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.
Excellent summary Phillip, I absolutely agree. I didn't have time to cover that side of it as I was already thinking my article was a bit long. But thanks for adding it for me, you've done it perfectly.
Phillip’s summary is excellent, but it doesn’t include an important point. Even if BRICs countries successfully end the petrodollar going forward, there is a lot of prior debt that is denominated in dollars, both due to the petrodollar system and due to US control of international organizations such as the UN and World Bank. Those debts will either need to be repaid in dollars or defaulted on - and massive defaults would almost certainly be accompanied by a major war. But even before a default, transacting commerce in currencies other than dollars will lead to tremendous economic and financial pressures in the countries that have de-dollarized, because they will no longer have dollars from international trade to pay their debts. This will lead to substantial upward pressure on the dollar as the demand for dollars increases, and it will also lead the de-dollarized governments to print their own currency on an attempt to be able to purchase more dollars - which in turn will further strengthen the dollar and export inflation to those countries.
In short, de-dollarization is not so easy as it sounds, and it will lead to a lot of pain in the countries that attempt it. And it’s also likely to lead to a major war.
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...
Thanks Olia. Yes it is very depressing that such a scenario could provide hope, but you're right that it does. Chinese authoritarianism is off the charts insane, but Russian? Russia has issues, but Putin's cultural sanity looks more and more attractive to me.
Thanks Mitchell. Look up Keynes trip to the US to renegotiate the Lend Lease terms and try to borrow some more. It was a disaster. Same with the Suez Crisis-that one gave Eden, the British PM, a complete mental breakdown. The US played hardball in both cases because the administration didn't want any European power trying to cling on to Empire. I'm a huge fan of the US-UK alliance and think it's done a lot of good, but Suez was definitely a betrayal of us within that. The Reagan-Thatcher era was our friendship at its best.
In truth and summary we’ve been generally led by morons and the US has generally been led by malevolent morons… we’re dead set on continuing down that path .. Trump was the best president since Coolidge but in reality you would need 20 years of trump like policy to make any difference. We don’t have the political will and most don’t have the understanding
Excellent article, Jupplandia. In addition to my comment above, let me add the following.
1. I believe that China’s economic condition is far more perilous than you suggest. They’ve printed money at a far faster pace than the US, and their financial bubble is a multiple of what the US’s bubble is - when that pops, China is in huge trouble. And the recent bankruptcy of Evergrande suggests that pop may be upon us.
2. Not only does de-dollarization pose significant risks to the countries implementing it for the reasons I suggest above, but it also has a very salubrious though unintended effect for the US. If, for example, the Saudis end the petrodollar, it will put huge pressure on the US government to lift limits on domestic energy production. Likewise, the outsourced manufacturing base is going to face pressure to come home if dollar hegemony ends and US companies have to deal with real exchange rate risk with offshore manufacturing. Similarly, if the BRICs countries band together to trade with themselves rather than the US, that likewise puts substantial pressure on those offshore manufacturing operations to return to the U.S. (because if a BRICs country such as China wants to eschew US trade, what good would it do a US manufacturer to offshore its manufacturing to that country? It wouldn’t).
Great article thankyou Jupplandia. But what of the 'hidden hand(s) that guide these events? I fear unless these occulted forces are recognised confronted and dealt with, nothing will change. They transfer their support from West to East, nation to nation, building with false money and destroying with military might, as suits their globalist vision; and always the clever deceptions, lies, corruption and easy money bribes. Many seem to sense something is very wrong ( https://www.youtube.com/watch?v=sqSA-SY5Hro) but have no idea what to do about it. Bizarre as it will sound to many, Russia may be our future and our salvation.
I’ve watched China’s encroachment spreading like mercury on glass, it’s too late now to stop it. I fear Trump can at best push back...but China owns us!
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.
Excellent summary Phillip, I absolutely agree. I didn't have time to cover that side of it as I was already thinking my article was a bit long. But thanks for adding it for me, you've done it perfectly.
Phillip’s summary is excellent, but it doesn’t include an important point. Even if BRICs countries successfully end the petrodollar going forward, there is a lot of prior debt that is denominated in dollars, both due to the petrodollar system and due to US control of international organizations such as the UN and World Bank. Those debts will either need to be repaid in dollars or defaulted on - and massive defaults would almost certainly be accompanied by a major war. But even before a default, transacting commerce in currencies other than dollars will lead to tremendous economic and financial pressures in the countries that have de-dollarized, because they will no longer have dollars from international trade to pay their debts. This will lead to substantial upward pressure on the dollar as the demand for dollars increases, and it will also lead the de-dollarized governments to print their own currency on an attempt to be able to purchase more dollars - which in turn will further strengthen the dollar and export inflation to those countries.
In short, de-dollarization is not so easy as it sounds, and it will lead to a lot of pain in the countries that attempt it. And it’s also likely to lead to a major war.
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...
Thanks Olia. Yes it is very depressing that such a scenario could provide hope, but you're right that it does. Chinese authoritarianism is off the charts insane, but Russian? Russia has issues, but Putin's cultural sanity looks more and more attractive to me.
Excellent. Thanks, Daniel. Your perspective on the US betrayal of Britain after World War II was especially enlightening to me. And very disturbing.
Thanks Mitchell. Look up Keynes trip to the US to renegotiate the Lend Lease terms and try to borrow some more. It was a disaster. Same with the Suez Crisis-that one gave Eden, the British PM, a complete mental breakdown. The US played hardball in both cases because the administration didn't want any European power trying to cling on to Empire. I'm a huge fan of the US-UK alliance and think it's done a lot of good, but Suez was definitely a betrayal of us within that. The Reagan-Thatcher era was our friendship at its best.
In truth and summary we’ve been generally led by morons and the US has generally been led by malevolent morons… we’re dead set on continuing down that path .. Trump was the best president since Coolidge but in reality you would need 20 years of trump like policy to make any difference. We don’t have the political will and most don’t have the understanding
Sadly true, unfortunately.
Excellent article, Jupplandia. In addition to my comment above, let me add the following.
1. I believe that China’s economic condition is far more perilous than you suggest. They’ve printed money at a far faster pace than the US, and their financial bubble is a multiple of what the US’s bubble is - when that pops, China is in huge trouble. And the recent bankruptcy of Evergrande suggests that pop may be upon us.
2. Not only does de-dollarization pose significant risks to the countries implementing it for the reasons I suggest above, but it also has a very salubrious though unintended effect for the US. If, for example, the Saudis end the petrodollar, it will put huge pressure on the US government to lift limits on domestic energy production. Likewise, the outsourced manufacturing base is going to face pressure to come home if dollar hegemony ends and US companies have to deal with real exchange rate risk with offshore manufacturing. Similarly, if the BRICs countries band together to trade with themselves rather than the US, that likewise puts substantial pressure on those offshore manufacturing operations to return to the U.S. (because if a BRICs country such as China wants to eschew US trade, what good would it do a US manufacturer to offshore its manufacturing to that country? It wouldn’t).
So the end of dollar hegemony isn’t all bad news.
Thanks Ed, I agree those are more encouraging aspects.
Daniel; This is SO important I want to share it but it won’t share.
Have you been able to share it Sandra?
Harsh truth…
Great article thankyou Jupplandia. But what of the 'hidden hand(s) that guide these events? I fear unless these occulted forces are recognised confronted and dealt with, nothing will change. They transfer their support from West to East, nation to nation, building with false money and destroying with military might, as suits their globalist vision; and always the clever deceptions, lies, corruption and easy money bribes. Many seem to sense something is very wrong ( https://www.youtube.com/watch?v=sqSA-SY5Hro) but have no idea what to do about it. Bizarre as it will sound to many, Russia may be our future and our salvation.
I’ve watched China’s encroachment spreading like mercury on glass, it’s too late now to stop it. I fear Trump can at best push back...but China owns us!