When Richard Nixon severed the official ties between U.S. currency and the mineral known as gold, he did not know what he was doing. Well, to be more accurate, as he told me, he did not take the potential effect on nations with a substantial supply of the mineral in the ground into consideration. That is, it seems not to have occurred to Nixon that repressive regimes in South Africa and the Soviet Union would no longer be able to purchase advanced technology, or anything for that matter, by just digging gold out of the ground. Vodka and wine were not going to bring in enough universally valued currency. So, they’d have to play nice and some other sources of revenue would have to be found.
It did not happen at once. Indeed, it took about two decades. Meanwhile, perhaps the significance of the demise of gold was missed because the sudden flood of paper currency had to be brought under control in the U.S. Talk of a guaranteed family income gave way to price controls, austerity as a virtue, followed by excessive interest rates and, finally, strict Congressional limits on disbursements and the wholesale conversion of public and private assets into cash. And cash turned out to be really easy to steal. That’s how we ended up with billionaires, who are now discovering they don’t know how to manage; how to avoid drowning in cash.
Meanwhile, thanks to car culture in the U.S. which came in handy to derail public transportation of all kinds, fuelling the gas guzzling cages on wheels, made oil more valuable than gold and created new wealth wherever it was found. Moreover, as is now being discovered since we know the residues in the atmosphere are bad, the rumors of oil being depleted were always premature, a fiction designed to increase its dollar value, encourage more exploration and “conserve” the resource for later exploration.
The countries of the Middle East and the Mediterranean were ahead of the curve in exploiting their oil reserves. Perhaps past cultural affinities with the U.S. accounts for that. In any event, Eurasia and Central Asia are late arrivals to the carbon conversion game. Why Russia even bothered to consort with ExxonMobil is a puzzlement.
Unless it was just a scam to get $600 million of technology and a drilling platform for free.