The Secret History of the American Empire by John Perkins

The Secret History of the American Empire by John Perkins

Normally I would not post on such stuff but this book is currently 759 in best sellers; its rankings in other categories is,

#2 in Books > Professional & Technical > Accounting & Finance > International
#2 in Books > Business & Investing > Economics > International
#3 in Books > Business & Investing > International


All of this is scary. Perkins is the same paranoid who wrote Confessions from an Economic Hit Man a few years back and the abbreviation EHM is used throughout the new book.

The type of thinking (and writing) on display in this book is apparent right up front. From page 5 we have,

Points 1 and 2 The United States represents less than 5 percent of the world’s population; it consumes more than 25 percent of the world’s resource. This is accomplished to a large degree though the exploitation of other countries, primarily in the developing world.
Point 3 The United States maintains the largest and most sophisticated military in the world. Although this empire has been built primarily through economics – by EHMs – world leaders understand that whenever other measures fail, the military will step in, as it did in Iraq.
Point 4 The English language and American culture dominate the world
Points 5 and 6 Although the United States does not tax countries directly, and the dollar has not replaced other currencies in local markets, the corporatocracy does impose a subtle global tax and the dollar is in fact the standard currency for world commerce. This process began after World War II when the gold standard was modified; dollars could no longer be converted by individuals, only by governments. During the 1950s and 1960s, credit purchases were made abroad to finance America’s growing consumerism, the Korean and Vietnam Wars, and Lyndon B. Johnson’s Great Society. When foreign businessman tried to buy goods and services back from the United States, they found that inflation had reduced the value of their dollars – in effect, they paid an indirect tax. Their governments demanded debt settlements in gold. On August 15, 1971, the Nixon administration refused and dropped the gold standard altogether. Washington scrambled to convince the world to continue accepting the dollar as standard currency. Under the Saudi Arabian Money-laundering Affair (SAMA) I helped engineer in the early seventies, the royal House of Saud committed to selling oil for only U.S. dollars. Because the Saudis controlled petroleum markets, the rest of OPEC (Organization of Petroleum Exporting Countries) was forced to comply. As long as oil reigned as the supreme resource, the dollar’s domination as the standard world currency was assured – and the indirect tax would continue.
A seventh characteristic emerged during my discussions with students: An empire is ruled by an emperor or king who has control over the government and the media, is not elected by the people, is not subject to their will, and whose term is not limited by law.


Where to begin? Let’s go in order.

Point 1: It never occurs to some that the US produces about 25 percent of the world’s goods so it must necessarily consume about 25 percent of the world’s resources.
Point 2: Perkins believes the reason the US consumes 25 percent of the world’s resources is primarily by exploiting the developing world, however, our imports are only 16% of GDP and the US buys the overwhelming majority of its imports from the developed world; Europe, Japan, Canada and Mexico (China is a very recent entry into the top tier of exporters to the US). The problem with the developing world is that they do not have enough interaction with the US, not that they have too much; serious development scholars and members of the IFI know this well.
Point 3: The first sentence is true and thank god that the second sentence also has some truth to it.
Point 4: This sounds funny – no?
Point 5 and 6: Foreigners are not forced to hold dollars, they chose to hold dollars. Virtually all dollars held outside the borders of the US are in Euro-dollars, that is, dollars in held in banks not located in the US where they earn interest that protects the purchasing power of they holdings from inflation. The people who were hurt by high US inflaton (essentially in from 1978 to 1983) were US citizens and these were lenders who were locked into low fixed interest rate loans. Perkins makes it sound as if there were a conscious plan to engineer an inflation to reduce the real value of foreign holdings of dollars (using inflation in this way – to deflate the real value of foreign debt placements, is what developing countries do). He claims he played a rather large role in the 1970s helping bail the US out of some (unnamed) crisis after Nixon moved the US off a $35 per ounce peg to gold (economists would not call this a gold standard), however, whatever scrambling took place was to ensure that the international payments system did not break down. Note: any country in OPEC can sell oil for any price they wish; see Venezuela and Iran most recently.
Point 7: I’ll leave it to the reader’s imagination as to where Perkins is going with this.

Overall the writing is weak, the reasoning childish, the self-promotion shameless (he mentions the NGOs he founded and runs in virtually every chapter), and the paranoia overwhelming.