The six nations that make up the Gulf Cooperation Council (GCC) – Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates – have profited handsomely over the last several decades, trading oil for dollars. The wealth held by GCC millionaires is projected to shoot up by more than 50% to around $3.8 trillion by 2012.

How much of this “wealth” is illusory?  How much of it has disappeared, how much of it will disappear in the ongoing global financial collapse? Keep in mind: the bundling of consumer loans and home mortgages into packages of securities – a process known as securitization – was the biggest U.S. export business of the 21st century. More than $27 trillion of these securities have been sold since 2001, toxic junk that infected financial systems around the world. These are now blowing up. Who knows what they’ll ultimately prove to be worth.

The flood of petrodollars into the Gulf has resulted in raging inflation in Gulf economies. Because GCC countries’ currencies are pegged to the dollar, exchange rates have been effectively frozen for years. This works to the advantage of the U.S. because the dollar retains its nominal value, even when the U.S. runs huge balance of trade deficits with oil producers year after year.

Gulf governments are seeking more control over their own economic destiny through a monetary union.  This may threaten the hegemonic position of the U.S. dollar. The GCC monetary union could usher in a “new world financial geography” in which the Gulf states, who control 45% of the world’s oil reserves, exercise their power on world’s economic stage. The GCC shares a common language, common demographic trends and a common reliance on expatriate labor, could smooth the transition towards a unified economy.

China may be the first to be shouting that the emperor has no clothes. A leading Chinese state newspaper has accused the United States of plundering global wealth by exploiting the dollar’s dominance, pointing out that other countries have lost vast amounts of wealth because of the financial crisis, while Washington’s sole concern had been protecting its own interests.

The front-page commentary in the overseas edition of the People’s Daily says the world urgently needs other currencies to take the dollar’s place.  It calls for Asian and European countries to banish the U.S. dollar from their direct trade relations for a start, relying only on their own currencies instead. A meeting between Asian and European leaders, to start on Friday in Beijing, is offered as the perfect opportunity to begin building a new international financial order.

The old international financial order freed the U.S. from having to make “real things”, allowing the U.S. to use credit and the power of its US dollar hegemony to keep its consumer economy ticking. The Oil Drum: Australia/New Zealand has posted this next chart suggesting that we’ve been living on borrowed time since about 1990:

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John Michael Greer in The Long Descent argues that the decline of civilizations can take the form of a slow-motion, staged collapse as the demands of maintaining physical and social infrastructure exceed the available resource base. At each stage, “capital” that can no longer be maintained is abandoned, just as a house or a car that a family cannot afford to keep fixed up slowly and inevitably fall into disrepair, eventually becoming unusable and salvageable. Environmental degradation is accounted for in this formulation as a decline of the resource base – as “sinks” become overloaded, the environment loses its capacity to provide ecosystem functions.

Since the Enlightenment and the Industrial Revolution, our most profound faith has been in progress. Each generation has felt it has progressed from what previous generations had. As this op ed in the Houston Chron.com titled After oil: the future of energy by Peter Bishop shows, we’re not near ready yet to abandon that faith.

“If finding new energy sources and energy efficiency doesn’t work, we will be required to change our behavior. Few expect human society to disappear in a reduced energy environment, but it could change dramatically. We have already seen some inevitable changes: driving less, cooler homes in the winter and warmer in the summer, more local production of food and manufactured goods.

“Other changes will take longer: higher population density in cities, increased telecommuting, alternative vehicles for different purposes, more mass transit options and increased walking and cycling. Under this scenario, the world could be considerably different in 2050.

“While we can’t predict the future, exploring plausible scenarios in the story of human civilization is exciting and valuable for us today. . .

“When it is all said and done, future generations might even value their lives over ours.”

For most of their time on Earth humans have lived without the illusion of progress, often harkening back instead to a “golden age”.

Odds are that our worship of progress will in the future seem akin to worshiping golden idols. Our mythic wisdom warns of the consequences.