July 16th, 2008 10:34 AM by Lehel Szucs
Paul Joseph WatsonPrison PlanetTuesday, February 26th, 2008
Alan Greenspan has again exposed himself as a traitor working against the interests of the American people by urging Gulf states to abandon the dollar peg, a move that could result in financial chaos and an economic depression in America.
The dollar peg mandates Gulf nations to price their assets in U.S. dollars and follow U.S. monetary policy at a time when the Fed is cutting interest rates, a system that has produced a boom in oil revenues but led to high inflation as the dollar weakens.
"It [de-pegging] is probably the most useful thing that can be done to stop the increasing influence of foreign assets on the monetary system and therefore the monetary base which is basically the major force in inflationary pressures," Greenspan told the Abu Dhabi Corporate Leadership Forum yesterday.
"In the short term free floating … will not fully dissipate inflationary pressure, although it would significantly do so," added Greenspan, giving a green light for Gulf states to drop the dollar peg.
According to Economist editor Pam Woodall, Greenspan’s comments heralded the beginning of the end for the US dollar as the currency of choice for foreign exchange reserves.
"If Asian central banks hold today more than 80 per cent of the global foreign exchange reserves, which indicates the shift of the global economy domination towards Asia, it seems quite awkward that the UAE still maintains the peg of its currency to the US dollar," she told Gulf News.
Greenspan’s zeal to destroy the dollar is evident in numerous public statements he has made predicting the replacement of the dollar with the Euro as the world reserve currency.
The former Fed chairman has repeatedly badmouthed the dollar and hyped the inevitability of economic chaos at a time when market confidence is in the toilet. Greenspan’s rhetoric matches that of the IMF, who in October of last year bizarrely slammed the dollar as "overvalued" at the same time the greenback hit its all time low against the Euro.
A decision on behalf of the Gulf states to abandon the dollar peg would have disastrous consequences for the greenback and the American economy.
Such a move could lead the likes of the United Arab Emirates and Saudi Arabia to diversify their foreign exchange holdings out of dollars. This would amount to a vote of "no confidence" in the dollar and may cause other countries with large dollar reserves, such as China and Japan, to follow suit and begin dumping the greenback en masse.
China has threatened repeatedly to use the "nuclear option" and liquidate its vast holding of US treasuries in response to continued pressure on the Communist state to force a yuan revaluation. According to a widely-read London Telegraph report, such an event "could trigger a dollar crash" and also "cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession."
Runaway inflation would also ensue, making the cost of living unaffordable to even middle class Americans as food prices skyrocket and international aid organizations like the World Food Programme predict rationing and food riots.
The dollar has held firm against the Euro and recovered some losses against Sterling over the past two months, but it has still lost 12 per cent of its value against the trade-weighted index over the last two years and has plunged by a whopping 60 per cent against the Euro since Bush entered the White House.