“The economic law of honest exchange, demands only things of real value as currency cannot be repealed. The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil, rather than dollars or euros.” Ron Paul.
Think about it, what Ron Paul says: Where’s the incentive to keep pricing oil in dollars and maintaining large dollar reserves if the U.S. is no longer your biggest customer? “The petrodollar system breaking down, where oil is no longer paid for in dollars internationally, essentially would be the death knell to U.S. dollar as the reserve currency. It means the U.S. can’t borrow with ‘exorbitant privilege’ anymore, and it means the U.S. Treasury market is set for an out-of-control interest rate spiral.”
“By one expert estimate, some $8–10 trillion in currency balances lie in Middle Eastern hands, much of it in dollars. How long will they want to keep all those dollars lying around? Especially when Asia and the Pacific now account for one-third of global oil consumption and the U.S. only 20%? Meanwhile, the world’s leading oil importer — China took that crown from the United States last fall — is doing its part to undermine the petrodollar. In recent years, China has been striking agreements with many of its trade partners to do business using each other’s currencies. China and Russia, China and Brazil, China and Australia, even China and its old/new enemy Japan — they all have currency swaps and other arrangements in place to bypass the dollar.
The world is at the point of a massive paradigm shift in the global monetary system, and hardly anyone is aware of it. Businessmen are making plans and expending capital as though the world is in a recovery. People continue to spend money and save little with the same expectations. And investors continue to invest as though everything is perfectly fine. They have difficulty extracting the truth about the western world economy, which is mired in debt as possibly could be. The western world is so much in debt that the numbers are mind-boggling for humanity.
Trillions of dollars in capital will be lost due to this and will enter the Western world into something that may be written about for centuries as one of the darkest periods in human history and labelled the Gigantic Fiat Money Collapse. And yet not one in a hundred people are even aware of it nor even think it is possible.
Those who are aware, however, and who have internationalized their assets and have the great majority of it in hard assets such as precious metals and also outside the financial system, preferably outside of their home country, stand the best chance to survive the coming changes.
The days of the mighty “petrodollar” are numbered; and the “exorbitant privilege” or economic windfall that America has enjoyed as the issuer of the world’s reserve currency has now been jeopardized by the War Party’s arrogant over-reach and intervention in Russia’s backyard.
When U.S. and EU politicians started slapping economic sanctions on Russia, they probably never even imagined that there might be serious consequences for the U.S. and the EU. But now the Russian media is reporting that the Russian Ministry of Finance is getting ready to pull the trigger on a “de-dollarization” plan. For decades, virtually all oil and natural gas around the world has been bought and sold for U.S. dollars.
Never before has it been more important to turn off your television, do your own research and take control of your financial affairs.
“We have all of the major central banks printing staggering amounts of money. We’ve got this artificial ocean of liquidity out there and it has to end someday. When it does, it’s going to be very difficult.” Jim Rogers.
The banking system is a fantastic business; they lend money they don’t have and charge the lender interest on it, add to it the ‘fractional reserve lending’ that allows the banks to lend ten times more what they have on deposit. In other words they lend ‘money’ they don’t have and doesn’t exist, correctly called – credit money– while charging interest on it.
In the depression of the 1930s it was the supply of money that mattered, but after Nixon in 1972 abolished the gold backing for the US dollar, he changed ‘real money’ into credit money. So now, it’s not the supply of money that matters, it’s the supply of credit. As long as credit is increasing at a healthy rate – <2% = inflation = theft – markets and GDP go up. When the usage of credit doesn’t increase; expect recession and bear markets. The idea behind the QE was to supply more credit money, but as there was no market for, QE became a worthless tool, as QE did not create lending capability.
Chris Mayer explains this simple and clear. “QE does not create new lending capacity. Let me put it to you as simply as possible. Reserves are bank assets. Lending is constrained by capital. QE shifts assets but doesn’t alter capital. “If the Fed buys $2.6 trillion in Treasuries from the nongovernment sector… the nongovernment sector sells $2.6 trillion in Treasuries to the Fed. “Now, how is it that the Fed ‘injected’ $2.6 trillion in liquidity into the system? “The net effect is zero.
“So to say that a bank can go to Goldman and lever up the $2.6 trillion as if it were something new is not correct. They could do that before using Treasury securities as collateral.
“The idea that the excess reserves point to future hyperinflation is also absurd. The assumption is that the banking system will somehow ‘lend out’ those excess reserves. It can’t happen. It’s impossible. Banks in aggregate cannot lend reserves. Period. I never tire of pointing this out. Even very smart people get this wrong…”
But, “The Fed knows credit must expand, or we have a depression. And today, debt levels are so high that a depression would be catastrophic. The disaster would be worldwide, not just in the US. And people would die.
“Because a depression in the US would mean tens of millions… maybe hundreds of millions… of people in China and Southeast Asia would lose their jobs. Businesses would go broke. Governments would go broke. People living at the margin – with no savings – would soon be desperate. Civilization would not survive. That’s why the Fed will not allow a real credit contraction.”
The financial system is in a situation with many fingers in the dike, but it isn’t known in advance, which one finger is being removed that might cause the dike to give way. But it does look more certain that the end of U.S. dollar hegemony is in sight. The only questions at this point are: When does it end, and when does the real panic begin? Regardless, the demise of the dollar is a certainty.
The belief is sold; the US with fracking has sufficient oil for the future, and will recover on that premise. However Oil Fracking is a fraud, its pure misallocation of capital to produce nothing, it’s a hoax, with Junk Economics, explained (first 12 min.) in footage below:
The savvy investors are continuing to buy physical gold and silver on an ongoing basis. Gold is undervalued, and it’s money outside the banking system so that your money is not at risk of a bail-in when you own gold. That’s a strategy I’ve been following myself and I’m going to continue that strategy.” James Turk.
The collapse of the monetary system awaits the world in the near future, says financial expert James Rickards. Russia and China’s desire to rid the US dollar of its global reserve currency status is an early sign of the “increasingly inevitable” crisis.
“China has three trillion dollars, but they are buying gold as fast as they can. China worries that the US is going to devalue the dollar through inflation so they want to have a hedge if the dollar goes down, so the gold will go up.”
The best-selling author writes that the “linchpin” of the collapse is the approaching failure of the dollar since it is at the foundation of the system. Powerful countries such as Russia, China, Iran, and India do not rely on the US in their national security and would benefit from the US economy being weaker, thus desiring to break free from the dollar standard.
He elaborates that the dual collapse “looks increasingly inevitable. The mistakes have already been made. The instability is already in the system. We’re just waiting for that catalyst that I call the snowflake that starts the avalanche.”