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Phillip Legard's avatar

Key to undoing US dollar dominance is the dismantling of the petro-dollar. The US dollar was strong post-WWII because it was convertible into gold. At the outset of WWII many nations exported all their gold to the US, to the total of 28,000 tons. Gold, of course, is a pain in the ass to carry about so the fact that the $$$ was backed by gold and could be redeemed as gold at any time led to its use throughout Europe as rebuilding took place. Nixon changed all this in 1971 when he closed the gold window and declared that the $$$ could no longer be converted in the manner it was. This was due to the French taking le piss, and effectively draining US gold reserves. The US was bankrupt, but they didn't declare it. Kissinger came up with a political solution, which was the dollar recycling scam known as the petro-dollar; all energy around the world, be it oil, gas or petrol was to be paid for in $$$. It took a war in the Middle-East in 1973/74 to make it so, but with the Saudis onboard the lifespan of the $$$ was prolonged. By 50+ years.

The petro-dollar has been brilliant for the US, in that it has allowed it to export most of its inflation abroad. Meanwhile, the US war machine ensured that any country that tried to sell its oil in any currency other than $$$ got a good kicking. See Iraq (sale of oil in Euros) and Libya (creation of a pan-African gold-backed Dinar for oil payments). With the Saudis selling oil in Yuan, albeit in limited quantities for now, and clamoring for BRICS membership it can only be a short amount of time until the petro-dollar dies. Once this happens, the US will no longer be able to export inflation the way it has.

The BRICS are also proposing a gold-backed settlement mechanism for inter-BRICS trading, that may include other commodities. In other words, they are taking us back to 1971 and unwinding the Keynes magical-thinking economic reality that the West forced upon the world. The biggest change will be that commodity producers set the price rather than Western middle-men. Think about how supermarket buying works: the supermarkets tell the farmers how much they're prepared to pay for eggs and the farmers have to suck it up. Same with commodities world-wide. Under the BRICS scheme, the power goes back to the farmers. The West will no longer say to the Congo "We'll pay you $100 a ton for cobalt." Instead, Congo will say "Cobalt is $250 a ton. That's the price."

The consequences of the BRICS ascension are huge. And no-one in the MSM is talking about it.

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Olia Zvenyatsky's avatar

Thank you for an outstanding analysis, Daniel!

Oddly enough, in your apt description of the depressing descent of the US & the West, juxtaposed against the rise of China, Russia, & even Saudi Arabia, I saw a glimmer of hope: if BRICS takes, over, perhaps there is the potential of reversing the trend of physically mutilating and mentally messing up our children. They would still be indoctrinated, but by different forces, and even though the world would be crushed by the heel of Marxism, the problems would become real rather than imaginary (as in which gender to choose), and perhaps the collective scenarios would yield "strong men" (who are invariably the product of hard times).

How depressing that THIS is what gives one hope nowadays...

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