Bretton Woods,
National Security State,
Dollar Standard,
Nixon and Bretton Woods

excerpted from the book

Gods of Money

Wall Street and the Death of the American Century

by F. William Engdahl

edition.engdahl, 2009, paperback

p224
Leo D Welch, Treasurer of Standard Oil Company, 1946

As the largest source of capital, and the biggest contributor to the global mechanism, we must set the pace and assume the responsibility of the majority stockholder in this corporation known as the world.., nor is this for a given term of office. This is a permanent obligation.'

p225
George F. Kennan, in a confidential internal State Department memo, 1948

[W]e have about 50% of the world's wealth but only 6.3% of its population .... In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity without positive detriment to our national security. To do so, we will have to dispense with all sentimentality and day-dreaming; and our attention will have to be concentrated everywhere on our immediate national objectives. We need not deceive ourselves that we can afford today the luxury of altruism and world benefaction.

p225
The true postwar [WWII] goal of the US elite was US domination of the world, or at least as much of it as it could seize and hold onto in 1948.

p225
The single largest expenditure for [European] countries receiving Marshall Plan aid [after WWII] was for the purchase of American oil - oil supplied by the Rockefeller Standard Oil companies at highly inflated prices paid for in US dollars.

p228
President Harry Truman announcing the Truman Doctrine to the US Congress on March 12, 1941

I believe that it must be the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures.

p229
Containment of the Soviet Union served the useful purpose for the US power establishment and their military industry of creating a permanent national security state with what later were revealed as fictional images of an aggressive, threatening Soviet Union.

US foreign policy was being significantly shifted from an alliance with the Soviet Union against the German threat to one of gradual alliance with a postwar humiliated Germany against the alleged Soviet threat.

p229
For the Rockefeller faction and their allies in American finance and industry, the mere fact that state socialism in the Soviet Union [1945] and China [1948] effectively removed more than one-fifth of the planet's land mass and untold treasures of raw materials and resources as well as potential markets from their grip was sufficient grounds to declare them the new "enemy image." Their problem was how to sell it to a skeptical American population, how to sufficiently mobilize fear and anxiety in the American public to justify financing a permanent war state directed against the new "absolute evil, Godless Communist Totalitarianism."

p230
Leading circles in and around the Truman Administration concluded by late 1949 that the only means to mobilize a sense of sacrifice from the American population for vastly larger military spending ... would be a new war. The ideal war would be one that could be managed, and one that posed no direct threat to the United States or the still-fragile Western Europe.

... For various reasons, Korea was chosen as the ideal place to stage a limited war designed to mobilize popular support for a permanent national security state. The goal was the enormous expansion of military industry on a permanent basis - what financier and Truman adviser Bernard Baruch labeled a "Cold War".

In late 1948 Washington announced plans for the creation of a new Atlantic military alliance with its Marshall Plan partners, in return for permanent US bases in western European countries The legal instrument to create a North Atlantic Treaty Organization, NATO, was signed in April 1949, with Belgium, Luxembourg, the Netherlands, France and Britain joining Washington.

Within months, the Korean War would galvanize NATO members to accept an active, permanent military defense organization in Western Europe under the control of Washington, with headquarters in Brussels. A war weary Europe was drawn into Washington's Cold War strategy via a military alliance.

p231
In 1949, a year after the creation of NATO, a top secret group within the US State Department convened to formulate a new US strategic policy. Their report, "NSC 68: United States Objectives and Programs for National Security," argued for a US military buildup to confront what it claimed was an enemy "unlike previous aspirants to hegemony... animated by a new fanatic faith, antithetical to our own."

The group, chaired by former Wall Street banker Paul Nitze, argued that the Soviet Union and the United States existed in a polarized world in which the Soviet Union wished to "impose its absolute authority over the rest of the world."

p233
Following proclamation of the Truman Doctrine, a creation of Secretary of State Dean Acheson, the Administration's propaganda apparatus tried to drum up popular support for their Cold War against the 'evil, Godless' communists in the Soviet Union. They believed that they could win popular voter support for huge increases in Federal defense spending by "scaring the hell out of America," as one of Truman's advisors put it --perhaps by engendering a "war scare to deceive the nation."

p234
General MacArthur had demanded of Truman that US forces under his command use the pretext of the Korean conflict to launch a direct military attack on China itself, one using nuclear weapons.

... MacArthur, US Chief of Joint Chiefs of Staff General Omar Bradley, Defense Secretary Johnson and Rockefeller lawyer and State Department consultant John Foster Dulles, all wanted to use Korea as a stepping stone for a direct war not just against China, but ultimately against the Soviet Union itself in Asia.

... Korea's war was a matter of US geopolitical grand strategy to shift the pieces on the Asian chess board and mobilize Cold War fears within NATO and the US population, in order to provide the pretext for creating an enormous, permanent US national security state... The Korean War led most Americans to conclude that the Soviet Union was indeed bent on world domination. It was the needed catalyst to justify mobilization of the nation's significant resources to counter the perceived threat.

... The Korean War served the agenda of the Washington Cold War faction masterfully. The US Defense budget soared 400% from less than $13 billion at the start of the war to more than $60 billion by war's end in 1953. US puppet regimes under Chiang Kai-shek in Taiwan and Syngman Rhee in South Korea, and a US Military Government in Japan under Douglas MacArthur, would provide the basis for America's Cold War presence in East Asia. Under MacArthur's occupation, assisted by a young New York banker named John D. Rockefeller, III, Japan's industry was allowed to reorganize into giant conglomerate groups to provide a 'bulwark against communism' in Asia.

... In the domestic US economy, politicians quickly realized that they could get almost any program passed by Congress if they argued 'US national security' and 'defense against totalitarian Godless communism.'

In 1953, the war and national security anxiety of the American public had been raised to such a fever pitch that retired wartime General Eisenhower was elected President. It was the Rockefellers initially who had convinced Eisenhower to run and who organized Wall Street money behind his campaign.

p236
Republican Senator Robert Taft, 1952

Every Republican candidate for President since 1936 has been nominated by the Chase Bank.

p236
In addition to dominating the two largest banks in New York - Chase Bank and National City Bank of New York - Rockefeller controlled the largest oil companies in the world, the Standard Oil group, and numerous strategic military industries, chemical companies, and agribusiness firms. In addition [Rockefeller] controll[ed] the CFR through the Dulles brothers, the Central Intelligence Agency and State Department.

p242
James Burnham, co-founder of the National Review magazine, in a1947 book titled 'The Struggle for the World'

The United States cannot within the allotted time win the leadership of a viable world political order merely by appeals to rational conviction... Power must be there, with the known readiness to use it, whether in the indirect form of paralyzing economic sanctions, or in the direct explosion of bombs. As the ultimate reserve in the power series there would be the monopoly control of atomic weapons.

p242
The United States [1950] held extraordinary power over much of the world in an informal economic empire. It had done so by using the mechanisms of the Bretton Woods institutions, the IMF and World Bank, through its control of broad western European economic policy via the Marshall Plan and the Paris-based Organization for Economic Cooperation and Development (OECD), through the role of the dollar as the world reserve currency and the heart of world finance, and above all, through the Money Trusts New York banks and their allied civil servants in Washington.

p249
As President, [John] Kennedy earned many powerful enemies during his few months in office, from the head of US Steel to CIA chief Allen Dulles and the Pentagon. Perhaps no one opposed Kennedy more strongly than the powerful bankers of Wall Street.

... Five months before his assassination by what was decades later revealed to have been a CIA hit team," Kennedy issued an all-but unknown proclamation which may have cost him his life.

Much as Abraham Lincoln did when he avoided dependence on London bank loans to finance the Civil War and instead issued interest-free US Treasury notes, Greenbacks, to finance the war, President Kennedy issued Executive Order 11110 on June 4, 1963. Kennedy's EO 11110, which did not require a vote of Congress, mandated the US Treasury "to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury."

This meant that for every ounce of silver in the US Treasury's vault, the government could introduce new money into circulation. In all, Kennedy brought nearly $4.3 billion in US notes into circulation in $2 and $5 denominations. The $10 and $20 United States Notes were just in the process of being printed by the Treasury Department when Kennedy was assassinated. They were never circulated. It was the first time since Lincoln that a President had issued interest free money and the first time a President had challenged the sole money power of the private Federal Reserve.

... After JFK's death, E011110 was put into abeyance, no more silver certificates were issued and those that had been issued were removed from circulation. The very existence of E011110 was hidden from the public, and forgotten or ignored by most historians.

p248
Shortly before he was assassinated, JFK issued United States Notes, interest free and independent of the Federal Reserve. At the top it says, United States Note, not Federal Reserve Note. The Notes were immediately recalled by his successor.

p258
The Vietnam War strategy had been deliberately designed by Defense Secretary Robert McNamara, National Security Adviser McGeorge Bundy, along with Pentagon planners and key advisers around Lyndon Johnson, to be a "no-win war" from the onset, in order to ensure a prolonged buildup of the military sector of the US economy.

p259
Beginning in the late 1950s the major New York banks had greatly increased their power and influence through a series of bank mergers. Rockefeller's Chase National Bank had merged with the Bank of Manhattan to form Chase Manhattan Bank headed by John J. McCloy, Rockefeller's attorney and a Rockefeller Foundation Trustee as well as Chairman of the New York Council on Foreign Relations... The National City Bank of New York took over the First National Bank of New York to form City Bank of New York, later Citibank, under the chairmanship of James Stiliman Rockefeller.

... According to a 1961 US Department of Justice report, the five largest New York banks, dominated by the two Rockefeller banks, controlled 75% of all deposits in the nation's largest city, the world's international financial center.

... To facilitate this extraordinary concentration of financial power, the US Government exempted banks from US anti-trust laws prohibiting undue concentration or cartelization.

p261
A confidential internal memo [at the Rockefellers' Chase Manhattan Bank] was circulated within the bank in 1966 on the subject of the disadvantages that American, i.e. New York, banks had in capturing the lucrative international market for 'flight capital.' The memo pointed to the advantages enjoyed by Swiss banks that dominated the lucrative market in managing and profiting from the hidden fortunes of dictators like Marcos in the Philippines, Saudi princes, drug barons and the like. The memo proposed that Chase open up a foreign entity to capture a major share of the booming offshore flight capital, or 'hot money,' for itself.

p263
Offshore banking [1960s] marked a sea change in New York banking practice that would explode in importance during the next three decades and beyond. Chase Manhattan, Citibank and other major US money center banks were to launder hundreds of billions of dollars of illicit hot money, no questions asked, whether the funds originated from US-friendly dictators like the Philippines' Ferdinand Marcos, Iran's Shah Reza Pahlavi, Mexico's Rañl Salinas de Gortari, or Juárez drug cartel money being transferred to Uruguay and Argentina, or from countless other controversial and politically sensitive transactions."

p163
On August 15, 1971 President Richard Nixon announced to the world that he had ordered the Gold Discount Window of the New York Federal Reserve to be permanently shut. Foreign holders of dollars had without warning been robbed of their right to gold by the unilateral act of the US President, and in violation of a treaty obligation of the United States.

... Nixon was acting on the advice of a small circle of Rockefeller -linked advisers, including Secretary of State Henry Kissinger, a life-long appendage of the Rockefeller interests, and budget adviser George Shultz, later Secretary of State and chairman of the vast Bechtel construction giant.

p263
Under Secretary for International Monetary Affairs and former Chase Manhattan Bank executive, Paul Volcker [was] a life-long enabler of Rockefeller interests. Volcker went on ... at the urging of David Rockefeller, to become Jimmy Carter's nominee to head the Federal Reserve.

p265
In May 1973 on a resort island outside Stockholm, a highly secret meeting took place that gave the dollar a new lease on life, a lease at the expense of world industrial growth.

Wall Street and Washington power elites around Secretary of State Henry Kissinger decided to impose a dramatic shock on the world economy in order to rescue the falling dollar as the asset of world trade and finance, and restore it as a pillar of the American economic imperial strategy.

p265
In May 1973, with the dramatic fall of the dollar still vivid, a group of 84 of the world's top financial and political insiders met at the secluded island resort of the Swedish Wallenberg banking family, at Saltsjoebaden, Sweden. This gathering later came to be known as Prince Bernhard's Bilderberg Group. At the meeting, the group heard an American participant outline a 'scenario' for an imminent 400% increase in OPEC petroleum revenues.

p266
In May i972 a year before the Bilderberg Saltsjoebaden [Sweden] talks, the Shah had met with [Henry] Kissinger and President Nixon in Teheran. Nixon and Kissinger promised the Shah he could buy any US military equipment he wanted from the US defense arsenal except nuclear weapons, and he would be permitted to do it without US Congressional OK.

In order to finance the huge purchases, the Shah would need vastly higher oil revenues. Chase Manhattan Bank, of course, was Iran's bank, the Shah's personal bank, National Iranian Oil Company's bank, the Pahlavi family bank, and the Pahlavi Foundation's bank. The entire financial empire of the Pahlavi regime was a Rockefeller operation from top to bottom.

p267
Present at Saltsjoebaden [Sweden] for the May 1973 gathering were David Rockefeller of Chase Manhattan Bank, by then the acknowledged 'chairman of the board' of the American establishment; ... Zbigniew Brzezinski, the new Executive Director of David Rockefeller's private Trilateral Commission and soon to be President Carter's National Security Adviser ... Henry Kissinger had also been invited to the gathering.

The powerful Bilderberg elite group that met in Sweden in May 1973 had decided to launch a colossal assault against industrial growth in the world, in order to tilt the balance of power back to the advantage of American Wall Street financial interests, and specifically to support the vulnerable dollar, the heart of their global financial and economic power. In order to do this, they would use their most valuable strategic weapon-their control of the world's oil flows.

The Bilderberg policy was put into effect six months later in October 1973 when US diplomacy was deployed to trigger a global oil embargo, shockingly enough, in order to force the intended dramatic increase in world oil prices. Since 1945, world oil trade had by international custom been priced in dollars because American oil companies dominated the postwar market. A sharp and / sudden increase in the world price of oil, therefore, meant an equally dramatic increase in world demand for US dollars to pay for that necessary oil. In addition 1 to making Exxon, Mobil Oil and the other Rockefeller companies into the largest corporations in the world, it would make their banks-Chase Manhattan, Citibank and a handful of others-into the world's largest banks.

The Rockefeller-dominated American financial establishment had resolved to use their oil power in a manner no one could imagine possible. The very outrageousness of their scheme was to their advantage. No one could conceive that such a thing could possibly be deliberate. It was.

p268
In October 6, 1973, Egypt and Syria invaded Israel, igniting what became known as the 'Yom Kippur' war. The Yom Kippur war was not the simple result of miscalculation, blunder, or an Arab decision to launch a military strike against the state of Israel. The entire series of events leading up to the outbreak of the October war had been secretly orchestrated by Washington and London, using powerful 'back door' diplomatic channels developed by Nixon's National Security Adviser, Henry Kissinger.

Kissinger effectively controlled the Israeli policy response through his intimate connection with Israel's Washington ambassador, Simcha Dinitz. Kissinger had also cultivated channels to the Egyptian and Syrian side. His method was simply to misrepresent to each party the critical elements of the other's position, ensuring the outbreak of war and the subsequent Arab oil embargo.

... The war brought about the very oil price shock discussed at the Bilderberg deliberations of the previous May in Saltsjoebaden [Sweden], some six months before the outbreak of the war.

OPEC and the Arab oil-producing nations would be the scapegoats for the coming rage of the world over the resulting oil embargo to the United States and Europe and an ensuing huge increase in oil prices, while the Anglo-American interests that were actually responsible, stood quietly in the background, ready to reap the windfall.

... One enormous consequence of the ensuing 400% rise in OPEC oil prices was that the risky North Sea investments of hundreds of millions of dollars by British Petroleum, Royal Dutch Shell and other Anglo-American petroleum concerns could produce oil at a profit. It was a curious fact of the time that the profitability of the new North Sea oil fields was not at all secure until after Kissinger's oil shock. At pre-1973 world oil prices, the North Sea projects would have gone bankrupt before the first oil could flow.

... The US Treasury 'arrangement' with Saudi Arabia on dollar pricing of oil was finalized February 1975... Under the terms of the agreement, the huge new Saudi oil revenue windfall would be channeled largely into financing the US government deficits.

... The Bilderberg scheme was operating fully as planned. The Eurodollar market that had been built up over the previous several years was to play a decisive role in the offshore petrodollar 'recycling' strategy. Subsequently, Rockefeller's Chase Manhattan Bank estimated that between 1974 and the end of 1978 the oil producing countries of OPEC generated a surplus from oil exports of $185 billion, more than three-fourths of which passed through Western financial institutions, the lion's share through Chase and allied banks in New York and London, and from thereon as loans to the Third World.

... From 1949 until the end of 1970, Middle East crude oil prices had averaged approximately $1.90/barrel. They had risen to $3.01 in early 1973, the time of the fateful Saltsjoebaden meeting of the Bilderberg group who discussed the imminent 400% future rise in OPEC's price. By January 1974 that 400% increase was a fait accompli.

... After Nixon had eliminated the gold exchange mechanism in August 1971, the offshore Eurodollar market exploded ... by the mid-1970s in the wake of the 400% OPEC oil price rise the Eurodollar market reached an estimated $1.3 trillion pool of 'hot money. Interestingly, by the end of the 1980s, the volume of international narcotics revenues alone - which had to be laundered through such offshore 'hot money' banks - exceeded an estimated $1 trillion a year. The big New York and London banks made sure they got the lion's share of drug money.

The London Eurodollar banking market became the centerpiece of the huge Petrodollar recycling operation, lending OPEC oil revenue deposits from banks 'offshore' in London, to Argentina, Brazil, Poland, Yugoslavia, Africa and other oil importing nations that were starved for dollars with which to import the more expensive OPEC oil after 1974.

p272
The dollar system ... a paper or fiat currency, went through several phases after August 1971. The first phase could be called)the 'petrodollar' currency phase in which the strength of the dollar rested on the 400% rise in oil on the world market priced in dollars, and on the highly profitable recycling of those petrodollars through the US and UK and a select handful of other international banks in the City of London, the offshore haven for Eurodollars. That phase lasted until about the end of the 1970s.

The second phase of the post-1971 dollar system was sustained on the Voicker interest rate coup of October 1979 and lasted until approximately 1989 when the fall of the Berlin Wall opened a vast new domain for dollarization and asset looting by Wall Street banks. That opening, combined with the colossal economic growth of China as a member of the WT O, opened the world economy to a drastic lowering of wages across the board, most dramatically in the industrial countries.

In 1997 yet another phase in the post-1971 dollar system was initiated with a politically-driven hedge fund attack on the vulnerable currencies of the high-growth 'Tiger' economies of east Asia, beginning with Thailand, the Philippines, Indonesia and spreading to South Korea. That phase was in large part responsible for a massive inflow of Asian central bank dollars into the US dollar to build dollar reserves as defense against a possible new speculative attack. The inflow of hundreds of billions of dollars of Asian capital after 1998 fuelled the US IT stock market bubble of 1999-2002.

The final phase of the dollar system after August 1971 was the Alan Greenspan Revolution in finance, which he launched after the collapse of the IT stock market bubble in 2001-2002, By his strong support of the revolution in finance, mortgage and other assets as security to issue new bonds, Greenspan helped engineer the 'securitization revolution' which ended with the collapse of his real estate securitization bubble in 2007.

p274
The agenda of the US establishment had been announced [in 1973] by David Rockefeller's brother John D. III, in a book modestly titled, 'The Second American Revolution'.

... The book called for a radical reduction in the powers of government for expanded 'privatization' of functions long performed by the state, "moving as many government functions and responsibilities toward the private sector as possible." It was a clear call for abandonment of New Deal Keynesian policies-at least the use of the state to correct imbalances in social distribution of jobs and income that had existed since the 1930s.

Rockefeller's 1973 call served as the signal for launching a national media propaganda campaign against alleged Government inefficiency, incompetence, and obstruction, using the inevitable bureaucratic inefficiencies of social services as a smoke screen to end all oversight and regulation of banking and large commercial transactions. The book used carefully selected examples that every citizen could recognize to build support for essentially destroying the traditional and necessary role of the state in regulating commerce and the pubic welfare, to the advantage of the pure and unfettered profit-maximization of private companies and banks financing those companies. It was a Darwinian world they unleashed where the fittest were the biggest and naturally the ones with the clout to destroy their competitors.

p275
In 1976, the Rockefeller agenda for a 'second American revolution' made a significant advance: David Rockefeller's protégé at the Trilateral Commission, Georgia peanut farmer turned Governor, Jimmy Carter, won an upset election against incumbent Gerald Ford who had taken over when Nixon was driven from office by the Watergate scandals. Carter promptly went on to staff his key cabinet positions with 26 members of Rockefeller's Trilateral Commission, including Vice President Walter Mondale, Secretary of State Cyrus Vance, Defense Secretary Harold Brown, and Treasury Secretary Michael Blumenthal.

As President, Carter's entire foreign policy, much of his election strategy, and some of his domestic policy came directly from Rockefeller's Trilateral Commission. The architect of Carter's foreign policy from 1975 was his National Security Adviser Zbigniew Brzezinski who had resigned as Trilateral Commission Executive Director in order to take the post.

... It was Carter who began the Rockefeller group's long process of Government deregulation and privatization that his successor, Ronald Reagan, would make the centerpiece of his Presidency.

p276
The deepening US economic crisis of the 1970s was the motivation for the Rockefellers and other US establishment leaders to come up with radical new strategies. The US was faced with stagnation or even decline of its market strength and corresponding profit share globally and within the United States.

... From this crisis emerged a new social vision or political philosophy called "neoliberalism."

... The neoliberal revolution that was launched in the mid-1970s was a project of the US establishment and their British counterparts. Specifically, it was a concoction of the Rockefeller brothers, based on the radical free market dogma of Milton Friedman, a member of the arch-conservative Mont Pelerin Society and then professor of Economics at the University of Chicago, an institution founded decades earlier with Rockefeller Standard oil money. Neoliberalism could more accurately have been called neo-feudalism.

Echoing John D. Rockefeller's 1973 manifesto, Friedman's neoliberalism, enshrined in his popular book, 'Free to Choose', called for untrammeled free markets and free trade, and attacked trade unions as a "throwback to a preindustrial period. "

The neoliberal revolution was, in essence, a globalized version of John D. Rockefeller's Second American Revolution... It was the initial phase of what two decades later would be called "globalization."

The powerful circles around the Rockefellers within the US financial establishment called explicitly for a global restructuring to their benefit, including:

new discipline of labor and management to the benefit of lenders and shareholders; the diminished intervention of the state concerning development and welfare; the dramatic growth of financial institutions; the implementation of new relationships between the financial and non-financial sectors to the benefit of the former; a new legal stand in favor of mergers and acquisitions; the strengthening of central banks and the targeting of their activity toward price stability, and the new determination to drain the resources of the periphery toward the center.

The predominant feature of the new neoliberalism was not just its structural arrangements, but the creation of mechanisms to extend the dollar's reach to the rest of the planet, the globalization of the dollar and of US finance behind it. The destructive process of market liberalization spread with devastating speed and efficiency, assisted by creation of new multinational institutions such as the World Trade Organization and massive trade pressures from Washington and its free market allies, especially Britain.

Milton Friedman's dogma of monetarism was the theoretical expression of the new revolution, or more accurately, counter-revolution. The decisive year in the economic counter-revolution was 1979 when David Rockefeller got President Carter to name his protege, Paul Volcker, to become Chairman of the Federal Reserve. In October 1979 Volcker imposed the most radical monetarist policy in the history of the Federal Reserve as he allowed interest rates to soar by more than 300% into the 20% range, and held them high until the resulting inevitable Third World debt crisis erupted by August 1982, prompting him to reverse the rate policy.

... The high interest policy was imposed by the wealthiest members of the establishment as part of their long-term strategy of clawing back the concessions forced from them during the Great Depression in terms of the creation of the Keynesian social welfare state, social security, and Government support for labor union organization.

p278
Confronted with stagnating domestic markets, declining absolute profits and the need to invest huge sums in order to bring their domestic US industries up to world standards, the Rockefeller circles opted instead to walk away from renewing their domestic US economic base, leaving it to become what their think-tanks called a 'post-industrial society.'

[Paul] Volcker's interest rate policy led to 'real'- that is, corrected-for-inflation - interest rates of 6-8%, a staggering windfall boon for wealthy bond holders, the center of the financial system. It also created a recession and with it, a rising wave of unemployment in Europe and in the United States, which created the conditions for a new crackdown on labor implemented by both Reagan and Thatcher in the early 1980s, dramatically weakening the influence of trade unions on wage levels for decades to come.

p279
By 1973 the US trade position with respect to its major allies in Western Europe and Japan was taking form. The terms of the 'grand bargain' would be that the US would open its borders to almost unlimited Japanese or European imports of products such as cars, steel, and later, electronics. In return, the foreign countries would agree to purchase US defense equipment, US agricultural products and US aircraft for its national airlines.

But the most far-reaching aspect of the new regime implemented after 1973 by Washington and adhered to by every Administration since then was the idea that, because of the unique role of the dollar as world foreign exchange reserve under a floating-rate exchange regimen -- and the fact that the dollar could no longer be redeemed for gold -- foreign nations that built up a surplus of dollars exporting to the United States, especially Japan and Germany, would be forced to reinvest those dollar trade surpluses in US Government debt, in order to earn interest and hold them in a safe repository.

... The United States, led by Wall Street banks that held the monopoly on buying and selling US Treasury debt, would emerge as the world's greatest capital market during the 1980s, as US deficits exploded and its internal industry went into malign neglect as a result of the decision. Wall Street bond brokers reaped the gains. Ronald Reagan's Presidency was chosen by the establishment to implement this 'greatest rip-off.'

Gods of Money

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