The Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets (Cornell Studies in Political Economy)

According to Mr. Spiro, the US engineered a brilliant response to the oil crisis of the 1970s.It goes like this. Through stick and carrot the US gets an agreement from OPEC only to accept US dollars in exchange for oil. This means that the US can print dollars to pay for price increases in oil. Industrialised countries without oil, such as Japan, have to export to the US in order to obtain dollars to exchange for Opec oil; for example, cars in the case of Japan. So America gets oil and services and goods (eg cars) in exchange for pieces of paper. Not only that but Opec's excess dollars were then reinvested in the US and other industrialised countries, thus funding the US budget deficit and reducing US interest rates.I had read this elsewhere and could not quite believe it is true. However Mr Spiro's book is very scholarly and carefully written, so this makes me think the above theory is true.Mr Spiro's book is mainly about the second half of the process--the "recycling" of OPEC's excess dollars. He shows that contrary to conventional wisdom most of the excess dollars were "recycled" to industrialised countries rather than less developed countries. In the process of acquiring excess dollars the US reneged on agreements with the IMF.Much of Mr Spiro's book is concerned as to whether the above history corresponds with various theoretical economic models. I found this of some interest but it might be too heavy going for some people.Mr Spiro concludes that traditional economic theories fail to take account of the fact that nation states use violence and the threat of violence to "distort markets."Altogether very interesting and worthwhile, though the writing style might be too academic for some people.