The Dollar Abyss (1)

Recapping some odds and end & some comments on Peter Dale Scott

Every once in a while I get the question: Ed Berg, what’s the connection between the two sides of what you’re doing, the theoretical stuff and the research into ‘parapolitics’ or ‘deep politics’. It’s a good question, and I’m inclined to not really try and shove the two of them together. It’s also worth pointing out that I don’t really care for either term, parapolitics or deep politics, and besides being interested in spooky stuff—intelligence agencies, assassinations, state-sanctioned drug trafficking, the shadow-world of arms dealing, the viciously psychedelic workhouse of permanently-surveilled and regimented post-post-post-postmodernity, etc—I’m not sure if I would classify that research into those categories.

If I had to shove a label atop it, one that would bridge the gap between the two (we should never been scared of having gaps or tensions, since this is the just the ‘natural’ order of things), maybe deep finance would be a better term than ‘deep politics’. If a bridge between the two must be built, it’s the highly fluid and opaque circulation of money—the dollar, most specifically—that could form that rickety trestle.

I attempted to construct that pathway once before, in a post written in March of 2024 but not published on here until this past December: Metacartel II: Capitalist Axiomatics. The goal there was to try and show how the neatly-carved distinction between the ‘regulated’ and mostly-visible economy, its contours and management that we take as a given, and the ‘unregulated’, murky, and occulted world of offshore finance, tax havens, the upside-down land of shell companies, bank secrecy and exotic schemes, are bound together. Shadow finance is by no means monetary anarchy made loose upon the world, no matter how much rhetoric those working in the Austrian tradition attempt to pile on it.

That post was way too long and too technical, so I’ll just summarize briefly. The stand-in for the offshore world as a whole was the Eurodollar market, Eurodollars being (in the most simplistic understanding) dollars held in banks and shadow banking institutions in jurisdictions nominally outside of American regulatory reach. The Eurodollar, historically, helped secure the US dollar as the world reserve currency, but paradoxically appeared as a mechanism through which the Americans seemingly lost control of their own currency. The Eurodollar markets held underwrite the interstices of world trade and foreign investment flows; they are also the plaything of all manner of dubious actors, ranging from state intelligence operatives to criminals and conmen.

The problem with the standard narrative is that the central banks of not only the UK—where the Eurodollar market first flashed into existence, at least in its formalized and recognized form—but the US itself, the Federal Reserve, tacitly approved and accelerated the development of this market. Later, the Federal Reserve—the key institutional node in the Metacartel—set up swap lines with foreign central banks to allow it inject dollar liquidity into this market in times when it appeared like it might get jammed up. By 2020, as Covid struck, the Fed had become effectively the manager and controller of the Eurodollar market.

There’s also a whole complicated story about how the Fed fund rate has a downstream effect on the Eurodollar rate. What this means is that the parameters and conditions that the American central bank sets for inter-banking lending exerts a downstream effect on the interest rates on Eurodollar deposits. This is all deeply fascinating stuff, very exciting, and the interested reader can go to that post linked above if they’re inclined to pull that thread further.

Maybe another way we can go about grafting or stapling the two side together is through an examination of the work of Peter Dale Scott, the man who is most arguably the ‘father’ of deep politics as a semi-rigorous mode of inquiry.

Scott’s long career is punctuated by idiosyncratic works of deep historical depth, spanning the JFK assassination (like in his excellent, yet messy, unpublished The Dallas Conspiracy and its streamlined successor Deep Politics and the Death of JFK), American military involvement in Southeast Asia (The War Conspiracy), the intersection of oil geopolitics with state-enabled drug networks (Cocaine Politics and Drugs, Oil, and War), September 11th (The Road to 9/11), and the War on Terror (American War Machine). Running like a silver thread through these is a fairly unique methodology that is only glimpsed obliquely, one grounded not merely in historical research, but in a particular sociological tradition. Scott touches on this methodology infrequently, if at all. Let’s try to drag it out.

Reason, Unreason and Deep Politics

In the early pages of Deep Politics and the Death of JFK, Scott gives a brief biographical gloss on his entry into the anti-war movement of the 1960s: “I first became aware of all this [deep politics] in the course of my years of anti-war research into the origins of the U.S. commitment to fight a war in Vietnam. As a former Canadian diplomat I had been exposed very peripherally to the secret Canadian cable traffic of the 1950s on Indochina”. At the time, his orientation was towards what he describes as the “rational moderates” who opposed the looming repetition of the French experience by the Americans in Southeast Asia—the names he drops are those of liberal internationalists and technocrats like Hans Morgenthau and Walter Lippman.

“At the outset”, he continues, “my anti-war speeches were naive appeals to rationality” [my emphasis]. Over time, this ‘naive’ approach altered. Scott became more sensitive to the nature of bureaucracy and soon he began to look at bureaucratic institutions as a battlefield unto themselves, entities riven with factionalism and subjected to constant infighting. Simultaneous to these developments came an increasingly large focus on the roles of irrationality and unreason as constitutive components of the prevailing social order and the bureaucratic institutions that uphold it.

Take this term, parapolitics. Initially Scott defined it simply as “a system or practice of politics in which accountability is consciously diminished”—a high liberal lament over the erosion of democratic processes and functional bureaucratic oversight. This is how he described the parapolitical in The War Conspiracy, published in 1972. By the time Deep Politics and the Death of JFK hit the shelves twenty-one years later, Scott noted that this definition was far too narrow, too intentional to encompass “the deeper irrational movements… it describes at best only an intervening layer of irrationality under our political culture’s rational surfaces”.

Parapolitics here becomes one iteration of deep politics, now taken as “all those political arrangements, deliberate or not, which are usually repressed rather than acknowledged”.

There’s several key elements here. The first is that Scott came to define these sorts of processes as a wide spectrum, encompassing both intentional behavior (which could be treated as provisional instances of corruption) and something more automatic (it seems to me that the drift of bureaucracies, state, para-state and extra-state, could fit in here). The second is this point of repression. This operates on two levels, the first being the direct violence of state repression of dissent, of information, etc. This is underpinned by the second, deeper level: automatic psychological repression, where a wide variety of social actors repress conscious acknowledgement of irrational forces, apparently to blunt the traumatic recognition of how governance actually functions.