Hold on to your wallet!

It was a troubling 24 hours for the empire. Would there be a run on the dollar?

On Feb. 22, South Korea's central bank, the fourth biggest holder of U.S. debt, announced it intended to sell off dollars and diversify into other currencies. South Korea holds about $69 billion in U.S. Treasury securities, and a total of $200 billion in all foreign reserves.

The global currency markets feared that China, which holds $600 billion and Japan, with $800 billion in total foreign currency reserves, might join in the sell-off. The dollar plunged against almost every currency--at least 30 of them.

The fallout sent shock waves throughout the global financial markets.

The Dow Jones Industrial Average plunged 174.02 points. The British stock exchange, FTSE, along with the European stock markets in Frankfurt and Paris, also dropped significantly.

Gold, the safeguard against plunging markets, rose $7.40 an ounce. Oil, which is priced in dollars, spiked 5.8 percent to $51.15, the highest level since October.

Alarm bells ring worldwide

A Feb. 24 New York Times editorial warned: "The United States' trade deficit has mushroomed to record levels, as has the United States' need to borrow from abroad--some $2 billion a day just to balance its books. ... As the Korean comment ping-ponged around the world, all hell broke loose, with currency traders selling dollars, fearing the central banks of Japan and China, which hold immense dollar reserves--a combined $900 billion or 46 percent of foreign treasury holdings--might follow suit."

The editorial described a scenario that "would be the United States' worst nightmare ... if it appeared that the flow of investment was not enough to cover the nation's gargantuan deficits, interest rates would rise sharply, the dollar would plunge further, and the economy would stall. A fiscal crisis would result."

Within 24 hours, the South Korean central bank and other Asian banks said their comments had been misinterpreted. They calmed the markets by stating they had no intention of selling their dollars.

How much pressure--economic, military and political--did the U.S. ruling class put on the Koreans to reverse their earlier statement? The world may never know.

Oil and inflation

Oil is king. The robber barons of the 19th century, like the ruthless Rocke feller dynasty, are back on top with mega-mergers and new names.

ExxonMobil has replaced General Electric as top dog among the blue- chip players. ChevronTexaco and Conoco Phillips are right behind them. All three stocks spearheaded the recent surge in the stock market. These three mega-mono polies control the market and the pricing of oil, which hovers above $50 a barrel.

George Soros, the multi-billionaire investor and speculator and a major contributor to the John Kerry presidential campaign, described the link between oil and the dollar. At a conference in Saudi Arabia he said, "The higher the price of oil, the more the dollars there are to be switched to euros [so] the strength of oil will reinforce the weakness of the dollar." (USA Today, Feb. 21)

Middle East oil exporters and Russia have already switched from dollars to euros. A further rise in crude prices could prompt more withdrawals from their dollar reserves, sending the dollar to all-time lows.

January "core" prices, which exclude food and energy, rose a significant .08 percent. Add the skyrocketing costs of food and energy, and the inconvertible truth is that inflation is a fact of life here in this arrogant super-power. The global markets are flooded with cheap dollars, and will be inundated with uncontrolled inflation.

The Wall Street Journal editorialized on Feb. 23: "[This] taste of dollar inflation removed any doubt that the long era of low interest rates that we've been living through is over. ... Alan Greenspan broke this bad news last week when he told Congress that while the economy was sound [the Gross Domestic Product expanded during last quarter 2004, thanks to cheap dollar-denominated exports-MN], the Fed may have to step up the pace of its interest-rate increases."

This is a signal that interest rates will rise to levels far beyond the Federal Reserve's own "measured rate." This will raise the cost of borrowing money for the purpose of attracting dollars to cover the intractable U.S. debt.

Previously, Greenspan was asked at what point there would be a global sell-off of dollars that sustain the humongous debt, and what the Fed's target range for the next rate increase is. Greenspan said these questions were like a "conundrum"--his fancy way of saying, "How the hell do I know?"

Is another run on the dollar on the horizon? Central banks have already shifted their reserves away from the dollar and toward the euro. About 65 central banks controlling assets worth $1.7 trillion took part. The dollar has dropped over 30 percent against the euro.

What lies ahead?

In the Feb. 24 New York Times Tho mas L. Friedman quoted Robert Hor mats, vice chair of Goldman Sachs International: "These countries don't have to dump dollars--they just have to reduce their purchases of them for the dollar to be severely affected. ... Remember the October 1987 stock market crash began with a currency crisis."

Is this what faces the labor movement, the unorganized, the oppressed nationalities and the poor? Wages and benefits have dropped significantly. Inflation has driven up prices of goods and services and wiped out whatever meager wage increases have been won. Social services and programs for low-paid workers have been drastically cut to pay for imperialist wars and Bush's tax giveaways to the 1-percenters.

The cheaper dollar has enriched U.S. corporations, which have flooded global markets with goods and services at the expense of the European Union, primarily France and Germany. A global trade war is in the making.

France, Europe's third largest economy, has 10 percent unemployment. That's a five-year high. Street protests have mounted.

There have also been many protests in Germany, suffering from similar double-digit unemployment and deficits.

A Feb. 25 Wall Street Journal article headlined, "CEO Bonuses Rose 46.4% at 100 Big Firms in 2004," cited a survey by the New York firm of Mercer Human Resource Consulting. Mercer has been retained by the Wall Street Journal to track the financial statements of 100 biggest corporations.

"CEOs in the Mercer study enjoyed med ian total direct compensation of $4,419,300--about 160 times what the average U.S. production worker made last year. The Mercer study also revealed that the median 2004 bonus equaled 141 percent of annual salaries, another record. Clerical and technical support staff received an average bonus of 5 percent of salary."

Most of these companies are applying the principles of "lean manufacturing"--keeping inventories as low as possible and reacting to short-term demand--while using temporary or part-time workers from non-union, low-paying sub-contractors and outsourcing agencies.

"The number of Americans without a job for more than six months has more than doubled over the past three years to 1.6 million. The share of the unemployed without work for more than six months has stayed above 20 percent for the past year and a half. Never before has the rate been so high for so long." (Financial Times, Feb. 18, 2005)

Only a mass mobilization--independent and class-wide--can eliminate the gross inequities between the billionaires and the workers, whose labor power produces the wealth that maintains these parasites in obscene luxury.

History has confirmed over and over that political and social change, organized from below, is the only antidote to the ruthless imperialist/monopoly capitalist system of wars, plunder and profit.