Views: 1857|Replies: 1

China, Russia, and the End of the Petrodollar [Copy link] 中文

Rank: 8Rank: 8

Post time 2012-10-10 18:23:15 |Display all floors
China, Russia, and the End of the Petrodollar
by John Rubino on October 9, 2012 · 30 comments

Say you’re an up-and-coming superpower wannabe with dreams of dominating your neighbors and intimidating everyone else. Your ambition is understandable; rising nations always join the “great game”, both for their own enrichment and in defense against other big players.

But if you’re Russia or China, there’s something in your way: The old superpower, the US, has the world’s reserve currency, which allows it to run an untouchable military empire basically for free, simply by creating otherwise-worthless pieces of paper and/or their electronic equivalent. Russia and China can’t do that, and would see their currencies and by extension their economies collapse if they tried.

So before they can boot the US military out of Asia and Eastern Europe, they have to strip the dollar of its dominant role in world trade, especially of Middle Eastern oil. And that’s exactly what they’re trying to do. See this excerpt from an excellent longer piece by Economic Collapse Blog’s Michael Snyder:China And Russia Are Ruthlessly Cutting The Legs Out From Under The U.S. Dollar China and Russia are not the “buddies” of the United States.  The truth is that they are both ruthless competitors of the United States and leaders from both nations have been calling for a new global currency for years.They don’t like that the United States has a built-in advantage of having the reserve currency of the world, and over the past several years both countries have been busy making international agreements that seek to chip away at that advantage.Just the other day, China and Germany agreed to start conducting an increasing amount of trade with each other in their own currencies.You would think that a major currency agreement between the 2nd and 4th largest economies on the face of the planet would make headlines all over the United States.Instead, the silence in the U.S. media was deafening.However, the truth is that both Russia and China have been making deals like this all over the globe in recent years.  I detailed 11 more major agreements like the one that China and Germany just made in this article:


“11 International Agreements That Are Nails In The Coffin Of The Petrodollar”.


A few of the things that will likely happen when the petrodollar dies….

-Oil will cost a lot more.-Everything will cost a lot more.
-There will be a lot less foreign demand for U.S. government debt.
-Interest rates on U.S. government debt will rise.
-Interest rates on just about everything in the U.S. economy will rise.
So enjoy going to “the dollar store” while you can. It will turn into the “five and ten dollar store” soon enough. Some thoughts
Snyder goes on to note that both China and Russia are accumulating gold, which will protect them from the coming currency crisis and give the ruble and yuan greater legitimacy in global trade. In Jim Rickards’ book Currency Wars, he tells the story of financial war games conducted by the US military, in which one of the scenarios was a Russian gold backed currency that challenged the dollar. We’re apparently not far from that plan becoming feasible.The US spends a big chunk of its $700 billion a year defense budget on dominating the Middle East in order to force the trading of oil in dollars. Let that trade be diversified into several currencies and the demand for petrodollars goes way down. Central banks and global corporations will sell part of their dollar holdings, sending the dollar’s exchange rate into a tailspin. This in turn will make it harder for the US to finance its military empire/welfare state.

The net result: America becomes Spain, no longer able to simply whip out the monetary credit card to cover its overspending. We’ll have to live within our means, cutting maybe $3 trillion a year in government largesse (including the growth in unfunded entitlements liabilities).Cuts on this scale can’t be accomplished smoothly, as Europe is discovering. So in this scenario the coming decade will be even messier than the last one, with “Occupy” movements shutting down cities and every election producing incumbent massacres. A combination of higher prices for necessities and lower wages will demote much of the middle class to “working poor.”Meanwhile, China and Russia will reap the rewards of stronger currencies, and will divide (or share) control over their part of the world. It’s hard to know who to feel sorrier for, Americans who thought they could depend on government programs for a middle class lifestyle, or the neighbors of China and Russia who will see the relatively light hand of the American empire replaced with something far more atavistic.


FIRST NATIONS ( LAKOTA PEOPLE ) Heartbreaking - (Google Search for video) "to stay true to who you are. Never allow anyone make you different or think different about what it is you are created to be ...

Use magic tools Report

Rank: 8Rank: 8

Post time 2012-10-11 17:01:32 |Display all floors

RE: China, Russia, and the End of the Petrodollar

Excerpt:


China Launching Gold Backed Global  
Currency!
Sunday, August 12, 2012 17:14

China is busy recasting all of their gold reserves into smaller one kilo bars in order to issue a new ‘gold backed’ global currency. This is no doubt the reason for the recent trade agreements with Russia, Japan, Chile, Brazil, India, and Iran. Expect to see more nations sign new trade agreements with China in the near future.

GATA now estimates that 80% of the gold (40.000 metric tons) supposedly stored in the vaults/allocated accounts of the bullion brokerages is long gone. Clients retrieving their allocated gold have had much trouble in doing so, and when they do manage to take possession, their gold does not bear the registered serial numbers they are supposed to. One can only wonder how much of the allocated gold is now 1 kilo bars. Additionally we now read that China is interested in purchasing Gold mines.


Here is an excerpt from Jim Willie’s recent ‘Hat Trick Letter’


CHINA RECASTS GOLD BARS


China is well along an ambitious plan to recast large gold bars into smaller 1-kg bars on a massive scale. A major event is brewing that will disrupt global trade and assuredly the global banking system. The big gold recast project points to the Chinese preparing for a new system of trade settlement. In the process they must be constructing a foundation for a possible new monetary system based in gold that supports the trade payments. Initally used for trade, it will later be used in banking. The USTBond will be shucked aside. Regard the Chinese project as preliminary to a collapse in the debt-based USDollar system. The Chinese are removing thousands of metric tons of gold bars from London, New York, and Switzerland. They are recasting the bars, no longer to bear weights in ounces, but rather kilograms. The larger Good Delivery bars are being reduced into 1-kg bars and stored in China. It is not clear whether the recast project is being done entirely in China, as some indication has come that Swiss foundries might be involved, since they have so much experience and capacity.

The story of recasting in London is confirmed by my best source. It seems patently clear that the Chinese are preparing for a new system for trade settlement system, to coincide with a new banking reserve system. They might make a sizeable portion of the new 1-kg bars available for retail investors and wealthy individuals in China. They will discard the toxic USTreasury Bond basis for banking. Two messages are unmistakable. A grand flipped bird (aka FU) is being given to the Western and British system of pounds and ounces and other queer ton measures. But perhaps something bigger is involved. Maybe a formal investigation of tungsten laced bars is being conducted in hidden manner. In early 2010, the issue of tungsten salted bars became a big story, obviously kept hush hush. The trails emanated from Fort Knox, as in pilferage of its inventory. The pathways extended through Panama in other routes known to the contraband crowd, that perverse trade of white powder known on the street as Horse & Blow, or Boy & Girl.



FIRST NATIONS ( LAKOTA PEOPLE ) Heartbreaking - (Google Search for video) "to stay true to who you are. Never allow anyone make you different or think different about what it is you are created to be ...

Use magic tools Report

You can't reply post until you log in Log in | register

BACK TO THE TOP
Contact us:Tel: (86)010-84883548, Email: blog@chinadaily.com.cn
Blog announcement:| We reserve the right, and you authorize us, to use content, including words, photos and videos, which you provide to our blog
platform, for non-profit purposes on China Daily media, comprising newspaper, website, iPad and other social media accounts.