Chapter 247
Chapter 247
-----------------------------------------------------------------
Translator: crow
Chapter Title: Chapter 247 - 블랙 프라이데이
-----------------------------------------------------------------
-----------------------------------------------------------------
Translator: crow
Chapter 247: Black Friday
-----------------------------------------------------------------
Korea's gold purchases and the Asian nations' attempts at dollar convertibility.
The series of moves in Asia dealt a fatal blow to America's gold standard.
"Whether the Koreans did it on purpose or not, we can't just let their schemes slide."
"First, show them what happens with a currency devaluation."
"Currency devaluation. That sounds good."
To get revenge on Korea, the Kennedy administration handled the dollar non-convertibility issue without consulting them.
"Have a taste of this."
The unilateral devaluation and dollar non-convertibility caused the value of Korea's dollar assets to plummet.
But it wasn't easy to roll out even harsher retaliatory measures.
If America wanted to properly sanction Korea, it would have to bear some pain itself.
To do that, the administration's approval ratings needed to be rock-solid enough to stomach the damage, but Kennedy's support wasn't that sturdy.
"We should hold off on additional measures for a bit."
"The world trade is already in chaos from the shock of dollar non-convertibility."
But the shock from dollar non-convertibility they'd tasted so far was nothing.
Soon, the true aftershocks of dollar non-convertibility assaulted Washington.
"The dollar's value keeps crashing? Didn't we set the exchange rate at $38 per ounce?"
Kennedy couldn't hide his bewilderment at Treasury Secretary Clarence Douglas Dillon's report.
"At this rate, it wouldn't be surprising if it hits $1,000 per ounce."
The U.S. dollar's value plummeting to 1/30th.
It was absurd.
"No countermeasures?"
"To stop the dollar's fall, we need to give the markets faith that America's currency won't turn into wastepaper. That means raising tariffs first."
They had to restore America's trade balance to recover any credibility for the dollar.
Dillon proposed protecting the dollar's value through protectionism.
'The Republicans won't oppose tariff hikes in this situation.'
Kennedy decided to push through tariff increases as Dillon advised.
The tariffs weren't limited to Korea.
They were blanket hikes against the entire world.
"Of course, tariffs alone won't guarantee the dollar's value. To halt the plunge, we need another way to back our currency. We have to show something to replace gold if we want market confidence to recover."
"What could replace gold?"
"If you had to pick the most important thing in modern society, what would you choose, Mr. President?"
Thanks to the recent oil shock, Kennedy came up with the answer right away.
"Oil, obviously."
"Exactly."
"Switching from gold standard to oil standard?"
Kennedy fell deep in thought.
Using oil to back the dollar's value.
It was far more realistic than gold.
As of 1963, America's oil production averaged 8.8 million barrels per day.
The United States outproduced No. 2 Soviet Union's 5.2 million and No. 3 Venezuela's 3.5 million combined.
Add a few more countries, and establishing the petrodollar wouldn't be so hard.
"Are there countries that would cooperate on an oil standard?"
"There are candidates."
Dillon listed pro-U.S. oil producers.
Saudi Arabia, Venezuela, Mexico, Argentina, Qatar, Kuwait, and so on.
But many of them used the won as their settlement currency.
Saudi Arabia and Kuwait were prime examples of petro-won settlement nations.
"Those guys won't easily accept petrodollars."
"I'm no diplomat, but for deals like this, guaranteeing regime security is probably the best bet, right?"
Station U.S. troops and protect the regime from internal and external threats.
That option might just appeal to them.
"I'll consider your advice, Secretary."
After much deliberation on Treasury Secretary Dillon's proposal, Kennedy set a policy to back the dollar's credibility with an oil standard.
To put the plan into action, America dispatched Secretary of State David Dean Rusk to Saudi Arabia.
At his meeting with King Saud bin Abdulaziz Al Saud, Rusk proposed a big deal.
"You'll guarantee our dynasty's security with U.S. troops? Sounds good on paper, but if you're making offers like that, you'd have to stop supporting Israel. What would my people think if we accepted?"
Saudi Arabia didn't accept America's proposal outright.
Instead, they made a counteroffer.
Abandon support for Israel, and we'll take your deal.
That was Saudi Arabia's stance.
"Your Majesty, that's diplomatically difficult."
"Your proposal is domestically problematic too."
The talks hit a snag.
That said, Saudi Arabia didn't really want to kick America's offer to the curb.
It was just that security guarantees weren't enough—they wanted more.
America never held the upper hand in negotiations with Saudi Arabia.
The oil sheikhs knew exactly how valuable what they had was.
They understood the gains America stood to make from petrodollars, so they didn't budge an inch without extra concessions.
Rusk coordinated with Washington multiple times, offering Plans B and C, but Saudi Arabia demanded even more.
"If you can't abandon support for Israel, then give us equivalent terms. I need something to tell my people."
After long, drawn-out negotiations, Rusk finally offered Saudi Arabia these terms.
First, guarantee the royal family's regime and Saudi national security via U.S. troop deployment.
Second, mandate hiring Saudi directors at U.S. oil companies and transfer oil pricing rights in Saudi Arabia to them.
Third, guarantee technical support for Aramco's independent continental shelf oil development.
Fourth, grant the Saudi royal family the same investment benefits as U.S. citizens.
It was the kind of concession that brought tears of blood to America.
But there was no choice.
Nothing less would convince Saudi Arabia.
The others were just as tough.
Kuwait and the Arab Emirates openly laid out their terms from the start.
"You'll station troops, of course—and pay the stationing costs."
Not protection money from them, but rent to them.
They positioned themselves to bleed America dry.
Mexico and Argentina were relatively meek out of fear of America's fist, but only compared to the oil sheikhs above.
"Cooperate? Then drop the tariff barriers first."
America stripped out the most outrageous demands it could, but still had to yield a lot to the oil producers.
And the negotiations weren't even fully wrapped up.
There were endless mountains for the working-level teams to climb.
Even as America scrambled for petrodollars, the dollar kept sliding.
Protectionism didn't help.
The fall was so rapid that prices exploded upward.
The Kennedy administration was blindsided by the monstrous price shock.
"We could be heading for stagflation."
"No, even with protectionism, if the dollar keeps tanking like this, what are we supposed to do?"
On top of that, higher tariffs slashed Korea's and Europe's exports to America.
This made U.S. inflation far worse than the government had anticipated.
"Mr. President, we absolutely cannot lower tariffs. A big trade deficit on top of this would turn the dollar into toilet paper."
Treasury and economic advisors urged sticking to protectionism despite the inflationary pressure.
Kennedy agreed they needed tariff walls up for a while to protect the dollar.
The problem was the inflation shock.
Record inflation completely rocked America's lower classes.
The group hit hardest was Black Americans.
The shock ignited the fury of Black communities already dissatisfied with Democratic rule.
"Black Lives Matter! Black people have a right to live!"
Mass protests erupted across American cities.
They believed the Kennedy administration's incompetence had ruined their lives.
"This punk Kennedy talks big about checking Korea with protectionism, and now he's strangling America's economy. Do we keep tolerating this madman's antics?"
The Republicans seized the inflation as ammo to attack the Kennedy administration.
"We deserve the chance to buy cheap, high-quality goods through free trade!"
Of course, the Republicans didn't exactly adore Korea either.
But in the Cold War framework, they saw Korea as a partner worth cultivating.
Checking Korea could wait until after toppling the uncompromising archenemy, the Soviets.
Above all, to win the next election, they had to shove Kennedy off the cliff.
The Republican assaults on the Kennedy regime grew fiercer with time.
The president couldn't withstand the merciless barrage.
"We'll lower the tariffs."
The White House retreat accelerated the dollar's crash.
The dollar, plummeting like a shooting star, even broke through the symbolic $1,000 per ounce.
Nations hoarding gold and other assets laughed as the dollar's value tanked below 1/30th.
"Bye, America. Buy America. Time to snap up U.S. assets."
The arrival of history's biggest shopping spree: Black Friday.
Korea raised its shopping basket at the sight of America's crashed asset prices.