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| Subject: Ooops The US dollar has just insured it is no longer the world reserve currency | |
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Author: Allen Currie |
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Date Posted: 21:39:59 04/14/12 Sat Every organization/country who ever developed a new weapon tried mightily to maintain sole possession of that weapon, or at least stop its proliferation. It worked that way with the crossbow, and gunpowder and on and on. People who lust after power like to maintain their advantage. It never works. The first time whatever the new weapon is used, the secret is out. Sooner or later someone is going to figure it out, and then someone else. They can’t afford not to. I am certainly not happy that the atomic bomb is proliferating, but that is inevitable. It is also probable that some psychopath will get his hands on the technology and mankind and the earth will suffer or die. Kicking the can down the road is an honourable endeavour, but it does have its costs. Sometimes kicking the can down the road can be done in other ways. Sometimes some of these other ways can even be more effective. The US is being very vigilant in trying to stop proliferation, although I don’t know how effectively if a poor country like N. Korea can develop the technology. Most, if not all the world agrees with that goal. Iran must be feeling very insecure right now. They have a very valuable asset that major powers seem to have no hesitation in invading in order to control. The bogus reasons Iraq was invaded springs to mind. Iran would dearly love to level the playing field a bit. I think it is probable they are working towards bomb technology. The US has righteously taken the lead in punishing Iran for this transgression. They have caused to be installed an economic blockade. Like all governments everywhere, if at first your plans don’t work immediately, make the laws more draconian. And if that doesn’t work immediately, bend the laws. Guantanamo Bay, water boarding, and other crimes against humanity spring to mind. The SWIFT payment system was a perfect blunt object to insure that Iran suffered economically and badly. So they shut it down for Iran. Iran can no longer get payment for their assets, nor can they pay for whatever they need or want to import. Unfortunately I don’t think the engineers of this action considered the next dominoes in this row. Cut off my primary source of income and I am going to try to replace it somehow, rather than starve to death. Desperate actions are entirely predictable. Potential starvation tends to focus the mind wonderfully. Not only that, but the implied threat against every other country in the world was not missed by all those same countries. The BRIC countries in particular were already chaffing under the heavy handed imposition of economically skewed rules. China in particular had already begun weaning itself with separate agreements with various countries to trade in local currencies. They had the wherewithal to set up regional central banks and fund them. They “offered” (read pressured) to trade with their various trading partners in currencies other than USD. They have been buying assets like both copper and mines using US dollars in payment, frantically. Better to have ones store of value in commodities than an increasingly shaky dollar. I understand their store of US dollars has declined in value by half a trillion dollars in purchasing power. The percentage of US dollars in their reserves has declined from 65% to 54% in two years. That does not include the nearly $280 billion in annual US trade surpluses that they have managed to negate. They are serious about the US dollar and the Renmimbi/Yaun. Back to the Iranian row of dominoes. This embargo is not only against Iran. It does not effect the US overmuch. The US does not trade substantial amounts of its GDP with Iran. But local countries like Italy do. Italy gets just under 15% of its oil from Iran. In return it exports trucks and other goods so they have a more or less balanced trade account with Iran. Italy is already in deep do doo and losing this export market is real painful. Should they become the object of economic sanctions for failing to toe the line, it would be catastrophic. Italy is all too aware that a philosophic whim could bring punishment especially given the Iranian SWIFT action. Italys economy is already in decline for various reasons, including the above. Their attention is on saving their own butts. If they have to cooperate, it won’t be willingly. India has not waited. They also import significant amounts of Iranian oil. Already they have arranged to continue to continue to import oil with payments in Rupees, goods, and gold. How quickly the oil and other trade switched out of the worlds reserve currency. This trend can be expected to continue. As this trend continues there will be a flood of US petro and other dollars seeking to return home to the US. Printing more dollars will not cure this malady. Noting that the Fed is already buying 61% of the treasury auction, effectively the US can not borrow their way out of this situation, even if other countries wanted to lend. And indicators such as China show an increasing disinclination to do so. Perhaps that is why the US is passing increasingly draconian laws such as the military non Habeas Corpus detention of anyone or the March 16 (Friday EVENING) signing by Obama of the peacetime martial law edict. Allen Currie [ Next Thread | Previous Thread | Next Message | Previous Message ] |
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