. With its gargantuan balance of payments deficit (currently pushing $200 billion) driven by an even bigger trade deficit (currently pushing $700 billion) the US owes “the bank”—the rest of the world—so much money that calling it in all at once would crash the global economy. Total US debt, now pushing $30 trillion, is rapidly expanding as the US floods the world with dollars using COVID and “quantitative easing” as excuses.
The unique American privilege of running endless deficits is, in essence, a license to create unlimited money out of nothing and force others to take it in exchange for real goods and services. Since 1971, when Nixon stopped backing the dollar with gold, the US has somehow managed to convince the world to take its worthless toilet paper dollars and use them as de facto global reserve currency.
The trick that made it work was strong-arming the Saudis to sell their oil only in US dollars, forcing other nations to pay dollars for their energy and thus generating artificial demand for the greenback. This monstrous swindle, the biggest in human history by orders of magnitude, has financed the metastasizing US military-industrial complex, which spends more money than the next seven biggest nations combined, imposing more than 800 military bases on more than 80 vassal states around the world and killing more than 60 million people since World War II in an endless series of imperial wars and CIA interventions.
Economist Michael Hudson, author of Super Imperialism, explained to me in a recent interview:
“If you understand how America gets a free lunch through the dollar standard, if you understand how the IMF and The World Bank are impoverishing countries, then you realize why other countries are trying to de-dollarize, and why this is causing desperation in the United States, which now has to finance its own military expenses throughout the world with its own dollars. And that’s causing the dollar to go down. It’s causing inflation here. It’s causing other countries to break away from the U.S. orbit and leave the United States isolated. So the United States, when it went off gold in 1971, created a system that gave it an enormous amount of free lunch and foreign money for 50 years. But now that’s ending.”
The biggest countries seeking to break away from the US orbit, of course, are Russia and China. Those two Eurasian giants took a giant step toward escaping the stranglehold of the dollar during the Putin-Xi video summit conference on December 15, when they agreed to create an “independent financial structure for trade operations that could not be influenced by other countries” as Putin’s senior advisor Yuri Ushakov explained. The new structure will be formally announced at a Russia-China summit next year.
Russia and China have reduced their use of dollars in bilateral trade. And they already use barter mechanisms in trade with Iran, which has been pushed outside of the dollar-based system by a brutal, Zionist-driven US sanctions regime. Now that the US is threatening the “nuclear option” in anti-Russia sanctions—expelling Russia from the SWIFT settlements system—Xi and Putin apparently have decided the time has come for a new sanctions-proof settlement system. That system would be available not only for Russia-China trade, but for the rest of the world as well.
The new non-dollar-based payment system for international trade will, if it succeeds, kill the petrodollar—and the globe-straddling US empire it buys. Without the gargantuan subsidy the US receives from petrodollar users—a disguised form of imperial tribute—the Pentagon won’t be able to pay for its military empire.
The accelerating threat to petrodollar hegemony has spooked the empire’s leadership, leading to increased saber-rattling against Russia, China, and Iran. In Ukraine, Taiwan, the South China Sea, and the Persian Gulf, the empire and its vassals are engaging in reckless provocations. Their message: “We won’t go down without a fight.”
But if the multi-trillion-dollar boondoggle-plagued US military can’t defeat impoverished rural people in Afghanistan, how could it possibly succeed against the two biggest Eurasian powers—or Iran for that matter? All three pillars of increasingly independent Eurasia have built effective military deterrents. The US cannot climb more than a couple of rungs up the escalation ladder without suffering unacceptable damage. It no longer can make credible threats. All it can do is bluster and bloviate, lash out in futile acts of terrorism, and finally, inevitably, retreat.
The impending defeat of the Empire of Riba is playing out during a time of transition to a low-growth or no-growth world. That is not a coincidence. The Riba Empire’s fiat currency system, entailing the creation of currency by private bankers who lend it into existence at interest, can only function in a high-growth environment. Why? Because the money supply has to keep expanding to allow currency plus interest to be paid back to the bankers who created it. The exponentially-expanding money supply must match up with exponentially-expanding goods and services; otherwise the whole system collapses.
The rapid economic growth of the past two centuries was driven by cheap natural resources, especially fossil fuel. But by the early 21stcentury CE (14th century AH) the low-hanging fruit had been picked, and the limits of growth reached.
As the riba currency system collapses, the world will start looking for alternatives. Islam, which puts its complete rejection of all forms of riba at the heart of its economic thinking, will be in a position to lead the way toward a stable free economy in which all people, including the marginalized and vulnerable, are taken care of. As the Empire of Riba retreats from its occupation of Islamic lands, the Islamic Awakening will increasingly find opportunities to put its principles into practice and influence the trajectory of history.