Preparing for the Collapse of the Petrodollar System, Part 4

Source: FTM Daily
by Jerry Robinson
Miss Part One, Two, and Three? START HERE.

Introduction to Part Four: “The War in Afghanistan and the New Great Game”

As we have learned from the previous articles in this series, the petrodollar system that was cleverly crafted in the 1970′s has served America well. What began as a way to drive more demand for the U.S. dollar, in the wake of a move away from the international gold standard in 1971, has provided benefits that few could ever imagine. America’s ‘dollars for oil’ system has greatly enriched our nation at the expense of other nations and their potential prosperity. It has also helped solidify the U.S. dollar as the global currency of choice, following a temporary loss of credibility after President Nixon’s decision to close the gold window. In this fourth installment of our series, I will explain how the petrodollar system has led the U.S. into a perpetual state of war in the Middle East and Central Asia. In particular, this article will focus on the rise of Al Qaeda and the Taliban, along with what I believe may be the real reasons for the War in Afghanistan. I have entitled this piece, The Petrodollar Wars: The War in Afghanistan and the New Great Game

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Austin-Fitts: Push for digital currency or a new dollar backed by food, not oil

Source: Examiner.com
Date: December 11, 2012
by: Kenneth Schortgen Jr

 Catherine Austin-Fitts, former Assistant Secretary of Housing and Urban Development, was a guest on the Dec. 10 Coast to Coast AM radio show to speak on the fiscal cliff, and other economic issues facing the country going into 2013. On the subject of what may be in store for the future of the dollar, Catherine suggested that the government is working towards implementing a new digital currency, or one that would be backed by food instead of the current petro-dollar.
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Editor's Note: For a primer on the current petrodollar system, visit the page "The Coming Collapse of the Petrodollar System".

11 International Agreements That Are Nails In The Coffin Of The Petrodollar

Source: The Economic Collapse
Date: 7/17/2012

Is the petrodollar dead?  Well, not yet, but the nails are being hammered into the coffin even as you read this.  For decades, most of the nations of the world have used the U.S. dollar to buy oil and to trade with each other.  In essence, the U.S. dollar has been acting as a true global currency.  Virtually every country on the face of the earth has needed big piles of U.S. dollars for international trade.  This has ensured a huge demand for U.S. dollars and U.S. government debt.  This demand for dollars has kept prices and interest rates low, and it has given the U.S. government an incredible amount of power and leverage around the globe.  Right now, U.S. dollars make up more than 60 percent of all foreign currency reserves in the world.  But times are changing.  Over the past couple of years there has been a whole bunch of international agreements that have made the U.S. dollar less important in international trade.  The mainstream media in the United States has been strangely quiet about all of these agreements, but the truth is that they are setting the stage for a fundamental shift in the way that trade is conducted around the globe.  When the petrodollar dies, it is going to have an absolutely devastating impact on the U.S. economy.  Sadly, most Americans are totally clueless regarding what is about to happen to the dollar.

One of the reasons the Federal Reserve has been able to get away with flooding the financial system with U.S. dollars is because the rest of the world has been soaking a lot of those dollars up.  The rest of the world has needed giant piles of dollars to trade with, but what is going to happen when they don't need dollars anymore?

Could we see a tsunami of inflation as demand for the dollar plummets like a rock?
The power of the U.S. dollar has been one of the few things holding up our economy.  Once that leg gets kicked out from under us we are going to be in a whole lot of trouble.
The following are 11 international agreements that are nails in the coffin of the petrodollar....
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Editor's Note:  For a primer on the petrodollar system, see “THE COMING COLLAPSE OF THE PETRODOLLAR SYSTEM” BY JERRY ROBINSON.

“THE COMING COLLAPSE OF THE PETRODOLLAR SYSTEM” BY JERRY ROBINSON

Source: Follow the Money
by: Jerry Robinson

[Editor's Note: Learn about a key aspect of our economic system that perhaps is not emphasized enough in its importance.  After the collapse of the Bretton Woods agreement and the gold standard, a scheme to prop up the U.S. dollar was devised and sold to the Arab nations by the Nixon administration.  In 1973 Henry Kissinger was sent over to negotiate this deal with the Saudis in which it was agreed that Saudi Arabia would trade her oil only in US dollars.  In return the Saudis received weapons and protection from the United States.  The OPEC nations by 1975 had followed suit...]

FOR THE DETAILS, READ JERRY ROBINSON'S POWERFUL NEW ARTICLE SERIES HERE

ARTICLE 1: Preparing for the Collapse of the Petrodollar System

ARTICLE 2: The Rise of the Petrodollar System

ARTICLE 3: The Petrodollar Wars: The Iraq Petrodollar Connection

ARTICLE 4: The Petrodollar Wars: The Afghanistan War and the "New" Great Game

Cold Fusion, Oil and the US Dollar

Source: e-cat site
Date: 2/7/2012

In the last few articles, an attempt has been made on this site to explore some real world scenarios that may be taking place behind the scenes in regards to cold fusion and how government and otherwise influential entities, like corporations and the military, may be responding to the increasing body of evidence that cold fusion/LENR has not been debunked and in fact its existence is supported by an ever growing amount of evidence, and being confirmed by a wider and wider group of scientists and researchers.  If you have not read Tom Baccei’s previous articles that explore such scenarios, they can be found here and here.  These have attempts to explain why in spite of the growing evidence (actually undeniable if one takes the time to review the evidence contained on this site and elsewhere, especially lenr-canr.org), the defining moment where the reality of this technology becomes apparent to the masses continues to be elusive.  NASA’s January 12 LENR video was very nearly the push that was needed to take this subject out of the shadows.  It actually succeeded but only for a very brief time.  Below are two charts related to LENR searches on Google.  The first chart plots Google searches for the term LENR from 2004 to the present.  The second chart plots Google searches for the term NASA LENR from 2004 to the present.

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Will Iran Kill the Petrodollar?

Source: Casey Research
Date: January 25, 2012 7:46pm GMT
by: Marin Katusa, Chief Energy Investment Strategist

The official line from the United States and the European Union is that Tehran must be punished for continuing its efforts to develop a nuclear weapon. The punishment: sanctions on Iran's oil exports, which are meant to isolate Iran and depress the value of its currency to such a point that the country crumbles.
But that line doesn't make sense, and the sanctions will not achieve their goals. Iran is far from isolated and its friends – like India – will stand by the oil-producing nation until the US either backs down or acknowledges the real matter at hand. That matter is the American dollar and its role as the global reserve currency.

The short version of the story is that a 1970s deal cemented the US dollar as the only currency to buy and sell crude oil, and from that monopoly on the all-important oil trade the US dollar slowly but surely became the reserve currency for global trades in most commodities and goods. Massive demand for US dollars ensued, pushing the dollar's value up, up, and away. In addition, countries stored their excess US dollars savings in US Treasuries, giving the US government a vast pool of credit from which to draw.
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China to allow yuan trade settlement nationwide and direct foreign investment in the yuan

Source: NHK World
Date: Wednesday, August 24, 2011 11:10 +0900 (JST)

[Editor's Note: Of particular interest in the following video is that China will start allowing direct outside investment in its yuan currency in addition to facilitating international trade in the yuan. This development is part of a trend in which countries have shown a preference for transacting in their own currencies rather than the U.S. dollar, which is still the world's reserve currency (although perhaps for not much longer).]



China is expanding the use of its currency in settling cross-border trade. It will now allow businesses nationwide to settle exports and imports with the yuan.

On Tuesday, the People's Bank of China, the country's central bank, said permission for yuan-based trade settlement will now be given to all parts of the country.

This means Chinese companies, as well as trading firms overseas, can use the yuan for cross-border settlement to rein in currency risks.

Originally, in 2009, China permitted companies in just 5 cities, including Shanghai, to use the yuan for trade with Southeast Asian nations.

The government later expanded the use of its national currency for trade to 20 provincial regions and all international transactions.

China's Commerce Ministry said it will also start allowing foreign direct investment in yuan.

China is aiming to boost the status of the yuan as an international currency, amid weakening trust in the US dollar.

EUR/USD is 7% Backed by Gold What Backs the US Dollar?

Per Bob Chapman of The International Forecaster in a recent interview with The Gold Report, the EUR/USD was originally backed by 15% gold but that has since dropped down to 7%.  For whatever reason the realization that the Euro actually had some gold backing astonished me.  In fact it is the only fiat currency which is gold backed.  Does this make the Euro more sound structurally than the US dollar?  This made me wonder, what the heck is the US dollar backed by?  Oil, in essence, since oil is forced to be transacted in US dollars.  A deal was concocted in 1973 by which Saudi Arabia, the world's largest oil producer, agreed to trade their oil exclusively in US dollars in exchange for protection from its enemies and the right to purchase US arms.  As a result, OPEC as a whole did the same thing and started trading their oil exclusively in dollar denominated terms.  The phenomenon by which oil dollars are repatriated to the US in the form of investment (often US Treasury Bills) or purchase of goods and services is called petrodollar recycling, which does lend intrinsic value to the dollar.  Many theorize that the attack on Iraq was not only a ploy to gain control over the oil resources in that region but also to protect the reserve currency status of the US dollar, as Saddam Hussein had started trading his oil for Euros in protest of sanctions.  Iran has as of February 2008 opened its own oil exchange (Iranian Oil Bourse) where petrochemical products and crude oil are traded in many different currencies except the US dollar. [2]  Recently there was speculation that Israel (bitter enemies with Iran) might attack Iran before it got its first nuclear power plant online but luckily this did not happen.  In fact a  group of seasoned senior intelligence officers (Veteran Intelligence Professionals for Sanity) anticipated there might be a strike and signed a petition to persuade President Obama to discourage any such action by Israel beforehands. [1]  However, it makes sense from the neoconservative bent of maintaining US hegemony for Iran to be on the hit list for an invasion (both to control its third largest oil reserves in the world and discourage non-dollar based oil trading).  In fact at least one Iranian commander who believes that they are in still in danger of being attacked by the US in the near future. [3]



It occurs to me that as currency traders we can not afford to ignore the implications of unseemly oil related politics.

1. If Iran is attacked for whatever underlying reason, the US dollar will see a massive flight to safety, the stock market will crash and oil will spike up big, as well as gold.
2. If OPEC as a whole, or more and more countries start to trade oil or other commodities in other currencies other than the US dollar, the dollar will sell off.
3. A recent report by a German military think tank leaked to the Internet predicts peak oil in 2010 with the effects to be felt 15 to 30 years later. [4]  Granted, the peak oil predictors in the past have had terrible timing and have not been right yet. The implication is higher oil prices and an economic downturn.

Sources:
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1. VIPS Sends Memo to Obama Warning that Israel May Bomb Iran "As Early as Next Month" Tyler Durden, ZeroHedge
2. Iranian Oil Bourse Starts Trading, Sans Dollar Contracts The Prudent Investor, SeekingAlpha
3. Iran on Verge of US-Led War PressTV (First Iranian international news network)
4. German Military Braces for Scarcity after 'Peak Oil' John Collins Rudolf, New York Times Green Blog