Currency War - The Non Shooting Proxy War That Could Prove More Lethal Than Bullets
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What the Latest Currency 'War' is All AboutDoes It matter If The Dollar Is Replaced?
Sanctions have failed, the Russian rouble is stronger than before the war
Euro Challenges USDollar As Global Currency
E U Central Bank Digital Currency Is The Death Rattle Of A Failed Experiment Europe to ditch US dollar in payments for Iranian oil?
Massive Boost To China’s Petro-yuan As Iran Ditches US Dollar In Oil Trade
China's Low Key Launch Of Its Challenge To Petrodollar Supremacy Soros Declares War on Bitcoin In Speech At World Economic Forum In Davos
Chinese Silk Road Plan Will Impact Western Trade
Europe Prepares To Join The Currency War Currency Wars: Former UN Under-Secretary-General Calls For One World Currency
De - Dollarisation: More Nations backing Away From The US$ Russia Says Time Has Come To Ditch The Dollar
Russian Gold Reserves Hit Putin-Era High, Buying Frenzy Accelerates
How Russia plans to disentangle its economy from US dollar
Russia-China return to gold standard means end of US dollar dominance
The Death Of Petrodollars & The Coming Renaissance Of Investing
U.S.A. Threatens To Cut Off China From The US Dollar If They Do Not Uphold Sanctions On North Koreas
Russia & China Declare All Out War on US Petrodollar
The Demise Of Dollar Hegemony: Russia Breaks Wall Streets's Oil-Price Monopoly
Another Oil Exporting State Surrenders: Last Nail In Petrodollar's Coffin
China launches global yuan payment system
US Becoming Isolated As Key Ally Japan Considers Joining China-Led Investment Bank
De-Dollarization Accelerates As More Washington "Allies" Follow Australia To China-Led Bank
China Becomes Global Lender Of Last Resort With Bailout Of World's Most Indebted Oil Company
What the BRICS plus Germany are really up to in the Currency Wars?
De-Dollarization: Russia Ratifies $100 Billion BRICS Bank
De-Dollarization Accelerates: Russia Launches SWIFT-Alternative Linking 91 Entities
Swiss Decoupling Sets The Euro Adrift, Triggers Vast Losses For Banks, And Currency Traders
Russia Propositions Europe: Dump The US$ And I'll Show You My Eurasian Economic Union
Oil price: Britain's North Sea Oil Industry 'Close To Collapse'
The Dollar Versus The Rouble
China Stumps Up To Help Beleagured Russian Economy
Is The World About To Return To The Gold Standard?
Is The Chinese Cavalry About To Ride To The Rescue Of Russia's Economy
Don’t believe American lies about Russia
China-Russia currency agreement further threatens U.S. dollar
War On Terror - omnibus page
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Sanctions have failed, the Russian rouble is stronger than before the war
Looking at the financial data earlier today I noticed that the Russian rouble is now worth more against the US dollar than it was before conflict broke out in Ukraine. On the 22nd of February this year, one US dollar would exchange for just over 79 rubles. As of the time of writing, it is now 78.
The same is true of the UK pound (still a reserve currency and actually gaining popularity as the US$ and the European €) which stood at around 108 rubles before the war and is 102 now, while the Euro traded at 88 rubles before, and is 84 now).
Around the world the ruble is stronger than before the war, particularly among those nations that have refused to support santions. but we are still being told on a daily basis that the US /NATO / EU sanctions are crippling Russia economically So, what is going on and why are we being lied to again?
The media are attempting to throw a cloak of invisibility over their propaganda falsehoods by claiming that the current strength of the ruble “may be illusory” or that Russia has exploited a “loophole” in the sanctions and used “financial alchemy” to “rescue the ruble”.
This is bollocks, Russsian exporters are avoiding sanctions by using methods that are standard business practice, they are trading through middle men. It was obvious from the moment sanctions were imposed that Russia and its customers would continue to do business through companies trading under the banking equivalent of a flag of convenience.At the same time, Europe and the US are expecting food and gas shortages, seeing record petrol prices and talking about rationing. And mainstream media claim Ukraine is winning the shooting war and sanctions are destroying the Russian economy and stirring up public unrest and demands for Putin to be removed from office.
Last week OffGuardian.com published an article asking “Is Russia the REAL target of Western sanctions?”
As the war continues, and the ruble strengthens, while food prices and energy costs in Europe, North America spiral out of control as the establishment try to keep the COVID fear and panic bandwagon rolling the answer is becoming pretty obvious. We The People are the target of all these manufactured shitstorms, the objective behind them is less obvious. but the guess of most habitual sceptics like myself is that we are being softened up for the creation of a totalitarian world government.
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Euro Challenges USDollar As Global Currency
Our currency wars feature has taken a back seat these past two years as the COVID pandemic (or propaganda pandemic as some people might say,) has pushed all other stories aside. In our opinion however, the pandemic has served as a convenient smokescreen behind which all sorts of elitist skulduggery has been going on, hidden from the view of the general population.
In Europe, Brexit is done and dusted, the UK economy though hit by the irrational and panic stricken responses to the pandemic as all other major economies have been, is doing well while the European Union (EU), the globalist project aimed as completing the trio of superpowers needed to create an Orwellian dystopia, seems to be falling apart politically and economically. Well we Brits always knew Europe needed us far more than we needed Europe.
And as if to confirm this, the UK£ has been doing remarkably well in currency markets.
It is somewhat surprising then that investment bankers Goldman Sachs this week predicted that the Eurozone would grow at a faster pace than the U.S. in 2022, predicting growth 4.4 percent for EU and only 3.5 percent for U.S. GDP. The latest World Bank forecast, also from January, still sees the U.S. ahead, if only by a paper-thin margin of 0.1 percent, while the new IMF outlook is yet to be released.
As our finance expert Phil T. Looker always likes to remind us GDP is a next to useless measure of real economic health as it only measures the level of churn in an economy. The old analogy is Joe wins $500 on a scratchcard, so the pays Jeff the mechanic the $500 he owes for car repairs. Jeff takes the cash and pays Simon the accountant for sorting out his little problem with the Taxman. Simon decides his office is looking a bit dingy and hires Will the decorator to freshen up the decor. Will passes the money on to Mandy the prostitute in gratitude for her comforting him when his wife left, his mother was sent to prison and and his dog died all on the same day. Mandy looked in the mirror, decided her face was looking a bit tired and spent the money on a spa day. And the beautician, feeling lucky, blows the whole lot on scratch cards.
So Joe's $500 has increased GDP by $3000 yet no extra wealth has been created. But hey - ho, in a system reliant on fiat money, as John Steinbeck wrote, "The monster must grow or else it dies, and for it to grow the monster must be fed," and measuring the heath of the economy by GDP is how we feed the monster. Thus 'growth' is the keyword even though ALL major economies the rate of price inflation is higher than the rate of growth, thus they are in fact contracting and all but the super rich are becoming poorer. But bankers make the rules not us, so on we go.
While mainstream business journalists are still arguing over who will trump whom for economic growth this year, Statista's Katharina Buchholz notes that there are other indicators that already show the Eurozone’s growing economic prowess and international importance.
While the Eurozone has seen output stagnate its single currency, The Euro has been doing quite well. The value of global transactions settled in Euro has been slowly gaining ground on the sum total of UD dollar transactions, data from the Swift international payment network indicates, hinting at increased activity around the currency.
In October 2020, Euro transaction value briefly moved ahead of the U.S. dollar, while in the longer term the gap between the two currencies on the world stage has become considerable smaller since the start of the coronavirus pandemic.
Goldman Sachs report that reasons for this include the EU’s coordinated efforts to prop up its economy in the current crisis and its continued zero-interest fiscal policy, both of which can only be harmful to the collective EU economy in the long term, and that since the inauguration of the economically illiterate Biden regime in Washington D.C. faith in the U.S. economy and its future prospects is crumbling. According to CNBC, uncertainty around President Joe Biden’s “Built Back Better” economic package continues to harm confidence in the USA, while far left lunacies like the Green New Deal threaten to bankrupt the Us economy while achieving nothing other than to score points with climate change whingers like Greta Thunberg and the unwashed crusties of Exstinktion Rebellion.
Here's an inforgraphic lifted from Statia showing the narrowing of the gap between Euro and US dollar transactions.
You will find more infographics on the topic at Statista
Looking at only payments between parties from different currency zones – thereby excluding international payments between different Eurozone countries – the U.S. dollar still retains its edge as a global trade currency. The gap to the Euro stood at around 3 percent of transaction value in November 2021. Yet, economists have shown surprise at the Euro’s general international success as a strong second player since the U.S. dollar was long seen as the singular international trade currency.
It is also worth mentioning that another reserve currency is performing strongly though on a smalled scale. The UK pound, though by no means a challenger to either Euro or Dollar is the forgotten currency of the bunch, and for decades has been used mainly for trade between nations in the British Commonwealth, (which represents about a third of the global population mainly due to India, Pakistan, Nigeria and Bangladesh being members. The reasons for this small rally in the popularity of the £ are less clear but as we have reported extensively elsewhere in this page, The People's Republic of China has been busy trying to promote its Yuan (Renminbi) as a reserve currency so it could be that both the Euro and The Pound are benefitting from smalled economies fear of getting too deeply in hoch to the predatory superpowers, The USA and China.
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Towards "One" World Currency
based on https://www.zerohedge.com/economics/towards-one-world-currency Most people in the western nations (including outposts like Australia,) think they prefer democratic government to any other kind, but recent behaviour has revealed an ugly truth, that about half of the populations in those democratic nations will gladly surrender their rights and liberties to tyrannous authoritarianism simply because the powers that be have generated and maintained a scare story about a killer virus which does not actually kill verty many people or even cause moderately serious illness in most of us. This suits the leaders of our democratic nations of course because recent events have also shown that all governments in this, the 21st century of the Common Era, Democracy or socialism, Communism or fascism, theocracy or technocracy, they all share one common feature, the desire to dominate populations, limit individual and societal freedoms and control the minutiae of peoples' lives . While seen as vastly different systems with distinct goals, each is rooted in the premise that people should sacrifice freedom and personal sovereignty for "the greater good." The biggest problem with democracy is that it allows a simple majority to force their ideas and values on others. This is why our forebears created systems of checks and balances, including separation of administrative, legislative and judicial branches of government in national constitutions. However, even these no longer guarantee freedom will remain. In the European Union we have oberved the progressives centralisation of power and the transfer of member states sovereign rights to an unelected committee of bureaucrats, in The USA and UK recent cases have revealed the Supreme Courts of those nations, once the defenders of liberty and upholders of the tradition that all are equal before the law, have been corrrupted by money and power and now decide cases according to political and corporate patronage rather than impartial application of the law as it stands. In nations such as Ukraine (twice), Lebanon, Serbia, Myanmar and arguably the USA in 2020, we have seen colour revolutions, sponsored by external players, lead to regime change and the replacement of democratic governments with authoritarian regimes which rule by decree. Over time our central banks and financial systems and institutions have been corrupted by similar influences, crony capitalism and a political system that aids encourages corporate businesses with fascistic ambitions to create near monopolies, in return for their cooperation in extending the sureveillance, control and propaganda activities of the state. It could be argued that those in power don't have to take away our freedom by force if we are willing to surrender it or trade it for empty promises of protection from not-very-deadly "killer" diseases. Nor do they have to be fair in how they go about this if they simply get a majority of the populace to go along with their plan. And one of the easiest and cheapest ways to ensure the complicity of the populace in their own subjugation is through fear. ****** The suspicion governments are self-serving creatures is apparent in the old school British imperial definition of “commerce” which used free trade as a cover for the military dominance of weak nations. Those put in a position of being exploited often saw this as simply a ruse promoted by those wishing to abuse them. In short, opening borders and turning off protectionism simply makes it easier to rob countries of their wealth. America, a wayward child of England, has been accused of following this same path. In my last article titled, "The first Global Inflationary Depression Is Possible" a case was made that the world was headed towards an economic crisis due to several factors. The problem is that such a scenario encompasses all aspects of life, from food and energy, to supply chains, geopolitics, and possibly even war. This article is an effort to offer up some ideas on how governments might respond to such an event based on current trends and some of the events that have occurred during the covid-19 pandemic. If we accept the idea that governments are self-serving and that a huge majority of the people suffer during an economic depression, we should expect frictions to develop as the populace seeks solutions to ease their pain. Sadly, governments across the world have overreached and crushed the rights of individuals during the pandemic. People have been denied the ability to travel, locked in their homes, followed by drones, and even been jailed. This may have been just a taste of what we might expect if governments are put under pressure to perform. Many people have pointed to the fact that in the past "war has been the go-to answer" often used to take our eyes off of problems. Hopefully, that will not be the case, however, many of the other options possible in the age of almost total surveillance do not seem much better. It is wise to remember that when all is said and done, those in power will not be kind to us but they will rapidly throw us under the bus without a thought. Silencing dissidents or those that protest or disagree by limiting free speech is only a start. Lock-downs and curfews take on a whole new meaning when harshly enforced. They can include things like house arrest, cutting power, links to the internet and communication, and even water to areas where unrest gets out of hand. You can expect governments to remove anything that gives us the power to control our fate. [Daily Stirrer] ... [Boggart Aboad] ... [ Greenteeth Home ] ... [ Medium.com ]Europe to ditch US dollar in payments for Iranian oil?
Whisper it very quietly. The European Union is planning to switch payments to the euro for its oil purchases from Iran, eliminating US dollar transactions, a diplomatic source told Russian news agency RIA Novosti. If this is true the move should come as no surprise as this blog reported in 2016 that as a result of Russian and Chinese efforts to set up an alternative to the US dollar as the medium of exchange for bilateral trades, the EU was among many parties expressing willingness to use the new system.
Brussels has recently been at odds with Washington over the US withdrawal from the Iran nuclear deal, signed by the Obama Administration. President Donald Trump, badly advised by the State Deptartment and The Pentagon, has moved to re-impose sanctions against the Iran. According to many well informed sources the US action is in preparation for a regime change campaign against Iran. The EU may be displaying atypical sanity by indicating it wants nothing to do with such adventures after the debalces in Afghanistan, Iraq, Libys, Ukraine and Syria.
Earlier this week, EU foreign policy chief Federica Mogherini revealed that the foreign ministers of the UK, France, Germany, and Iran had agreed to work out practical solutions in response to Washington’s move. The bloc is reportedly planning to maintain and deepen economic ties with Iran, which will include increased trade in oil and gas supplies.
Mogherini said the sides should work together on removing sanctions as part of the historic nuclear deal. “We're not naive and know it will be difficult for all sides,” she said.
The lifting of international sanctions two years ago allowed Iran to sell its oil in the world’s markets for the first time in nearly four decades. Since then, Tehran has managed to significantly increase its exports of crude although the bulk of its oild trade remains with China and other non aligned nations.
Oil is pegged to the US dollar on international markets however, making it difficult for Iran’s partners to make payments for crude and for Tehran to receive them. With the dollar playing the leading role on international financial markets, re-imposing sanctions would mean cutting Iran off from the global financial system. This is where China's new petro - yuan trading system on the Shanghai commodities market becomes a game changer. Nations are no longer dependent on US approval for their trades.
Dozens of contracts signed between European businesses and the Islamic Republic could be at risk of cancellation if Brussels obeys Washington’s reimposition of sanctions. This would damage Iran’s economy and European firms would lose a huge market in the Middle East. Switching to alternative settlement currencies allows both sides to continue trading despite US sanctions.
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primary denominator of value. Should this turn out to be the case we can expect an acceleration of the shift in geopolitical power from west to East.
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Europe's Depleted Gas Storage Might Not Get Refilled Ahead Of Next Winter
While mainstream news reporting of the conflict in Ukraine continues to pump out a torrent of anri - Russia, pro - war propaganda the catastropic effects of this war that could so easily have been avoided are not mentioned. Well why would warmongering governments admit they have inflicted an energy crisis, food shortages and soaring living costs on their people for no good reason ...
Russia Just Sent out a Message NATO Should Better Listen To
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Massive Boost To China’s Petro-yuan As Iran Ditches US Dollar In Oil Trade
Iran's oil indistry is one of the most technically advanced.
The ability of the Washington World Domination Party to shoot itself in the foot is legendary, but their latest move, renewal of sanctions on Iran has handed a huge advantage to China’s newly established oil futures market operating on the Shanghai stock exchange, markets analysts say. The sanctions could even make the yuan a better option than than the dollar in the oil markets.
Since the low - key launch in March this year, interest in the gold-backed oil contracts has steadily increased. Traded daily volumes hit a record 250,000 lots last Wednesday, and the share of yuan contracts in global trading jumped to 12 percent compared to eight percent in March.
“The contract is thundering into action,” Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore, was quoted by Reuters as saying. “It makes sense for Iran to begin selling oil under contracts denominated in yuan rather than dollars.”
It certainly does if the USA sanctions mean Iran cannot sell its oil in Petrodollar dominated markets. China is the largest oil consumer in the world and also buys the most from Iran, a major OPEC producer. Beijing buys 25 percent of Iranian oil exports, which accounts for eight percent of its needs. Plenty of other nations, though smaller markets, are willing to defy the USA and buy Iranian oil on the Shanghai market.
“The sanctions... can potentially accelerate this process of establishing a 3rd (oil) benchmark,” said senior vice president for derivatives in Singapore at financial services firm INTL FCStone, Barry White.
By using more yuan in the oil trade, Beijing both saves the costs of exchanging dollars and promotes the renminbi as a global currency, analysts say. London's financial markets benefit because as the world's leading currency market, the London financial Futures Exchange (LIFFE), instead of simply purchasing dollars to settle accounts, oil buyers will now have to source the currency of the vendor nation, and then supply non Chinese purchasers with Yuan. Last week, Shanghai futures rose to a dollar-converted record high of around $75.40 per barrel, growing faster than rival benchmarks Brent and WTI.
Russia Says Time Has Come To Ditch The Dollar
Saturday 25 August
As the US State Department unveiled the latest round of sanctions on Russia yesterday, while the trade war with China that has seen tariffs imposed on a wide range of Chinese goods shows no sign of easing, Moscow signalled its intention to respond to this latest attack on its economy. In particular, the Russian government announced it is accelerating efforts to abandon the American currency in trade transactions, according to Russia's Deputy Foreign Minister Sergei Ryabkov.
"The time has come when we need to go from words to actions, and get rid of the dollar as a means of mutual settlements, and look for other alternatives," he said in an interview with International Affairs magazine, he told RT.
"Thank God, this is happening, and we will speed up this work,” Ryabkov said, explaining the move would come in addition to other “retaliatory measures” as a response to a growing list of US sanctions. It is time mainstream media in the west started reporting accurately what is going on. The official position of the US is that their sanctions are in retaliation for various Russian acts such as meddling in the US election process, but in reality the USA is trying to protect its position as issuers of the reserve currency, while Russia, China and a number of emerging economies resent the way the US uses the reserve currency to dictate matters in global trade.
Previously, Russian Energy Minister Aleksandr Novak has said that a growing number of countries are interested in replacing the dollar as a medium in global oil trades and other transactions.
“There is a common understanding that we need to move towards the use of national currencies in our settlements. There is a need for this, as well as the wish of the parties,” Novak said.
According to the minister, it concerns both Turkey and Iran, with more countries likely to join the growing dedollarization wave.
Our reporting of this long running news thread tends to confirm his view.
“We are considering an option of payment in national currencies with them. This requires certain adjustments in the financial, economic, and banking sectors,” he said. Last week, we reported that the Kremlin was interested in trading with Ankara using the Russian ruble and the Turkish lira. India has also vowed to pay for Iranian oil in rupees. Some economists argue that modern technology removes the need for a reserve, the speed with which computer systems handle currency trades and conversions eliminated administrative bottlenecks.
Meanwhile, the world’s rapidly growing second-largest economy and Washington's trade nemesis, China, has been taking steps to challenge the greenback's dominance with the launch of an oil futures contract backed by Chinese currency, the petro-yuan. This is fully reported elsewhere in this page. China and Iran have already agreed to stop using the dollar in global trade as China has ramped up purchases of Iranian oil in defiance of US sanctions. India, Pakistan, the EU, Australia and Japan are also known to have made petr-yuan contracts.
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Refugee Crisis Or Existential Battle With USA for Europe
It has been clear for some years now that the USA, backed by its main NATO and EU military allies the UK and France (the FUKUS axis has been trying to provoke Russian into firing the shot that will be heard around the world and recognised as the startiung signal for World War Three.
Nothing is ever as it seems to be however, and views from middle east and far eastern journals suggest the USA is also working at destabilizing EU nations in order to force their support in its wars.
The European People’s Party (EPP) is the largest political group in the European Parliament, and they are unerringly supportive of America's efforts to start a war with Russia. “The time of talk and persuasion with Russia is over," MEP and Vice-President of the EPP told a meeting on Tuesday, 21 April, “Now it’s time for a tough policy, and concentration on defence and security ...”
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Does It matter If The Dollar Is Replaced?
"Without delving too deeply into Austrian economic and capital theory, just let me point out that money printing disrupts the structure of production by fraudulently changing the “price discovery process” of capitalism. Capital is allocated to projects that will never be profitably completed. Bubbles get created and collapse and businesses are suddenly damaged en mass, thus, destroying wealth. (Zero Hedge)"
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Europe Prepares To Join The Currency War
Things seemed to be going to plan for the European Unon's single currecncy, The Euro, which was the biggest single step in the plan to merge the twenty eight member states into a single political entity. Ties to the German economic powerhouse the poorer nations of southern Europe could not manage their finances efficiently and soon became dependent on bailouts from the European Central Bank with were made with attached conditions suggested by Germany. It seemed that as long as the German economy prospered the 'European project,' (referred to, a tad unkindly perhaps, by this news site among others as Greater Germany,) would stay on track.
German government spending was actually falling while the trade surplus inceased. Industries that had been nationalized in the socialist 70s were being privatized. The European Central Bank – run by sound money advocate Jean-Claude Trichet – was smarter and more cautious than the reckless money printers of the US Federal Exchange and The Bank of England. The single currency, The Euro, looked for a time as if it was poised to challenge the US dollar as the main global reserve currency as the world mistook stagnation for stability.
Then – with glacial speed and agility at first and now looking more like an avalanche ortsunami every day, both the German economy and European Union fiscal prudence have gone pear shaped.
Mario Draghi, an Italian economist (hardly a recommendation for a banker,) succeeded Trichet as head of the ECB and promised to do “whatever it takes” to generate at least 2% inflation. Then he proceeded to deliver on that promise by buying massive amounts of debt from insolvent EU nations and introducing negative interest rates (i.e. we the punters pay the banks for the privilege of watching them burn our money.)
But the disease was not just financial, inequality – which, we’re now coming to realize – fed by low interest rates and easy money, rose to near-US proportions with the citizens of Greece, Portugal, Ireland and east European nations reduced to penury by the austerities imposed as a condition of ECB loans. Immigration was mishandled to the point that it became the main political issue in many nations and triggered a wave of anti - EU feeling among Europe's working class communities. And populist parties opposed to the existing system started to attract enough votes to gain places in national assemblies and challenge theo cosy, neo - liberal consensus politics of the mainstream parties.
The ruling elites, shocked and frightened by the unwashed masses’ sudden refusal to believe the propaganda and do as they were told, could only respond with massive increases in social spending in an attempt to buy complicity in the destruction of European civilisation, their promises of even easier credit (Draghi actually claimed that there was “plenty of headroom” to cut rates from the current -0.4%) and do whatever it took to preserve the status quo.
Usually austere Germany’s government spending began to skyrocket, jumping from €300 billion to €400 billion in the two years from 2016 and 2018. And now that the Eurosceptic AfD have easten into the Christian Democrats vote now and the far left, spendthrift Greens are contenders for the position of biggest party, things don't look like returning to sanity any time soon.
From today’s Wall Street Journal:To win voters lost to an anti-globalization backlash, Europe’s mainstream parties are going back to the 1970s.
In Germany, the U.K, Denmark, France and Spain, these parties are aiming to reverse decades of pro-market policy and promising greater state control of business and the economy, more welfare benefits, bigger pensions and higher taxes for corporations and the wealthy. Some have discussed nationalizations and expropriations.
It could add up to the biggest shift in economic policy on the continent in decades.
In Germany, Europe’s biggest economy, the government has increased social spending in a bid to stop the exodus of voters to antiestablishment, populist and special-interest parties. Reacting to pressure on both ends of the political spectrum, it passed the largest-ever budget last year.
“The zeitgeist of globalization and liberalization is over,” said Ralf Stegner, vice chairman of the 130-year-old Social Democratic Party, the junior partner in Chancellor Angela Merkel’s government coalition. “The state needs to become much more involved in key areas such as work, pensions and health care.”
The policies mark the end of an era in Europe that started four decades ago, with the ascent of former British Prime Minister Margaret Thatcher and her U.S. ally, President Ronald Reagan.
After Thatcher abolished capital controls in 1979 and began selling off state companies in the 1980s, other European governments followed suit, embracing supply-side policies, deregulation, market liberalization and tax cuts. Revenues from privatization among European Union member states rose from $13 billion in 1990 to $87 billion in 2005, according to Privatization Barometer, a database run by consultancy KPMG Advisory S.p.A.
Today, concerns about growing inequality, stagnating wages, immigration, the debt crisis and China’s rising power have fueled the recent political shift. European businesses and governments also worry about potential changes in U.S. policy, amid looming threats of trade sanctions.
This erosion of the old technocratic consensus about how to run an economy, even in countries where populists aren’t getting any closer to power, could be one the most lasting consequences of the recent antiestablishment surge.
Even in countries where populist parties are already in government, such as Poland, those parties have shifted their focus from nationalist and anti-immigration rhetoric to championing generous welfare policies and state aid.
This reversion to the failed socialist ideas of centralisation and greater government control, coup-led with cultural Marxist attacks on the fabric of societies is spreading throughout Europe and North America as government debt grows and economic growth growth slows. This is how temporary recessions are turned into long term depresions. Borrow too much and the system starts to fail, leading to calls for a return to the good old days of rising benefits and increased government spending paid for with borrowed money.
This time around the only difference is that as the USA and Europe find their currencies undermined by growing debt and rising government expenditure (with social welfare budgets going through the roof,) China, Russia and their allies are waging a currency war on the west aimed at replacing the $US as global reserve currency, as we have reported extensively. China has alreasdy launched the Petroyuan, a non - dollar vehicle for oil trades, and Russia has opened up its own cross border electronic transfer system to rival SWIFT.
The next stage, already visible in Europe, is rising inflation and a currency crisis that wipes out the savings of the people the inflationary policies were supposed to help. The currency war between the US and China will soon be joined by Europe, already talking of its own EFT system and oil currency. The ECB and national central banks will try to undermine the value of the $ on currency exchanges in an effort to prop up the value of the Euro, leaving investors with nowhere to hide but gold. Have you noticed how the price of gold has risen on commodity markets between the beginning of 2019 and now?
RELATED:war can end global US dollar dominance
Petro-yuan: China To Launch Renminbi As Reserve Currency & Take Down Petro-dollar
Why It Really All Comes Down To The Death Of The Petrodollar
Globalisation, The Davosocracy and the Pushbac
Money from fresh air
Things seemed to be going to plan for the European Unon's single currecncy, The Euro, which was the biggest single step in the plan to merge the twenty eight member states into a single political entity. Ties to the German economic powerhouse the poorer nations of southern Europe could not manage their finances efficiently and soon became dependent on bailouts from the European Central Bank with were made with attached conditions suggested by Germany. It seemed that as long as the German economy prospered the 'European project,' (referred to, a tad unkindly perhaps, by this news site among others as Greater Germany,) would stay on track.
German government spending was actually falling while the trade surplus inceased. Industries that had been nationalized in the socialist 70s were being privatized. The European Central Bank – run by sound money advocate Jean-Claude Trichet – was smarter and more cautious than the reckless money printers of the US Federal Exchange and The Bank of England. The single currency, The Euro, looked for a time as if it was poised to challenge the US dollar as the main global reserve currency as the world mistook stagnation for stability.
Then – with glacial speed and agility at first and now looking more like an avalanche ortsunami every day, both the German economy and European Union fiscal prudence have gone pear shaped.
Mario Draghi, an Italian economist (hardly a recommendation for a banker,) succeeded Trichet as head of the ECB and promised to do “whatever it takes” to generate at least 2% inflation. Then he proceeded to deliver on that promise by buying massive amounts of debt from insolvent EU nations and introducing negative interest rates (i.e. we the punters pay the banks for the privilege of watching them burn our money.)
But the disease was not just financial, inequality – which, we’re now coming to realize – fed by low interest rates and easy money, rose to near-US proportions with the citizens of Greece, Portugal, Ireland and east European nations reduced to penury by the austerities imposed as a condition of ECB loans. Immigration was mishandled to the point that it became the main political issue in many nations and triggered a wave of anti - EU feeling among Europe's working class communities. And populist parties opposed to the existing system started to attract enough votes to gain places in national assemblies and challenge theo cosy, neo - liberal consensus politics of the mainstream parties.
The ruling elites, shocked and frightened by the unwashed masses’ sudden refusal to believe the propaganda and do as they were told, could only respond with massive increases in social spending in an attempt to buy complicity in the destruction of European civilisation, their promises of even easier credit (Draghi actually claimed that there was “plenty of headroom” to cut rates from the current -0.4%) and do whatever it took to preserve the status quo.
Usually austere Germany’s government spending began to skyrocket, jumping from €300 billion to €400 billion in the two years from 2016 and 2018. And now that the Eurosceptic AfD have easten into the Christian Democrats vote now and the far left, spendthrift Greens are contenders for the position of biggest party, things don't look like returning to sanity any time soon.
From today’s Wall Street Journal:To win voters lost to an anti-globalization backlash, Europe’s mainstream parties are going back to the 1970s.
In Germany, the U.K, Denmark, France and Spain, these parties are aiming to reverse decades of pro-market policy and promising greater state control of business and the economy, more welfare benefits, bigger pensions and higher taxes for corporations and the wealthy. Some have discussed nationalizations and expropriations.
It could add up to the biggest shift in economic policy on the continent in decades.
In Germany, Europe’s biggest economy, the government has increased social spending in a bid to stop the exodus of voters to antiestablishment, populist and special-interest parties. Reacting to pressure on both ends of the political spectrum, it passed the largest-ever budget last year.
“The zeitgeist of globalization and liberalization is over,” said Ralf Stegner, vice chairman of the 130-year-old Social Democratic Party, the junior partner in Chancellor Angela Merkel’s government coalition. “The state needs to become much more involved in key areas such as work, pensions and health care.”
The policies mark the end of an era in Europe that started four decades ago, with the ascent of former British Prime Minister Margaret Thatcher and her U.S. ally, President Ronald Reagan.
After Thatcher abolished capital controls in 1979 and began selling off state companies in the 1980s, other European governments followed suit, embracing supply-side policies, deregulation, market liberalization and tax cuts. Revenues from privatization among European Union member states rose from $13 billion in 1990 to $87 billion in 2005, according to Privatization Barometer, a database run by consultancy KPMG Advisory S.p.A.
Today, concerns about growing inequality, stagnating wages, immigration, the debt crisis and China’s rising power have fueled the recent political shift. European businesses and governments also worry about potential changes in U.S. policy, amid looming threats of trade sanctions.
This erosion of the old technocratic consensus about how to run an economy, even in countries where populists aren’t getting any closer to power, could be one the most lasting consequences of the recent antiestablishment surge.
Even in countries where populist parties are already in government, such as Poland, those parties have shifted their focus from nationalist and anti-immigration rhetoric to championing generous welfare policies and state aid.
This reversion to the failed socialist ideas of centralisation and greater government control, coup-led with cultural Marxist attacks on the fabric of societies is spreading throughout Europe and North America as government debt grows and economic growth growth slows. This is how temporary recessions are turned into long term depresions. Borrow too much and the system starts to fail, leading to calls for a return to the good old days of rising benefits and increased government spending paid for with borrowed money.
This time around the only difference is that as the USA and Europe find their currencies undermined by growing debt and rising government expenditure (with social welfare budgets going through the roof,) China, Russia and their allies are waging a currency war on the west aimed at replacing the $US as global reserve currency, as we have reported extensively. China has alreasdy launched the Petroyuan, a non - dollar vehicle for oil trades, and Russia has opened up its own cross border electronic transfer system to rival SWIFT.
The next stage, already visible in Europe, is rising inflation and a currency crisis that wipes out the savings of the people the inflationary policies were supposed to help. The currency war between the US and China will soon be joined by Europe, already talking of its own EFT system and oil currency. The ECB and national central banks will try to undermine the value of the $ on currency exchanges in an effort to prop up the value of the Euro, leaving investors with nowhere to hide but gold. Have you noticed how the price of gold has risen on commodity markets between the beginning of 2019 and now?
RELATED:war can end global US dollar dominance
Petro-yuan: China To Launch Renminbi As Reserve Currency & Take Down Petro-dollar
Why It Really All Comes Down To The Death Of The Petrodollar
Globalisation, The Davosocracy and the Pushbac
Money from fresh air
Currency Wars: Former UN Under-Secretary-General Calls For One World Currency
In this page, under the Currency Wars title we have covered US attempts to expolit its position as issurer of the global reserve currency, and the moves bt China, Russia and rest of the BRICS bloc to resist that. Moves to establish the US$ as a true global currency began a long time ago with the creation of the International Monetary Fund at the Bretton Woods conference in the final months of World War 2, with Germany defeated and the world ready to split into capitalist and communist factions. Twenty - five years later, in the midst of the first oil crisis came the creation of the Special Drawing Right (SDR), the IMF’s global reserve asset. And now this:When it introduced the SDR, the Fund hoped to make it “the principal reserve asset in the international monetary system.” This remains an unfulfilled ambition; indeed, the SDR is one of the most underused instruments of international cooperation. Nonetheless, better late than never: turning the SDR into a true global currency would yield several benefits for the world’s economy and monetary system. The idea of a global currency is not new. Prior to the Bretton Woods negotiations, John Maynard Keynes suggested the “bancor” as the unit of account of his proposed International Clearing Union. In the 1960s, under the leadership of the Belgian-American economist Robert Triffin, other proposals emerged to address the growing problems created by the dual dollar-gold system that had been established at Bretton Woods. The system finally collapsed in 1971. As a result of those discussions, the IMF approved the SDR in 1967, and included it in its Articles of Agreement two years later. Although the IMF’s issuance of SDRs resembles the creation of national money by central banks, the SDR fulfills only some of the functions of money. True, SDRs are a reserve asset, and thus a store of value. They are also the IMF’s unit of account. But only central banks – mainly in developing countries, though also in developed economies – and a few international institutions use SDRs as a means of exchange to pay each other. The SDR has a number of basic advantages, not least that the IMF can use it as an instrument of international monetary policy in a global economic crisis. In 2009, for example, the IMF issued $250 billion in SDRs to help combat the downturn, following a proposal by the G20. Most importantly, SDRs could also become the basic instrument to finance IMF programs. Until now, the Fund has relied mainly on quota (capital) increases and borrowing from member countries. But quotas have tended to lag behind global economic growth; the last increase was approved in 2010, but the US Congress agreed to it only in 2015. And loans from member countries, the IMF’s main source of new funds (particularly during crises), are not true multilateral instruments. The best alternative would be to turn the IMF into an institution fully financed and managed in its own global currency – a proposal made several decades ago by Jacques Polak, then the Fund’s leading economist. One simple option would be to consider the SDRs that countries hold but have not used as “deposits” at the IMF, which the Fund can use to finance its lending to countries. This would require a change in the Articles of Agreement, because SDRs currently are not held in regular IMF accounts. The Fund could then issue SDRs regularly or, better still, during crises, as in 2009. In the long term, the amount issued must be related to the demand for foreign-exchange reserves. Various economists and the IMF itself have estimated that the Fund could issue $200-300 billion in SDRs per year. Moreover, this would spread the financial benefits (seigniorage) of issuing the global currency across all countries. At present, these benefits accrue only to issuers of national or regional currencies that are used internationally – particularly the US dollar and the euro. More active use of SDRs would also make the international monetary system more independent of US monetary policy. One of the major problems of the global monetary system is that the policy objectives of the US, as the issuer of the world’s main reserve currency, are not always consistent with overall stability in the system. In any case, different national and regional currencies could continue to circulate alongside growing SDR reserves. And a new IMF “substitution account” would allow central banks to exchange their reserves for SDRs, as the US first proposed back in the 1970s. SDRs could also potentially be used in private transactions and to denominate national bonds. But, as the IMF pointed out in its report to the Board in 2018, these “market SDRs,” which would turn the unit into fully-fledged money, are not essential for the reforms proposed here. Nor would SDRs need to be used as a unit of account outside the Fund. The anniversaries of the IMF and the SDR in 2019 are causes for celebration. But they also represent an ideal opportunity to transform the SDR into a true global currency that would strengthen the international monetary system. Policymakers should seize it.* * * Once again being primed and propagandized to desire this inevitability of globalisation. Coming just a day after the Saudis threatened to end the Petrodollar, Ocampo's op-ed is well-timed to say the least. As we noted previously, nothing lasts forever.
De - Dollarisation: More Nations backing Away From The US$
De-Dollarization Du Jour: Russia's Largest Bank Issues Yuan-Denominated Guarantees
Leading the charge to multipolarity and de-dollarization are Russia, resugent despite economic sanctions and the rising superpower in waiting, China. The downgrading of the dollar is clearly demonstrated in the launch of the BRICS bank and the establishment of the AIIB. De-Dollarization Accelerates As More Washington "Allies" Follow Australia To China-Led Bank For many years the dollar has been the currency in which the world's nations settled cross-border transactions and the so called petrodollar became the only currency in which oil could be traded. In recent years however, as other nations, particularly the BRICS group, Brazil, Russia, India, China and South Africa, the leading nations outside the dominant US / European group, have been making moves to end the domination of the US dollar. Germany Alarmed by Aggressive NATO Stance On Ukraine As the US pro war rhetoric pumps up the tensions between Russia, its allies and the west in Ukraine we revisit once more the truth about which world power has been relentlessly pushing for war since 2009. It isn't Russia or China, though they are not likely to back down. De-Dollarization Accelerates: Russia Launches SWIFT-Alternative Linking 91 Entities Among the information revealed in The Great Leaks of 2013 were the documents that exposed the extent to which NSA and GCHQ had been secretly 'monitoring' the SWIFT payments system and recording details of cash flowing between nations and organisations. It appears the revelation was the last straws for Russia, China, and other sovereign nations ... Kiev Breaches Minsk Agreement Within Hours We all knew the ceasefire agreed by Angela Merkel, Francoise Hollande, Vladimir Putin and Ukrainian Nazi leader Poroschenko would not hold. The people whose country stands to gain most from war, that is of course Barack Obama and John Kerry, President and secretary of State of the USA, the country that wants and needs perpetual war, were trying derail the fragile deal while the four leaders were still negotiating. India's Ruling BJP Party Crushed In Regional Poll India gets it own UKIP and they are already winning elections as The Common Man party shocks the establishment by tapping into the anger about institutuionalised corruption in the world's biggest democracy Another Conspiracy Theory Becomes Fact: Oil Collapse Is All About Obama's Proxy War With Russia. While we are distracted with sex scandals at home and terrorists rampaging through the middle east and Africa, the US / EU / NATO confrontation with Russia / China / Iran is geting into a very dangerous state. While the Chinese led move to dump the US dollar as global reserve currency is causing economic chaos, the USA attempts to provoke armed conflict with Russia are getting more reckless and desperate. Russia throws down the gauntlet: energy supply to Europe cut off; petrodollar abandoned as currency war escalates There are some big moves taking place on the global stage that you need to know about, as this could all lead to World War III. Yesterday Russia cut off its natural gas supply to Europe, "plunging the continent into an energy crisis 'within hours' as a dispute with Ukraine escalated," the Daily Mail reported. Russia along with three quarters of the world, is isolated The latest EU sanctions announced today after last weeks NATO summit have left Russia increasingly isolated in the world according to mainstream media reports of the response from western governments. Without American leadership, democracy is in peril? Not really. Much of the corporate propaganda spouting mainstream media are forecasting a bad outcome from the current chaose in Ukraine, with ISIS aka ISIL aka Islamic State in Syria and Iraq and the imminent collapse of the petrodollar. The consensus is that the west is currently not winning because of the failure of American leadership. This is untrue, most of the problems exist because America is leading the world towards war. G77 Nations vow to destroy petrodollar and America’s New World Order By leading the G7, G8 and G20 economic groups for the past few decades the US government has managed to exploit its status as holder of the global reserve currency until it appeared on the brink og global economic hegemony. The Americans overplayed their hand however, became too blatant in their bullying of smaller nations and helping corporate interests override national laws. Now the world is closing ranks against the USA. Can't say we're sorry. American Dollar Dumped The status of the US dollar as global reserve currency has kept the Americasn economy afloat for several decades in spite of the US government's vast debt and profligate public spending. It has looked for some time as if rival powers led by the Chinese were getting ready to topple the dollar from supremacy. Iran's Oil and the US Dollar You can't reason with religious fanatics. When the USA (was it the Bush or the Clinton administration?) first imposed economic sanctions on Iran in the hope of turning a medievalist theocracy into a liberal democracy it was always going to backfire. As the US tightened sanctions under Obama, Iran has attacked the USA where it is most vulnerable, taking the initiative in moves to replace the US Dollar as the global reserve currency Money From Rock Better Than Money From Air Strange things are happening in the finance markets, very strange. As the FT and Dow Jones main indexes go up and down faster than a whores knickers, commodity prices are behaving weirdly too.Russian Gold Reserves Hit Putin-Era High, Buying Frenzy Accelerates
picture: Zero Hedge
The move to dump the US dollar as the main reserve currency for international trade seems to be gatherinmg momenum in spite of US sanctions mania when smaller countries will not obey wasdhington's diktat.
Bloomberg's Yuliya Fedorinova and Olga Tanas report today that the Bank of Russia has more than doubled its monthly gold purchases, bringing the share of bullion in its international reserves to the highest of Putin’s 17 years in power, according to World Gold Council data.
In the second quarter of 2018 alone, Rusia's buying accounted for 38 percent of all gold purchased by central banks. The gold rush is allowing the Bank of Russia to continue growing its reserves while abstaining from purchases of foreign currency for more than two years. It’s one of a handful of central banks to keep the faith as global demand for the precious metal fell to a two-year low in the second quarter.
“Gold is an asset that is independent of any government and, in effect, given what is usually held in reserves, any western government,” said Matthew Turner, metals analyst at Macquarie Group Ltd. in London.
Some pundits are trying to suggest Russia's gold buying is a hedge against further US sanctions or a bid to cut off Russia's access to global financial markets, but in fact Moscow's hoarding of gold goes back a lot further than the current tensions. Russia is of course heavily involved in the creation of a gold backed financial vehicle on the Shanghai financial marke,t planned to act as a rival to the petrodollar.
If Russia’s buying continues at a similar pace, the World Gold Council said the full-year increase in 2018 “could closely match” the 200 tons purchased annually in 2015 and 2016.
At its current pace, Moscow will unseat China for the number five spot of gold-holding nations by the first quarter of 2018.
But China is no slouch, as Reuters reports, China’s proven gold reserves reached 12,100 tonnes at the end of 2016, the state news agency Xinhua reported on Monday quoting an official with the national gold association.
How Russia plans to disentangle its economy from US dollar
Phil T Looker, 6 October, 2018
The Russian Finance Ministry this week officially revealed a plan to end the country's dependence on the US dollar for foreign trade. Economic analysts are warning it will be a long and painful process, but readers familiar with this page will be aware Russia and China, with support from Iran and a number of other oil rich countriies whose oil trade is restricted by US use of the petrodollar to manipulate makets, is several years along the road to economic independence alredy. As well as news updates elsewhere in the page on progress, we have also explained at length how separation from the global reserve currency could be achieved.
According to the plan mentioned above, Russia aims to de-dollarize its economy by 2024. The program is complicated, but a key point is that Russian traders who use roubles instead of dollars would get huge taxation benefits including quicker VAT returns and other incenives to dump the US currency. Russia and China have already signed up some very significant economies, including India, Brazil, Nigeria and Turkey to a system of settling cross border trades in the national currency of the vendor. Another post within this page from 2015 shows how long the process of gathering support for dedollarisation has been under way.
Andrey Perekalsky, an analyst at brokerage company FinIst, told news reporters, “It is necessary to gradually switch to such a system of international payments, which implies payment in rubles for Russia’s best and most popular goods on the world market like oil, gas and arms exclusively.” Currency traders in The City Of London, the world's main currency trading centre will no doubt be delighted to hear that.
Perekalsky added thatRussia should also unite with China and the European Union in creating a payment channel that can’t be controlled by the United States. The alternative to the SWIFT interbank settlement network that could bypass Iranian sanctions could be seen as a first step in that direction. As this page has reported previously, moves are already underway in Russia, China and the EU to create such a system.
Petr Pushkarev, chief analyst at TeleTrade, offers the opinion that Russia with its vast foreign currency reserves (almost $500 billion,) is able to keep the ruble value stable despite the effects of US sanctions mania, which is actually hitting US allies in Europe and Asia which must trade with Russia harder than Russia itself. The currently high prices for crude oil could also help, by increasing Russia's revenue without their having to increase volumes sold.
It appear Russia will diversify not only into rubles, but also use the Chinese yuan - it has been an early supporter of the gold backed petroyuan system set up by China earlier this year to enable oil trades priced in Youan to be conducted on the Shanghai commodity exchange. Deals have also been signed to trade in Vietnamese dong, Indian rupee, and the Euro. The British pound is also involved and has always enjoyed reserve currency status, though in recent decades its role has been minor and restricted mainly to trade between members of the British Commonwealth.
The dollar is pretty much overvalued against the euro; the IMF forecasts a gradual devaluation of the dollar by 10-15 percent,” Pushkarev noted.
“American policy is disliked not only in Russia but by Europe and throughout the third world. There is a widespread feeling that the USA has abused its position as issuer of the main reserve currency to bully smaller nations into trading on terms advantageous to the USA. EU officials have already openly announced that they are starting to create their own system of settlements with Iran, in which transactions will not be transparent to the US authorities and therefore will not be subject to sanctions,” he added.
China's Low Key Launch Of Its Challence To Petrodollar Supremacy
We have been blogging and commenting for several years on moves by Russia, China and Iran to replace the US dollar as the global reserve currency, or at least to create a serious rival to the dollar hegemony. There can be no greater threat to the established order (or to the global banking cartel's dreamed of New World Order,) than the emergence of a serious rival to the dollar. As economic game-changers go there is none bigger or more disruptive than a yuan-denominated settlement system for crude oil contracts, especially when set it is set up up by the largest importer of crude on the planet and the secong largest expoirter of hydrocarbons.
And yet Beijing’s strategy seems to be a softly softly approach. Oil trades are already being conducted in petro-yuan at the Shanghai International Energy Exchange is on hold. This may be related to US sabre rattling and concern that the US deep state, having no economic response to the move may react rashly if presented with a fait accompli. Thus the fact that China and its partners chose to play down the official launch of the new settlement system is understandable. There was room for some euphoria following the launch, Brent Crude soared to $71 a barrel for the first time since 2015. West Texas Intermediate (WTI) reached the highest level in three years at $66.55 a barrel; then retreated to $65.53.
The launch also signalled a series of “firsts” for China's trade links with the west, including the first opportunity for overseas investors to access a Chinese commodity market. Significantly, US dollars will be accepted as deposit and for settlement. In the near future, a basket of currencies will also be accepted as deposit. This is entirely in line with the Sino - Russian policy of moving their economic partners towards condusting trades in the currency of the vendor nation.
Will the launch of the petro-yuan be a deathblow to the petrodollar and U.S. economic dominance and the birth of a new era in trade relations? It will but the change is likely to take years rather than weeks. Many variables have to be considered, the most important being China’s capacity to manipulate and eventually dominate the global oil market.
RELATED POSTS:The Business of War: Defense Sales Keep Economies Of Manufacturing Nations Afloat
Tens of thousands have been killed and millions displaced due to 'humanitarian' interventions by the developed nations (led by the USA, France and the UKm the FUKUS axis) in the domestic politics of third world nation. Usually the interventions support rebel groups who if they came to power would be far more oppressive and brutal regime than the one they replaced.
Naked Bankers Go For Gold
... That gold sale in 2013 was a naked short. The seller had no gold to sell. COMEX reported having gold only equal to about half of the short sale in its vaults, and not all of that was available for delivery (quite a lot of it belonged to the german government) In effect the naked shorting of gold could only work because really the right hand was selling to the left hand.
"West's War In Syria Is Part Of A Global war Waged By The USA And Its Dupes Allies Against Russia"
Arthur Foxake brings us a brilliant analysis of the geopolitical picture from the black Sea and Middle East, but ahead of the embed window we get a few of Arthur's own thoughts on the situation
Russia Just Sent out a Message NATO Should Better Listen To
The key paragraph from the latest official Russian naval doctrine is that Putin and his military advisers have sent a clear message that NATO encroachment is unacceptable. To be honest, there is nothing earth shattering in this, The Daily Stirrer and many other alternative media news and analysis sites have been warning for about two years that Obama's foreign policy was making conflict inevitable.
What Putin Wants
China Warns U.S. to Stop Its Ukrainian Proxy War Against Russia
The World Rejects USA Attempt To Manipulate Venezuela
India's Ruling BJP Party Crushed In Regional Poll
Another Conspiracy Theory Becomes Fact: Oil Collapse Is All About Obama's Proxy War With Russia.
G77 Nations vow to destroy petrodollar and America’s New World Order
American Dollar Dumped
Iran's Oil and the US Dollar
Money From Rock Better Than Money From Air
Strange things are happening in the finance markets, very strange. As the FT and Dow Jones main indexes go up and down faster than a whores knickers, commodity prices are behaving weirdly too. Currency Wars
Back to Contents table
If You Look At How Fast Global Trade Is Unravelling, You'll Get Dizzy
Governments constantly make positive noises about the health of their economies although most people who are in work have felt no improvement on the position they were in after the crash of 2008. Wagest are stangnant, employment has reduced somewhat (see below) and while the banks are printing money and the super rich are widening the gap between themselves and ordinary people faster than ever, the real situation is frightening.
The move by governments to eliminate cash as a means of trading goods and services is moving faster than we imagined. With another global financial crisis looming according to financial journalists and investment experts this is as understandable as it is undesirable for us ordinary punters.
Refugee Crisis Or Existential Battle With USA for Europe
It has been clear for some years now that the USA, backed by its main NATO and EU military allies the UK and France (the FUKUS axis has been trying to provoke Russian into firing the shot that will be heard around the world and recognised as the startiung signal for World War Three.
Nothing is ever as it seems to be however, and views from middle east and far eastern journals suggest the USA is also working at destabilizing EU nations in order to force their support in its wars.
Currency war can end global US dollar dominance & those who own gold have power
The world is facing a currency war and the only hedge against the crash of the US dollar is real gold, a precious metal analyst has said in an interview with RT. With geopolitical power shifting from West to East, US dominance may be ending. "But isn't this just one person's opinion?" you might well ask.
In this particular instance it is, but this page has spent enough time over the past few years reporing on the coming currency war, the move by China, Russia and a group of emerging economic powers including India and Brazil, to abandon the US$ as the reserve currency for international trades to convince even the most gung ho American patriots that something is going on that cannot have a good outcome for their country.
A significant sign that the USA is no longer regarded as the ultimate safe haven is the recent rush tp repatriate physical gold from the United States. In the past twleve months nations including Germany, Turkey, France, The Netherlands, South Korea and Japan have been taking their bullion home. The reason is the Cold War is over and despite the Russiagate scaremongering of neocons and the military - industrial complex, countries don’t see Russia as a threat anymore, says Claudio Grass, an independent precious metals advisor and Mises Ambassador.
The world has been living in crisis since 2008, while a currency war started even earlier, Grass said to RT. Central banks have been creating trillions of dollars out of thin air by issuing bonds, while central banks are coordinating the debasing of currencies, he said.
None of the money printing panic measures implemented since 2008 have made a significant difference, and with sovereign debt still growing it is obvious that the systemic problems still exist. The longer economies remain reliant on debt the greater the risks become and the more fragile the global economy is. More than 65 percent of all monetary reserves in the central banking system are held in the world currency reserve, i.e. in USDollar denominated treasury bonds. Therefore, holding physical gold is definitely the best hedge against a crash of any paper currency, and therefore also against a crash of the USD.
The global economy has become boged down in a “Monopoly-Game” system or a legalised Ponzi scheme that is based on debt and financial leverage.
Russia's Gold Hoard Soars As Trust In Dollar As Reserve Currency Diminished
Leaders greet each other at the St. Petersburg Economic Forum
In spite of the presence of many close US allies, including Japanese Prime Minister Shinzo Abe, French President Emmanuel Macron, China’s Vice President Wang Qishan and IMF chief Christine Lagarde, Vladimir Putin dominated Russia's annual economic showcase.
The Russian president in an unusually outspoken performance, expressed concerns over the erosion of trust and the specter of a global crisis brought on by Washington's disruptions. This probably has a lot to do with the recent launch of the long planned Russian / Chinese alternative to the Petrodollar as a medium for cross border trades.
“The free market and fair competition are being squeezed by confiscations, restrictions, sanctions,” Putin said, in a clear referernce to the use of sanctions by the USA to bully smaller nations into accepting Washington's diktat.
“There are various terms but the meaning is the same -- they’ve become an official part of the trade policy of certain countries. The “spiral” of U.S. penalties is targeting “an ever larger number of countries and companies,” undermining “the current world order,” Putin said.
Macron - who seemed more enamored with Putin than the rest, replied: “I fully share your point of view.”
Putin also expressed frustration at lack of contact with US Predident Donald Trump, blaming the investigation into alleged collusion between Trump's campaign and Russia to influence the 2016 U.S. election. "We are hostages to this internal strife in the United States," Putin said. "I hope that it will end some day and the objective need for the development of Russian-American relationships will prevail."
As Bloomberg reports, the panel had its prickly moments. After Putin suggested that Europe depended on the U.S. for its security, and told Macron there was “no need to worry” because Russia would help, the French president shot back:
“I’m not afraid, because France has an army that knows how to protect itself.”
However, the most ominous signs were from Putin himself as he referred to changes to the unipolar order. In his opening statement at the plenary session, Putin said the global economic order is being undermined and that breaking the rules is becoming the rule of the game. The Daily Stirrer has been reporting on the currency wars being waged by Russia, China and Iran against the USA in reponse to increasing US military belligerence.
Coming a only day after Russia's Finance Minister Anton Siluanov said at the St. Petersburg International Economic Forum that settlements in US currency could be dropped by Russia in favor of the euro, the significance of that threat was unequivocal.
"As we see, restrictions imposed by the American partners are of an extraterritorial nature. The possibility of switching from the US dollar to the euro in settlements depends on Europe’s stance toward Washington’s position,” said Siluanov, who is also Russia’s first deputy prime minister.
“If our European partners declare their position unequivocally, we could definitely see a way to use the European common currency for financial settlements, such as payments for goods and services, which today are often subject to restrictions,” Siluanov added, dangling the bait of a possible way to save their beloved single currency in front of Merkel and Macron as the EU confronts new problems in Italy and Spain.
The global economy is facing a threat of a spiraling protectionist measures that can lead to a devastating crisis, Vladimir Putin warned. Nations must find a way to prevent this and establish rules on how the economy should work.
Simply put, Putin concluded:
"US sanctions hurt trust in the US dollar as the world's reserve currency."
All of which appears to confirm many conspiracy-theorist's reasoning for why Russia is stockpiling gold faster than any other nation on earth...
How Russia has piled up the gold - Source: Zero Hedge
Digital Currencies
E U Central Bank Digital Currency Is The Death Rattle Of A Failed Experiment
The announcement from the European Central Bank (ECB) that is is to intrduce an official European Union digital currency spells the end of the European Single Currency experiment and with it the ambition of "ever closer union until the EU's member states were merged into a single political entity Digital Currencies might not quite be Ponzi schemes but on appearances the difference can be compared to that between a horse and a pony.
Thus, with the announcement all trust in the EU's financial integrity has been erased, and with the single currency, The Euro - € - no longer credible, neither is anything else. The European Union is fragmenting as a political entity and the cracks papered over for the past decade by the single currency papered have become clearly visible. Since it has effectively usurped member states monetary sovereignty by tying the southern and eastern European basket case nations to the German economic powerhouse (which is itself feeling the strain of propping up so many insolvent national economies,) the EU has hamstrung member states and subsequently impoverished the majority of EU citizens.
The only parties who have benefited are the pointy shoes in Brussels who have used the subsequent bankruptcy of member states as a leverage tool over their own political agendas. While it was only small, economically weak nations like Greece, Portugal, Ireland and Cyprus that were feeling the pain Brussels could get away with its sacrificing national prosperity to its political ambitions, but with several of the big population nations, Italy, Spain and Poland also dependent on German fiancial support delivered via Brussels, and France teetering on the brink of similar economic chaos, the Union's economic crisis is spiralling out of control.
This is why the ECBs lending to member states has been so strong. It isn’t because they are being virtuous but rather because the Bastards of Brussels are using disaster capitalism. Bankrupt the buggers, lend them money you know they can’t pay back, and then use that indebtedness to force through your own political agendas. At the time of writing Italy, Spain, Greece, Portugal, Belgium and Sweden are governed by minority coalitions shoehorned intp power by the European Commission, the committee of unelected bureaucrats that effectively rules the EU.
Now that the entire craptabgle of collective insanity insanity is coming to a head (pension funds are dry and ECB now being forced to buy sovereign debt issuance) they are desperately trying to champion a “reinvention” of the Single Monetary System in the firm of a digital currency. The founders of Bitcoin are not crapping themselves.
Some of the EU's desperation stems from the European economy, if there is such a thing, being more broke than an alkie living in a cardboard box and another part is the rapidly rising cost of living. Inflation is always underreported by central banks because admitting that your purchasing power is being eroded erodes confidence, and it is confidence that the entire ball of wax rests on.
Rising cost, and the consequence of reduced purchasing power for peoples' earnings and savings is going to be impossible to hide. The inflation is already affecting the lifestyles of EU citizens, this is what triggered they year long |Gilerts Jaunes protests in France through 2017 and 2018. Inflation is the cruellist form of stealth tax, it reduces the value of government debts while destroying the assets people have laboured for years to build.
The ECBs answer comes in the form of CBDCs: central bank digital currencies. How anybody can think gimmicks like this will change any of the underlying issues or problems is a complete mystery. More likely the introduction of CBDCs will make matters worse if only because CBDCs will make “money laundering” harder. This may sound like condoning crimes like drug smuggling, gun running and people trafficking and all those things can happen but there are legitimate tax avoidance techniques that involve moving money around just ahead of tax dealines, jut ask Microsoft, Google, Amazon, Facebook and any hedge fund operator. The upside of this is keeping money out of the clutches of governments means it can get put to productive use instead of being squandered on virtue signalling and vanity projects.
So CBDCs will, if anything, simply cause the monetary system to collapse faster. Alternatively they will just be a huge, embarrassing flop because the whole point of digital currencies like Bitcoin and Etherium is that they are not controlled by government. CBDCs would allow the government to direct your actions like a puppet with taxation being direct debits to your account with the CB. What would be the point of hiding money from the taxman in a system the taxman is part of?
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Negative Interest Rates - Final Nail In The Coffin Of Neoliberalism? Negative interest rates, in plain terms a situation in which we pay bankers for holding our money, are the latest ruse of politicians and economists to make uis start spending our investments and savings, thus kickstarting the global economy thy have screwed up.
The age of financial privacy is over
Yes you read that right. The fascist regime in the USA has usurped to itself the right to raid bank accoutns anywhere is the world. At the moment they are only stealing money by way of tax demands from people who were born on US soil even if those people have not lived in the USA since childhood and have never be employed by a US business.
Plans to let the taxman take cash out of people’s bank accounts without their permission were condemned by MPs after Rebecca Benneyworth, of the Institute of Chartered Accountants, warned the department is ‘shooting itself in the foot.’ She told the ICAEW conference : ‘Public trust in HMRC would be eroded very quickly if cases come to light where funds have been incorrectly removed. ‘HMRC cannot afford to have public opinion turn against the tax system and those charged with administering it.’Accountants have warned HMRC cannot be trusted ...
Taxes Will Rise If Government Do Not Raid Bank Accounts Taxes will have to rise unless officials are given new powers to raid people’s bank accounts, David Cameron has said.
The Treasury select committee warned that allowing HM Revenue and Customs to remove cash from bank accounts without court orders is “very concerning” because of its history of mistakes.
The committee said that taxpayers could suffer “serious detriment” if officials are able, either by mistake or through an “abuse” of power, to take money from people who have done no wrong.
A look at how the fractional reserve banking system works and how it brought the global economy and many people's personal finances close to collapse. It's really all about pulling magic money out of fresh air.
Investors Ignore Triple Dip Regession As Stock Market Hits Four Year High
News that the British economy was staring an unprecedented triple dip recession in the face left investors unperturbed yesterday as shares on Britain's leading index hit their highest point in since the crash four-and-a-half years ago.
Tax The Rich, Hurt The Poor
The Folly Of Using Inflation To Reduce The Debt
As the Obama administration starts to seriously consider minting Trillion dollar coins to reduce debt by fuelling massive inflkation the Daily Stirrer's finance expert explain why this would not work and would have catastrophic consequences.
A Dickensian Christmas Gift: Mister Micawber's Economic Wisdom
Anti Austerity Protests Bring European Capitals To A Standstill
Angry protests have left many European capitals in chaos as millions of workers joined strikes against austerity measures they claim have made their national economies worse. Trade unions in Spain, Greece, Portugal and Italy staged a series of demonstrations throughout the continent on the ...
Government Powerless Against a New Wave Of Immigration
The government is powerless to stop tens of thousands new migrants heading to Britain after a new EU borders shake-up, Theresa May has admitted. The Home Secretary yesterday warned the Government is legally unable to block Romanian and Bulgarian citizens from coming to the UK under an expansion of ...
Poverty tycoons who make themselves millionaires from taxpayer-funded foreign aid budgetIn responce to questions about Britin's overseas aid budget,David Cameron has said at the United Nations that rather than cutting aid to developing nations in these austere times UK taxpayers should be happy it is being increased. Meanwhile with her own millions safely tied up in trusts Hillary Clinton demands global wealth taxes to raise money for helping the disadvantaged.
The Folly Of Trying To Inflate Away Debt
Feeding The Monster
The loopy left in Britain and the USA have, throughout the cedit crunch, chanted their Tax The Rich mantra. Those who do not learn from history are condemned to repeat it of course and the left have still not learned from all the other economic catastrophes caused by attempts to redistribute wealth that taxing the rich huts the poor most.
Despite the ever growing dunghill of evidence to the contrary lefty politicians around the world continue to call for higher taxes, more government spending and collectivist solutions while the clueless Obama administration embark on another futile round of "quantitative easing. What they are trying to do is inflate away debt but inflation is the curellist stealth tax. (Also posted at Scribd)
As the debt crisis grinds on and the creit crunch mutates into the credit famine the clueless politicians and even more clueless economists and academics who advise them can only think of one course of action. That is to inflate away their debt problem by devaluing currency to the extent at whic a bag of potatoes or wheat grain costs $£€ 1 trillion. Inflation is the cruellest tax, destroying the savings and pensions of sensible people and rewarding irresponsibility.
As Spain's economy nears collapse and economists call for Europe's taxpayers to stump up still more money for a bigger bailout fund to save bankrupt nations, The Daily Stirrer economic expert under his new nom de plume explains why efforts to save the Euro are throwing good money after bad.
[Daily Stirrer] ... [Boggart Aboad] ... [ Greenteeth Home ] ... [ Medium.com ]
Dedollarisation contagion: Germany Calls For Global Payment System Independent Of US
In what can only been seen as a vote of "no confidence" in the US dollar as global reserve currency, which effectively gives the US a monopoly over global trade settlements infrastructure, Germans foreign minister Heiko Maas yesterday called for the creation of a new payments system independent of the US that would allow Brussels to be independent in its financial operations from Washington and as a means of rescuing the nuclear deal between Iran and the west.
Maas may have stopped short of openly supporting the Russia / China bid to replace the US dollar, but and independent European settlements system would have to exclude the dollar in trades between European nations and the BRICS bloc.
The German daily Handelsblatt reported that Maas said "Europe should not allow the US to act over our heads and at our expense. For that reason it’s essential that we strengthen European autonomy by establishing payment channels that are independent of the US, creating a European Monetary Fund and building up an independent Swift system," he wrote, cited by the FT.
Maas who has made clear his opposition to the US use of sanctions to maintain its stranglehold on world trade, said it was vital for Europe to stick with the Iran deal. "Every day the agreement continues to exist is better than the highly explosive crisis that otherwise threatens the Middle East," he said. The unspoken subtext was clear: Europe is no longer willing to be a vassal state to US monopoly over global payments, and will now aggressively develop its own payments network that is not subservient to Washington's every whim.
German foreign minister Heiko Maas (Picture: Zero Hedge )
Belgium based Swift, global payment network owned by a consortium of banks, enables financial institutions worldwide to send and receive information about financial transactions. Swift is supposedly politically neutral and independent but it has been used to block transactions and enforce US sanctions against various countries, most notably Iran.
In 2012, the Danish newspaper Berlingske wrote that US authorities seized money being transferred from a Danish businessman to a German bank via the system for a batch of US-sanctioned Cuban cigars. The transaction was made in US dollars, which allowed Washington to block it although the USA has no legal or moral right to stop sovereign nations trading with any country they want to.
Thorsten Benner, director of the Global Public Policy Institute, a Berlin-based think-tank supported Maas’s, saying his intervention was the “strongest call yet for EU financial and monetary autonomy vis-à-vis US."
The German foreign minister’s words emphasise the dilemma facing European politicians as they struggle to maintain trade relations with Iran while coping with the fallout of US sanctions imposed by the US against companies doing business with Tehran. As the FT adds, the EU is determined protect European businesses from retaliation by Washington for trading with Iran, but has failed to convince EU companies more concerned about maintaining their access to the lucrative US market than in the more modest opportunities presented by Iran.
Last month Washington rebuffed a high-level European plea to exempt crucial industries from sanctions. Mike Pompeo, US secretary of state, and Steven Mnuchin, Treasury secretary, formally rejected an appeal for carve-outs in finance, energy and healthcare made by ministers from Germany, France, the UK and the EU.
Swift will also be affected. Unless it wins an exemption from sanctions, which is unlikely, it will be required by the US to cut off certain Iranian banks from its network by early November or face possible countermeasures against both its board members and the financial institutions that employ them.
Maas’s stark warning against US domination of global payments comes with relations between Germany and the US in their worst state for decades. Mr Trump has chastised Berlin over its large surplus in bilateral trade with the USA, its relatively low military spending and its support for Nord Stream 2, a new gas pipeline that will bring Russian gas directly to Germany.
In Major Blow to US, Pakistan Prepares to Abandon Dollar for Trade With China
from The Anti Media
Pakistan is the latest country to jump on the anti-U.S. dollar bandwagon, Reuters reports. Pakistan is considering a proposal to replace the U.S. dollar with the Chinese yuan for bilateral trade between Pakistan and China.
Between 2015 and 2016, bilateral trade between the two countries totaled $13.8 billion.
According to Reuters, Pakistan’s Interior Minister, Ahsan Iqbal, who has been doing a lot of work in planning and implementing China-Pakistan economic ties, was reportedly discussing this recent proposal after unveiling a long-term economic development cooperation plan between the two nations.
Much in the same way that Syria is Russia’s roadmap to the Middle East, Pakistan is but just one of China’s pathways into the region and beyond. In the middle of this year, it was reported that China is considering its own military bases in the Islamic nation and just recently granted hundreds of millions of dollars in aid to Pakistan, as well.
According to Reuters, China has already committed to invest $57 billion in Pakistan to finance the China Pakistan Economic Corridor (CPEC) as part of Beijing’s overall Silk Road initiative, which will create land and maritime trade routes across more than 60 countries in Asia, Europe, and Africa.
The development will rattle China’s counterparts in Washington. Iran is already trading oil with China in return for Chinese yuan, and Qatar has conducted billions of dollars’ worth of transactions in yuan, as well. Just this year, as a means of bypassing U.S.-led sanctions, a Chinese state-owned investment firm reportedly provided a $10 billion credit line to Iranian banks, which will specifically use yuan and euros — not the U.S. dollar.
Venezuela, a country that sits on the world’s largest oil reserves, also recently announced it had abandoned the U.S. dollar in response to American-imposed sanctions. It has now begun publishing its oil prices in — wait for it — yuan.
The list goes on. According to Carl Weinberg, chief economist and managing director at High-Frequency Economics, China is in the process of trying to “compel” Saudi Arabia to also trade oil in Chinese yuan.
“I believe that yuan pricing of oil is coming and as soon as the Saudis move to accept it — as the Chinese will compel them to do — then the rest of the oil market will move along with them,” Weinberg stated, as quoted by CNBC.
Not to mention that China has also begun launching a crude oil futures contract priced in Chinese yuan that will be completely convertible into gold. As the Nikkei Asian Review reported, analysts have referred to this move as a “game-changer” for the oil industry.
On top of all this, China has just successfully completed its fifth round of testing yuan-backed oil futures with speculation that the futures are to start over the Christmas period. There is only one final hurdle to attain: China’s State Council’s approval.
“Oil futures in Shanghai would be a very, very interesting product and I can’t wait for them,” Yuan Quwei, a speculator helping to pump trillions of yuan into the country’s commodities bourses, told Bloomberg. “An official launch during Christmas would be appropriate. The western market would be quiet and allow the Shanghai exchange as well as Chinese investors to adjust in the early days.”
Chinese Silk Road Plan Will Impact Western Trade
The Chinese Belt and Road Initiative (BRI), part of China's bid to revive the old Silk Road east - west trade route, intends that by lending out money using an new reserve currency instead of the US dollar, to open up huge opportunities for investment and the strategic transformation of the south east Asia region.
The facilitation of easy trading systems by the BRI, led by China, Russia and Iran, aims to create different transit routes for movement of goods between east and west as well as boosting economic development along the new Chinese 'Silk Road'. Naturally Chinese banks and investors interested in creating infrastructure or developing potential industrial poles in the countries involved in this grand Chinese initiative will be among the main beneficiaries if the plan succeeds.
Hong Qi, president of China Minsheng Bank, recently told an economic forum in Beijing that BRI potentially opens the way for about $10 trillion worth of investments in infrastructure in the countries that are part of the system, in areas railways, urban development, logistics and cross-border e-commerce.
At the time of writing,more than $10 billion has already been committed in projects planned by companies already operating in over thirty countries and regions along the BRI. These projects will be financed through the banks of China’s public and private sectors. According to data from the China Banking Regulatory Commission, a total of nine Chinese banks are involved in the financing of projects, with 62 branches having been opened in 26 countries. A further $10 billion could come from European countries as a result of investments stemming from the China-CEEC forum.
Despite delays in the development of such projects, analysts believe that the BRI is the ideal ground for making regional cross border trade agreements based use of national currencies and cutting out the US dolar (oaka Petrodollar,) Such agreements would create the possibility of closer economic ties within the the region. Thus, not only are public and private banks involved in investments but the Asian Investment Infrastructure Bank (AIIB) and the Silk Road Fund are also part of the financial package that should lay the foundation for the accelerated development of the Chinese BRI. Confirming a new approach to the development of the BRI, Chinese investors during the first ten months of 2017 proposed projects totalling $11 billion in the 53 countries involved.
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Russia-China return to gold standard means end of US dollar dominance
The BRICS counties are considering starting an internal gold trading platform, according to Russian officials. When this happens, the global economy will be significantly reshaped, and the West will lose its dominance, predicts a precious metals expert.
In 2016, 24,338 tons of physical gold were traded, which was 43 percent more than in 2015, according to Claudio Grass, of Precious Metal Advisory Switzerland.
Gold moving from the West to the East
“We have to put the BRICS initiative into a broader context. It is just part of a geopolitical tectonic shift which started decades ago. We have seen a constant outflow of physical gold from the West to the East. At the same time, the West has lost the economic war, and as a consequence, the focus now turns to the financial system. China dominates the world economy and has displaced the US as the world’s most formidable economic powerhouse,” he told RT.
The creation of a new gold standard by BRICS is also a step to end the US dollar’s domination of the global economy
“As Bejing and Moscow understand that America used the dollar to control the world, by implementing a new kind of ‘Gold standard 2.0’ they want to distance themselves from this control. Furthermore, the vast majority of the people in Asia sees gold as superior, or ‘real’ money, something the West has forgotten, because of all the paper wealth (credit) they have accumulated,” said Grass.
The expert notes the BRICS countries account for 40 percent of the world’s population and around 23 percent of the world’s domestic product.
"In combination with the announcement of pricing oil in yuan, using a gold-backed futures contract in Shanghai, the establishment of the Asian Infrastructure Investment Bank and the New Development Bank, China is setting up an alternative to the post-Bretton Woods establishment. This is certainly a game changer,” said Grass.
Physically backed precious metals market spells the end of paper gold trade
The level of trust between BRICS countries can help them establish intragroup gold trading, which would be 100 percent physically backed.
“This will present a viable challenger that could over time lead to a break up of the current system since the West will likely still trade paper gold in the meantime,” Grass said.
According to London gold clearing statistics for 2016, the total trading volume in the London Over-the-Counter (OTC) gold market is estimated at the equivalent of 1.5 million tons of gold. The volume of 100oz gold futures on New York's COMEX reached 57.5 million contracts during 2016 or 179,000 tonnes of gold, the analyst notes.
The amount of mined gold is much smaller
“If we now take into consideration that only approximately 180,000 tons of gold have actually been mined up to today the scam is just gigantic and obviously unsustainable. The paper scams in London and New York will either blow up when the paper price of gold drops to zero or when just a fraction of investors insists upon receiving physical gold in return,” Grass said.
The expert believes that with paper gold trading, the established gold exchanges could cease to exist sooner or later.
“They will likely become obsolete and lose their importance over time. Although one cannot predict exactly how fast this will happen, the trend is clear: OTC and COMEX are working toward their own destruction,” he said.
The analyst recollected the Heartland Theory of Halford Mackinder, a British geostrategist at the beginning of the 20th century who influenced the likes of Kissinger and Brzezinski. Following the theory, we will soon face a war between physical gold and the US dollar.
Does It matter If The Dollar Is Replaced?
by Phil T Looker
The theme of this omnibus page is that the US dollar is progressively being replaced as the global reserve currency. For many years the dollar has been the currency in which the world's nations settled cross-border transactions and the so called petrodollar became the only currency in which oil could be traded. In recent years however, as other nations, particularly the BRICS group, Brazil, Russia, India, China and South Africa, the leading nations outside the dominant US / European group, have been making moves to end the domination of the US dollar and with it the economic supremacy of the USA.
The Washington government has only itself to blame for this, enabled by the need of other nations to acquire dollars in order to buy in work markets, the USA was able to dictate prices it would pay for imports. And the not-so-clever Harvard economics and political science professors advised politicians to exploit that position ruthlessly. Eventually the world started to become pissed off with America's bullying and with the US military's habit of bombing small, third world nations that resisted the American diktat.
Led by Russia with its vast natural resources and China with its vast labour force which gives it the ability to keep wages low and undercut other exporting nations, and facilitated by modern technology which makes trades between different currency zones simple, the world began to abandon the Dollar.
Dear old Saddam Hussein started it back in 1999 or around then, when he decreed that Iraq would accept Euros, UK Pounds, Russian Roubles, Chinese yuan or Japanese Yen and ther currencies in payment for Iraq's oil (So a decade after his death, the old tyrant may still win his war with America). A few years elapsed, as relations between the USA and the Russian - Chinese alliance deteriorated. About three years ago The Daily Stirrer picked up on the fact that something was happening.
And now it seems the rest of the world is catching on too. From a British point of view, we do not agree with the author of the embedded article, abandonment of the US Dollar worldwide, accompanied by a UK divorce from the EU and rebuilding of British Commonwealth trade links could only benefit the people of the UK. London is the financial capital of the world (in spite of what they guys on wall Street would like to think) and the centre where currencies are traded. Our sycophantic politicians would never admit it as all their blether about 'the special relationship' shows, but America is only a fair weather friend to the UK, they invoke the special relationship when in need of British support to legitimise their wars, but will be quite ruthless in stabbing British interests in the back when it suits them.
The Threat to the Dollar as the World’s Premier Reserve Currency …but does it really matter?
(Reproduced under creative Commons licence)
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Economic Collapse and End Of Dollar Hegemony
Authored by Federico Pieraccini via The Strategic Culture Foundation,
In the previous article I explained why bitcoin should be considered a reaction to US dollar hegemony and how other nations and central banks are facing the crisis of the dollar brought on by de-dollarization. In this article I will go into how we came to this point and what mechanisms helped to bring about a debt-based society. In the third and last article we will examine the nature of the future geopolitical and geo-financial transition as well as the signals we need look out for in the immediate future.
From Gold to Paper
To understand what is happening today we must look back to simpler times, back when people bartered with each other. The utility and availability of commodities determined their value. Gold in particular represented a finite good that was difficult to find and was useful in various fields. For this reason gold has always been considered the highest example of a valuable good, together with diamonds, platinum, silver and other elements that are difficult to find but have a common or daily use. For example, the importance of utility transformed uranium, an otherwise worthless element, into a valuable commodity following the discovery of atomic energy. Returning to gold, one can understand how in the era of barter, gold was the reference element with which to price the value of everything. Little by little, gold was joined by silver and then bronze in simplifying the exchange of goods and increasing convenience of use.
Gold had its own intrinsic value and was valid in every empire around the world; the same with silver and bronze. Gold had become not only a means of exchange and a measure of value but also a reservoir of value to be bequeathed to heirs. Above all it was a means of payment. When silver coins began to become scarce, payment with currency printed on leather was introduced. However, they were often refused due to lacking the basic principles that gave gold, silver and bronze their measure and reservoir of value. The skin of this currency could wear out, and though it was a means of payment, it was not as solid and trustworthy as precious metals.
The real revolution began in the 1700s when the French central bank began to take gold bars from its citizens in exchange for pieces of paper with the corresponding value written on it. This change would have enormous repercussions on the world economy over the next 300 years. READ MORE >>>
Suddenly People Are Taking The De- Dolarization Threat Seriously
We have reported extensively on moves by the U.S.A's main geopolitical rivals to deprive the US dollar (Petrodollar) of its status as the global reserve currency. We have told you how China, Russia, Iran and India have cut deals with each other and other nations in which they agree to use each others’ currencies for bi-lateral trade (usually payment is in the currency of the vendor's host nation) while The European Union designed the Euro specifically to be a rival reserve currency and international medium of exchange to the US dollar.
Read more on this story
The Death Of Petrodollars & The Coming Renaissance Of Macro Investing
As well as the concerted effort led by China, Russia and Iran to replace the Petrodollar as the global currency, its status is also being undermined by the shift of financial activity to digital technology and changes in the geopolitical balance. What comes next is all too easy to predict ...
In the summer of 1974, Treasury Secretary William Simon traveled to Saudi Arabia and secretly struck a momentous deal with the kingdom. The U.S. agreed to purchase oil from Saudi Arabia, provide weapons, and in essence guarantee the preservation of Saudi oil wells, the monarchy, and the sovereignty of the kingdom. In return, the kingdom agreed to invest the dollar proceeds of its oil sales in U.S. Treasuries, basically financing America’s future federal expenditures.
Soon, other members of the Organization of Petroleum Exporting Countries followed suit, and the U.S. dollar became the standard by which oil was to be traded internationally. For Saudi Arabia, the deal made perfect sense, not only by protecting the regime but also by providing a safe, liquid market in which to invest its enormous oil-sale proceeds, known as petrodollars. The U.S. benefited, as well, by neutralizing oil as an economic weapon. The agreement enabled the U.S. to print dollars with little adverse effect on interest rates, thereby facilitating consistent U.S. economic growth over the subsequent decades.
An important consequence was that oil-importing nations would be required to hold large amounts of U.S. dollars in reserve in order to purchase oil, underpinning dollar demand. This essentially guaranteed a strong dollar and low U.S. interest rates for a generation.
Given this backdrop, one can better understand many subsequent U.S. foreign-policy moves involving the Middle East and other oil-producing regions.
Recent developments in technology and geopolitics have already kicked off a process to end the era of dollar dominance. This can only have a major impact on global financial markets. The 40-years of stability this system has guaranteed is being dismantled, and that is due in part to the exponential growth of technology which makes cross border trades relitively simple to conclude in the currency of the vendor's nation. Moreover, the current system no longer is in the best interests of the major players in the global oil trade. Developments such as these have begun to exert influence on financial markets and will only grow over time. The upheaval of the petrodollar recycling system will trigger a major change in the way nations with large economies trade with each other.
Technology is also affecting the energy production industry dramatically, and this impact is also growing. Although power generatede by wind and solar farms has proved disappointing, other technologies such as tidal and run-of-river schemes are showing more promise and new ways of extracting fossil fuels, while not living up to scientists' claims are having a significant on supply and prices. The pattern-seeking human mind is built for an observable linear universe, but has cognitive difficulty recognizing and understanding the impact of exponential growth. Albert Einstein is rumored to have described compound interest (another form of exponential growth) as the most powerful force in the universe.
The growth of oil production from new technologies such as hydraulic fracturing (fracking) and horizontal drilling has both reduced U.S. oil imports and led to lower global oil prices. With the U.S. economy more self-reliant for its oil consumption, reduced purchases of foreign oil have led to a drop in the revenues of oil-producing nations and by extension, lower international demand for Treasuries and U.S. dollars. China, now the world’s largest importer of oil, and with ambitions to overtake the USA as the most powerful economy, is no longer comfortable purchasing oil in a currency over which it has no control, and has taken steps that allow it to circumvent the use of the U.S. dollar:
China has signed an agreement with Russia to purchase Russian oil and natural gas in yuan. Iran, India, Turkey and a number of other nations have now added their names to the agreement. As an example of China’s newfound power to influence oil exporters, China has persuaded Angola (the second-largest oil supplier to China) to accept the yuan as legal tender, another move by Beijing to speed up internationalization of the yuan. The incredible growth rates of the Chinese economy and its thirst for oil have given it tremendous negotiating power and will lead other countries to cater to China’s needs at the expense of their historical client, the U.S.
China will launch an oil exchange by the end of the year (Russia has already opened one) where oil trades will be settled in yuan. Note that in conjunction with the existing Shanghai Gold Exchange, also denominated in yuan, any country will now be able to trade and hedge oil, circumventing Petrodollar transactions, with the flexibility to take payment in yuan or gold, or exchange gold into any global currency.
As China further forges relationships through its One Belt, One Road initiative, it will pull other exporters into its orbit to secure reliable supplies from multiple sources, while pressuring the terms of the trade to exclude the U.S. dollar.
The world’s second-largest oil exporter, Russia, is currently under sanctions imposed by the U.S. and European Union (though some EU nations are circumventing this by buying Russian oil through internediaries,) and has made clear moves toward cutting the dollar out of oil and international trade. In addition to agreeing to sell oil and natural gas to China in exchange for yuan, Russia recently announced that all financial transactions conducted in Russian seaports will now be made in rubles, replacing dollars. Clearly, there is a concerted effort from the East to reset the economic world order.
Meanwhile in the USA, THE FEDERAL RESERVE is now in the beginning stages of a shift toward "normalization," which will lead to a reduction of "quantitative easing" (buying US government bonds,) for the U.S. Treasury market. The Fed’s total assets stand at approximately $4.5 trillion, or five times what they were prior to the financial crisis of 2008-09. The goal of the Fed is to “unwind” this enormous balance sheet with minimal market disruption. This is like performing a high-wire act a thousand feet in the air without a safety net. Additionally, at some not-so-distant future date, the U.S. will need to finance enormous and growing entitlement programs, and historical international sources for that financing will no longer be willing to support that endeavor by holding up the price of US bonds.
Market participants could theoretically accept such a de facto devaluation but it is unlikely the banks would tolerate it for long. The accumulation of many small losses in a low-volatility and generally trendless market has robbed them of confidence and the psychological balance to embrace any new model offering unknown consequences. They are frozen with fear that the lower-yield profile of recent years could become permanent in a brave new world .
U.S.A. Threatens To Cut Off China From The US Dollar If They Do Not Uphold Sanctions On North Koreas
The government of the USA has threatend to impose economic sanctions on China if The People's Republic does not adopt the new sanctions imposed against North Korea, the US Treasury Secretary has warned. Steven Mnuchin said that among the actions being considered was a move to cut off Beijing’s access to the US financial system. This seems particularly self defeating even by usual Washington foreign policy standards, China, Russia and Iran have been working for several years to separate themselves from the US dollar (The Petrodollar) and set up an alternative reserve currency for global trade, as has been reported many times in this page and elsewhere on our site.
"Economic warfare against North Korea economic works," Mnuchin said Tuesday at the Delivering Alpha Conference in New York City. "We sent a message that anybody who wanted to trade with North Korea – we would consider them not trading with us." We wonder what planet this Munchkin lives on. The USA has been levying economic sanctions on North Korea for sixty five years, and the communist regime in Pyongyang is still in place and still as defiant as ever.
The Treasury Secretary was not alone in uttering risible threas however, his statement echoed the words of the US envoy to the UN, Nikki Haley, calling the fresh round of sanctions against Pyongyang "historic." Munchkin Mnuchin added "if China doesn’t follow these sanctions, we will put additional sanctions on them and prevent them from accessing the US and international dollar system."
The USA might find that not only difficult to implement, but more harmful to the US and its allies than to China, just as the sanctions on Russia have harmed the economies of EU nations more that Russia's debt free economy. Washington has until now been reluctant to impose economic sanctions on China over fears of possible retaliatory measures from Beijing and the potentially catastrophic consequences for the global economy.
Washington runs a $350 billion yearly trade deficit with China which also holds $1 trillion in US debt. This amounts to an astonishing 28 percent of US Treasury bills, notes and bonds held by foreign governments. The US State Department however, seems more interested in putting pressure on Beijing and other countries trading with Pyongyang as they demand a "supercharged" response to North Korea’s nuclear tests, including imposing sanctions on companies from China and any other country doing business in North Korea. If the U.S.A. tried throwing its weight around as it has will many small countries in the past, it may find itself up against an adversary with just as much weight to throw around.
"I believe the response from the United States and our allies should be supercharged," said Ed Royce, chairman of the House of Representatives Foreign Affairs Committee during a hearing Tuesday, "We need to use every ounce of leverage [...] to put maximum pressure on this rogue regime," he said. Royce also called on Washington to target major Chinese banks, including the Agricultural Bank of China and the China Merchants Bank for dealing with Pyongyang.
He also said China was apparently reluctant to follow through on the sanctions adopted by the UN Security Council (UNSC) against the North. "It’s been a long, long time of waiting for China to comply with the sanctions that we pass and, frankly, with the sanctions that the United Nations passed," he said.
The committee chair went on to say the US could give Chinese banks and companies "a choice between doing business with North Korea or the United States." He added that the US should also "go after banks and companies in other countries that do business with North Korea the same way." We believe that back doors for trade with North Korea were already in place before Russia and China agreed to withhold their veto when the latest sanctions were voted through by the ~United Nations security council.
Russia To Cut Dependence On U.S. Dollar, Payment Systems
Russia will speed up its project to reduce dependence on the dollar and U.S. international payment systems, and intensify efforts to persuade trading neations to settle cross border transactions in the currency of the vendor nation in response to U.S. sanctions, Deputy Foreign Minister Sergei Ryabkov said on Monday.
Reuters report that Ryabkov said that "we will of course intensify work related to import substitution, reduction of dependence on U.S. payment systems, on the dollar as a settling currency and so on. It is becoming a vital need." The reason for that is that "the US is using its dominating role in the monetary and financial system to impose pressure on foreign business, including Russian companies."
While the world's mainstrewam media has been focused on Syria, Ukraine, Yemen and other trouble spots, the currency war has been simmering on the back burner for almost a decade. Three years ago the MasterCard payment system stopped serving clients of seven Russian banks without warning after Washington imposed its first set of sanctions on Moscow in 2014. In response, the Russian government ordered the creation of a national payment system. With the support of the country's banking system, China and Iran the Brics bloc created new systems for international trade and the Mir charge card was introduced in 2015, although there is no information on what its adoption rate has been in the following years.
As Zero Hedge reported late last month, part of the latest Russian sanctions imposed by the USA are restrictions on the Russian banking and energy sectors: these target Russian firms already hit by earlier rounds of santions, limiting the financing period for them to 14 and 60 days. The new law will also punish individuals for investing more than $5 million a year or $1 million at a time in Russian energy export pipeline projects or providing such enterprises with services, technology or information support, a provision that has drawn strong condemnation from Washington's European allies.
It will be interesting to discover just how the US government intends to enforce these sanctions on non - US businesses and individual foreign nations. The neo - liberals and neo - cons in Washington might cling to a deluded belief that they are still the most powerful nation militarily, but to start trying to impose US laws on transactions conducted between sovereign nations is surely an overreach too far and will not be tolerated.
US energy companies have criticized the tightening of already existing sanctions as damaging for business and the German government has protested strongly that the US action will hit EU nations hard but have little effect on Russia. At the same time, the European Union expressed concerns the new penalties may undermine the bloc’s energy security. European Commission president Jean-Claude Juncker pledged to prepare an "adequate" response and "within days" if the measure hurt the interests of European companies. So far Europe has to elaborate on what, if any, retaliation to the sanctions it will unveil.
The joint bid by Russia, China and Iran to create an alternative to the US dollar (Petrodollar) as the reserve currency, and to eventually replace it is reported throughout this page, go back to our active CONTENTS list to browse the article. Or read other articles on the CURRENCY WARS:
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Russia & China Declare All Out War on US Petrodollar
When Donald Trump defeated Hillary Clinton ("Crooked Hillary") in the 2016 US Presidential Election, the world hoped he would at least attempt to keep his campaign promised and abandon the "perpetual war" foreign policy of his predecessors Barack Hussein Obama and George W Bush (though realists were not betting much money on it actually happening. Six months into his presidency Trump seems to be just as totally in thrall to the Washington War Party and The Deep State as Obmaa, who promised to be the peacemaker and joybringer of the twenty first century, but became the first president to serve two full terms without a single day on which the USA was not at war.
It is only due to the restraint of Russia and China in the face of contstant provocation by the USA and NATO that we are not already in (or indeed out of at the wrong end) a global conflict. Had Hillary Clinton won the presidency, one of her campaign pledges, to directly attack Syria and depose the Assad regime (an ally of Russia and China, the ensuing conflict would probably have destroyed most of what is left of European civilisation by now.
But while Washington has been huffing and puffing, Russia and China have been waging a more subtle kind of war, with the aim of replacing the US dollar (the petrodollar) as the global reserve currency. And it looks as though they are winning. The death of the petrodollar could be imminent which would drastically reduce America’s ability to wage war with other people’s money or protect its business sector from competition.
We have reported the moves to create a trading system in which cross border trades are settled in the national currency of the vendor, and the establishment of global investment banks by both Russia and China. Now the formation of a BRICS gold marketplace, which could easily bypass the U.S. Petrodollar in bilateral trade, continues to take shape as Russia’s largest bank, state-owned Sberbank, announced this week that its Swiss subsidiary has started trading in gold on the Shanghai Gold Exchange.
Russian and Chinese officials have repeatedly signalled that they plan to create a system with China and Iran using 'paper' gold as a means of nullifying the dollar's influence in bilateral trade between economically and politically powerful nations. We reported in 2015 that a number of influential nations and the EU, the world's largest trading bloc had signed up to the system. This latest movement is quite simply the manifestation of a larger game being played out between the great powers.
According to Reuters:Sberbank was granted international membership of the Shanghai exchange in September last year and in July completed a pilot transaction with 200 kg of gold kilobars sold to local financial institutions, the bank said.
Sberbank plans to expand its presence on the Chinese precious metals market and anticipates total delivery of 5-6 tonnes of gold to China in the remaining months of 2017.
Gold bars will be delivered directly to the official importers in China as well as through the exchange, Sberbank said.
Russia’s second-largest bank VTB is also a member of the Shanghai Gold Exchange.
A transformation of the entire global monetary system is in progress, driven by the decline of the west where self destructive politically correct thinking and corporate greed dominates foreign and economic policy, and the economic ambitions of Russia, China, Iran, and India, Brazil and other emerging economies. The implications of these changes should worry U.S. policy makers because the relationship between the USA and the two regional powers in the Middle East, Israel and Saudi Arabia which for nearly the past half century has been underpinned by the monopoly of the petrodollar in world trade, particularly in oil, the worlds most traded commodity. Now the petrodollar is being attacked while saudi Arabia has been destabilised by increasingly extremist Wahhabi Muslim rulers.
The dollar was established as the global reserve currency in 1944 with the Bretton Woods agreement, commonly referred to as the gold standard. The U.S. leveraged itself into this power position by holding the largest reserve of gold in the world. The dollar was pegged at $35 an ounce — and freely exchangeable into gold.
By the 1960s, a surplus of U.S. dollars caused by foreign aid, military spending, and foreign investment threatened this system, as the U.S. did not have enough gold to cover the volume of dollars in worldwide circulation at the rate of $35 per ounce; as a result, the dollar was overvalued.
When America finally abandoned the gold standard in 1971, the dollar became a pure fiat currency (decoupled from any physical store of value), until the petrodollar agreement was concluded by President Nixon in 1973. The quid pro quo was that Saudi Arabia would denominate all oil trades in U.S. dollars, and in return, the U.S. would agree to sell Saudi Arabia military hardware and guarantee the defense of the Kingdom, which gave the medieval Kingdom military dominance over all the middle east except for Israel. At the time US military hardware held an enormous technological advantage over anything Russia and China had. More recently military analyists have warned that while the USA has been obsessing over the 'rights' of gay and transgender soldiers, both rival powers have surpassed them.
A report by the Centre for Research on Globalalization clarifies the implications of these most recent moves by the Russians and the Chinese in an ongoing drive to replace the US petrodollar as the global reserve currency.
Euroclear Gives Green Light to Russian Bonds
by Phil T Looker
Russia plans to issue more sovereign bonds later this year following its successful May issue, Russian Minister for Economic Development Aleksey Ulyukaev said on Friday. Investors who bought into Russia's sovereign bond sale in May have been vindicated after Euroclear admitted the bonds for settlement last week. The move is interesting because, unlike the USA and most nations in the democratic world, Russia is not running a current account deficit and therefore has no need to borrow money by selling its bonds on international markets in order to fund obligations such as pensions, state employees wages and social welfare payments. Brussels-based Euroclear Bank is one of the two main providers of settlement and related services for securities; the other is Clearstream, owned by Deutsche Börse. These are highly specialised banks for traders in bonds and derivatives. Euroclear began carrying out transactions with Russian Eurobonds on July 28 after more than two months of deliberations following Russia's first Eurobond sale in May. On May 24 Russia issued sovereign debt for the first time since 2013, selling $1.75 billion in ten-year Eurobonds at an annual yield of 4.75 percent. This entry into the bond market might be to raise finance for infrastructure projects but is more likely to be calculated to give Russian finance houses a toehold in this important sector. Both Euroclear and Clearstream declined to take part in the first sale due to pressure from regulators in the EU and US, despite the fact that anti-Russian sanctions imposed by the US and EU against some Russian individuals and entities in 2014 do not include sanctions against the Russian state. On July 6 Euroclear also delayed its participation in the sale of Russian ruble-denominated ten-year OFZ sovereign bonds, worth 20 billion rubles ($305 million). However, Dmitry Polevoy of ING Bank told Vedomosti that the securities were accepted a few days later by the clearing house. Euroclear's decision widens the pool of potential investors in Russian securities, and the bond yield decreased to 4.116 percent the day the news broke. Traders told Bloomberg they expect a significant decrease in the yield on Russian bonds of up to 20 or 30 basis points as a result. Bonds from emerging markets such as Russia are becoming increasingly popular with investors looking for more profitable returns than those gained from Western sovereign debt; an estimated 30 per cent of global government debt is currently offering yields of less than zero. RELATED POSTS: The Real Rate Of Inflation, USA, UK (Europe's is off the scale). The Global Economy Is Bankrupt Economists Just Did Not Want To Understand Why Britain Had To Leave Europe End Of An Era: The Collapse Of The Petrodollar SystemGlobalists Like Soros Are Now Blatantly Moving Forward Their Totalitarian World Government Agenda
Europe's Bank Crisis Arrives In Germany: €29 Billion Bremen Landesbank On The Verge Of Failure
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The Demise Of Dollar Hegemony: Russia Breaks Wall Streets's Oil-Price Monopoly
by Phil T Looker
Significant moves in the geopolitical chess game have just rendered the huffing and puffing of warmonger Obama meaningless and will break the hold Wall Street exercises in controlling oil prices, at least in markets that supply a huge part of the world demand for oil. The move is part of Vladimir Putin's long-term strategy of decoupling Russia’s economy and especially its very significant export of oil, from the US dollar, in effect responding to Obama's attempts to provoke Russia into starting a shooting war by attacking American interests in the Caucasus and middle east by waging a currency war designed to depose the US dollar as the global reserve currency. Late in November 2015 the Russian Energy Ministry announced that it will begin test-trading of a new Russian oil benchmark. So what you might well say. Well this move has huge signifiucance in terms of global economics. If successful, and there is no reason why it won’t be, the Russian crude oil benchmark futures contract traded on Russian exchanges, will price oil in rubles and no longer in US dollars (the petrodollar). It is part of a de-dollarization move that Russia, China, Iran, India and a growing number of other countries have quietly begun (extensively reported below). Setting an oil benchmark price is the basis of the Wall Street bank's method of controlling world oil prices. The London financial community uses similar techniques to control currency trading. Oil is the world’s most traded commodity. In dollar terms it props up the US economy and gives US companies an immense advantage over non - American competitors. At present the price of Russian crude oil is tied to the Brent price. The problem is that the Brent field, along with the UK's other major North Sea oil fields is in major decline while the US West Texas benchmark is based on fields enjoying a temporary resurgence due to the fracking of shale deposits. Thus Wall Street can use a vanishing benchmark to leverage control over vastly larger oil volumes. A quick look at historic price trends will show that Brent Crude is always a higher price than West Texas Intermediate (WTI). This is not solely because Brent tends to be better quality. The sale of oil denominated in dollars is essential for the support of the US dollar (sic). In turn, maintaining demand for dollars by world central banks for their currency reserves to back the foreign trade of countries like China, Japan or Germany, is essential if the United States dollar is to remain the leading world reserve currency. That status as world’s leading reserve currency is one of two pillars of American hegemony since the end of World War II. Because all nations have to buy dollars to pay for imports of oil and other commodities, countries such as Russia or China find the USA can influence the health of their economied by manipulating the price of dollar. That reserve role of the US dollar, since August 1971 when the USA abandoned the gold standard, has essentially allowed the US Government to run seemingly endless budget deficits without having to worry about interest rates, like having a permanent, unlimited overdraft at your bank. Nations need dollars to pay for their imports, he USA simply forces the dollar exchange rate higher. That has allowed Washington to run up an $18.6 trillion federal debt without major concern. Today the ratio of US government debt to GDP is 111%. In 2001 when George W. Bush took office and before trillions were spent on the Afghan and Iraq “War on Terror,” US debt to GDP was just half, or 55%. The glib expression in Washington is that “debt doesn’t matter,” assumes that the world, Russia, China, Japan, India, Germany–will always buy US debt with their trade surplus dollars. The ability of Washington to hold the lead reserve currency role, a strategic priority for Washington and Wall Street, is vitally tied to how world oil prices are determined. In the period up until the end of the 1980’s world oil prices were determined largely by real daily supply and demand. It was the province of oil buyers and oil sellers. Then Goldman Sachs decided to buy the small Wall Street commodity brokerage, J. Aron in the 1980’s. They had their eye set on transforming how oil is traded in world markets. Russia has just changed it for them. RELATED POSTS: American dollar dumped?America's global hegemony broken?
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Another Oil Exporting State Surrenders: Last Nail In Petrodollar's Coffin
Egbert Nobakon
Another Oil Exporting State Surrenders: Last Nail In Petrodollar's Coffin
While record mainland deficits covered by the petroleum sector is nothing new in Norwegian budget history, the 2016 budget did raise some eyebrows. The net inflow to the Norwegian Treasury from North Sea oil will be lower than the required amount to cover the deficit. This has never happened before and is testimony of the sea change occurring in the world of petrodollar recycling.
Throughout this Currency Wars omnibus page we have tried time and again to raise awareness of how dependent economically the USA, the world's largest economy (at the time of writing) has become on the fact that the most valuable traded commodity in terms of gross turnover, is traded in US dollars.
We are not the only ones aware of this, obviously Russia, saudi Arabia, Nigeria, Iran, and other oil produder states and net consumers such as China, Japan and the European Union are too. And there are serious moves underway to replace the US$ as the de facto global currency.
Another Oil Exporting State Surrenders: Last Nail In Petrodollar's Coffin
China launches global yuan payment system
Soon after we started reporting the existence of a currency war, the much more sensible option Russia, China and Iran have chosen in reponse to the provocative warmongering of the USA, as if eager to save us the bother of swatting all those 'American exceptionalism' fans who called us conspiracy theorists, China’s Central Bank has started a global payment system which provides cross-border transactions in yuan. The China International Payment System (CIPS) intends to internationalize the yuan and challenge the US dollar's dominance.
China launches global yuan payment system
What the Latest Currency 'War' is All About
Phil T Looker
When the US prints money, calling the response to its governments financial diarrhea quantitative easing, that's sound economics. When the EU prints money in its futile efforts to prop up the idiotic experiment in financial union that the sigle currency always was, that's 'ever closer union'. But when the Bank of China decides it's in the best interest of the nation to let the yuan slide against other traded currencies instead of rising like a helium balloon as washington and Wall Street require, that's Armageddon.
It took the Bank of China to devaluate the yuan on two consecutive days, by a magring within the 2 percent band that is allowed, for the proverbial globalist soothsayers to go completely apeshit.
The heart of the matter is that Beijing has moved to the next level of a complex game; to liberalize the yuan exchange rate and allow it to free float against the US dollar; and establish the yuan as a global reserve currency. So this is essentially exchange rate policy liberalization, not a currency "war", as the frenetic spin goes from Washington/Wall Street to Tokyo via London and Brussels. The opening skirmishes of the curency war were the founding of a BRICS bank, backed by Russia, and of China's AIIB bank, both designed to weaken the IMF and World Bank.
Former Morgan Stanley non-executive chairman in Asia, Stephen Roach, delivers the predictable hyperbolic, Goddess of the Market orthodoxy, warning about the "distinct possibility of a new and increasingly destabilizing skirmish in the ever-widening global currency war. The race to the bottom just became a good deal more treacherous."
A note written by a group of HSBC analysts is more realistic; "The depreciation pressure on Asian currencies from China's action should fade as the nation isn't aiming at engineering a much weaker yuan. Doing so would contradict the goal of promoting wider global use of the yuan in cross border trades."
But it's Chantavarn Sucharitakul, the Bank of Thailand's assistant governor, who hits the nail on the head Asia-wide; "The long-term impact must be assessed as to whether greater flexibility of the yuan could benefit China's economic reform, while the depreciating yuan could be positive for China's economic growth, which would benefit regional trade as well."
The Bank of China itself, in a statement, stresses it will allow the markets to have more influence over the yuan exchange rate.
And crucially, it also stresses there is no economic basis for the devaluation, pointing to China's enormous current account surplus and humongous foreign exchange reserves.
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Back to Contents table
If You Look At How Fast Global Trade Is Unravelling, You'll Get Dizzy
Governments constantly make positive noises about the health of their economies although most people who are in work have felt no improvement on the position they were in after the crash of 2008. Wagest are stangnant, employment has reduced somewhat (see below) and while the banks are printing money and the super rich are widening the gap between themselves and ordinary people faster than ever, the real situation is frightening.
The move by governments to eliminate cash as a means of trading goods and services is moving faster than we imagined. With another global financial crisis looming according to financial journalists and investment experts this is as understandable as it is undesirable for us ordinary punters.
Refugee Crisis Or Existential Battle With USA for Europe
It has been clear for some years now that the USA, backed by its main NATO and EU military allies the UK and France (the FUKUS axis has been trying to provoke Russian into firing the shot that will be heard around the world and recognised as the startiung signal for World War Three.
Nothing is ever as it seems to be however, and views from middle east and far eastern journals suggest the USA is also working at destabilizing EU nations in order to force their support in its wars.
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US Becoming Isolated As Key Ally Japan Considers Joining China-Led Investment Bank
A few days ago the bully - boys in Washington were cock-a-hoop as they claimed to have persuaded the USA’s closest allies and trading partners to shun the Asian Infrastructure Investment Bank (AAIB), backed by China, with Russia and Iran in support. The AAIB is designed to fund and support development across Asia that is meant to rival the US/Japanese-led ADB and begin a seismic shift away from the world’s traditionally US-dominated institutions such as the World Bank and the IMF. Then, much to the chagrin of Washington, the UK joined as a founding member calling it an "unrivaled opportunity." As we and many other observers correctly noted at the time, the move by Britain, and the involvement of Germany in another international finance agency being set up by the BRICS nations (Brazil, India, China, Russia, South Africa,) could well embolden other countries who had expressed an interest initially but been deterred by pressure from Washington to reconsider their support for verious aspects of the de-dollarization movement in world trade. In (very) short order, everyone from Germany to Australia (reported here yesterday) and Luxembourg is suddenly ready to cast their lot with the Chinese despite US warnings that the bank won’t adopt the proper operational standards. We said yesterday the world has woken up to the fact that US criticism of the new venture is very likely nothing more than an attempt by The White House to undermine Chinese regional ambition: "...and that means in short order Australia and South Korea will likely be on board and at that point, the stigma the US has created around membership will have completely disappeared (if it hasn’t already), opening the door for other US “allies” to join despite the bank’s alleged “low” standards." Now, it appears the last valuable friend the US has in the bid to keep China from undercutting the ADB is beginning to consider a bid to join up. Read more on this at :Reuters. RELATED POSTS:The Business of War: Defense Sales Keep Economies Of Manufacturing Nations Afloat
Tens of thousands have been killed and millions displaced due to 'humanitarian' interventions by the developed nations (led by the USA, France and the UKm the FUKUS axis) in the domestic politics of third world nation. Usually the interventions support rebel groups who if they came to power would be far more oppressive and brutal regime than the one they replaced.
Naked Bankers Go For Gold
... That gold sale in 2013 was a naked short. The seller had no gold to sell. COMEX reported having gold only equal to about half of the short sale in its vaults, and not all of that was available for delivery (quite a lot of it belonged to the german government) In effect the naked shorting of gold could only work because really the right hand was selling to the left hand.
"West's War In Syria Is Part Of A Global war Waged By The USA And Its Dupes Allies Against Russia"
Arthur Foxake brings us a brilliant analysis of the geopolitical picture from the black Sea and Middle East, but ahead of the embed window we get a few of Arthur's own thoughts on the situation
Russia Just Sent out a Message NATO Should Better Listen To
The key paragraph from the latest official Russian naval doctrine is that Putin and his military advisers have sent a clear message that NATO encroachment is unacceptable. To be honest, there is nothing earth shattering in this, The Daily Stirrer and many other alternative media news and analysis sites have been warning for about two years that Obama's foreign policy was making conflict inevitable.
What Putin Wants
China Warns U.S. to Stop Its Ukrainian Proxy War Against Russia
The World Rejects USA Attempt To Manipulate Venezuela
India's Ruling BJP Party Crushed In Regional Poll
Another Conspiracy Theory Becomes Fact: Oil Collapse Is All About Obama's Proxy War With Russia.
G77 Nations vow to destroy petrodollar and America’s New World Order
American Dollar Dumped
Iran's Oil and the US Dollar
Money From Rock Better Than Money From Air
Strange things are happening in the finance markets, very strange. As the FT and Dow Jones main indexes go up and down faster than a whores knickers, commodity prices are behaving weirdly too.
De-Dollarization Accelerates As More Washington "Allies" Follow Australia To China-Led Bank
by Phil T Looker
The global de-dollarization trend continues as it appears the UK’s move to join the China-led Asian Infrastructure Development Bank has indeed shown other US “allies” that spurning Washington’s advice is actually acceptable and concerns about the institution’s “standards” may simply be a diversion aimed at undermining China’s attempt to exercise more influence in its own backyard. Here’s more from the NY Times:
Ignoring direct pleas from the Obama administration, Europe’s biggest economies have declared their desire to become founding members of a new Chinese-led Asian investment bank that the United States views as a rival to the World Bank and other institutions set up at the height of American power after World War II.
The announcement on Tuesday by Germany, France and Italy that they would follow Britain and join the Chinese-led venture delivered a stinging rebuke to Washington from some of its closest allies. It also called into question whether the World Bank and the International Monetary Fund, which grew out of a multination conference in Bretton Woods, N.H., in 1944 and established an economic pecking order that lasted 70 years, will find their influence diminished.
The announcement by Germany, Europe’s largest economy, came only six days after Secretary of State John Kerry asked his German counterpart, Frank Walter-Steinmeier, to resist the Chinese overtures until the Chinese agreed to a number of conditions about transparency and governing of the new entity. But Germany came to the same conclusion that Britain did: China is such a large export and investment market for it that it cannot afford to stay on the sidelines.
South Korea, another US ally that the Obama administration has not-so-subtly lobbied to stay out of the AIIB for the time being, is reportedly reconsidering a bid to join and although reports that Seoul had already committed to the venture appear to have been a bit premature, the country will make a decision this month and is expected to discuss specifics this weekend at a meeting with Chinese and Japanese officials.
This change of mind was perhaps triggered by a story just a few days ago:
"Colossal Defeat" For Obama As Australia Joins China's Regional Bank
Having attacked its "closest ally" UK for "constant accomodation" with China, we suspect President Obama will be greatly displeased at yet another close-ally's decision to partner up with the Chinese-led Asian Infrastructure Investment Bank (AIIB). As The Australian reports, "make no mistake," the decision by Australia's Abbott government to sign on for negotiations to join China’s regional bank, foreshadowed by Tony Abbott at the weekend, "represents a colossal defeat for the Obama administration’s incompetent, distracted, ham-fisted diplomacy in Asia."
This is how Greg Sheridan of The Australian reported the move:
The decision by the Abbott government to sign on for negotiations to join China’s regional bank, foreshadowed by Tony Abbott at the weekend, represents another defeat for Barack Obama’s diplomacy in Asia.
The Abbott government is right to make this decision. It had well-founded concerns about the vague and unsatisfactory governance arrangements of the institution when Beijing first invited Canberra to join.
Those arrangements have improved since then and Australia is only signing on to negotiate terms of accession.
If the terms are no good, Australia will ultimately walk away.
Canberra’s move follows similar decisions by Britain, Singapore, India and New Zealand.
Make no mistake — all this represents a colossal defeat for the Obama administration’s incompetent, distracted, ham-fisted, dippy diplomacy in Asia.
The Obama administration didn’t want Australia to sign up for the China-led AIIB. The Abbott government rightly feels that it owes Obama nothing. The American President went out of his way to embarrass the Prime Minister Abbott politically on climate change with a rogue speech at the G20 summit in Brisbane. The speech had been billed as dealing with American leadership in Asia and instead was full of material designed to embarrass Abbott.
Since then, the Abbott government has felt absolutely zero subjective good will for Obama. This outlook is shared by many of America's erstwhile allies. It’s important to get all the distinctions right here.The Abbott government operates foreign policy in Australia’s national interest. But the Obama administration has neither the continuous presence, nor the tactical wherewithal to carry the support of Canberra, or other allies, on non-essential matters.
The Obama administration has tried to convince both its friends and allies not to join the China Bank. Washington desperately did not want Australia to sign up for the China-led AIIB because of the influence the Australians weild among south east Asia's more populous but poorer nations. The Abbott government rightly feels that it owes Obama nothing.
As Sheridan notes in the linked article:
Obama treats allies shabbily and as a result he loses influence with them and then seems perpetually surprised at this outcome. The Asian professionals in Washington regard the Obama administration as particularly ineffective in Asia. The consensus is that the Obama White House is insular, isolated, inward-looking, focused on the President’s personal image and ineffective in foreign policy.
The bottom line is: this is not speculation anymore (nor has it been for a long time despite what Obama worshippers may say). Every shred of objective evidence tells us the dollar’s dominance is coming to an end.
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Russia Outmanoeuvres the west again
While mainstream media (and even some of the more rabidly fascistic left wing bloggers) have been trying to demonize Russia as a way of drumming up public sympathy for Barack Obama's efforts to start a shooting war with Moscow, we Boggart Bloggers and ...
World War Three? Kiev Reinvades Donbass, Deliberate Provocation Trashed Minsk Agreement
When America wants to provoke Russia it uses proxies, a rabble in Libya, Islamic fundamentalists in Syria and Iraq and neo - Nazi thugs in Ukraine. So far Russia has resisted the urge to kick Obama in the balls, but sooner or later the Russia - China - Iran alliance will respond.
According to as yet unconfirmed reports from Iranian news agency Farsnews, "Saudi Arabia has sent around 5,000 Takfiri mercenaries to fight against the Yemeni army and revolutionary committees," Yemeni Army Commander Colonel Abdel Sattar al-Boushali told FNA on Saturday night.
American dollar being dumpedAmerica's debt disaster
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Turkey and India join Chinese - Russian move to dump Petrodollar
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China Becomes Global Lender Of Last Resort With Bailout Of World's Most Indebted Oil Company
For the past month we have reported the development of the Asian Infrastructure Investment Bank as a strategy by Beijing to reset the post-World War II global economic order by undermining US-dominated multinational institutions, as an attempt to usher in a new era characterized by yuan hegemony, and a bid to entrench China’s regional influence. The AIIB is already hitting its targets, we hear that the China Development Bank (which isn’t the same as the AIIB but will work very closely with it) is throwing out clues as to how Beijing’s new venture will operate. China development bank is set to provide $3.5 billion in financing to Brazil’s deeply indebted Petrobras. The new funding comes 6 years after a $10 billion oil export deal between the company and China and just days after Brazil signed up as a founding member of the AIIB. More, via WSJ:EU and US talk of war with Russia
The European People’s Party (EPP) the largest political group in the European Parliament, nominated Luxemourgeois nonentity and alcoholic (allegely) Jean-Claude Juncker as President of the European Commission. The party has the support of some of Europe’s most powerful leaders, including German Chancellor Angela Merkel. Made up largely of centre Social Democrat parties and centre right Christian Democrats they command an automatic majority in any vote taken by the European Parliament and are unerringly federalist, globalist and anything but democratic.
And they are unerringly supportive of America's efforts to start a war with Russia.
“The time of talk and persuasion with Russia is over," MEP and Vice-President of the European People’s Party (EPP) Jacek Saryusz-Wolski told a meeting of the European Parliament on Tuesday, 21 April, “Now it’s time for a tough policy, a realistic policy, and concentration on defence and security, because the eastern flank of the EU feels vitally, existentially threatened.”
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EU and US talk of war with Russia
What the BRICS plus Germany are really up to in the Currency Wars?
by Phil T Looker, 28 February, 2015
RUSSIA DITCHES THE PETRODOLLAR - VIDEOWatch a video giving the background to the really big story in global news (but you will neither hear nor read of it in mainstream media) - or if you are already aware of the move to dump the US dollar as global reserve currency and the role that has played in creating the current political and economic situation, skip past the video frame to the main story.
The ‘Empire of Obamaland’ is now facing multipe crises. Wars, massive unemployment and economic stasgnation at home, increasing hostility to its foreign policy, global economic chaos, the move led by Russia and China to dump the Petrodollar (the rock on which The Empire of Obamaland, the superpower formerly known as The United States Of America) is founded. Some wars as in Ukraine, by proxy are not going so well. Others, like the one against Islamic State aka ISIS aka ISIL in the middle east are going worse. Disintegration of The American Economic Empire is manifesting itself in moves by wannabe global players towards creating a multipolar world.
The thinkers in the global thinktak capital, Washington, are going bonkers, releasing wacky, propaganda heavy "forecasts" predicting that Russia is about to disintegrate Russia and China is turning into a communist dictatorship (Russia is as ever a mystery wrapped in an enigma and is anyone really stupid enough to think China was ever in the modern era, anything other than a communist dictatorship. So much (imperial) wishful thinking, so little time to prolong hegemony.
The Elephant In The Room that all the people who make these "forecasts" are aware of but refuse to mention is BRICS (Brazil, Russia, India, China, and South Africa). BRICS is worse than the Ebola, Nationalism and the twenty year pause in global warming as far as the 'Masters of the Universe' the shadowy figures that really control the desiny of the western democracies are concerned. True, the BRICS nations experiencing are major problems themselves. Brazil at the moment is totally paralyzed; a long, complex, self-defeating process, now coupled with intimations of regime change by local agents of 'The Masters Of The Universe' minions. Brazil will rebound however.
That leaves the RICs Russia, India and China, aided and abetted by Iran, as the key drivers of the move away from American dominance. For all their contradictions and conflicts, they agree they don’t need to challenge the hegemon directly until their new world order is ready to topple the mighty US dollar.
The key factor in the BRICS + 2 (see below) move against the Petrodollar is The New Development Bank (NDB), reported here before and a key alternative to the IMF in its role as enabler of developing nations. The NDB will rid developing nations of dependence on the US dollar as a reserve currency. According to reports it will be operative by the end of this year.
The NDB,, to quote its prospectus "will finance infrastructure and sustainable development projects not only in the BRICS nations but other developing nations [...] BRICS nations will keep 55 percent of the voting power, and outside their domain no country will be allowed more than 7 percent of votes. But crucially, developing nations may also become partners and receive loans.
So forget about the Western (Rothschild) controlled World Bank, whose capital and lending capacity are never increased by the so-called Western economic powers, the NDB will welcome all comers.
Meanwhile other interesting geo-economic moves are afoot.
Germany, the only economically solvent nation in the Euro zone (European Single Currency system) now exports 50 percent of its GDP. In 1990 it was only 24 percent. For the past 10 years, half of German growth depended on exports. Therefore this giant economy badly needs global markets to keep expanding. And ailing EU, its collective economy dragged down by crazy ruiles on welfare, employment rights, immigration rules and the permacrisis in the Club Mediterranean economic basket case nations, simply does not look able to meet Germany's need.
The result of this is a falling proportion of German exports are now going to destinations within the EU. The growth markey for german manufacturers is Asia. So Germany is having to move away from the Eurozone. That does not entail Germany breaking up the Euro or leaving the EU; that would be interpreted as a nasty betrayal of the cherished Single European Federal State project and "ever closer union.
In that scenario lies the real reason for Germany’s kicking little Greece around, "Either you surrender completely to our demands, or you leave the euro," the Germans are saying in effect. Which is no choice at all for Grece, already on the verge of social breakdown due to E U imposed economic measures.
What Germany wants is to keep a partnership with France and dominate Eastern Europe , relying on Poland as an economic satellite. So expect Greece, Spain, Portugal and Italy to face a German wall of intransigence. So much for European integration, it works as long as Germany dictates all the rules.
The spanner in the works is the nightmare the double craptangle of Greece + Ukraine has exposed. Berlin as a European hegemon is a nightmarish possibility for many nations including Poland that twice suffered at the hands of German occupiers in the twentieth century's wars. The only worse result wuold be a full blown, American-instigated war in Europe’s eastern borderlands against Russia. No wonder Angela Merkel is flying to Moscow to cuddle Putin every few days.
Diplomatically Moscow has been the winner in the opening skirmishes of the curreny wars. They have resisted to respond directly to American military provocation in both Syria and Ukraine and been busy extending their influence in europe, Africa and Asia while Obama blusters but lacks the testicular fortitude to fire the first shot in the war his backers desperately want. And Russia won again when late in 2014 Turkey, fed up with trying to join the EU and being constantly blocked by, who else, Germany and France,(rightly so but Brussels and Washington led them to believe it was in the bag,) decided to pivot to Eurasia for good, ignoring NATO and amplifying relations with both Russia and China.
That happened in the framework of a major ‘Pipelineistan’ game-changer. After Moscow cleverly negotiated the realignment of South Stream Pipeline through Ukraine towards the Turk Stream (though Turkish territorial waters and overland), right up to the Greek border, Putin and Greek Prime Minister Tsipras also agreed to a pipeline extension from the Turkish border across Greece to southern Europe. So Gazprom will be firmly implanted not only in Turkey but also Greece, which in itself will become mightily strategic in European ‘Pipelineistan’.
So Germany, sooner or later, must answer a categorical imperative – how to keep running massive trade surpluses while dumping their euro trade partners. The only possible answer is more trade with Russia, China and East Asia. It will take quite a while, and there will be many bumps on the road, but a Berlin-Moscow-Beijing trade/commercial axis – or the “RC” in BRICS meet Germany – is all but inevitable.
BTW, you won’t read any of that in mainstream media's globalist propaganda sheets.
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Only One Percent Of US Bakken Shale Oil Is Profitable At Current Prices
Obama's strategy to make the USA the worlds leading oil exporter is in ruins. It is entirely in keeping with his record for fuck up and failure that has been the hallmark of his presidency. But what will be the consequences for the world of this latest failure by Obama?
America and UK Lead the World in Climate Scepticism Several times now it has looked as if the climate chance scare was over as the enthusiasm of climate scitentists for changing real world data to fit in with the predictions of their mathematical models has been exposed. But as the scare was never about the environment, but was a scam to redistribute wealth from rich to poor countries, the politicians are throwing their propaganda budgets behind it again.
Germany Alarmed by Aggressive NATO Stance On Ukraine
As the US pro war rhetoric pumps up the tensions between Russia, its allies and the west in Ukrain we revisit once more the truth about which world power has been relentlessly pushing for war since 2009. It isn't Russia or China, though they are not likely to back down.
The American dollar is being dumped in a move led by Russia and China
America's warmongering and the impreatives behind it
US fears for dollar prompt hyper - aggressive foreign policy Iran, oil and the petrodollar
Obama tries and fails to bully Russia
The imminent collapse of the Petrodollar
Obama is letting Russia destroy the Petrodollar
Russia and China sign up India and Turkey to their dollar alternative
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De-Dollarization: Russia Ratifies $100 Billion BRICS Bank
by Phil T Looker
A BRICS Bank - as an IMF alternative and to enable nations to become less dependent on the global reserve currency - was originally discussed at The BRICS Summit in 2012. Then at the 2014 BRICS Summit, the framework for The BRICS Bank was approved as "a system of measures that would help prevent the harassment of countries that do not agree with some foreign policy decisions made by the United States and their allies."
Headquartered in Shanghai and chaired by Russia, this week saw what appears to be the final step in the creation of BRICS New Deverlopment Bank as RT reports, The Russian State Duma has ratified the $100 billion BRICS bank that’ll serve as a pool of money for infrastructure projects in Russia, Brazil, India, China and South Africa. It is expected to start fully functioning by the end of 2015. Isolated?
The Russian State Duma has ratified the $100 billion BRICS bank that’ll serve as a pool of money for infrastructure projects in Russia, Brazil, India, China and South Africa, and challenge the dominance of the Western-led World Bank and the IMF.
The New Development Bank is expected to start fully functioning by the end of 2015, according to the Russian Finance Ministry.
Russia has agreed to provide $2 billion dollars from the federal budget for the bank over the next seven years.
It will have three-tiers of corporate governance, with a Board of Governors, Board of Directors and a President.
The bank’s board of directors will hold its first meeting in Ufa in Russia in April. Russian Finance Minister Anton Siluanov is likely to become the bank’s first Chairman of the Board of Governors, according to Deputy Finance Minister Sergei Storchak talking on the Russia 24 TV channel.
The decision to establish the BRICS bank, along with a $100 billion reserve currency pool, was made in July 2014. Each of the five member countries is expected to allocate an equal share of the $50 billion startup capital that will be expanded to $100 billion.
The bank will be headquartered in Shanghai, India will serve as the first five-year rotating president, and the first Chairman of the Board of Directors will come from Brazil.
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De-Dollarization Accelerates: Russia Launches SWIFT-Alternative Linking 91 Entities
by Phil T Looker
Among the information revealed in The Great Leaks of 2013 were the documents that first exposed the extent to which the USA's National Security Agency (NSA) and UK's surveillance operation GCHQ had been secretly 'monitoring' the SWIFT payments system and recording details of cash flowing between nations and organisations. It appears the revelation was the last straws for Russia, China, and other sovereign nations, spying had gone beyond what could be tolerated spying rigging of markets to maintain and dollar domination began to be seen as a series of hostile acts.
Last year (2014), following threats to remove Russia from SWIFT by the UK government, (which SWIFT rapidly distanced its 'independent-self' from), Russia (and China) announced plans to create its own de-dollarized version. In November, Russia detailed the SWIFT-alternative's launch date around May 2015, and just last month, Medvedev warned of "unlimited reaction" if Russia was cut off from the SWIFT payments system.
So the news that Russia has now launched its own 'SWIFT'-alternative, initially linking 91 credit institutions, suggests de-dollarization is considerably further along than was suspected even those of us determined to put into the public domain a degree truth of what is happening expected (especially as Russia dumps US Treasuries at a record pace). I say a degree of truth because independent bloggers and small groups of contraians cannot hope to gather and publish news on the same scale as traditional broadcasters and publisher. That you will learn nothing of this story and many like it in mainstream media is the perfect illustration of why senior journalist Peter Oborne resigned from The Daily Telegraph recently.
We have covered de - dolarization, the move led by Russia, China and Iran to dump the US Dollar (Petrodollar) as the global reserve currency throughout this omnibis page, but even out determined efforts have until now not managed to find how rapidly the world is turning away from US domination. Sputnik News reports:
Almost 91 domestic credit institutions have been incorporated into the new Russian financial system, the analogous of SWIFT, an international banking network.
The new service, will allow Russian banks to communicate seamlessly through the Central Bank of Russia.
It should be noted that Russia's Central Bank initiated the development of the country's own messaging system in response to repeated threats voiced by Moscow's Western partners to disconnect Russia from SWIFT.
Joining the global interbank system in 1989, Russia has become one of the most active users of SWIFT globally, sending hundreds of thousands of messages per day. In general, SWIFT provides a secure communication network for more than ten thousands of financial institutions around the world, approving transactions of trillions of US dollars.
Earlier this month Russian Deputy Prime Minister Igor Shuvalov expressed confidence that Russia would not be disconnected from SWIFT. In her turn, Russian Central Bank First Deputy Chair Ksenia Yudaeva called upon Russian civilians and financial institutions not to dramatize the current situation.
Russian experts point to the fact that Western businesses would face severe losses if they expelled Russia from the international SWIFT system. On the other hand, the alternative system launched by Russia might reduce the negative impacts caused by measures imposed by the West, including possible disconnection from SWIFT, and diminish Western financial dominance over Russia.
SWIFT (The Society for Worldwide Interbank Financial Telecommunication) is a Belgium-based international organization that provides services and a standardized environment for global banking communicating that allows financial institutions to send and receive messages about their transactions.
Obviously any such system must be able to guarantee the absolute privacy of data, no organisation can tolerate a situation in which its rivals may be able to obtain details of transactions and other trade secrets. The USA faces crises on several fronts, most of these are of its own making and its foreign affairs difficulties are a direct result of Washington's contempt for international law and the sovereignty of other nations.
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The world is dumping the American dollar
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Swiss Decoupling Sets The Euro Adrift, Triggers Vast Losses For Banks, And Currency Traders
by Phil T Looker, 30 January 2014
Nobody is shedding any tears over the news that the deciusion by the Swiss central bank to sever the link that kept The Euro single European currency from the Swiss Franc, it is just another example of really important news you will never read of hear of from mainstream media. It is however bad news for all of us.
The decision by the Swiss National Bank to decouple from the euro sent shockwaves through the financial world and triggered billions of dollars worth of losses for banks, currency dealers and hedge funds all over the globe. Citigroup and Deutsche Bank both reported their losses were in the region of 150 million dollars; it is reported that a major hedge fund Everest Capital’s Global Fund had heavily bet against the Swiss franc, and as a result it now has lost "virtually all its money", in numbers that is $830 million dollars in assets at the end of December. The fund has now been forced to shut down. Several major global currency trading firms have announced that they are now insolvent.
These are only the headline stories we know of so far. The full extent of the financial damage caused by the Swiss National Bank will not be known for months. The same could be said of the slump in oil prices since the middle of last year. These two “black swan events” have caused a domino effect around the world and we can only guess at what the long term outcome may be.
How bad will the brewing financial crisis be? Everyone agrees it will be extremely bad, some say it will be even worse than that. For example, one economics professor at Boston University says that he believes the losses caused by the Swiss National Bank decision will eventually reach into the billions of dollars. And he is on the cautious side ...
“The losses will be in the billions — they are still being tallied,” said Mark T. Williams, an executive-in-residence at Boston University specializing in risk management. “They will range from large banks, brokers, hedge funds, mutual funds to currency speculators. There will be ripple effects throughout the financial system.”
Citigroup, the world’s biggest currencies dealer, lost more than $150 million at its trading desks, a person with knowledge of the matter said last week. Deutsche Bank lost $150 million and Barclays less than $100 million, people familiar with the events said, after the Swiss National Bank scrapped a three-year-old policy of capping its currency against the euro and the franc soared as much as 41 percent that day versus the euro. Spokesmen for the three banks declined to comment.
The enormity of the crisis for U.S. currency traders only became clear today (30 January, 2014) when New York-based FXCM, a publicly traded U.S. currency broker, the largest so far to announce it was in financial trouble after beig hit by a 90-percent drop in its share price. FXCM bosses said the firm would need a $200-$300 million bailout to prevent regulators declaring it insolvent.
Currency traders worldwide are allowed to leverage their accounts 100:1, meaning the customer can bet $100 in the currency exchange markets for every $1.00 the customer has on deposit in its account, this can result in huge gains from unexpected currency price fluctuations or massive and devastating losses, should the customer back the wrong currency.
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Russia Propositions Europe: Dump The US$ And I'll Show You My Eurasian Economic Union
contributed by Phil T. Looker, 5 January
The wheels of bureaucracy turn slowly but they grind exceedingly fine, goes an old business maxim (usually used to warn hot headed young businessmen that tax evasion is not a game for impulsive types). It seems the slow turning of the European Union's bureaucratic wheels is bringing Brussels round to understanding that as a result of the western economic and financial sactions on Russian, it is the European Union member nations that trade most with Russia, and the EU itself that is being hit hardest. Germany was first to publicly admit this in December 2014.
Due mostly to the US led economic war on Russia the German economy economy is now on the brink of recession. Other nations are catching on to the fact that the USA has little to lose as there is hardly any trade between America and Russia, while EU members have little to gain as the USA simply sees the destruction of the Russian economy as a step on the way to global economic hegemony. The former head of the European Commission, and Italy’s former Prime Minister, Romano Prodi told Italian newspaper Messaggero yesterday that the "weaker Russian economy is extremely unprofitable for Italy."
from Prodi's statement:
Lowered prices in the international energy markets have positive aspects for the Italian consumers, who pay less for the fuel, but the effect will be only short-term. In the long-term however the weaker economic situation in countries producing energy resources, caused by lower oil and gas prices, mostly in Russia, is extremely unprofitable for Italy, he said.
“The lowering of the oil and gas prices in combination with the sanctions, pushed by the Ukrainian crisis, will drop the Russian GPD by five percent per annum, and thus it will cause cutting of the Italian export by about 50%,” Prodi said.
“Setting aside the uselessness or imminence of the sanctions, one should highlight a clear skew: regardless of the rouble rate against dollar, which is lower by almost a half, the American export to Russia is growing, while the export from Europe is shrinking.”
The rest of the world is also starting to grasp the reality of the situation: it is not the financial exposure to Russia, or the threat of financial collapse should Russia suffer a major recession: it is the loss of trade that will cause the most economic damage for Europeean economies. Because while central banks can print money, leading to yet another asset bubble which may temporarily boost investor and consumer confidence, they can't conjure trade out of thin air. Keeping the fiat money moveing is the essential driver of confidence in the globalized economy. Trade became king long before central banks begant to print over $1 trillion in bonds each and every year to mask the fact that the developed world is in a deep depression.
Which is why anyone with a pension fund, savings or a job should read and take note of the following report written in yesterday's Deutsche Wirtschafts Nachrichten (German Financial News) with great interest because it goes right to the bottom line. In it Russia has a not so modest proposal to Europe: dump trade with the US, whose call for Russian sanctions has cost you another year of declining economic growth, and instead join the Eurasian Economic Union! Translated from the source (unfortunately in German but if you want to read the whole thing there's always Google Translate though the syntax is somtimes less than perfect):
A western free trade zone with Russia? Linking Europe to the eastern trade bloc being fashioned by Russia, China and Iran? It would indeed make more sense than pandering to Washinggton's global Empire dreams , but then how would Europe feign outrage when the American NSA is found to have spied yet again on its "closest trading partners"?
Because let's be honest with ourselves, the USA hs only ever been friendly to smaller nations while those nations were useful to them.
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Even The BIS Is Shocked At How Broken Markets Have Become
Dark clouds of retribution are gathering over the hubris of economic optimism
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IMF Now Ready To Slam The Door On The U.S. And The Dollar
via blacklisted newsAs I write this, the news is saturated with stories of a hostage situation possibly involving Islamic militants in Sydney, Australia. Like many, I am concerned about the shockwave such an event will create through our sociopolitical structures. However, while most of the world will be distracted by the outcome of this crisis (for good or bad) for at least the week, I find I must concern myself with a far more important and dangerous situation.
Up to 40 people may be held by a supposed extremist in Sydney, but the entire world is currently being held hostage economically by international banks. This is the crisis no one in the mainstream is talking about, so alternative analysts must.
As I predicted last month in “We Have Just Witnessed The Last Gasp Of The Global Economy,”severe volatility is now returning to global markets after the pre-game 10 percent drop in equities in October hinted at what was to come.
We expected such destabilization after the wrap-up of the Fed taper, and the markets have not disappointed so far. My position has always been that the taper of QE3 made very little sense in terms of maintaining the manipulated illusion of economic health — unless, of course, the Federal Reserve was implementing the taper in preparation for a renewed financial catastrophe. That is to say, the central bankers have established the lie of American fiscal recovery and then separated themselves from blame for the implosion they KNOW is coming. If the markets were to collapse while stimulus is officially active, the tragedy would be forever a millstone on the necks of the banksters. And we can’t have that now, can we?
This is not to say that individual central banks and even currencies are not expendable in the grand scheme of things. In fact, the long-term goal of globalists has been to consolidate all currency systems and central banks under the outward control of the International Monetary Fund and the Bank Of International Settlements, as I outlined in “The Economic Endgame Explained.”
That particular article was only a summary of a dangerous trend I have been concerned about for years; namely the strategy by international financiers to create a dollar-collapse scenario that will be blamed on prepositioned scapegoats. I have no idea what form these scapegoats will take - there are simply too many possible triggers for fiscal calamity. What I do know, though, is the goal of the endgame: to remove the dollar’s world reserve status and to pressure the American people into conforming or even begging for centralized administration of our economy by the IMF.
The delusion perpetuated in the mainstream is that the IMF is a U.S.-dominated institution. I have outlined on many occasions why this is false. The IMF like all central banks is dominated by the international corporate banking cartel. Central banks are merely front organizations for globalists, and I am often reminded of the following quote from elitist insider Carroll Quigley when I hear people suggest that central banks are somehow independent from one another or that the Federal Reserve is itself the singular “source” of the world’s economic ills:
It must not be felt that these heads of the world’s chief central banks were themselves substantive powers in world finance. They were not. Rather, they were the technicians and agents of the dominant investment bankers of their own countries, who had raised them up and were perfectly capable of throwing them down.The substantive financial powers of the world were in the hands of these investment bankers (also called “international” or “merchant” bankers) who remained largely behind the scenes in their own unincorporated private banks. These formed a system of international cooperation and national dominance which was more private, more powerful and more secret than that of their agents in the central banks.
No one can now argue against this reality after we have witnessed hard evidence of Goldman Sachs dictating Federal Reserve policy, as outlined here. MORE>>
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Has German Finance Minister Goven The OK For A Greex EU Exit Referendum?
Comments by German Finance Chief Wolfgang Schaeuble seemed to indicate that the EU's paymaster is ready to let Greek PM Tsipras put continuing Euro single currency membership for Greece to a popular vote. Any such move could affect negotiations with creditors by allowing Syriza to claim it hasn’t betrayed its support base, but a vote also risks plunging the country into turmoil should the gambit backfire
The Debt Ponzi Deconstructed
Most of us are familiar with the concept of GDP as a measure of economic health. If GDP increases, the myth goes, then the economy has grown. It is a measure of how effectively or efficiently we are utilizing our assets to generate wealth. The idea is that the more I invest the more notional returns I can generate. Unfortunately GDP is a false economic measure, it only measures the rate at which money churns around the economic system.
Economist, Nobel Prize Winner, Has Irony By Pass
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Oil price: Britain's North Sea Oil Industry 'Close To Collapse'
We were perhaps mistaken in calling this page 'Currency wars' and focusing initially on American attempts to undermine Russia's economy which is overly dependent on oil and gas. That of course is just a skirmish in a much wider economic war that is now hurting those nations that complied with Obama's diktat and imposed economic sanctions on Russia in retaliation for Moscow's refusal to surrender its strategiclly vital satellite state, Ukraine, to NATO and the EU.
Britain, because of our north sea oli interests is one of the hardest hit.
The price of crude oil began to collapse when The United states Of America, the swaggering bully of the world community decided to use its new status as a net exporter of oil, due to the shale boom, to flood world markets, finding because their oil is the most expensive to extract, that their wells were not economically viable, and damage Russia's oil dependent economy. Naturally prices in world markets dropped due to the law of supply and demand. With typical stupid arrogance the Americans demanded that the Arabs and other traditional oil producers cut production to hold up prices.
The arabs and other oil producing nations, sensing Amerca's push to become gobal hegemon had run off track and what they were threatened with was the empty bluster of a bully whose cowardice and weakness has been exposed in effect said, "Fuck the fucking fuck off," by pumping more oil and sending prices crashing even further. Result? Approximately $1trillion worth of new shale fracking projects planned in the USA have been cancelled. If it ended there the world would only have the minor problem of a US / Russia currency war.
Unfortunately the plunging oil price has brought about a "huge crisis" in energy markets, one of the worst hit is the UK's North Sea oil industry, expert have warned. With North Sea oil now selling at below $60 a barrel, it is "almost impossible to make money", Robin Allan, chairman of independent explorers’ association Brindex, told the BBC.
"It's a huge crisis. This has happened before, and the industry adapts, but the adaptation is one of slashing people, slashing projects and reducing costs," he said.
After several days of volatile trading in oil markets, Brent crude, the global benchmark, ended the day down 1 per cent at about $60 per barrel after having risen 3 per cent in early trading. In recent weeks, oil prices have crashed to their lowest levels in five-and-a-half years following falls demand due to weaking in major economies and concerns of a global oil glut.
Up to £55bn worth of North Sea oil projects scheduled for 2015 could be cancelled due to the falling prices, the Daily Telegraph reports.
Concerns over the financial state of the oil industry have increased since Opec voted not to cut production in an attempt to arrest sliding prices when they met in Vienna last month. Iran's oil minister has publically criticised Opec's inaction. Bijan Zanganeh told the country's state petroleum news agency: "The prolongation of the downward trend of the oil price in world markets is a political conspiracy going to extremes."
The US-based oil company ConocoPhillips has already moved to cut 230 out of 1,650 jobs in the UK and some analysts predict that other large firms will make similar cost-cutting announcements in the coming months.
However, the Department of Energy and Climate Change said yesterday that even though reductions in oil prices have proven "very challenging" for companies active in the North Sea, "we have seen very little evidence of new projects being cancelled or deferred in reaction to lower oil prices".
[more]
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From Keynesian Shangri-La To Outright War
Over the last few weeks drum beats could be heard signalling the coming of troops from abroad to lay waste to any foe ahead of them. However, unlike what we first conjure up as troops from an opposing force made up of men and weapons. This battlefield is being waged in the either of the currency markets.
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The Dollar Versus The Rouble
contributors: Ian R Thorpe, Phil T. Looker, Xavier Connolly 18 December, 2014What a kerfuffle this week about the 'crisis' in Russia and the collapse of the Russian Rouble. To read mainstream media one might think the Rouble is the global reserve currency, whereas it is not even a traded currency on many exchanges (this is not the same as being able to buy Roubles from your bank.) American propagandists are trumpeting the crisis as a triumph for western corporatocracy and say it heralds the reassertion of US dollar supremacy.
Now I know some members of the neo Nazi left and the people who want Barack Obama anointed God - King of The Entire Universe And Everything Else Besides are going to hate me for saying this, they will accuse me of being a Putin fan (I'm not, I'm sure he's a complete bastards but he's Russia's bastard)and many other irrational accusations will be thrown my way, but I'm a realist and unlike lefties who live in la-la-land I look at real world evidence. And I tell you thins:
The Rouble is fundamentally a stronger currency than the dollar which makes what is going on seem very strange?
Russia’s attempt to defend the rouble by pushing up interest rates has inevitably failed miserably. The central bank’s intervention once the currency was on the slide was pointless because the economy’s problems cannot be dealt with by monetary policy alone.
The fall in oil prices has painfully exposed the Russian economy’s dependence upon world consumption at a time of falling demand. Ironically this is not a result of American led economic sanctions which have hurt EU members more than Moscow, but are a result of the Arab response to one of Obama's attempts to shaft Russia. By using the much hyped shale boom to flood the oil and gas market and drive down prices he has pissed off the Arabs who have responded not by cutting production to keep prices up (they're not fools) but by pumping more oil to create a glut. Boggart Blog reported on this yesterday. This has now made oil so cheap America's oil boom is completely fracked, it costs them more to get the stuff out of the ground than they can sell it for. One trillion dollars worth of investment in new fracking projects has been cancelled. Russia has also found itself at the mercy of the Saudis, who might have pushed OPEC to cut output and restore prices, but chose not to. As stated above that was mainly to see off the threat from American shale, but as a bonus also it allowed the Saudis to kick Russia's arse for supporting their enemies in Syria and Iran.
Think it through. OPEC decides to pump oil madly when there is massive over supply. Why? Perhaps to retain market share but there is more to this. The dramatic drop in the price has also been engineered between the US and the Saudis, Qataris and other Gulf states. The impact upon Russia has been planned as punishment for blocking America's path to global hegemony and for propping up Isalamic leaders who refuse to bow to the Wahabi supremacy desired by the Saudi and Qatari royal houses. The risks are truly appalling as many European banks have massive exposure in Russia, fracking development in the US is seriously hampered and Euroland depends on Russian fuel.
The US wild determination to direct the rest of the world by saving the reserve status of the dollar is imperial madness.
Will it work? I doubt Mr Putin and his oligarch mates are suffering any personal inconvenience. As for your ordinary Ivan Ivanovitch in the Russian street, the old 'enemy at the gate' scare will probably serve to justify local hardships. you can bet the reasons cited as to why Russia is at loggerheads with the west will sound very different in Moscow newscasts to those spun by Western news organisations.
But before we start listening to Professor want-War or any other academic idiots or self declared experts as they shill for war, we should think long and hard about the version of events we have been sold. It is the EUSSR and USA adventurism which is causing the problems. It is the unparalleled acts of economic war by the west which are causing his internal problems. Russians have the wit the Ukrainians didn't possess, they know that the fall of Putin would signal the slavery and plunder of their nation as the last obstacle in the west to American corporate hegemony collapsed.
It is sad our politicians have failed do the same for Britain. Their duty was to defend the interests of our country and its people rather than being servile puppets of the USA and EUSSR and obediently parroting the mantras of globalism and multiculturalism. The Russians have the brains to say NO. So should we now we have the chance. in France, Germany Italy and Sweden as well as here in the UK the tide is turning.
There is a bigger picture to all this however. A systemic crisis in emerging markets has been wrought by the massive amounts of new money "printed" (bonds issued by government and bought in by central banks) in the US, UK and EU after the crash of 2008. Small nations and businesses in emerging economies have been encouraged to take on substantial dollar-denominated debts, this has proved increasingly costly as the US currency gained in value. The Russian state is not indebted and is a net creditor to the rest of the world, its balance sheet cannot withstand a continuing drop in the rouble but if the Russians hunker down they are in better shape to ride out their crisis. Meanwhile we must sever the umbilical cord that makes the free world dependent on America. Over to our economics expert. (SKIP to next)
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2015: Death Of The Petrodollar
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Are We About To Return To The Gold Standard
by Phil T Looker
If you listen to conventional financial news, they’ll all tell you that the ruble is in freefall, and that the dollar is the place to be. But if you look at the real data and I am a very data-driven person (so long at is not the fairy story data of climate science) take a stroll through the numbers and make an objective comparison between the US dollar and the Russian ruble. Better sit down though, if you are an Obama fan.
Start from the premise that ALL paper currencies are fundamentally flawed.
The global monetary system based on fractional reserve banking is insane — the idea of letting unelected, virtually unregulated central bankers pull as much new money as they can imagine, that money being underwriten by unsecured debt, out of thin air is simply irrational. But some fiat currencies have a more solid base than others. If you want to understand the health of a currency, you must look at the ISSUER of that currency, i.e. the central bank.
As with any business, one of the most important measures of its financial health is its level of solvency. In particular we look at the capital (i.e. net assets) as a percentage of the total balance sheet.
Meanwhile back in Moscow, the Russian central bank’s basic capital ratio is 12.5%—literally a much healthier figure than the Fed's.
A comfortably positive capital ration is muck like us ordinary punters having a stash of rainy day money. When the brown smelly stuff hits the fan it's what keeps you afloat. You might be able to keep on living hand to mouth for a considerable time, or even accumulating debt by borrowing against future expectations, but only until your car breaks down, or the domestic boiler blows up and you need a new heating system, for example. Then all of a sudden, your lack of capital can become a serious issue.
As it happens Russia is one of the most financially healthy nations in the world. Thus as they, along with China, have been leading a move to abandon the $US by concluding bilateral currency deals with their main partners, we must assume they have prepared for some response. Being the owner of the reserve currency has kept the American economy afloat for thirty years, they were never going to surrender that position lightly.
So where will this all end? I suggest you look at a central bank’s GOLD reserves as a percentage of the money supply, i.e. how much gold backs the money supply, because all the indicators suggest we will move back to a gold based global currency (why else would China be hoarding gold?).
In Russia, gold reserves are 6.2% on the money supply and rising. Last year it was 5.5%, and the central bank is continuing to heavily stockpile more.
How much gold backs the dollar? Precisely zero point zero percent. All that gold Bruce Willis and Samuel L Jackson prevented Jeremy Irons stealing from the vault at the Fed did not belong to the Fed, the Fed doesn’t own gold it merely looks after it for other people. It loudly proclaims this on its own website: "The Federal Reserve does not own gold. Eff off Irons, there's nothing here for you."
What the Fed holds is paper. Its capital is‘certificates’ which are redeemable for US dollars. But there’s not a single ounce of gold backing the US dollar.
So… with no gold and pitifully razor thin solvency levels, it really wouldn’t take much of a shock to topple the dollar.
By comparison, the ruble is much better capitalized and actually has something backing it.
Not that this means you should invest in Roubles, far from it. People who do that would be lucky to see their any of savings again. However hard, publicly available (but not online, for free) numbers clearly demonstrate the discrepancy between pro - western fervour and objective data.
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The Mediterranean Boat People Crisis - How Does Europe Deal With The Mediterranean Migrant Crisis
The numbers of migrants trying to cross from the Libya on the coast of north Africa to one of the EU's southern nations is increasing. Europe's impoverished southern nations can't cope. And in the better off nations of northern Europe immigration is a toxic issue which is fuelling the rise of anti EU parties from France to Finnland in the north and Hungary in the east. What can be done?
The Road To War With Russia
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Is The Chinese Cavalry About To Ride To The Rescue Of Russia's Economy
Ed Butt, The Daily Stirrer, 18 December, 2014
After the trials and tribulations of the Russian Rouble in currency markets this week (the Rouble has lost up to ten per cent of its value against the US dollar, excitable types in western media have been declaring the Third World War over. This is somewhat premature, buried under al the hyperbole was a news item that was far more significant that the scant coverage it received suggests.
While The White House, Whitehall and the leaders of western plutocracies crowed about how Putin had caved in, it was quietly announced that Russia had tied up bilateral trade deals with Turkey and India, though adding another two heavily populated nations to the growing club that have abandoned the US dollar as the reserve currency for international trades.
Retaliation was inevitable of course, our friends at Boggart Blog reported on how the American attempt to undermine the Russian economy by flooding the market with cheap oil available thanks to its shale boom has backfired in the longer term. The Arabs, pissed off with America's demands for co-operation in its games and Russia's support for Shia Muslims in the middle east, responded by pumping more oil and forcing prices down further. This has led to $1trillion worth of planned shale feacking projects being cancelled as uneconomic.
So what was loooking like a victory in an early skirmish for the USA is now shaping up to deliver a first round knockout for America's adversaries as the Russian leader prepares to play a trump card.
The Russians and their allies are not fools, they were bound to have kept a card or two un their sleeves as the Americans lashed out against nations involved in the move to abandon the Petrodollar. Amid the huge changes underway in the global economy which are a symptom of de-leveraging from the petro-dollar and the BRICS bloc turning it’s back on the west's wannabe hegemon, new alliances and economic partnerships are being formed. Russia and China are old pals of course so it is no surprise that the worlds second largest economy about to bail-out it’s partner?
From the South China Morning Post: "Russia could fall back on its 150 billion yuan (HK$189.8 billion) currency swap agreement with China if the rouble continues to plunge. If the swap deal is activated for this purpose, it would mark the first time China is called upon to use its currency to bail out another currency in crisis. The deal was signed by the two central banks in October, when Premier Li Keqiang visited Russia.
"Russia badly needs liquidity support and the swap line could be an ideal tool,” said Bank of Communications chief economist Lian Ping. The swap allows the central banks to directly buy yuan and rouble in the two currencies, rather than via the US dollar. Two bankers close to the People’s Bank of China said it was meant to reduce the role of the US dollar if China and Russia need to help each other overcome a liquidity squeeze.
The central banks of China and Russia signed a 3-year, 150 billion yuan bilateral local-currency swap deal today, according to a statement posted on PBOC website, which signals a fully funded deal in support of the currency. Either that, or Russia could sell it’s gold reserves.
Bloomberg reports:Russia’s surprise interest-rate increase failed to stop the plummeting ruble. Another tool available to repair economic havoc caused by sanctions and falling oil prices: selling gold.
Russia holds about 1,169.5 metric tons of the precious metal, the central bank said last month. That’s about 10 percent of its foreign reserves, according to the London-based World Gold Council. The country added 150 tons this year through Nov. 18, central bank Governor Elvira Nabiullina told lawmakers. The Bank of Russia declined to comment on its gold reserves.
Russia’s cash pile has dropped to a five-year low as its central bank spent more than $80 billion trying to slow the ruble’s retreat. The currency’s collapse combined with more than a 40 percent tumble in oil prices this year is robbing Russia of the hard currency it needs in the face of sanctions imposed after President Vladimir Putin’s annexation of Crimea. A fall in gold prices signals that traders are betting that the country will tap its reserves, according to Kevin Mahn, who oversees $150 million at Parsippany, New Jersey-based Hennion & Walsh Asset Management.
“Russia is at a critical juncture and given the sanctions placed upon them and the rapid decline in oil prices, they may be forced to dip into their gold reserves,” Mahn said. “If it happens it will push gold lower.”
As Winston Churchill once said, "This is not the end, it is not even the beginning of the end, but it is the end of the beginning. World war Three will be fought not in the skies over the Atlantic and Pacific, nor on the great plains of North America or the central asian steppes, but in the dealing rooms and currency exchanges of the world's financial centres. Well it will until the Americans realise they are losing.
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Don’t believe American lies about Russia
Our sanctions caused Russia’s downturn. They protect Big Oil, the well-connected, and make the world more dangerous PATRICK L. SMITH - New York TimesIt is true that Russians are besieged. Until you look south and east. China and Iran are long time partners, India and Turkey have just signed trade deals with Mocow. Sanctions the West has insisted on prosecuting in response to the Ukraine crisis — Washington in the lead, the Europeans reluctant followers — are hitting hard, let there be no question. but they are hitting the EU harder. Oil prices are at astonishing lows, probably if not yet provably manipulated by top operatives in the diplomatic and political spheres. This has cause $1trillion of investment in US shale facking projects in the US to be cancelled and now oil prices have fallen so far it is not economical for US producers to get the stuff out of the ground because the fracking process is ludicrously expensive in relative terms.
Russia is isolated. NOT! The USA has mede itself hugely unpopular around the world thuough its heavy handed attempts to dominate seconomically and influence culturally the smaller nations that must deal with it. Russians are hot everywhere. With an energetic activism just as astonishing as the oil prices, Russian officials, Putin in the very visible lead but with swarms of technocrats behind him, are building an extensive network of South-South relationships — East-East, if you prefer — that are something very new under the sun. Some of us were talking about South-South trade and diplomatic unity as long ago as the 1980s.
The siege of the Russian economy (sic), has become a significant catalyst in the the creative response of a nation under ever-mounting pressure. Timothy Snyder, the Yale professor whose fuckwittery on the Ukraine crisis is simply gobsmacking as he acts as cheerleader for those who think World War Three will serve their interests, was raving months ago that Putin is threatening to undermine the entire postwar order. In fact it is Obama who threatens the world order as he pushes trade treaties like TPP and TTIP that demand nations surrender sovereignty over their laws to global corporations.
The most gobsmacking lie is that the west is winning. In fact Russia is advancing this world-historical turn with a considerable assist from its adversaries in the West, where economists addicted to debt have driven nations to the brink of insolvency with no margin against sudden shocks as we reported above. For all the pseuds who pretend to know Schumpeter but know only one thing, the creative destruction bit, how is this as a prime example of the phenomonon?
Consider the size of the Russian economy. It is the world’s No. 2 producer of natural gas and No. 3 producer of oil. In terms of nominal gross domestic product — standard measure — Russia’s economy, at $2.1 trillion, is slightly larger than Italy’s. Another measure, purchasing power parity, values Russia’s economy at $3.5 trillion, but never mind: Even by nominal GDP, a totally false measure based on churn of currency rather than generation of wealth, Russia is the world’s No. 8 economic power. Weight againt that the proportion of Russian GDP that is generated by domestic consumption however and the picture looks very different and a lot more resilient than the western economies with their wafer thin capial ration.
Comfortable now with the sanctions regime, are we?
The cliques in Washington are because the U.S. trades very little with Russia and neither politicians nor academics have a firm grasp of limits. This is cynicism made flesh when you consider Europe’s vulnerabilities. The contagious economic and social crisis is already spreading to nations near Russia’s borders.
As Germans and a few other European nations understand, try to take down this beast and blood will flow everywhere. Now you can see, maybe, why one consequence of the Ukraine crisis is a serious deterioration of relations between America and those known as “the allies,” a term that has masked many complications since the Cold War’s onset.
And the more we learn of what is really happening in Ukraine, the worse the picture gets. And it is not just Ukraine.
Everyone thought that any major monetary policy surprises and/or capital controls today would come from Putin during his annual press conference. Boy were they wrong: just after 2 am Eastern, none other than the Swiss National Bank joined the ranks of the ECB in scrambling to stem the wave of capital flight, not to mention the cost of money, when it announced it too would start charging customers for the privilege of holding cash in its banks, when it revealed a negative, -0.25% interest rate on sight deposits: a step which according to the SNB was critical in maintaining the 1.20 EURCHF floor.
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Believe The Phoney Narrative Or Be Branded a Conspiracy Theorist.
Right now the west is in big trouble, the move led by Russia and China to dump the petrodollar as global currency has provoked the Americans to lead the wesern allies into an economic war that we cannot win. Why not? One word: debt. A shooting war is the only option but it's by no means certain the allies would win that.
EU imposes sanctions on Russian oligarchs
Russia, Ukraine, The Petrodollar War and the shooting war
USA Engineered Ukraine Regime Change
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China-Russia currency agreement further threatens U.S. dollar
As long ago as 2010 China and Russia were planning their currency war against the USA when the two nations agreed to let their currencies trade against each other in spot inter-bank markets.The aim of this move is to promote the bilateral trade between China and Russia, facilitate the cross-border trade settlement using the yuan or rouble rather than traders having to settle in US dollars, and benefit their local economies by reducing the cost involved in currency trades, according to Chinese officials.
This constitutes a continuation of efforts by both countries to abandon the U.S. dollar usage in international trade threatens the dollar's reserve currency status.
For example, when Malaysia and Germany exchange goods, the transaction is often denominated in dollars. In particular, oil -- something that all modern economies need -- is denominated in U.S. dollars (hence the appelation 'petrodollar', so the currency is almost as indispensable as oil itself. So long as the dollar remains the reserve currency, it has the effect of propping up the ailing US economy, allowing the U.S.A. to dictate the price it will pay for goods it imports and to carry enormous deficits deficits because its debt is denominated in U.S. dollars and can therefore print unlimited dollars to pay the interest on its $20TRILLION of government debt and inflate its way out of default. America, understandably, wants to protect these privileges.
Some economists claim that the U.S. is so desperate to protect this status it invaded Iraq because the country began selling oil in euros instead of dollars (How Saddam may yet win the war, 2005). Now, the U.S. is allegedly threatening to invade Iran because of the country's desire to use euros or Russian rubles in oil transactions.
Meanwhile, China and Russia are leading a rebellion against the U.S. dollar. This latest move to shift bilateral trade away from it is significant in itself because China-Russian trade, previously denominated in dollars, is currently around $40 billion per year. For Russia, trade with China is larger than trade with the U.S.
As the policy has been extended to Russian exports of oil and natural gas to other nations than China, it threatens the global petro-currency status of the U.S. dollar.
According to statistics compiled by the International Energy Agency, China is now the largest consumer of energy, although the U.S. is still the largest consumer of oil. However, China, now the largest automobile market in the world, is expected to rapidly increase oil consumption so we must expect it will overtake the USA in oil usage in the next few years. Russia is already the second biggest oil exporter and the biggest natural gas exporter in the world. Iran has been the subject of sanctions imposed by the US led United Nations for years, but sells it's oil to China and through intermediaries to traders on the world spot markets.
In other words, the growing importance of Russia, China and Iran in the global energy picture and their phasing out of dollar usage for trading energy commodities is likely to undermine the status of the dollar. Given that other oil producers, including VGenezuela and Nigeria, and oil users such as Australia and Japan are also eager to join the Russo - Chinese bilateral trades system puts even more pressure on the USA.
Russian ambitions against the dollar for energy exports go back to 2006. That year, President Vladimir Putin, who was in his first tenure as president, made plans to set up a rouble-denominated oil and natural gas stock exchange in Russia (how this is being implemented is reported elsewhere in this document).
For China, promoting the use of yuan as a reserve currency for cross border trades is the goal they neee as necessary to their ambition to become an economic superpower. Over the past few years it has allowed its currency to trade against the Malaysian ringgit, the Thai Bhat, the Indian Rupee. This is in addition the currencies of Pakistan, Japan, Ne Zeland, Indonesia, Burma, Australia and South Korea. The Yuan also trades on the London currency exchanges. Just like the deal with Russia, the purpose of these moves is to promote bilateral trade between China and Malaysia and facilitate using the yuan to settle cross-border trade.
Trade is the major reason for the demand of foreign currencies in the first place. So as countries like China and Russia phase out the usage of U.S. dollars for international trade -- including but not limited to oil trade -- its status as the world's reserve currency will continue to slide.
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Soros Declares War on Bitcoin In Speech At World Economic Forum In Davos
Addressing delegates to the World Economic Forum Held In Davos, Switzerland, billionaire investor George Soros dismissed the current investment fad for cryptocurrencies as being "only for criminals and money launderers."
Soros thinks crypto currencies are exclusively for criminals? That is beyond irony. I suppose it means Soros, being the crook he is, has invested a few billion $$$ in Bitcoin then?
But let's think for a moment what for "cryptocurrencies" really are and how this Bitcoin - led fad for digital currencies rates as a long term investment.
Let me explain what a currency is and why bitcoin is not a currency, and also what would have to change to make it a currency.
It should be becoming clear that bitcoin is not a currency, if it was a currency you would be able to price a 30 year home mortgage in it and the buyer would know what they were going to be paying and the seller would know what they were going to be getting. That is not and can not be the case with bitcoin or any of the other currently available digital assets commonly refereed to by the misnomer "cyptocurrency" , but why?
To explain why bitcoin is not a currency you first need to understand what currency is. Currency is the base UNIT in a system of measurement for value. The reason that bitcoin is not a currency is because it is not a unit of measure. Units of measure all have socially objective definitions and are a constant, bitcoin can not be defined in objective terms and is therefor not capable of being a unit of measure and is therefor not currency. That reason alone would be enough to bar it from ever functioning as a currency, but we will look at a couple others as well.
The astute reader will be noting at this point that the worlds reserve currency the US dollar is also suffering from this same condition. It has not been definable in objective terms for the last 46 years, ever since the closing of the gold window by Nixon and the end of the bretton-woods agreement. Exactly, the USD is no longer a currency, for the same reason that bitcoin is not a currency, Its not a unit of measure. So, the question becomes why are we able to make long term economic calculations with the dollar and not bitcoin? The answer is simply that we are operating the system off of the legacy of the gold standard. If the usd dollar were to be introduced in a similar manor as bitcoin without the legacy of a objective definition/standard, it too would have massive stability issues and would not be capable of pricing long term economic projects. The fact that the dollar is not currently a currency should be concerning.
The next major reason that bitcoin is not and can not be a currency is that it has a predetermined hard limit of around 21 million. Units of measure must have an elastic supply without any arbitrary limits. There is not a hard limit to the number of inches, pounds, hours etc. and there can not be a hard limit to the unit of measure for value either. If we wanted to create all value units in advance and keep the definition a constant we would have to know all of the value man is capable of creating, in the same way that if we wanted to create all of the units for the measure of length in advance we would have to know all of the length we might need to quantify in advance, both are unknowable.
The final reason that bitcoin is not a currency is that it contains the property it is supposed to represent (value), all units of measure with the exception of the unit of measure for value have evolved to become artifact free, there is literally no there there just words on a piece of paper. Inches contain no length, pounds contain no weight, hours contain no time and currency should contain no value. Science has proven that units of measurement should not contain the properties they represent. Which brings us to the difference between money and currency. Money is the most traded of commodities, contains socially objective value, and is used as a unit of measure, (examples would be gold,silver, salt, oil, water, paper notes). Currency is strictly a representation of value (examples would be coupons, air line miles, business to business barter credits, digital USD balances). Money is the inch worm (contains length and represents length), Currency is the inch ( a pure representation). We no longer use money in the same same way that we no longer use the inch worm. In the same way inches have much greater accuracy and utility than inch worms, currency has much greater accuracy and utility than money.
In conclusion the way to create a true digital currency is to first define it in socially objective terms, second is to remove the limits and let the unit have an elastic supply and lastly to ensure that the unit does not contain socially objective value and is solely a pure representation.
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