[VIDEO] Reality Check: Is This The End of The Petro-dollar?

[Constitutional Paulicy]

Reality Check: Is This The End of The Petro-dollar?

Ben Swann Reality Check explains the petro-dollar and looks at how the national media isn't telling you that China is actively working to end it

[Travlyr]

That'll be a life changing event.

[Steven Douglas]

Sorry once again, I know I'm a long-winded bastard. Most of what I write is only to cement my own understanding -- and hopefully have holes poked in it, so that I can learn more.


Funny, petrodollars are just regular FRN's, like any other, referred to as petrodollars only because of their intended use. We didn't only export our inflation to the rest of the world - we also exported a very real kind of legal tender status for the dollar abroad, enforced by our military, by causing it to be the only medium of exchange that most oil producing countries are willing to accept, which forces artificial demand for that currency from virtually all other countries, the economies of which cannot function without oil - and therefore Fed dollars.

The inflation that our counterfeiters in charge exported to the world means that the "savers" of petrodollars abroad are also being invisibly taxed in a way that makes FRN's a hot potato of constantly eroding value. They all need to get rid of their petrodollars, pumping them to the Saudis before they command less oil tomorrow than they did today.

Over 60% of the world's reserve currency is in petrodollars. Few people, however, consider what happens to all those petrodollars once they pumped into Saudis and others. They don't just pile up in a vault somewhere, or circulate as massively inflated currencies in those economies. That would be stupid. Those petrodollars are recycled into the world economy as investments -- mostly in US debt securities.

Petrodollars are like distant off-shore toxic waste tankers, because they represent nothing but debt no matter how they are spent. The biggest threat they pose to Americans is staved off so long as they remain offshore, or get converted into US debt, US Securities -- US commitments and promises of indebtedness heaped on future generations.

Since every country requires oil, and that oil can only be purchased with Fed dollars, which can be expensive to obtain on the foreign exchange market, many countries have found it more cost effective to export cheap goods to the US, where they are paid directly in US dollars which can then be used to purchase oil. That "oil for dollars" requirement is what created an artificial demand for importing cheap goods to the US.

In the future, any country that stops spending dollars to obtain their oil are freed from the need to even have and hold dollars in reserve -- and therefore freed also from the need to export their own resources and goods cheaply to obtain those dollars. Dollars no longer bought and pumped into the Saudi's coffers are no longer recycled into US debt securities. And the dollars that are held now just get dumped -- BACK TO US -- with no new petrodollars being bought in the future.

So every 'tanker' (country) of toxic petrodollars "out there" becomes a massive spill, as petrodollars come flooding back to the US. And it doesn't matter how they come back, whether they are sold on the foreign exchange, or used to buy US exports. Every resource in the US is bid up by more dollars chasing fewer goods. In other words, massive price inflation in the US.

The Petrodollar Legal Tender Effect

Most people are not even aware of the complexity and ironies involved in the US relationship with Israel and the rest of the Middle East, and the deals made in 1973 with the Saudis (and ALL members of OPEC by 1975). It is a complex arrangement, with complex mechanisms in place, but the core arrangement is simple: we agree to supply the Saudis and others with weapons and military protection -- mainly from Israel and the former Soviet Union -- in exchange for their agreement to price oil in dollars only.

Meanwhile, and here is the irony, albeit one that makes perfect sense: We also provide money, protection, technology, training, and superior weapons, including nuclear, to Israel, to make sure Israel remains an artificially strong, ever-viable threat to the Saudis, Iran, or anyone else in the Middle East. Otherwise, eventually, given enough money and enough weapons owned by the oil-producing nations, the Soviet Union crumbles and Israel is no longer be considered a threat. And if that happens, what is the value in that protection? What would be the point of continuing to price oil in dollars only? IRONIC SOLUTION: Make the very threat we are supposedly 'protecting' them from even stronger.

Enter China, a bigger oil customer now than the US, with a massive military industrial complex of its own, and its own ability to offer protection -- for the oil spigots it is opening in Saudi Arabia for itself. Any other country attempting to do what China did would have incurred the war-mongering wrath of the Treasury/Fed's hornet's nest, and received a major slapdown from any number of offensive political, economic and warfaring tentacles of the US. Hard to do that with China, the other rooster that is now firmly in the oil henhouse. They are no threat to the Saudis; only to the artificial US Oil for Dollars Only Legal Tender machine that they are helping to break.

THE BIGGEST IRONY OF ALL

The Japanese attack on Pearl Harbor was triggered by the US, as we froze Japanese assets, along with their access to oil with an embargo (80% of which came from us at the time). That was the Japanese' most crucial import, vital to their economy and their war efforts. Now, here we are some 70+ years later, making many of the same mistakes as the Japanese -- and just as ready to pick fights with anyone who threatens our stake and claims on foreign oil, both the physical oil and the debased thoroughly debauched currency, once it no longer makes economic sense for anyone to continue to engage in the scam.

We attacked Iraq and are now sabre-rattling with Iran for reasons that have nothing to do with WMD's, rabid leaders, religion, human rights abuses, tyranny or anything else. If that was true, Pakistan and North Korea alone took the cake on most of those fronts, and should have had the same sanctions placed on them as Iran does now. And if you just wanted to stand on principle, and battle tyranny and human rights abuses abroad for altruistic reasons, Iran would not even rank as a target. There are lots of African countries ripe for the picking, with corruption, tyranny, abuses, mass murders, genocide and starvation by the literal millions. But they don't have oil -- so there is no economic incentive to protect them.

[Constitutional Paulicy]

That'll be a life changing event.

No doubt. We are going to piss away the value of our currency to the extent that a significant event such as this could likely be the nail in the coffin.

[opal]

Ben needs to be syndicated!

[Acala]

Sorry once again, I know I'm a long-winded bastard. Most of what I write is only to cement my own understanding -- and hopefully have holes poked in it, so that I can learn more.


Funny, petrodollars are just regular FRN's, like any other, referred to as petrodollars only because of their intended use. We didn't only export our inflation to the rest of the world - we also exported a very real kind of legal tender status for the dollar abroad, enforced by our military, by causing it to be the only medium of exchange that most oil producing countries are willing to accept, which forces artificial demand for that currency from virtually all other countries, the economies of which cannot function without oil - and therefore Fed dollars.

The inflation that our counterfeiters in charge exported to the world means that the "savers" of petrodollars abroad are also being invisibly taxed in a way that makes FRN's a hot potato of constantly eroding value. They all need to get rid of their petrodollars, pumping them to the Saudis before they command less oil tomorrow than they did today.

Over 60% of the world's reserve currency is in petrodollars. Few people, however, consider what happens to all those petrodollars once they pumped into Saudis and others. They don't just pile up in a vault somewhere, or circulate as massively inflated currencies in those economies. That would be stupid. Those petrodollars are recycled into the world economy as investments -- mostly in US debt securities.

Petrodollars are like distant off-shore toxic waste tankers, because they represent nothing but debt no matter how they are spent. The biggest threat they pose to Americans is staved off so long as they remain offshore, or get converted into US debt, US Securities -- US commitments and promises of indebtedness heaped on future generations.

Since every country requires oil, and that oil can only be purchased with Fed dollars, which can be expensive to obtain on the foreign exchange market, many countries have found it more cost effective to export cheap goods to the US, where they are paid directly in US dollars which can then be used to purchase oil. That "oil for dollars" requirement is what created an artificial demand for importing cheap goods to the US.

In the future, any country that stops spending dollars to obtain their oil are freed from the need to even have and hold dollars in reserve -- and therefore freed also from the need to export their own resources and goods cheaply to obtain those dollars. Dollars no longer bought and pumped into the Saudi's coffers are no longer recycled into US debt securities. And the dollars that are held now just get dumped -- BACK TO US -- with no new petrodollars being bought in the future.

So every 'tanker' (country) of toxic petrodollars "out there" becomes a massive spill, as petrodollars come flooding back to the US. And it doesn't matter how they come back, whether they are sold on the foreign exchange, or used to buy US exports. Every resource in the US is bid up by more dollars chasing fewer goods. In other words, massive price inflation in the US.

The Petrodollar Legal Tender Effect

Most people are not even aware of the complexity and ironies involved in the US relationship with Israel and the rest of the Middle East, and the deals made in 1973 with the Saudis (and ALL members of OPEC by 1975). It is a complex arrangement, with complex mechanisms in place, but the core arrangement is simple: we agree to supply the Saudis and others with weapons and military protection -- mainly from Israel and the former Soviet Union -- in exchange for their agreement to price oil in dollars only.

Meanwhile, and here is the irony, albeit one that makes perfect sense: We also provide money, protection, technology, training, and superior weapons, including nuclear, to Israel, to make sure Israel remains an artificially strong, ever-viable threat to the Saudis, Iran, or anyone else in the Middle East. Otherwise, eventually, given enough money and enough weapons owned by the oil-producing nations, the Soviet Union crumbles and Israel is no longer be considered a threat. And if that happens, what is the value in that protection? What would be the point of continuing to price oil in dollars only?

Enter China, a bigger oil customer now than the US, with a massive military industrial complex of its own, and its own ability to offer protection -- for the oil spigots it is opening in Saudi Arabia for itself. Any other country attempting to do what China did would have incurred the war-mongering wrath of the Treasury/Fed's hornet's nest, and received a major slapdown from any number of offensive political, economic and warfaring tentacles of the US. Hard to do that with China, the other rooster that is now firmly in the oil henhouse. They are no threat to the Saudis; only to the artificial US Oil for Dollars Only Legal Tender machine that they are helping to break.

THE BIGGEST IRONY OF ALL

The Japanese attack on Pearl Harbor was triggered by the US, as we froze Japanese assets, along with their access to oil with an embargo (80% of which came from us at the time). That was the Japanese' most crucial import, vital to their economy and their war efforts. Now, here we are some 70+ years later, making many of the same mistakes as the Japanese -- and just as ready to pick fights with anyone who threatens our stake and claims on foreign oil, both the physical oil and the debased thoroughly debauched currency, once it no longer makes economic sense for anyone to continue to engage in the scam.

We attacked Iraq and are now sabre-rattling with Iran for reasons that have nothing to do with WMD's, rabid leaders, religion, human rights abuses, tyranny or anything else. If that was true, Pakistan and North Korea alone took the cake on most of those fronts, and should have had the same sanctions placed on them as Iran does now. And if you just wanted to stand on principle, and battle tyranny and human rights abuses abroad for altruistic reasons, Iran would not even rank as a target. There are lots of African countries ripe for the picking, with corruption, tyranny, abuses, mass murders, genocide and starvation by the literal millions. But they don't have oil -- so there is no economic incentive to protect them.

Nicely stated. This is one of the reasons the USA is not going to get away with a placid "lost decade" of economic doldrums like Japan, but will instead have a catastrophe.

[Seraphim]

Try not to forget that the USA holds most of the world's gold reserves. At the end of the day, when the petro peg fails - the gold peg will be reintroduced. It may take until the hour of Midnight, but full fledged self preservation instincts usually lead to concenssion.

[jllundqu]

I'll believe it when I see it... people have been saying this for years.

[Travlyr]

I'll believe it when I see it... people have been saying this for years.

Yes, you are not alone. People will sit on their petrodollars until they see the loss first hand. The paper dollar has already lost plenty of value against commodities. Do you see that yet?

[wgadget]

Jim Willie agrees. He has much to say about the petrodollar and the House of Saud.

Say...Wasn't 911 committed by the Saudis? Funny we're not at war with them.

Oh, wait.

http://www.silverdoctors.com/jim-wil...ar/#more-14531

HOUSE OF SAUD STARTS TO UNRAVEL
More loyal Jackass wannabee followers will recall a story (repeated often) that on the Easter Sunday weekend of April 2010, a secret gathering of over 200 Arab billionaires convened in Abu Dhabi. They arrived in unmarked jets. My source was one of only two or three white faces in the crowd, invited by his clients. One result of the meeting was an accord struck between the Persian Gulf oil producers, led by the Saudis, to work toward a pact with Russia and China as protector of the gulf in return for financial cooperation, economic construction, and forward progress. The implicit message was that the Untied States would be phased out in the protectorate. In the balance would lie the Petro-Dollar defacto standard as victim. Events continue to this day in movement toward that end.
*
However, since the Syrian uprising, a new lethal element has entered the mix. Account will be kept brief, since so volatile and controversial. Just some bare notes. The Assad family in Syria has suffered some assassinations. Apparently, the Saudis had a hand in the killings. HezBollah has vowed retaliation. Their ties to Iran might be longstanding, but perhaps are exaggerated. My view is their home is in Lebanon. In August, Prince Bandar was assassinated. He was the Saudi head of security, and long-time ally to the USGovt. The Saudi regime is concealing his death, with outdated photos and false statements. They are working toward a transition. The House of Saud has been unstable from threats to the south in Yemen. It is unstable from internal threats tied to the fundamentalists. Although cooperation and respect has been shown between Riyadh and Tehran, the Bandar hit has created an entirely new environment. The Saudi regime with high likelihood is in its final months.
*
More importantly, the Petro-Dollar is losing its all important Saudi leg. Implications are vast. The US public takes the USDollar for granted, with almost no concept of FOREX exchange rates. If the House of Saud falls, when it falls, the impact crater will include the entire waistline of the USEconomy and its financial dog tail that wags it. The USGovt and its banker handlers have relied heavily upon the Petro-Dollar in general, and on the Saudis in particular, ever since Henry Kissinger signed an accord that governs over the grand surplus recycling back in the 1973-1974 era. Watch the Saudis convert USTBonds to Gold, then bug out of the desert to their new mansions in Southern Spain.
*
CHINA AS INTERMEDIARY AGAINST PETRO-DOLLAR
Reports swirl that China is attempting to act as intermediary in global oil transactions, for Yuan currency settlement. The rebellion globally is picking up momentum against the USDollar. The Petro-Dollar defacto standard is slowly unraveling. The denizens of the Untied States have no idea the ravaging impact of a lost global reserve currency. It will unleash price inflation when the USFed central bank is letting loose the monetary flood gates. This declaration is an act of financial war directed at the US by China. To fortify the rear flank, Russia has promised to meet all requests for crude oil made by China, with settlement in Yuan and Ruble currencies. Take the pledge as a protection from any sudden USGovt threat or retaliation. The Russia-China Axis is forming more clearly in opposition to the USDollar, the Syndicate behind it, the many Embassies that offer sanctuary for espionage, and the global rules that enforce its hegemony.
*
Crude oil payments are the critical core of global trade. The rest of global trade will follow in non-USDollar payments, all in time. Entire banking systems will gradually make a transition away from the USTreasury Bond in its reserves managements. The banking practices will follow the trade payment structures, as it should be. The profound effect on the USEconomy will be clear, as blame is shifted as usual to external factors, even to extremists. In reality the US is up against vengeful Cossacks and the angry Mongol Horde. The entire world is moving against the USDollar, seen increasingly as a toxic agent within their internal domestic systems. They see the lack of solutions, the spreading bank insolvency, the accelerated debasement of currency, and the corrupted grants of multi-$trillion banker grants. They are taking action in response. They are following the Chinese lead with the Russians acting as a quasi-Rasputin.
*
Gerald Celente reported in early September, “On September the 6th of 2012, China officially announced that any country in the world that wishes to sell crude oil using its currency the Renminbi instead of the USDollar can do so. The following day September the 7th, Russia announced that the nation will sell China all the crude oil they need, no limitations whatsoever. They will not use the USDollar for their trade.” The claim by Celente is far reaching. The USDollar is dying a slow death. Its antagonists do not wish to speed the death process too rapidly, for fear of quickening the ravage to their own nations. They also do not wish to invoke the wrath of the USGovt, which since 2003 has enforced the USDollar as global reserve currency via its war machinery.
*
What China is offering is an intermediary clearing house role to sidestep the Petro-Dollar, where crude oil payments can be made in the Chinese Yuan currency. This offer is a financial act of war against the Untied States currency, where China will backstop all transactions. It is a violent offer to disrupt the USDollar. Look to see if any Saudi oil sales are settled in Yuan currency as alternative, even the Euro currency as expedient. The superpowers are openly attempting to isolate the USDollar, the clear victim to be the USEconomy, the land of consumption excess. The move is a tacit push of the US into an isolated place where it can very easily slide into the Third World.