I very much do understand petrodollars, post-WWII economics and the various schools of economic theory.

I also understand the "value" of combining a Middle East oil cartel (Iraq, Indonesia, Iran, Kuwait, Libya, Angola, Algeria, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela; any of those names sound familiar?) with a printing press and the point of a gun.

Before I engage in any back and forth regarding "free market" economics, I would like to say (hopefully without insulting any libertarian and/or Austrian school economic thinkers, some of whose members I happen to count as friends in my daily life) that it is very important to make a clear distinction between a truly free economic market (something everyone talks about but no one can provide a good example of at the macro level of nations -- sort of like communist states) and corporate markets. Normally beginning with new and emerging industries, corporate markets evolve from something resembling a competitive free market into organizations with political, legal and other trade advantages not available to smaller companies. From that point on, competition, innovation and rate of change are drastically reduced. Free market competition disappears, except among the giants. Essentially, that is what we are in the U.S. -- a monopoly corporatist state with some vestiges of free market capital structures. Even Rothbard makes the distinction between free market capitalism and state capitalism. Like Marx, Rothbard also seems to think that the state will somehow fade away over time leaving us a peaceful and harmonious utopia of purchasing choices. (I'm not picking on him. He seems like a nice enough guy.)

As for the reality of the petrodollar:

1. OPEC requires that all oil purchases be made with U.S. dollars. No other currency is accepted.

2. Combine this with the balance of trade relationship the U.S. maintains with a country like China in which the balance of trade was -1,664.7 millions U.S. in 1986 and was -232,588.6 millions U.S. in 2006.

3. Now add in the ability of the U.S. to pay for its oil using U.S. currency in the forms of dollars (that it can pull of a printing press hat for free like a magic trick), "checks" and loans to itself and to use that "free" money to pay for real goods from countries like China.

4. Now add in the requirement for every other non-oil producing country that lives by its manufacturing exports (e.g. Japan, China, basically Asia) to acquire U.S. dollars in order to pay for the oil it uses to manufacture things. Why in the world would China and Japan both have nearly a trillion dollars each in reserve currency, the majority of it denominated in U.S. dollars?

That's a nice racket if you can own it and keep it, which we have since after WWII. The U.S. trade deficit is currently 700 billion per year. Add to that the trillions of dollars in government debt we are racking up. Add to that the trillions of dollars in current consumer debt.

And as for the petrodollar being a theory, an urban banking myth if you will, we're about to find out just how much of a myth it is. China, Russia, Latin America and the EU are about to prove its existence, one way or the other.

My primary concern in writing any of this is the fact that, if it is true that the U.S. is about to go through some hard times, our tendency is to find someone besides ourselves to blame things on and then say, "Look! Over there!" so that those persons responsible for causing all the trouble won't get into any trouble of their own. That's just how we do things in America.

That means we need to identify a scapegoat as quickly as possible and the rising sounds of the war drums seem to indicate that the scapegoat will be Iran. If we were honest with ourselves we would admit that what we really want is to seize and hold the oil fields in the Middle East and use them to control the rest of the world. But then, no one would like us if we acted like that.

That is also the goal of the upper class, be they neocon or neolib. Dick Cheney and George Bush understand this. So does Hilary Clinton. Although I would rather have an enlightened king than a despot, (more likely to physically survive with an enlightened king I should think), I would really rather have a democracy. No kings. Ever. Forever.

A strong middle class. An educated populace.

For example, the young would not go to college with the understanding that they would graduate as indentured servants. They would go to college with the understanding that they were free to pursue a life of service, purpose and creativity after graduation. They would be free to be middle class: teachers, artists, librarians, social workers -- things like that.

I'm thinking Athens during the time of Socrates, Plato and Aristotle.

Funny that Digby's first post today is all about that.

I knew when I wrote them that my comments might bring out the "fighting Irish" Lew Rockwell libertarians and Ayn Rand objectivists. I also knew a likely result might be a rapid spiral into a black hole of debate that would ultimately result in exchanges of insults along the lines of "even someone with the neural capacity of a flatworm could certainly understand that . . ." Well, that hasn't happened yet and so I think I'll cash my chips while I can and just watch the game from here.

I appreciate the offer, but no thanks. Sorry I brought it up.

I capitulate. You are correct. There is no such thing as a petrodollar. There is no such thing as a trade deficit. Self-ownership is the only form of property ownership that truly exists and all beneficial forms of society are derived from it.

Truce. No hard feelings.