9/11: Undermining US Dollar a Weapon for Terrorists

"How many ounces of toothpaste are in your toothpaste tube, sir?" we were asked this morning while going through security at Denver's airport.

"You can see it's not much. About three day's worth, probably. Why?"

"Well," and here we knew we were about to have our Sensodyne confiscated, "the regulations stipulate you can only have up to three ounces of any fluid or gel in your carry on bags, and that said gel and or fluid must be in a clear plastic bag. Do you have a clear plastic bag, sir?"

"No."

"Is this prescription toothpaste sir?"

"No. Is there such a thing as prescription toothpaste?"

"I don't know sir. But I'm going to have confiscate your toothpaste."

"Okay."

Thank you Osama bin Laden. More than just a trivial inconvenience, this kind of absurdity shows that the Nation State's response to 9/11 is completely inadequate and bureaucratic. It's not that there mightn't someday be a toothpaste terrorist. It's possible. But the elaborate and inefficient security apparatus America has erected to respond to 9/11 doesn't really address the problem.

What is the problem? Well, the problem is that the modern world of globalisation can be described as a system of systems. How you get your electricity, your oil and gas, your food, your clothes, your phone calls...and even how you get to your job or cross the country by plane, train, or automobile...all of your economic activity and personal freedom is made possible by the interconnection of these various system-especially the systems that produce and deliver energy.

In a book we read on the airplane from Denver to Baltimore - Brave New War: The Next Stage of Terrorism and the End of Globalisation - John Robb argues that the target of non-state actors like al-Qaeda is to disrupt these systems. For example, the attack on the World Trade Center was not so much an attack on Manhattan's skyline as it was an attack on the chief pillar of America's global economic strength: the dollar.

"In a textbook application of these new mechanisms of war," Robb writes, "al-Qaeda used the technologies of global integration and fourth-generational ideas to attack the United States.... In classic 4GW fashion, the al-Qaeda planners had found a major strength of the United States and tuned it into a weakness. The very technologies and infrastructure networks we use to power our state and interconnect with the rest of the world were used against us."

Since 9/11, the US dollar has declined against every major currency in the world. It's down relative to base metals, precious metals, soft commodities, grains, and others. More importantly, the 9/11 attack disrupted the global dollar standard system by undermining confidence in the US currency. This confidence will never be restored. And what you see each week in the markets is the incremental evidence of the dollar's demise and the shift into a new global monetary standard where tangible assets enjoy a premium.

Systems disruption is what Robb calls fourth generation warfare, or 4GW. It's how the weak can defeat the strong. And if Robb is right, it may be the deathblow for large, centralised nation states like the government of the United States of America. Not only will America (and other countries) face attacks on crucial systems, they'll be unable to stop them. Their efforts to do so, like confiscating toothpaste, fail to appreciate the seriousness of 4GW's threat to the future.

Dan Denning
The Daily Reckoning Australia

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