Note: I was on Coffee and a Mike yesterday. The Rumble version is here. There was no Sunday show this week. Taking a break for the holidays, but behind the green door I have a post about a cheap fitness watch I bought as part of my latest health kick, a post about milling about. Subscribe here or here.

For most of human history the store of value, what we call money, was shiny rocks melted into more useful disks. Occasionally money was colorful bits of paper that represented the shiny rocks or the raw power of the issuer. If someone wanted the produce of your labor, they needed shiny rocks. Then in the 20th century this began to change, and the shiny rocks gave way to drab looking bits of green paper that represented something new, the energy unit.

In the future, historians will put this great shift in how the world does business up there with the semiconductor, the printing press, and the steam engine. The petrodollar that was formalized fifty years ago was the result of a long realization that what every nation needed was access to energy. It was not just to fuel engines, heat homes and light the streets, but to grow the food and make stuff. Oil, coal and natural gas were the most important things in the world, so they became our money.

The importance of energy is obvious. If the price of gold goes up, barely anyone notices, but if the price of oil goes up, everyone notices. Much of Joe Biden’s scheme to run for reelection was based on keeping gas prices low. He drained the strategic petroleum reserve to keep crude prices from rising. His people worked tirelessly to keep a lid on the Middle East because a regional war would send crude price through the roof, which would mean rising gas prices.

There is another piece to it. The deal with the Saudis to price energy in dollars and reinvest oil profits in U.S. Treasuries made the United State the global bank and the global mint. On the one hand, the American banking system could produce as many dollars as it likes, because the demand for energy never slackens. This let the American government run massive deficits. It also provided a form of seigniorage, which profited the American economy.

It is this piece that lies at the heart of global trouble. For example, energy is one reason why Syria collapsed. The United States took control of the Syrian oil fields and starved the Assad government of those revenues. American involvement in Syria was not just about those oil fields, but also about making sure there was never going to be gas lines running from the Persian Gulf to through Syria if Syria was not within the American sphere of influence.

The rebels were not done looting official buildings when there was talk about reviving the Qatar – Turkey gas pipeline. Europe needs natural gas, and the choices now are Russia and much more expensive American LNG, so a new source would be welcome in Europe and be a boon to Qatar and Turkey. The odds of the United States going along with this are low, unless they can control this new pipeline, either directly or through proxies loyal to the dollar.

Of course, the war with Russia is as much about energy as it is about the neocon obsession with Russia. The Ukraine war was an excuse to cut off Russia from the global oil trade and a reason to cut Europe off from Russian gas. This has largely failed, but the United States is now selling Europe more LNG than ever, thus making them more dependent on the dollar. There was also the dream of gaining access to Ukrainian coal and gas reserves after the war.

The Ukraine war offers another example of the centrality of energy. Ukraine makes money transporting Russian gas to Hungary and Slovakia. Zelensky wants to end the deal unless these two countries support NATO membership for Ukraine. These two countries sell electricity to Ukraine, especially when the Russians turn off the Ukraine power plants. The Russians have hinted that they will destroy the Ukraine natural gas system if Zelensky does not continue the gas deal.

If not for those gas lines running through Ukraine, no one would care much about this corrupt backwater on the edge of Europe. The homicidal maniacs we call neocons would still care, but the rest of the world would not care, but since Ukraine is at the heart of the Eurasian energy system, everyone cares about Ukraine. The corrupt midget in the green jumpsuit gets to make demands of the world, because the world’s bank relies on controlling global energy.

America’s greatest ally understands the importance of energy to America, which is why they are talking about war with Turkey. They will claim the Turks are the new Iraq and demand America let them raid their Akkuyu nuclear plant, which is scheduled to begin operation in 2025. The Israelis are worried that the Turks could gain control of Syrian oil fields and make a deal with the Gulf states on pipelines. Soon, we will hear Lindsay Graham talking bad about Erdogan.

Obviously, energy is a major factor in China relations. The Chinese buy a lot of energy, mostly from Russia. The unwillingness of the Chinese to join the war on Russia is due, in part, to dependence on Russian oil and gas. The Chinese also have zero trust in Washington but take away the energy issue and China is behaving different than what we have seen over the course of the Ukraine war. For the Chinese, energy is money and money always talks.

The global energy war that has broken out over the last decade is due to a fundamental reality of the American financial system. The thing that backs the dollar in energy and the control of the energy markets. Just as bits of colorful paper used to be backed by shiny rocks, the American dollar is backed by the BTU. If the United States loses control of that asset, the dollar becomes just another representation of that asset and Washington ceases to be the global bank.

That is the process we see unfolding in these regional crises. It is about control of global energy markets, as much as the ideological fever dreams from certain subcultures in Washington. In fact, the neocon crusade on Russia has harmed the economic interest of America. By shaking the trust in the system, the rest of the world is now looking for a way around the dollar denominated markets. The global bank forgot why it existed and now we have multiple crises.

Most likely, this will shape foreign policy under Trump. Re-normalizing relations with Russia to get them back onto the global banking system will be a priority, even if it is never mentioned. Settling the Syria mess in such a way that the United States, through regional proxies, continues to control the flow of energy will be the focus of Trump policy. Note that everyone has stopped talking about Iran. The project there and everywhere is not war, but the business of America, energy.

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