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The Wrongologist

Geopolitics, Power and Political Economy

Veterans Day: 11/11/2015

In his latest book, The Last of the Presidents Men, Bob Woodward reveals a previously unreported memo from 1972 in which Nixon writes Kissinger, saying that a years-long bombing campaign in Vietnam had produced “zilch,” even as he pitched the exact opposite message to the American public. He wrote that the day after giving an interview to Dan Rather, declaring that the bombing of North Vietnam had been “very, very effective”. Nixon’s note said:

K. We have had 10 years of total control of the air in Laos and V.Nam. The result=Zilch. There is something wrong with the strategy or the Air Force.

Nixon then increased bombing, dropping some 1.1 million tons in 1972 alone — more than in any single year of LBJ’s presidency. From Woodward: (brackets by the Wrongologist)

[Nixon] Us[ed] Vietnam to enhance his re-election prospects…breaking perhaps the most sacred trust for a commander in chief.

All these years later, it is hard to believe that anything Nixon did could surprise us, yet there it is.

Since the 1970’s, a meme among conservatives is that the reason we lost in Vietnam was a lack of will, brought on by liberals and war protesters. But thinking that the primary reason we lost Vietnam was that liberals stabbed America in the back is ridiculous. You may remember that in 1968, Nixon said he had a “secret plan” to end the Vietnam War. He had no plan, and by 1972, when he sent the note to Kissinger, he knew he was losing the war.

In total, the war stretched on for 7 years after the announcement of Nixon’s “secret plan” to end it.

Today we hear that feckless leadership is causing us to “lose” in Iraq, Afghanistan and Syria. This comes from a few career military, and many, many Republican Chicken Hawks, who continue to raise the specter of Vietnam.

On Veterans Day, let’s remember that Vietnam, Iraq, Afghanistan are all places where our boys bled and died on foreign soil. All are places where our money was recycled to the war profiteers, and where we left behind zero ability to foster the “democratic” way of life that our politicians wanted to bring to those nations.

And what about the “sacred trust?” Politicians break the sacred trust to its citizens and soldiers all the time, if there is an opportunity to spread the gospel, secure the oil, or beat the “enemy”. War profiteering for private corporations, socialized losses for the people. US soldiers dead or maimed for life. Their families robbed of optimism, their memories an open wound.

THAT is the sacred trust in ruins. That is the legacy of Vietnam, Iraq and Afghanistan on this, and on all Veterans Days.

And do the Chicken Hawks take care of our veterans after the fact, once they come home? They do not. The CH’s “cut taxes” mantra means that more money for the oligarchs has to come from somewhere. So, they try to cut social programs, because war profiteers (including those in Congress) can’t make any money off government-run, not-for-profit social programs.

Veterans have been with us since before the founding of the Republic. To observe this Veterans Day, here is a reasonably obscure song by Bob Dylan, “’Cross the Green Mountain.” It appeared on the soundtrack of the film, “Gods and Generals,” a Civil War film that was entirely financed by Ted Turner as a pet project.

The song speaks to the horror faced by soldiers in the Civil War. Dylan’s Civil War tale could be about any war, as his worn-down singing captures the essence of a soldier pining for home while reflecting on what may be his last battle, his last moments in life. Below is the abbreviated version of the song that was used as the official music video:

Those who read the Wrongologist in email can view the video here.

That gives you a taste, but if you want the whole thing, the full 8 minute song was part of Dylan’s Bootleg Series #8: “Tell Tale Signs,” and you can view it here.

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Is ISIS the Khmer Rouge With Prayer Mats?

Does our military history show us anything helpful for dealing with ISIS today? Do we have a former foe that resembles ISIS?

The best analogy to ISIS is the Khmer Rouge (KR). The Khmer Rouge managed to kill 2 million Cambodians (close to 30% of the nation’s population), from 1975 to 1979. Ideology played an important role in the KR genocide. The KR wanted to return Cambodia to its “mythic past”, to stop foreign aid, which they saw as a corrupting influence, and to restore the country to an agrarian society based on Stalinist and Maoist ideals.

The Khmer Rouge worked at it for 4 years until 1979, when, after the US failed to stem the tide with airpower and a brief 1970 boots on the ground adventure (the Cambodian incursion), the army of the Republic of Vietnam ousted the KR and its leader Pol Pot, liberating the Cambodian people. Our response to the KR overthrow was to impose economic sanctions on Cambodia. Their crime was to be liberated by our enemy, who had also defeated us.

Nixon had reached out to China in 1972, and created a few strange political bedfellows. Throughout the 1980s, the US, the European powers and China continued to recognize the Khmer Rouge as the legitimate government of Cambodia and blocked moves to place Pol Pot and his colleagues on trial. In fact, Zbigniew Brzezinski has said:

I encouraged the Chinese to support Pol Pot. Pol Pot was an abomination. We could never support him, but China could.

It took until 2014 to try the KR on genocide. The case is still working its way through the Cambodian courts.

The KR goal of purifying the nation via aggressive conversion of its people is starkly similar to the goals of ISIS, and in many ways, ISIS are the Khmer Rouge with prayer mats. Both wear (wore) black. Both morphed from destabilization engendered by the West. Both ruthlessly murdered rival factions, aiming to become the sole standard-bearer for fellow travelers in their region.

The parallels are sickly similar: The KR used brutality as a compliance technique − ripping fetuses from living women, smashing babies against trees – as does ISIS, randomly beheading and tweeting the result, burying women and kids alive. The KR were fundamental atheists – promising to tear down every temple, and kill all the monks, which they often did. Just as ISIS are fundamental believers, slaughtering the infidels, the heathens, the Christians, the Shia, or even certain Sunni tribes.

Fast forward to 2014 and there are obvious parallels between Cambodia and the Middle East. Both situations out of which the KR and ISIS emerged, were in part created by the West’s meddling in the geopolitics of the two regions.

The war in Iraq exposed that country’s deep sectarian divide. The Arab Spring toppled the Gaddafi regime. That led directly to Libya’s descent into lawlessness and fragmentation. After Libya came Syria, where ISIS currently constitutes the dominant opposition to Assad. Their faction includes thousands of foreign fighters, all of whom hew to a barbaric methodology that is similar to that of the Khmer Rouge. They have no political center to negotiate with, or anything to offer the region, except more sectarian violence and bloodletting. This is why Mr. Obama said they must be destroyed.

The lens of the KR’s frenzy may be a good way to view ISIS. First there was the KR’s bloodlust, whereby they slaughtered their own, including nominal KR supporters, who were thought to be less than true believers. Then they invaded a more powerful neighbor, Vietnam, leading to their own destruction. Thirteen years after the fall of Pol Pot and the KR, communism itself came tumbling down at the Berlin Wall. It turned out that the KR was the Meta example of extreme communism.

Far from ushering in a global Marxist Utopia, KR brought about its own demise.

That is also similar to the disjuncture between Islam and ISIS. As the KR’s brand of communism was rejected as a perversion by the vast majority of communists in the world, so the ideology of ISIS seems to be at least outwardly rejected by the bulk of the world’s Sunni Muslims, on the same grounds.

Could ISIS represent the final form of radical Islam? We can only hope that is true.

Finally, remember that Syria and Iran are nominal “enemies” of the US who are now confronting ISIS in Syria and Iraq. We have, for the most part, exited Iraq and are bombing ISIS, much like our less-than-successful bombing of the KR in the early 1970s.

We had no stake on the ground in Cambodia. We eventually reconciled with Vietnam and with Cambodia. Today, we have a limited stake in Syria and Iraq. Can we, or should we, work with a different set of “strange bedfellows” to blunt the challenge of ISIS in the Middle East?

 

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The Crook Who Took America off the Gold Standard

Forty years ago on August 9, 1974, Richard Nixon resigned in disgrace rather than face Impeachment. Millions of words have been written about his crimes and misdemeanors. Some efforts at rehabilitation of his image occurred over the last week.

One thing we shouldn’t forget is that Nixon took us off the gold standard.

When Nixon entered office in 1969, America had been part of the international monetary system known as Bretton Woods since the end of World War II. Bretton Woods committed the US to backing every dollar overseas with gold. Thus, foreign countries had the right to exchange their dollars at the rate of $35 per ounce. All other currencies were fixed to the dollar, and the dollar was pegged to gold.

Nixon appointed Arthur Burns as Chairman of the Federal Reserve in 1970, with instructions to ensure easy access to credit since Nixon was going to run for reelection in 1972, and wanted a growing economy to help his case. Bloomberg Business Week says he gave Burns some blunt instructions: “You see to it, no recession”.

Despite Nixon’s instructions to Burns, the US went into recession in 1970, triggering a rise in unemployment to 6% (imagine that!), which was the highest level since the Korean War. The recession should have curbed inflation, but it didn’t. Burns was stumped. Business Week quotes Burns’ diary:

What the boys around the White House fail to see…is that the country now faces an entirely new problem—sizable inflation in the midst of recession…The rules of economics are not working the way they used to. Prices were going up even when factories stood idle—a seeming refutation of the economic rules.

Despite growing inflation, Nixon pressured Burns to further loosen monetary policy, driving even more inflation. Domestic inflation was mirrored overseas. Foreign governments bought dollars to continue their growing exports to the US, leaving their central banks filled with greenbacks. Meanwhile, America’s gold holdings dwindled to $10 billion, about half its 1960 level.

The gold standard now existed in name only, since foreign banks held far more dollars than the US held in gold at $35/ounce. This left the US dollar vulnerable to a run.

In 1971, Nixon appointed John Connally as Treasury Secretary. Connally asked the White House financial team for options to control inflation and solve the possible run on the dollar, while keeping the domestic economy growing. Burns wanted price controls; he also thought the US should devalue the dollar against gold (that is, raise the gold price above $35). Undersecretary for Monetary Affairs Paul Volcker believed this would be ineffectual, as other countries would simply devalue their currencies by the same percentage. Volcker thought the US should temporarily halt gold-dollar convertibility.

On August 12, 1971 Britain demanded that the US guarantee $750 million. The next day, Nixon summoned his advisers to Camp David to agree on a plan. The plan had two essential points. First, America would stop converting dollars to gold. Second, to combat inflation, US wages and prices would be frozen for 90 days.

On August 15, 1971 Nixon announced the plan that unilaterally terminated convertibility of the US dollar to gold, effectively bringing the 25-year Bretton Woods system to an end. This was called the “Nixon Shock”. The gold standard was abandoned, and the previously fixed exchange rates of the world’s major currencies began to float.

Many conservatives argue that we should return to a gold standard. Would that help or hinder the world economy?

A terrific economic history of the Great Depression is the 2010 Pulitzer Prize-winning “Lords of Finance: The Bankers Who Broke the World” by Liaquat Ahamed. Ahamed says that the gold standard was the principal cause of the depression. His thesis is that tying the amount of currency a country has in circulation to the amount of gold it holds becomes a strait jacket. The problem is that if you have a gold standard, your money supply is fixed by the amount of gold available. When economic activity exceeds the value of a country’s gold holdings, trade and economic growth are stifled, or you devalue your gold, causing inflation.

Of course, because of Bretton Woods, you couldn’t devalue your gold. So Nixon, an economic conservative, took two unthinkable steps in order to get re-elected. He implemented wage and price controls, and ended the dollar’s convertibility into gold.

Taking the world off the gold standard has facilitated the unprecedented economic growth of the past 40 years, since trade has grown much faster than the growth in world’s physical stock of gold.

Nixon’s price controls didn’t do much. The Consumer Price Index rose 4.4% percent in 1971, and 3.1% in 1972. When the controls were phased out in 1973, inflation rose to 6.2%. It was a shocking 11% in 1974.

So, as in all things Nixonian, there was a little good along with a lottta bad.

When Nixon said the words “I will therefore resign”, it felt to the Wrongologist that years of anti-war protesting had come to fruition. Ford, our first appointed President, then promptly pardons Nixon, and the merriment was stopped dead in its tracks.

 

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