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Thread: weekend commentary - The WAR At The End Of The US Dollar

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    Default weekend commentary - The WAR At The End Of The US Dollar

    for what it's worth ... from


    (snip)"The history of the U.S. dollar is closely linked to U.S. involvement in a series of wars. The Bretton Woods Accord and the resulting world reserve currency status of the U.S. dollar were both byproducts of World War II (1939-1945). The Korean War (1950-1953) was followed six years later by the Vietnam War (1959-1975) which led to the end of the Bretton Woods system. Unfettered by the constraint of gold backing after 1971, the U.S. dollar became a weapon in the Cold War (1945-1991) between the U.S. and the former Union of Soviet Socialist Republics (U.S.S.R.). Each war corresponded with an increase in the U.S. money supply. The Gulf War (1990-1991) was followed by wars in Afghanistan, beginning in 2001, and in Iraq, beginning in 2003, and, simultaneously, by the U.S.-led War on Terror that began in 2001. Like the wars that came before them, the recent staccato of U.S. wars is correlated with increases in the U.S. money supply. The Iraq war, for example, is estimated to have cost as much as $4 trillion.

    The loss of value in the U.S. dollar caused by excessive expansion of the money supply, together with rising demand for raw materials from emerging economies, has led to permanently higher global commodity prices. Higher crude oil prices, in particular, have put pressure on the U.S. economy, which is putatively in a gradual recovery from the recession that began in 2007. At the same time, international trade has begun to move away from the U.S. dollar, threatening its world reserve currency status. Given the history of the U.S. dollar, it seems likely that an eventual end of the U.S. dollar's reign as the world reserve currency will be marked by war.

    U.S. politicians are clamoring for war with Iran, the third largest oil exporter in the world. Iran refuses to sell its oil for U.S. dollars. If Iranian oil were traded in U.S. dollars, it would moderate the U.S. dollar price of crude oil and ease pressure on the U.S. economy, as well as extend the world reserve currency status of the U.S. dollar and give the U.S. economic leverage over consumers of Iranian oil, which include China and India.

    The U.S. news media is preparing the American public for a war with Iran with reports about the dangers of Iran becoming a nuclear power. Television news reports have speculated that Iran would immediately wipe out Israel if it obtained a nuclear weapon, despite the fact that a thermonuclear exchange would wipe out Iran. It has also been reported that Iran might carry out nuclear strikes on U.S. soil using intercontinental ballistic missiles (ICBMs), although Iran possesses neither nuclear warheads nor ICBMs. In fact, there is no evidence that Iran is currently building a nuclear weapon. One concern that is valid, however, is that no nuclear power has ever been invaded in a conventional war.


    Forged in the Fire of War

    The approaching end of World War II led to the creation of the Bretton Woods system in July 1944, although fighting in Europe and in the Pacific continued into 1945. The U.S. dollar, which was convertible into gold, became the dominant mechanism for international trade settlement. The price of gold was set to the pre-war price of $35 per troy ounce, which was deflationary at the time. There was nothing in the Bretton Woods Accord, however, that prevented the U.S. from issuing more currency than was backed by gold other than the threat of a run on U.S. gold reserves.

    The Bretton Woods system worked as intended for roughly 17 years. The London gold market, which had been closed during World War II, reopened in 1954. By 1961, upward pressure on the price of gold prompted the establishment of the London Gold Pool by the U.S. Federal Reserve and major European central banks (including the central banks of the United Kingdom, Belgium, France, Italy, the Netherlands, Switzerland and West Germany). The London Gold Pool defended the $35 per troy ounce price through interventions in the London gold market, but upward pressure on the price of gold grew. In July of 1962, Americans were forbidden by then president Kennedy to own gold abroad by Executive Order 11037. In a 1965 press conference, then president of France, Charles de Gaulle publicly denounced the U.S. for abusing the world reserve currency status of the U.S. dollar. The London Gold Pool collapsed in March of 1968 after France withdrew from the group setting off a surge in gold demand that caused the London gold market to shut down for a two week period.

    By 1971, substantially due to the cost of the Vietnam War, the U.S. had leveraged its gold reserves to the breaking point. The expansion of the U.S. money supply caused the U.S. Consumer Price Index (CPI) to increase by more than 6% in 1970 and it remained above 4% in 1971. When U.S. President Nixon "closed the gold window" in August 1971 and instituted price controls, the Bretton Woods system ended and an ad hoc floating exchange system resulted. From their peak during World War II to 1971, U.S. gold holdings fell from approximately 20,205 tonnes to approximately 8,134 tonnes. In February 1973, the U.S. devalued the dollar and raised the official dollar price of gold to $42.22 per troy ounce. By June of the same year, the market price in London had skyrocketed to more than $120 per ounce.

    Although CPI inflation was below 4% at the start of 1973, it rapidly accelerated, reaching 9% at the start of 1974. With the last vestiges of gold backing having been removed from the U.S. dollar, Americans were once again allowed to own gold as a hedge against inflation. Against a backdrop of runaway U.S. dollar inflation, Arab members of the Organization of the Petroleum Exporting Countries (OPEC), along with Egypt, Syria and Tunisia proclaimed an oil embargo in October of 1974. Officially, U.S. support of Israel in the Yom Kippur War was the reason for the embargo, but it was also a challenge to the un-backed U.S. dollar's position as the world reserve currency, i.e., as an exclusive medium for crude oil sales."(snip)

    (snip)"Pressured by rising oil prices, the U.S. economy began to roll over in 2007. As the U.S. housing bubble began to burst, beginning with sub-prime loans, the price of West Texas Intermediate (WTI) crude oil hit an all-time high of $145 in June 2008. Roughly four months later, a financial crisis far larger than that of 1929 began to take place, i.e., the bursting of the largest credit bubble and monetary expansion in the history of the world. In October 2008 Greenspan testified before the U.S. Congress saying "...I found a flaw...in the model that I perceived is the critical functioning structure that defines how the world works..."

    Quantifying the Crisis

    The policy responses of the U.S. federal government and of the Federal Reserve (under Chairman Ben S. Bernanke since 2005) to the financial crisis and to the so-called Great Recession were radically inflationary. The Federal Reserve loaned $16 trillion to financial institutions worldwide and $7.77 trillion to U.S. banks and corporations. The Federal Reserve also purchased roughly $1 trillion worth of toxic mortgage backed securities (MBS) from banks and monetized a total of roughly $800 billion of U.S. federal debt, expanding its balance sheet from $900 billion before the crisis to $2.7 trillion.

    In the face of the most severe economic decline since the Great Depression, the U.S. federal government embarked on a $700 billion economic stimulus plan, despite the fact that tax revenues were falling. In addition to an initial $800 billion bailout package, government sponsored entities Fannie Mae and Freddie Mac were taken into receivership, making the U.S. federal government liable for roughly $5 trillion of mortgage debt. In 2009, the total liabilities of the federal government were estimated to be as high as $23.7 trillion by then Special Inspector General for the Troubled Asset Relief Program (SIGTARP), Neil Barofsky. As a result, U.S. federal government debt increased sharply and, in 2011, the U.S. credit rating was downgraded for the first time in history.(snip)

    (snip)Loss of value in the U.S. dollar, caused by radically inflationary monetary policies, set off a global currency war in 2009 and pushed global commodity prices higher than they would otherwise have been. Higher crude oil prices, despite lower demand, slowed economic recovery. At the same time, high debt levels, bank bailouts, soaring government budget deficits and falling tax revenues produced a sovereign debt crisis in Europe. Although the focus of the still developing sovereign debt crisis remains on Europe, the skyrocketing debt and unfunded Social Security and Medicare liabilities of the U.S. federal government, estimated to be more than $63 trillion, foreshadow a similar crisis in America.


    The Trap of Financial Warfare

    One of the key reasons why the U.S. has yet to experience a sovereign debt crisis is that the world reserve currency status of the U.S. dollar supports demand for the U.S. dollar and for U.S. federal government debt. However, the U.S. dollar is in the process of gradually losing its world reserve currency status. Global trade is fragmenting into increasingly autonomous trading blocks defined by currencies and trade relations, such as the BRIC nations (Brazil, Russia, India and China), together with South Africa.

    Demand from emerging economies, particularly China, is placing steady upward pressure on the price of crude oil. Higher oil prices resulting from a combination of a weaker U.S. dollar and increased global demand threaten to push the U.S. economy back into recession. Setting aside flat to declining supplies of sweet light crude oil (Peak Oil), the fact that the price of gold has risen roughly 500% in a single decade suggests much higher oil prices in the future.

    Iran, which is the world's third largest oil exporter and a major supplier of oil to China, lies outside of U.S. control. Iran refuses to sell oil for U.S. dollars, partly as a consequence of the overthrow of the democratically elected government of Iran in 1953, orchestrated by the U.S. Central Intelligence Agency, and partly as a consequence of current U.S. policies in the Middle East.

    In March of 2012, the U.S. unilaterally removed Iran from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system, effectively cutting it off from world commerce. However, wielding the U.S. dollar's world reserve currency status as a blunt instrument could be counterproductive in the current international climate. If the U.S. dollar were to lose its world reserve currency status over a short period of time, a U.S. sovereign debt crisis would be certain and a catastrophic collapse of the U.S. dollar, i.e., hyperinflation, would be possible.

    Having taken a decision to act unilaterally against Iran, the U.S. may be forced to resort to more extreme measures if the world reserve currency status of the U.S. dollar begins to break down. Of course, the U.S. does not control the oil trade solely through financial means. With Israel as a close ally, Iraq and Afghanistan occupied by U.S. forces, close ties with Turkey, Saudi Arabia, Kuwait, Qatar and other Middle Eastern countries, Iran is surrounded by more than 40 U.S. military installations.

    A successful invasion of Iran would eliminate the largest non U.S. dollar oil exporter, delaying the breakdown of the U.S. dollar's status as the world reserve currency. Although a war with Iran would cause a spike in oil prices, U.S. control of Iran's oil would increase the supply of oil available for purchase in U.S. dollars, which would bring the U.S. dollar price of oil down and enhance the ability of the U.S. to manage the price of oil to meet the needs of the U.S. economy. Controlling a major supplier of crude oil to China and India would give the U.S. additional leverage to support the U.S. dollar and U.S. debt, as well as a means of influencing the policies and economic growth of the two largest nations. The option of invasion, however, may be time limited. If Iran were to eventually obtain nuclear weapons, the risks involved in a U.S. invasion would escalate.

    As an alternative to invasion, a limited U.S. military action might involve surgical strikes on Iranian nuclear research and power facilities, as well as on Iranian military forces that pose a threat to the U.S. military. Destroying Iranian nuclear facilities and suppressing potential counterstrikes also suggests neutralizing Iran's threat of disrupting the oil trade by closing the Straight of Hormuz. Thus, a limited U.S. military action would involve military operations on a scale not seen since the invasion of Iraq in 2003.

    A limited U.S. military action might leave a weakened Iranian regime in place after the conflict and reignite the moderate, pro-democracy Green Movement that was brutally suppressed in 2009. Regime change from within might restore democracy to Iran after twenty six years of U.S.-imposed monarchy and more than three decades of quasi-democratic religious oligarchy. However, regime change is unlikely to result in the sale of Iranian oil in U.S. dollars or to extend the reign of the U.S. dollar as the world reserve currency. A preemptive strike by the U.S. could also strengthen political support for the current Iranian regime.

    There seems to be no political will in Washington D.C. to change course from a U.S. military conflict with Iran, despite the fact that a U.S. attack on Iran will increase anti-U.S. sentiment in the region and amplify the Islamic extremist dimension of the U.S.-led War on Terror. The drumbeat to war in the U.S. news media is loud and clear and, if history is any guide, the U.S. will soon, e.g., after the 2012 presidential election, "cry havoc and let slip the dogs of war".(snip)

    (snip)

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    Default Re: weekend commentary - The WAR At The End Of The US Dollar

    Let's hope not. Attacking Iran is a low gain; high cost; high risk proposition for the U.S.

    More to the point, it is long past time for us to re-link the dollar to gold. This does NOT necessarily involve or require that we return to the days when dollars were convertible into gold.Somewhere in the archives of this Forum is a post where I listed the drawbacks of a "pure" Gold Standard. Nor would it mean that we would try to set the price of gold. It would mean that the value of the dollar, and how many new dollars are created, would be governed in part by the price of gold.

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    Default Re: weekend commentary - The WAR At The End Of The US Dollar

    Attacking Iran is a low gain; high cost; high risk proposition for the U.S.
    The politically incorrect pundits would tell you that this evaluation depends on your point of view. How much would having the US Dollar's exchange rate / purchasing power dropping significantly, and US Dollar denominated interest rates jumping to heights not seen since the Carter years ( due to loss of US Dollar Reserve Currency status and associated global demand for US Dollars ) involve in the way of losses / costs to the US economy ? $4 a gallon gasoline and $2 loaves of bread are already stifling whatever US economic recovery might have been trying to develop. What do you suppose that $6 a gallon gasoline, $3 loaves of bread, and 25% credit card interest rates would do ?

    There's a whole lot of worrysome stuff going on behind the scenes in this regard ... from


    (snip)(Reuters) - Iran is concealing the destination of its oil sales by disabling tracking systems aboard its tanker fleet, making it difficult to assess how much crude Tehran is exporting as it seeks to counter Western sanctions aimed at cutting its oil revenues.

    Most of Iran's 39-strong fleet of tankers is now "off-radar" after Tehran ordered captains in the National Iranian Tanker Co (NITC) to switch off the black box transponders that are used in the shipping industry to monitor vessel movements, oil industry, trading and shipping sources said.

    "Iran, helped by its customers, is trying to obfuscate as much as possible," said a senior executive at a national oil company that has done business with Iran.

    And Iran may have countered a reported reduction in its oil sales in March by offering big discounts in the form of free freight, finance and insurance and generous credit terms, the sources said.

    Europe's July 1 oil embargo, and U.S. and European financial sanctions against Iran's nuclear program have seen Tehran's oil sales drop to most Western destinations and drawn promises from some Asian buyers that they will cut purchases.

    But cheap, covert sales may have curbed or even reversed the reduction in shipments, the sources say.

    Discretion is paramount.

    Ship captains steering NITC supertankers have switched off recognition systems and customers are keeping business strictly under wraps.

    "People are being very secretive right now. They are not talking about this on email, Yahoo or mobile," said the head of a crude oil desk at a top oil trading houses.

    A Reuters' survey of the Iranian fleet via the ship tracking system AIS (Automatic Identification System) Live shows only seven of its 25 very large crude carriers are still operating on-board transponders, allowing computers to track vessels.

    Only two of NITC's nine smaller Suezmax size tankers now have their tracking systems in operation, shipping sources say.(snip)

    (snip)The trouble is there is no hard evidence that Iran's oil production has actually fallen or that it is going into storage.

    Millions of barrels of Iranian oil that were in storage in Iranian tankers a few weeks ago now seem to have disappeared, ship tracking data shows.

    So where is it going? Has it been re-routed, has production been shut in or is the oil being stored somewhere else? Is it all being stored at sea?

    "It's the million-dollar question - the billion-dollar question even," a senior executive in Asia at a large oil trading house said.

    The hunt is getting more complicated as OPEC's second biggest producer comes up with a range of tactics to avoid scrutiny.

    "Some big Asian companies may be taking oil on Iranian ships provided they switch off the transponders," said another European shipping industry source.

    A trader in Singapore said Iran has managed to sell all the crude stored on half a dozen vessels floating off Singapore earlier in the year. The buyers were mainly Chinese and South Korean.(snip)

    (snip)"It has long been assumed Iran would sell most of the oil shunned by Europe to China, its long-term strategic and commercial ally. But until now there has been scant proof.

    India, however, has been buying oil on Iranian ships on extended credit for several months, industry sources say.

    "China and India are our lifters of last resort," said an Iranian oil official, who declined to be identified. "And the sanctions are making the situation very good for them."

    The senior oil trading executive agreed: "We think China is taking most of the Iranian overhang and is keeping very quiet."

    China's imports in April should climb back to contract volumes of around 560,000 bpd after a cut to half that in the first quarter when Chinese refiner Sinopec reduced purchases to negotiate better prices with the National Iranian Oil Company."(snip)


    Arguably, re-linking the 'purchasing power' of the US Dollar to gold isn't necessary as long as the 'purchasing power' of the US Dollar remains linked to Oil. Iran's recent and future sales of oil in direct exchange for Yuan, Rupees, Won etc., without requiring a US Dollar denominated transaction in the middle, threatens the US Dollar's Reserve Currency status. This in turn could lead to China, India, Korea et al starting to dump the US Dollar reserves they already hold, to avoid bidding at new US treasury bond auctions ( previously needed to safely 'park' their US dollar reserves), etc. Both of these developments could have a near immediate effect on the 'purchasing power' = exchange rate of the US Dollar, as well as on US Dollar interest rates, and 'world market' commodity prices as denominated in US Dollars.
    Last edited by Melonie; 04-13-2012 at 12:34 PM.

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    Default Re: weekend commentary - The WAR At The End Of The US Dollar

    related from


    (snip)" Iran is now seeking to disengage itself from the petrodollar dynamic. In 2005, Iran sought to create an Iranian Oil Exchange, thus bypassing the US controlled petrodollar. Fear that western powers would freeze accounts in European and London banks put an end to that plan.

    But that was not the end of their attempts, and Iran sought other ways to get around the petrodollar noose. There are rumors that India, which imports 12% of their oil from Iran, has agreed to purchase oil for gold. Energy trade with China, importing 15% of its oil and natural gas from Iran may be settled in gold, yuan, and rial. South Korea plans to buy 10% of their oil from Iran in 2012, and unless Seoul sides with American and European sanctions, it is likely to use gold or their sovereign currency to pay for it. Also, Iran is already dumping the dollar in its trade with Russia in favor of rials and rubles.

    Iran is breaking the back of the petrodollar. Others have tried, but Iran is succeeding. To understand how disastrous this is for the US, one must have a basic understanding of how critical a role the petrodollar plays in the economic health of the US.

    Through King Faisal, Nixon elevated the US to supreme economic ascendency, not unlike Damocles in his desire to rule. Sitting on the (economic) throne of the world is great, but Nixon was either unaware of the sword dangling over the US economic system, or chose to ignore it in favor of reaping the rewards of the moment.

    By creating the petrodollar paradigm, the US economy soared, as all countries of the world were required to amass US currency to purchase oil from OPEC nations. Sales of T-bills, securities and US bonds soared. US coffers fattened. With the US dollar as the world’s oil currency reserve, economic fortune favored the US. But with great reward comes great risk. While other countries exchanged their currency for the dollar, (forfeiting value in the process) the US simply printed more money to match their needs and purchase their oil – essentially for free. The best example is that while gasoline in the US cost $3.00 per gallon, in Europe that same gallon costs $6.00 or more.

    Herein lies the danger. If Iran is successful in its bid to set up their own bourse, or oil exchange, then what need does the world have for all those US dollars? The answer is none at all. As Iran creating gold and sovereign currency partnerships with India, China, South Korea and Russia, the hegemony of the petrodollar will be destroyed.

    The resulting sell-off of US dollars, T-bills, securities, bonds and assets will flood the already swollen world economy with even more useless dollars, ultimately devaluing it into a position where hyper-inflation becomes a risk.

    So, while the US government sabre-rattles and prattles on and on about nuclear weapons and the threat Iran poses to the Middle East, the thin veneer of lies spouted by the elite controlled media is being stripped away, revealing the truth of their warmongering rhetoric.

    The US, by their foolish insistence on enforcing embargoes and sanctions against Iran, is hastening the end of the petrodollar and ushering in the age of US dollar hyper-inflation. A practical example: One loaf of bread in a healthy economy is $1.00. In an inflationary economy it’s $1.75. In a hyper-inflationary economy, $500.00.

    Bullies may be large and dangerous, but rarely are they intelligent.

    Damocles wisely vacated the throne of Dionysius before the sword fell upon his head, but the US is foolishly refusing to step down from their economic dais in spite of the catastrophic effect current policy direction will mean for US citizens and the world economy."(snip)


    I would add that the non-US Dollar based Iranian Oil Bourse that was 'rumored' when this article was written went 'live' last month ... that the Indian 'barter' trade of oil for Gold actually began last January etc. And there are additional developments ...


    (snip)"WASHINGTON – The Russian military anticipates that an attack will occur on Iran by the summer and has developed an action plan to move Russian troops through neighboring Georgia to stage in Armenia, which borders on the Islamic republic, according to informed Russian sources.

    (snip)"Russian Defense Ministry sources say that the Russian military doesn't believe that Israel has sufficient military assets to defeat Iranian defenses and further believes that U.S. military action will be necessary.

    The implication of preparing to move Russian troops not only is to protect its own vital regional interests but possibly to assist Iran in the event of such an attack. Sources add that a Russian military buildup in the region could result in the Russian military potentially engaging Israeli forces, U.S. forces, or both.

    Informed sources say that the Russians have warned of "unpredictable consequences" in the event Iran is attacked, with some Russians saying that the Russian military will take part in the possible war because it would threaten its vital interests in the region.

    The influential Russian Nezavisimaya Gazeta newspaper has quoted a Russian military source as saying that the situation forming around Syria and Iran "causes Russia to expedite the course of improvement of its military groups in the South Caucasus, the Caspian, Mediterranean and Black Sea regions."

    This latest information comes from a series of reports and leaks from official Russian spokesmen and government news agencies who say that an Israeli attack is all but certain by the summer.

    Because of the impact on Russian vital interests in the region, sources say that Russian preparations for such an attack began two years ago when Russian Military Base 102 in Gyumri, Armenia, was modernized. It is said to occupy a major geopolitical position in the region.

    Families of Russian servicemen from the Russian base at Gyumri in Armenia close to the borders of Georgia and Turkey already have been evacuated, Russian sources say."(snip)

    from

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    Default Re: weekend commentary - The WAR At The End Of The US Dollar

    Quote Originally Posted by Melonie View Post
    related from


    (snip)" Iran is now seeking to disengage itself from the petrodollar dynamic. In 2005, Iran sought to create an Iranian Oil Exchange, thus bypassing the US controlled petrodollar. Fear that western powers would freeze accounts in European and London banks put an end to that plan.

    But that was not the end of their attempts, and Iran sought other ways to get around the petrodollar noose. There are rumors that India, which imports 12% of their oil from Iran, has agreed to purchase oil for gold. Energy trade with China, importing 15% of its oil and natural gas from Iran may be settled in gold, yuan, and rial. South Korea plans to buy 10% of their oil from Iran in 2012, and unless Seoul sides with American and European sanctions, it is likely to use gold or their sovereign currency to pay for it. Also, Iran is already dumping the dollar in its trade with Russia in favor of rials and rubles.

    Iran is breaking the back of the petrodollar. Others have tried, but Iran is succeeding. To understand how disastrous this is for the US, one must have a basic understanding of how critical a role the petrodollar plays in the economic health of the US.

    Through King Faisal, Nixon elevated the US to supreme economic ascendency, not unlike Damocles in his desire to rule. Sitting on the (economic) throne of the world is great, but Nixon was either unaware of the sword dangling over the US economic system, or chose to ignore it in favor of reaping the rewards of the moment.

    By creating the petrodollar paradigm, the US economy soared, as all countries of the world were required to amass US currency to purchase oil from OPEC nations. Sales of T-bills, securities and US bonds soared. US coffers fattened. With the US dollar as the world’s oil currency reserve, economic fortune favored the US. But with great reward comes great risk. While other countries exchanged their currency for the dollar, (forfeiting value in the process) the US simply printed more money to match their needs and purchase their oil – essentially for free. The best example is that while gasoline in the US cost $3.00 per gallon, in Europe that same gallon costs $6.00 or more.

    Herein lies the danger. If Iran is successful in its bid to set up their own bourse, or oil exchange, then what need does the world have for all those US dollars? The answer is none at all. As Iran creating gold and sovereign currency partnerships with India, China, South Korea and Russia, the hegemony of the petrodollar will be destroyed.

    The resulting sell-off of US dollars, T-bills, securities, bonds and assets will flood the already swollen world economy with even more useless dollars, ultimately devaluing it into a position where hyper-inflation becomes a risk.

    So, while the US government sabre-rattles and prattles on and on about nuclear weapons and the threat Iran poses to the Middle East, the thin veneer of lies spouted by the elite controlled media is being stripped away, revealing the truth of their warmongering rhetoric.

    The US, by their foolish insistence on enforcing embargoes and sanctions against Iran, is hastening the end of the petrodollar and ushering in the age of US dollar hyper-inflation. A practical example: One loaf of bread in a healthy economy is $1.00. In an inflationary economy it’s $1.75. In a hyper-inflationary economy, $500.00.

    Bullies may be large and dangerous, but rarely are they intelligent.

    Damocles wisely vacated the throne of Dionysius before the sword fell upon his head, but the US is foolishly refusing to step down from their economic dais in spite of the catastrophic effect current policy direction will mean for US citizens and the world economy."(snip)


    I would add that the non-US Dollar based Iranian Oil Bourse that was 'rumored' when this article was written went 'live' last month ... that the Indian 'barter' trade of oil for Gold actually began last January etc. And there are additional developments ...


    (snip)"WASHINGTON – The Russian military anticipates that an attack will occur on Iran by the summer and has developed an action plan to move Russian troops through neighboring Georgia to stage in Armenia, which borders on the Islamic republic, according to informed Russian sources.

    (snip)"Russian Defense Ministry sources say that the Russian military doesn't believe that Israel has sufficient military assets to defeat Iranian defenses and further believes that U.S. military action will be necessary.

    The implication of preparing to move Russian troops not only is to protect its own vital regional interests but possibly to assist Iran in the event of such an attack. Sources add that a Russian military buildup in the region could result in the Russian military potentially engaging Israeli forces, U.S. forces, or both.

    Informed sources say that the Russians have warned of "unpredictable consequences" in the event Iran is attacked, with some Russians saying that the Russian military will take part in the possible war because it would threaten its vital interests in the region.

    The influential Russian Nezavisimaya Gazeta newspaper has quoted a Russian military source as saying that the situation forming around Syria and Iran "causes Russia to expedite the course of improvement of its military groups in the South Caucasus, the Caspian, Mediterranean and Black Sea regions."

    This latest information comes from a series of reports and leaks from official Russian spokesmen and government news agencies who say that an Israeli attack is all but certain by the summer.

    Because of the impact on Russian vital interests in the region, sources say that Russian preparations for such an attack began two years ago when Russian Military Base 102 in Gyumri, Armenia, was modernized. It is said to occupy a major geopolitical position in the region.

    Families of Russian servicemen from the Russian base at Gyumri in Armenia close to the borders of Georgia and Turkey already have been evacuated, Russian sources say."(snip)

    from
    Humans adapt! So do we, even if the new "chic" is a full fridge!

    At some point, a global middle class is supposed to emerge, and we're supposed to get consumers back from all the jobs we export.

    In case I'm wrong, Melonie sounds prepared. Guns, gold, (canned) goodies, generators...

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    Default Re: weekend commentary - The WAR At The End Of The US Dollar

    Quote Originally Posted by Frenchie View Post
    Humans adapt! So do we, even if the new "chic" is a full fridge!

    At some point, a global middle class is supposed to emerge, and we're supposed to get consumers back from all the jobs we export.

    In case I'm wrong, Melonie sounds prepared. Guns, gold, (canned) goodies, generators...

    And what are we going to sell them.... Food....Annutities..... and phone apps?
    The country has been looted.

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    Default Re: weekend commentary - The WAR At The End Of The US Dollar

    ^^^ actually, we're increasingly selling them coal ... which the EPA won't allow US industries / power companies to burn economically anymore ! We're also selling them refined gasoline and diesel fuel due to significantly reduced US demand. And we wish we could sell them natural gas ... with a permit for a new LNG liquification / export facility having just been filed this week !!! In a nutshell, the 'destruction' of US manufacturing over the past 10-15 years has also resulted in a 'destruction' of total US energy demand ... although this isn't necessarily obvious ( with the exception of 'non-exportable' natural gas ) because worldwide demand is higher than ever.

    We're going to need to hang onto virtually all US grown food ... since a 'war' footing is likely to disrupt existing US imports of Vietnamese / Chinese / other low cost Asian food products which now comprise a significant share of total US food consumption. However, the future price of food based solely on US production costs is likely to create the same 'sticker shock' as moving from WalMart's grocery section to Whole Foods !


    a global middle class is supposed to emerge
    Circling back on topic, if the US Dollar does lose its Reserve Currency status, and the exchange rate of the US dollar is devalued accordingly, US labor costs will again become very competitive on a global basis. However, this is not likely to be extremely helpful in terms of average US standard of living, since $10-12 an hour jobs versus $6 per gallon gasoline and $3 loaves of bread won't leave much extra money for phone apps or lap dances. The 'truth' of the matter is that the 'average' standard of living of US residents is likely to equalize with the 'average' standard of living of people throughout the world ... which will clearly involve a decline in living standards for US residents versus present conditions. This will arguably make for millions of US 'unhappy campers' who in turn are likely to become very 'restless'. And the latter possibility provides motivation to preserve the US Dollar's Reserve Currency status thus the current standard of living of US residents, despite the fact that doing so could involve a new 'foreign' war.

    If the final choice comes down to havoc in the streets of Tehran versus havoc in the streets of NY / Chicago / LA, the 'powers that be' would definitely prefer the havoc take place in Tehran !!! Of course, just in case this doesn't happen, the US has been creating new 'emergency powers' allowing the indefinite detention of US citizens, has been rescinding Posse Commitatus re the domestic deployment of US military, has been developing FEMA camps with capacity to house millions of 'residents' etc. ... with this recent update




    In case I'm wrong, Melonie sounds prepared. Guns, gold, (canned) goodies, generators...
    I'm not obsessive about it, but hey a good investment is a good investment. And my most important supposed 'preparation' was relocating to a country where most of the local residents are already very poor, and already understand that creating havoc in the streets or robbing / assaulting / otherwise messing with less poor ( and well armed ) fellow residents will wind up having a VERY unhappy ending !!!
    Last edited by Melonie; 04-14-2012 at 05:18 AM.

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    Default Re: weekend commentary - The WAR At The End Of The US Dollar

    Quote Originally Posted by Melonie View Post
    ^^^ actually, we're increasingly selling them coal ... which the EPA won't allow US industries / power companies to burn economically anymore ! We're also selling them refined gasoline and diesel fuel due to significantly reduced US demand. And we wish we could sell them natural gas ... with a permit for a new LNG liquification / export facility having just been filed this week !!! In a nutshell, the 'destruction' of US manufacturing over the past 10-15 years has also resulted in a 'destruction' of total US energy demand ... although this isn't necessarily obvious ( with the exception of 'non-exportable' natural gas ) because worldwide demand is higher than ever.

    We're going to need to hang onto virtually all US grown food ... since a 'war' footing is likely to disrupt existing US imports of Vietnamese / Chinese / other low cost Asian food products which now comprise a significant share of total US food consumption. However, the future price of food based solely on US production costs is likely to create the same 'sticker shock' as moving from WalMart's grocery section to Whole Foods !




    Circling back on topic, if the US Dollar does lose its Reserve Currency status, and the exchange rate of the US dollar is devalued accordingly, US labor costs will again become very competitive on a global basis. However, this is not likely to be extremely helpful in terms of average US standard of living, since $10-12 an hour jobs versus $6 per gallon gasoline and $3 loaves of bread won't leave much extra money for phone apps or lap dances. The 'truth' of the matter is that the 'average' standard of living of US residents is likely to equalize with the 'average' standard of living of people throughout the world ... which will clearly involve a decline in living standards for US residents versus present conditions. This will arguably make for millions of US 'unhappy campers' who in turn are likely to become very 'restless'. And the latter possibility provides motivation to preserve the US Dollar's Reserve Currency status thus the current standard of living of US residents, despite the fact that doing so could involve a new 'foreign' war.

    If the final choice comes down to havoc in the streets of Tehran versus havoc in the streets of NY / Chicago / LA, the 'powers that be' would definitely prefer the havoc take place in Tehran !!! Of course, just in case this doesn't happen, the US has been creating new 'emergency powers' allowing the indefinite detention of US citizens, has been rescinding Posse Commitatus re the domestic deployment of US military, has been developing FEMA camps with capacity to house millions of 'residents' etc. ... with this recent update






    I'm not obsessive about it, but hey a good investment is a good investment. And my most important supposed 'preparation' was relocating to a country where most of the local residents are already very poor, and already understand that creating havoc in the streets or robbing / assaulting / otherwise messing with less poor ( and well armed ) fellow residents will wind up having a VERY unhappy ending !!!
    I see lots of human adaptation offsetting the very legitimate problems you cite.

    If history is any indicator, sovereign debt will fail at some point, and we will survive. Once that debt is "vomited" from the system, real growth can resume. Bailouts are like trying to cure food poisoning without inducing vomiting.

    If food prices skyrocket, we have some of the best farmland in the world, and could easily convert it back, especially given our newfound industrial weakness.

    As bad as the energy situation is, we have our own, and most countries do not.

    As water becomes more valuable, we have tons of that too.

    As the world becomes wealthier, our banking expertise will be in greater demand. Indeed, the seemingly large numbers blowing up now could be part of a much larger scale that reflects a much larger global economy. We won't know for another few decades whether or not this is the case, however.

    That people who are wealthy today might become poor tomorrow and vice versa is not a macroeconomic concern. I believe our global financial econsystem is just fine.

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    Default Re: weekend commentary - The WAR At The End Of The US Dollar

    Time to short the stock markets and go long gold and oil ???

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    Default Re: weekend commentary - The WAR At The End Of The US Dollar

    Quote Originally Posted by Frenchie View Post
    I see lots of human adaptation offsetting the very legitimate problems you cite.

    If history is any indicator, sovereign debt will fail at some point, and we will survive. Once that debt is "vomited" from the system, real growth can resume. Bailouts are like trying to cure food poisoning without inducing vomiting.

    If food prices skyrocket, we have some of the best farmland in the world, and could easily convert it back, especially given our newfound industrial weakness.

    As bad as the energy situation is, we have our own, and most countries do not.

    As water becomes more valuable, we have tons of that too.

    As the world becomes wealthier, our banking expertise will be in greater demand. Indeed, the seemingly large numbers blowing up now could be part of a much larger scale that reflects a much larger global economy. We won't know for another few decades whether or not this is the case, however.

    That people who are wealthy today might become poor tomorrow and vice versa is not a macroeconomic concern. I believe our global financial econsystem is just fine.
    You act as if debt is just a rain cloud that passes after it has dumped the rain. The level of debt in the world's economies is unprecedented. The only way out of this mess is going to be alot of pain, suffering, and drastic change of policies. None of which we have seen happen yet here. Greece is starting the process. People are killing themselves on the government's door step and children are being abandoned in the street.

    Our agriculture is now industrial farming to feed the world markets, not just our country. If you think they are going to give up profits to bring prices down, you must be dreaming. If corporations had ever been loyal to America this mess wouldnt be as bad as it is. They arent suddenly going to start now.

    If you go to China, Japan, or India they have their own banks. Looking at the huge mess our bankers have made of America, I highly doubt they would ever want our bankers. They are more likely to sit around and laugh at us. The banking technology is a different story. But that need is limited in scope.

    I pray to god im wrong. If im right though, in the next ten years our country will change so dramatically we wont even recognize it anymore. America will still be here, with alot less people, different economy, less rights, and alot less power.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Default Re: weekend commentary - The WAR At The End Of The US Dollar

    Quote Originally Posted by Melonie View Post
    Time to short the stock markets and go long gold and oil ???

    http://www.timesofisrael.com/iaf-plans-for-iran-attack/
    If we end up attacking Iran our economy will be toast. Iran has more allies then we like to think. It wont be like Iraq. We wont be able to fund it. Not to mention oil prices. Gold will go thru the roof. Some will get very rich off of it while the majority of the America will suffer the cost of it.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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