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

[Steven Douglas]

+1

That was spot on.

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.
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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.
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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...It will unleash price inflation when the USFed central bank is letting loose the monetary flood gates.
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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.
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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.
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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.

The part I put in red is the only thing that has made this a stalemate, even now, because fiat currencies really are tied to and dependent the dollar.



Superman: Don't worry, Lois, I've got you.
Lois Lane: You've got me--who's got you?!

After Nixon Shock, the US was still able to borrow prestige for the USD from a number of angles, the strongest of which was the dollar's former reputation and strength when it was backed by gold -- the closest thing to a 'stable' currency the world had already in wide circulation.

China has currency problems of its own with the Yuan, as the RMB is every bit an irredeemable fiat currency as the USD. Worse yet, the Yuan got its strength primarily from the Fed dollar through its trade with the US. In the end, they are all deliberately inflated fiat currencies in a bunch of fiat debt-money regimes.

Even so, China has been pushing for some time to prop up the RMB in the eyes of the world, in the hopes of getting it into the PetroYuan catbird seat, if nothing for its inflationary-hiding/misery exporting benefits, as demand for that currency is increased. Even selling off US securities and raising its peg against the dollar can some the illusion that the Yuan is 'standing on its own'. Most of the players involved aren't that stupid, and realize this, but while China has been desperately trying to make the RMB appear conservatively managed and somewhat well-behaved, all the Fed's rounds of Quantitative Easing, especially this last one, assures that the Yuan at least looks like a much lesser of two evils. And what has this insane world of ours been about, if not kicking the can down the road a little longer?

But there is much more to it than that. Whole economies are so intertwined with interdependency on trade with the US that a tsunami of increasingly worthless Fed-inflated dollars returning to the US could not only easily trigger hyperinflation in the States (a total loss of confidence in the Fed dollar at home), it could just as easily send the entire world into a massive, catastrophic depression.

Oddly enough, any transition using multiple competing fiat petro-currencies would serve as a natural check and balance against all of them. The US economy would still drown in its own worthless currency, but instead simply wiped out in a tsunami, it might be more like Chinese water torture. Economic water-boarding, as it were, as even our hyperinflation is 'managed' externally.

[The Freethinker]

Steven Douglas' post is solid and informative. Steven, never shy away from long-winded posts; I for one love to read.

I never thought I'd link a post from a leftist website like Third World Travelever while writing here, but in the defense of TWT, that is a website with tons of resources about global elites, the Federal Reserve, imperialism, and other things we liberty lovers read about. There is a lot on the Fed on TWT for anybody who wants more.

Anyway, regarding the petrodollar, I found this 2004 piece, which I excerpt below:

Oil can be bought from OPEC only if you have dollars. Non-oil producing countries, such as most underdeveloped countries and Japan, first have to sell their goods to earn dollars with which they can purchase oil. If they cannot earn enough dollars, then they have to borrow dollars from the WB/IMF, which have to be paid back, with interest, in dollars. This creates a great demand for dollars outside the U.S. In contrast, the U.S. only has to print dollar bills in exchange for goods. .....

Fiat money or currency (usually paper money) is a type of currency whose only value is that a government made a "fiat" (decree) that the money is a legal method of exchange. Unlike commodity money, or representative money, it is not based in any other commodity such as gold or silver and is not covered by a special reserve. Fiat money is a promise to pay by the usurer and does not necessarily have any intrinsic value. Its value lies in the issuer's financial means and creditworthiness.

Such fiat dollars are invested or deposited in U.S. banks or the U.S. Treasury by most non-oil producing, underdeveloped countries to protect their currencies and generate oil credit. ..... Nevertheless, the foreign deposited dollars strengthen the U.S. dollar and give the United States enormous power to manipulate the world economy, set rules, and prevail in the international market.

Thus, the U. S. effectively controls the world oil-market as the dollar has become the "fiat" international trading currency. Today U.S. currency accounts for approximately two-thirds of all official exchange reserves. More than four-fifths of all foreign exchange transactions and half of all the world exports are denominated in dollars and U.S. currency accounts for about two-thirds of all official exchange reserves. The fact that billions of dollars worth of oil is priced in dollars ensures the world domination of the dollar. It allows the U.S. to act as the world's central bank, printing currency acceptable everywhere. The dollar has become an oil-backed, not gold-backed, currency.

And of course, the good doctor himself had his say in the matter in 2006:

Amazingly, a new system was devised which allowed the U.S. to operate the printing presses for the world reserve currency with no restraints placed on it — not even a pretense of gold convertibility, none whatsoever! Though the new policy was even more deeply flawed, it nevertheless opened the door for dollar hegemony to spread.

Realizing the world was embarking on something new and mind-boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence “backed” the dollar with oil. In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite the radical Islamic movement among those who resented our influence in the region. The arrangement gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as dollar influence flourished.

This post-Bretton Woods system was much more fragile than the system that existed between 1945 and 1971. Though the dollar/oil arrangement was helpful, it was not nearly as stable as the pseudo—gold standard under Bretton Woods. It certainly was less stable than the gold standard of the late 19th century.

[psi2941]

http://www.youtube.com/watch?v=K9VLp0FcJ6I

[shane77m]

As always a great video from Swann.