Excerpt: Despite the vigorous debate in the United States and around the world on the many difficult questions associated with a war on Iraq, one topic is notable for its absence: the possible effect of a war on the stability of the U.S. dollar and the global financial system. It was the same during the Vietnam era, when the debate all but bypassed the severe turbulence in the global financial system that that war precipitated. This time the consequences could be much worse because there is an even greater risk of a collapse of the dollar due to the vulnerabilities that were created then.
There are numerous reasons for the risk of monetary chaos today. The emergence of the euro at a time of military and political turbulence is among them. Periods of crisis in capitalism have often been marked by monetary crises, including competition between the currencies of rival powers. In the nineteenth century, up to World War I, the British pound reined supreme as the currency of the dominant imperialist power. There was a period of competition, collapse and chaos between World War I and World War II. The countries that lost the war and their colonies saw their currencies fall apart. The German mark collapsed. Currencies were taken off the gold standard and put back on and taken off. Currency turbulence, debt crises, and questions relating to World War I reparations were crucial factors in the rise of Nazism in Germany. The gold standard even figured in a coup plot in the United States in 1933.