One of the most overused phrases in economic discussions is “petrodollar”, especially by those inclined to doomsday theories. Right behind it is the phrase “reserve currency”, which gets tossed around almost as much as petrodollar. For most people, these are terms that no longer have a practical meaning. They are words that are supposed to mean something bad. The petrodollar as the world’s reserve currency is the tool of the evil money men in Washington.
For starters, the petrodollar is not a real thing. It is simply a term to express the fact that in the 1970’s the large oil producing countries agreed to use the dollar. If you want to buy crude from the Saudis, they accept dollars and dollar equivalents. They will accept Chinese yuan or Vietnamese dong, but they will be converted to dollars. In the case of Vietnam, they may discount the exchange due to administrative costs. Otherwise, they turn the dong into dollars.
This agreement to price energy products in dollars is what makes the dollar the world’s primary reserve currency. Everyone needs energy, so if the energy guy will always take dollars for payment, then the world will always keep a supply of dollars around, not just for energy purchases, but as a reserve. In other words, the dollar’s position as the primary reserve currency is tied to the fact that energy is priced in dollars, so everyone has to have dollars around to buy energy.
Now, why did the Saudis agree to price everything in dollars. The main reason is they got something for it in return. What they got is a guarantee that the United States would protect the kingdom from threats in the region and never side with the wrong faction among the Saudi royal family. That last part is important. Joe Biden, as Vice President, sided with the faction opposing Mohammed bin Salman, the current Crown Prince and Prime Minister of Saudi Arabia.
This is why the Saudis are now open to pricing their energy products in Chinese yuan and maybe other currencies. Since Russian products are now priced in rubles, the ruble has become one of the strongest and most stable currencies in the world. Lots of countries now need to hold rubles, because lots of countries need to buy Russian energy and agricultural products. Lots of people need to buy Chinese manufactured goods, so you can see the appeal there as well.
To finish the thought on the Saudis, they no longer see Washington holding up their end of that bargain struck fifty years ago. Russia and China, on the other hand, are willing to help in that regard. The Chinese brokered a deal between the Saudis and Iran, which is an enormous development. Iran backs the rebels in Yemen and the Saudis back anti-regime forces in Iran. This new deal solves a problem for both countries and makes the Chinese the honest broker of the region.
Further up the road, the Russians have slowly been putting together a deal between the Turks and the Syrians to end the long bloody war in Syria. That war is the result of regime change efforts by Washington aimed at Syria. The Turks had been party to that scheme, but they have changed teams and now oppose regime change. The looming settlement of this problem, brokered by the Russians, will alter the dynamics in the region and further push Washington out of the picture.
Taken together, the regional players are now looking to Russia and China to help keep the peace and be the honest broker. Getting back to that old deal between Washington and Riyad, if Washington is no longer keeping the peace, then why only accept Washington’s money for energy products? If the world is increasingly comfortable holding yuan, to buy Chinese goods, and rubles, to buy Russian products, why not hold those currencies and accept them for payment?
This is why arguments like this one promoted by Darren Beatty at Revolver News miss the point of what is happening with the dollar. The writer just assumes that because things have always been this way, they will always be this way. It is as if he thinks the dollar has magical qualities that make it the primary reserve currency. The dollar’s value in the world is pegged to practical things. If those practical things decline in value or disappear, then the dollar loses its power.
What is taking shape is that the global conflict between the Global American Empire and the emerging power centers of the world will include a currency war. Both China and Russia clearly get this aspect of the conflict. Both countries are working to not only make their currencies more stable, but they are also building out the infrastructure to make dealing in their currencies easier. China and Russia are making it easier to do business with them in their currency.
What is happening is that as we move from the monopolar world of the post-Cold War era to the multipolar world, we are sliding into a currency war. As a practical matter, Washington will no longer be able to abuse the dollar as it has recklessly done for the last thirty years. This means Washington will not be able to export inflation in the form of excess dollars to other countries. Those other countries will now have choices, with regards to investment and reserves.
This does not mean the collapse of the dollar or a collapse of the empire, at least it is not a foregone conclusion. Instead, it means Washington must enter a period of reform similar to what followed the Second World War and the collapse of the gold-backed dollar in the 1970’s. Currency wars are the result of changing political and economic relationships that demand changes in money relations. The petrodollar solved a problem at the time and its end solves a problem of this time.
Whether or not there is the talent in the ruling class to pull off the needed reforms is the great question that looms over this currency war. The Fed chair is obviously in over his head, but there is no one in Washington noticing this. The current administration is staffed by lunatics and buffoons. The Republican side is trapped in the last century, unable to accept that the world has moved on from the 1980’s. Prospects for reform are grim at the moment, which is what makes for a crisis.
Even so, we are entering a period similar to the 1970’s in that we will have periods of inflation along with declining real growth. Unreliable money relations make for unreliable economic relations. America emerged from the last century as the global hegemon because she won the currency wars of the last century. The disposition of the American empire will be defined by the new currency war and what comes out the other side of the process will also be defined by the currency war.
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Revolver is a joke, it ranks right up there with The lancet.
That revolver article is funny.
The guy breezily dismisses the idea that the dollar’s status is driven by US military supremacy. And then sites as his first point supporting that assertion that the US is still the world’s hyper power – unmatched militarily.
The res of the article is just hand waving to obscure the reality he refutes – then embraces in the first paragraph.
The petro-dollar gave the GAE a few exorbitant privileges
They could print money out of nothing and exhange it with other countries against real assets (industrial products or oil). In the future, America will have to trade something valuable against what it purchases,
Hence a sharp future decline in leaving standards, extremely easy to observe every time you do your groceries
Good post.
Z. The only problem with this post is the very problem now at the center of dissident politics. Demographics.
Everyone is on here posting about currency reforms and re-shoring industry, et cetera.
The problem is we are now/becoming a minority white country. This includes pleasures like a 1 party state, lack of talent/skilled workforce, et cetera.
Managerialism will continue to grow because the population wanting it is growing and the population not interested is declining.
The GAE is not reformable because it committed ethnic suicide already. Manufacturing industry is not coming back to the United States, the currency will be in decline for the foreseeable future, our currently livable cities will become Third World cr*p holes that are unlivable. And no one is going to want to buy real estate in the middle of American cities as the crime and insanity continues to destroy everything. Until white people start acting in our own favor any and building our own communities separate from everyone else, it is only going to get worse and worse for white people and the nation. The Empire will last for a while longer until it grinds down the last of the blood/talent and money out of the remaining white people. Only white cultural reform will allow for reform in the Empire. And not enough white people have woken up yet.
Z- we’re not in the 1970s either.
Inflation and currency wars are not our worst problems, we’re in the 2020s and both the American people and the American Empire are fighting for survival, with each other as mortal flow. America can no longer go on half Nation and Half Empire, one or the other must win. We 🇺🇸 Are going to War, actually Wars. Certainly abroad, probably at home.
We 🇺🇸 The United States of America are rapidly reshoring industry as WE are going to War. This could not be clearer, it’s when and Who.
My Dears on this the Elites agree, which is why it’s happening.
The Empire wishes to live, DC wishes to live, DC doesn’t think they live if the Empire collapses and they may well be correct- but above all this is an Emergency and War government since FDR. They don’t know how to do anything else. Well beyond war profiteering or the grossly overexposed Neocons sticking their noses out too far. The elites have begun to defect back to America, their ally against the Globalists is DOD, DOD has only one real card and it’s war. They may tell themselves we’ll reshore industry then pursue peace through strength, as the Globalists control Foreign Policy that’s not within Nationalist Elites control (I mean they love the nation, not White Nationalist).
Or they at least want a better America, even just to show off or make money in a more stable nation.
The most serious faction of pro- American elites wants Space and will pay any price to get space, hello my dearest ally DOD. So war…
…the question is where and how bad.
Something strange will happen in these wars- we’ll 🇺🇸 win. The nation will win, because both the Empire and the nation need to win as they haven’t since the 1860s. The Globalists won’t be able to sabotage DOD and the nation, along the way we of essential necessity get manufacturing back in America. This will both placate and empower the working class and pro-American elites.
The outcome of all this is unknown, that it’s all settled at home and abroad by war is decided.
I’m reliably informed that the US has some super secret wonder weapons that are going to shock the world (PRO, I guess?).
Also told that they’re one-time-use, irreplaceable once spicy times commence. Think “rod-of-god” type stuff. (CON, once the US adversaries figure it out. They’re going to be uber pissed off.).
All this to stop things like the belt and road initiatives, which would make the US Navy superfluous for most of the world’s population.
Are we the baddies?
We’re in a race war and you’ll talk about anything but that.
Ok, boomer.
None of this is possible because the people that made the empire possible are/have committed ethnic suicide. America is not coming back to 1985 because the ethnic make up of our population will not allow it. White people are headed for a very small fractional minority status in America. The Empire will straggle on until it uses the last talent/money/blood of white people up. How do you go bankrupt? Slowly at first and then all at once. The same will happen to nation as the white people die off/continue to ethnically cleanse themselves.
This was a very interesting post, and there were a lot of interesting responses.
It seems very clear that the reform means greater budgetary and fiscal discipline. It means that we will need to pay our debts out of production and not money printing, borrowing and offshore money flows. That will mean a radical curtailment in government spending, or a default on the debt. Even a curtailment may mean a partial default. Of course, there will be no way around the pension and stock market pain this will cause as well. This may be just as well. Better to bring Mom and Dad home for care in their final days than to be abused in a nursing center.
We all know who gets a significant portion of welfare state largesse. In a time of declining living standards, the number one issue is addressing the Anti White regime. We once had the financial ability to throw money and our once great cities on a never ending bonfire of largesse to fund and shelter a dysfunctional albatross population. We once had the ability to tolerate Anti White hiring, lending and contracting practices. We were greater in number, wealthier and backed by an ability to borrow and spend into oblivion. That ability was backed by the blood and martial prowess of our men who overwhelmingly contributed to our military – whether the mission was well or ill conceived. They provided the credible threat, and gave their lives over to it. We have sacrificed enough. And for what? To be cast aside and scorned to feed the delusions and excuses of the failed.
After making those sacrifices, we are being thrown under the bus and put last in line by an explicitly Anti White Regime. In an environment where we need all of our resources to ensure our well being, the old appropriation is still a ball and shackle. Now one hand is being tied behind our back if not our legs are being cut off.
As we enter this period of reform, whether tackled head on with bold and brilliant leadership or by a tsunami brought on by deep incompetence if not malevolence, the number one issue for us is addressing the handicaps and injustices of the Anti White Regime. No more welfare state appropriations. No more discriminatory hiring practices. No more discriminatory training and job development programs. No more discriminatory lending and contracting programs.
Of course, we need to do our part and build ourselves and our people up. We must have all of our own resources at our disposal to do so. Whatever politician stands up and champions this cause is going to have a tsunami of support. It will only grow over time as the multi-polar world forces fiscal restraint and the difficult choices upon our nation. It will only grow as the doors that once welcomed us to come and prove our worth are closed. The Anti White Regime must go.
Z said: “The Fed chair is obviously in over his head, but there is no one in Washington noticing this.”
I would be really curious about Z or other’s take on Tom Luongo’s thesis that Powell is now temporarily on our side. This whole shitstorm of international finance is mind-numbingly complicated and, I think, deliberately so. To greatly simplify, if the Fed raises rates (which it is doing) it screws over certain GAE factions (Davos, Blackrock etc.) but controls inflation for the middle class. If the Fed cuts rates and goes back to QE, the assholes (GAE) are relieved of pressure and inflation kills the middle class.
If Powell is in over his head, what the hell does that make Yellen?
There’s been a constant back story about Yellen, having been affirmed upward as a bint who ticked all (or most) of the right boxes, effortlessly rose to a height where the real world vanished.
Powell is an improvement, he’s merely baffled.
The millennium so far, ain’t looking good.
That theory seems, at best, like wishful thinking to me. At worst, it’s deliberately misleading.
No, the chairman of the federal reserve is not going to save us. It should be common knowledge to everyone here at this point that the central bank is the belly of the beast. Powell is not and never will be your friend.
The reality of the situation is the fed’s policies have enable all of the evil things that the DoD, federal government, Wall Street, etc. have been up to for over a century now. This includes the ridiculous things the fed did during Covid under Powell’s watch.
The act of raising rates is not about helping the middle class fight inflation. It they wanted to do that they wouldn’t have left rates at zero for over 10 years. No, it’s about destabilization; it was a trap.
The ensuing crisis will be used to accomplish various things include but not limited to: ushering in “stakeholder capitalism” (destroying property rights), introducing CDBCs (destroying what’s left of financial autonomy and privacy), and possibly yet another war. Sorry to disappoint.
Instead, it means Washington must enter a period of reform similar to what followed the Second World War and the collapse of the gold-backed dollar in the 1970’s.
++++++++
You had me to right there and then I had to chuckle. Washington is incapable of economic or monetary reform. The current chuckle heads can’t do it, and so we’ll need new chuckle heads and that means an event must happen that will cause them to lose their position.
this may sound like a stupid question (and maybe it is) but what’s to stop a country from ‘creating’ $1T out of thin air?
Backed by what?
“this may sound like a stupid question (and maybe it is) but what’s to stop a country from ‘creating’ $1T out of thin air?”
Not a stupid question. Any country can do it. Zimbabwe does it with far bigger sums. They have 100 trillion dollar banknotes. The problem is to get someone to accept that money created ex nihilo in exchange for real goods. The USA has used military coercion to achieve this and also the fact that in the past the USD actually used to be backed by a manufacturing base and/or the USD was 25% backed by gold until 1971 and some of that past luster of the dollar lingers on. But this game can only continue for so long. Eventually no amount of coercion will persuade another country to accept fiat money created by a deadbeat country on its way down,.
In a technical sense, absolutely nothing. In a practical sense, there are a couple things that keep that impulse in check. First, devaluing a currency reduces it’s value to voluntary users. Not everyone who currently uses a given currency, like the dollar, have to use it (US citizens living in territory have to, of course, but foreigners in foreign countries aren’t necessarily forced to, so it’s important to provide stability in order to keep them using the dollar).
Second, rapid inflation destabilizes prices, which encourages spending and discourages lending. In America’s particular situation, making dollars worth less in real terms in order to write down debt is practically the same as raising interest rates because both scenarios, from a lender’s perspective, are a practically negative rate of return.
What the fed is trying to do is wean financial institutions (basically every Fortune 1000 company) off cheap credit, preferably slowly so as not to trigger massive bankruptcy. If companies had shown any sort of fiscal responsibility and not leveraged themselves to the max with debt, this would be feasible. However, very few companies have enough cash reserves to afford an increase in rates, so massive bankruptcy is inevitable. Incidentally, monetizing debt is the same as bankruptcy, and locks in inflation, and consequently locks in a real loss in ROI, which is why the fed is unlikely to mint a couple trillion-dollar coins.
Money, as opposed to currency, has three functions; A means of exchange, a unit of account and a store of value. Wanton printing makes a mockery of the first- everybody wants a one way exchange- to exchange dollars as soon as they get them, hopelessly complicates the second and destroys the third. It is the last act of a desperate regime.
Zman – Another stellar post. And a terrific and very educational comment thread, gentlemen. Many thanks for all the informative and witty comments, gentlemen!
one thing not addressed. it they decided that they would only do business in yuan, the Chinese would have us by the short hairs. we would have to exchange dollars for yuan to buy the manufactured goods we need. America lasts about a month without Chinese manufactured medicines and maintenance parts.
if your look at the WEF video on the world in 2030 they said in 2020 ” The US won’t be the world’s leading superpower, a handful of nations will dominate. ” their exact words . https://m.facebook.com/worldeconomicforum/videos/10153982130966479/?locale2=ga_IE
A handful means more than 2. It usually means more than 3. It’s hard to picture more than 3.
But it is easy to picture 2 or 3
USA, Russia, China, India, Germany(?), Japan, South Korea, Turkey, one of the Central Asian stans, Brazil and maybe a couple more.
The USA will still be a force to contend with but it will not be the only one.
I don’t think it’s true or fair to say that Jerome Powell is in over his head. He may be one of the only important persons in the Western world who isn’t. He is a very different animal from Bernanke and Yellen. They were academics; he is an old private equity guy with wizened experience of skin in the game. I consider him one of the very few beacons of sanity in this world, and I pray for him.
Agree. The Fed chairman, that is, even an honest and sound man, has as much chance to steer a sound monetary policy now as, as Z has written, elections do in changing the ways of imbedded government in this era. And no one has sat over a shitstorm of this magnitude, inclunding 1929.
OT:
Meanwhile, in France, the police are now beating women for WEARING face rags:
https://twitter.com/Ak_bh2047/status/1636600861978951681
I hate this timeline.
Good, I am sick and tired of seeing face diapers
I won’t interact with someone wearing a face rag at this point. And yet, in the Far East, entire nations of supposedly high IQ people continue to wear them. Is this it? Is this now permanent in their countries?
KGB: Communitarian and compliant bugmen.
I thought they always wore them bc of pollution. They wore them preCOVID.
Can confirm, i saw many Japs wearing masks back in 2000 when I was there. They would wear when they were sick to limit the exposure of others.
Face rags enable enormous amounts of criminal activity.
They were illegal in the south for decades, because no one wanted to be outed as a KKK sympathizer.
Cameras are everywhere. Storage is cheap. Computerized facial recognition gets every better. Those in power on the left know that their shock troops won’t engage unless they can wear their masks to do their dirty work.
We need a new sign for the doors of businesses:
No Mask, or No Service (and a gun pointed preemptively at your face).
Trust – that is the essential ingredient the US has squandered … trust is irreplaceable. The only reason the EU stays in our corner is they prefer an American hegemon across the Atlantic over a German or German/Russian hegemon next door.
As the rest of the world finds its way to alternative stability alliances, they tip toe around insane Washington like DC is a demented uncle playing with dynamite in the attic.
Putin brought tactical nukes into Belarus as a smart precaution, because he fully appreciates the level of insanity coming out of our capitol. It was a smart move in that it shows that he fully appreciates the US can no longer be trusted.
Would take at least a couple of generations merely to begin rebuilding it, if begun right now
“Putin brought tactical nukes into Belarus as a smart precaution, because he fully appreciates the level of insanity coming out of our capitol.”
Virtually everything poor Putin does is merely a reaction to western aggression and provocation. Same here. This piece explains what happened:
https://www.indianpunchline.com/moscow-calls-out-us-rules-based-order-in-europe/
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“they turn the dong into dollars.”
Are they porno film stars?
“I’m Ron Jeremy, and I approve this comment.”
Andrew Curtis made an interesting documentary touching on the US-Saudi relationship going back to FDR:
https://www.youtube.com/watch?v=1pn2z7zp1V0
JMHO. The only thing in the long term that can save the dollar is for America to reindustrialize. Real GDP, not phony GDP as counted by Washington, is what makes a currency strong. That would prove very difficult to impossible now due to our social capital.
America at this point just does not produce enough valuable and useful things.
Reindustrialize would kill the dollar as the GFC – and that would be a good thing.
You can’t have the GFC without trade deficits. Reindustrialize and those trade deficits go away, starving the global trading and banking system of dollars, forcing them to use other currencies.
The GFC and trade deficits go hand in hand.
Is that really true? The US ran a trade surplus in the 1950s and 1960s. The deficits didn’t start until the 70s.
Before the early 1970s, the dollar will implicitly linked to gold. You could argue that gold was the GFC. Most currencies were pegged to the dollar, but the dollar was pegged to gold.
People used the dollar, but the real currency was gold.
After we closed the gold window and the dollar became the end of the line, that’s when the deficits started to show up.
If we reduced our trade deficits to zero, how would China, Europe and Japan get enough dollars to buy energy and food?
The value of the dollar would skyrocket. That’s the irony of all this “death of the dollar” talk. The dollar might die, but its death likely would be preceded by the dollar increasing in value – dramatically.
“If we reduced our trade deficits to zero, how would China, Europe and Japan get enough dollars to buy energy and food?
“The value of the dollar would skyrocket.”
That’s not correct. Why should these countries use dollars at all? No need. If China wants to buy oil and gas from Russia, or from Saudi, for that matter, it doesn’t need to use dollars.
The real US economy is a small an declining percentage of the real world economy. That’s the crux of the problem. It’s not like the halcyon days of the immediate post-WW2 period, when the USA accounted for half the world’s GDP.
Put another way, a country that has a small real economy cannot continue to have its currency as a reserve. And being a reserve currency the way the dollar has been is something with a limited lifespan. Eventually no-one wants to hold dollars because there is nothing to buy with them and even countries that had hitherto accepted them (like Saudi) now prefer to be paid in another currencies.
Arshad,
You’re wrong on every point.
“Why should these countries use dollars at all?”
These countries may not need the dollar to buy some energy and food, but I’m talking about the entire world’s need for dollars. Most other countries will still need dollars to buy oil, nat gas and food.
And what about other trade. Around 80% of trade globally is done in dollars. In North and South America, it’s 96%. In Asia, it’s 74%. Hell, even in Europe, it’s 20%.
The world needs dollars to trade and that’s not just for oil. It’s everything.
Just as importantly, there’s debt service. There’s $15 trillion in dollar-denominated debt outside the the US. Dollar debt makes up 60% of all world debt. Those debts need to be serviced and for that, you need dollars.
So, no, a few trade deals using yuan and rubles isn’t going to change that anytime soon. It will someday, but it’s a long process.
“Put another way, a country that has a small real economy cannot continue to have its currency as a reserve.”
The British pound was 55% of global reserves into the 1950s by which time, Britain’s economy was a joke. Britain’s economy and empire had been falling fast since the end of WWI, but it took another 30 years to finally see the end of the pound as the GFC.
I’m not trying to defend the dollar or the neocons, but people need to understand that unseating the dollar will be a long process.
But that process has begun.
“Most other countries will still need dollars to buy oil, nat gas and food.”
That’s not correct. The point is they’re not going to be buying oil and nat gas from the USA. Why then to use dollars? If USD, why not Zimbabwean dollars, for that matter, with the same argument? Suppose Saudi, Kuwait, and UAE say, “You can pay us in rubles or yuan.” Why then a need to hold dollars?
“Britain’s economy and empire had been falling fast since the end of WW1”.
Not true.
Uk’s economy in the 50s was a joke
Hmmm. Dealing with the aftermath of WW2 but still in a situation where Eisenhower was trying to get them into war in Vietnam to aid the putative US intervention.
One thing to take into consideration is that Paul Volcker gave us a 30 year lifeline on the dollar because he concentrated on its internal value. Part of the deal in having vast amounts of foreign wealth held in dollars is that it generally holds its internal value. It’s not the Brazilian Real. Given what’s been happening, the future inflation level will tell us how long the dollar has. Even the current 6% level is not acceptable for them in the long term. However, we get back to the sordid topic of national debt finance. Interest rates are sort of at a ceiling right now, so if inflation goes to 7%, 8% or more from here, there’s no brakes on the car.
current inflation of 6%?? i would love it if the inflation rate were that low!
On paper. Sure, you can add a couple percent. No one really knows with government stats. Which is why TIPS aren’t doing anything right now.
karl von hungus: Agreed. We were discussing this same matter with a friend the other night and my husband suggested it would be far more accurate to put a ‘1’ before that ‘6.’
Agreed. Just anecdotally based on my own basket of goods, it feels like about 15%. As a double check, having lived through the 70s, I can attest it feels pretty similar. The BLS calculations were changed in the late 90s to drive down the official inflation measure, implementing circular calculations like changing product weightings for high/low inflation items (substitution effect), trying to filter out product improvements, and swapping out home prices for esoteric comparable rent calculations.
The BLS calculations
You got an extra letter in there.
Zman, whats 30 trillion with 10% rates attached to it???
😉
The end of empire.
is any of that $30T in long term notes?
longer i believe, but it won’t matter when people stop buying the debt period.
https://www.investopedia.com/terms/o/operation-twist.asp
i was thinking long term notes won’t be affected by an increase in interest rates.
Don’t mean to be fanciful but Say’s Law notes that goods and services are exchanged for goods and services. Money in the form of currency makes it more efficient. But money could be anything used to set prices for exchange. Units of energy measured on some reliable scale. Credits discounted for the time value of savings/consumption measured in minutes, hours, days etc. accompanied by enforceable payment schedules while gambling unto derivates into the quadrillions could render money markets meaningless.
‘In the case of Vietnam, they may discount the exchange due to administrative costs. Otherwise, they turn the dong into dollars.’
. . . thereby having a great deal in common with American women!
“As a practical matter, Washington will no longer be able to abuse the dollar as it has recklessly done for the last thirty years.” – That would require brain cells alive and firing in their heads. It’s going to be the opposite, more like that f-ag at work who, perceiving that no one “likes him” anymore becomes even more fa-g-otty and queen like until management points to him and says “just go, you’re disturbing everyone.” We’ll probably file an EEO lawsuit in Federal Court against the entire world.
It is said that if you owe the bank 100 grand you have a problem, but if you owe the bank 100 million the bank has a problem. I think about this when I look at globohomo’s debtors. And at globohomo’s fading military.
the problem is that We are the creditors. our pension plans, 401k,IRA, or IRA are credit instruments . the firm holding them OWES you money . much of it in treasury bonds . if they don’t get paid , neither do you. it he firem you have your money deposited in fails , no money for you because you are an unsecured creditor to them
“I think about this when I look at globohomo’s debtors. And at globohomo’s fading military.”
The debtors know this. The Chinese know they’re going to take a massive haircut on their treasury holdings (in terms of real purchasing power). And there’s nothing they can do about it. For sure they’re not going to throw good money after bad. They will lump it. Life goes on.
What’s the deal with Evergrande and the Chinese banking sector more generally? I keep hearing about all the problems, and they seem rather large, but nothing continues to happen.
Also, I hear there is a ton of Dollar denominated debt and contracts all over the world. I hear this is one of the major linchpins of Dollar hegemony.
It’s weird, but last night, after the story about Rand Paul’s staffer being stabbed, I couldn’t find a picture or a description of the offender, even though he was supposedly arrested.
I thought,”hmm, I wonder if there are any inferences I can make due to the lack of info”.
Aannnnd, he’s black.
Of course. Now let’s follow the life history of the Tennessee school shooter. Hint, they are white washing her as we speak.
Compsci: They are also explicitly ‘dead-naming’ her/it and ‘misgendering’ it. And deliberately referring to her by her given, middle, and last names – there’s a definite and familiar pattern to the official pronouncements.
And then there was that school shooting, no description of the shooter, must be a jogger I think to myself, well I got that one wrong
Fedi called it pretty quick as they knew it had to be a tranny of some sort, though a black tranny would have been icing on the cake.
Correct. But now we are seeing a revelation of a “mentally ill” person as illustrated by her “transition” and her social media support environment. This is why I never mince words describing these *delusional, mentally ill* individuals. They are sick people, not just folk marching to a different drummer.
Of course, the other side is fighting—with MSM full support—to control/regain the narrative. The alternative narrative being that societal repression of trans people made this person into a killer. Lot’s of mention of the current bills in many legislatures to rein in Drag Queen story hours and irreversible medical “transition” procedures before the age of 18 yo.
And the “Clown Show” marches on….
Btw, the irony of the Eurodollar system that so dominates the world and that Russia is trying to defeat is that it was create by the Soviet Union.
In the 1950s, the Soviets had accumulated a lot of dollars held in US banks. Fearful, that the US might seize those dollars, it moved them to European banks. However, the Soviets didn’t want to convert the dollars to the local currencies because it needed dollars for trade settlements (sound familiar) so it keep the money denominated in dollar but held at European banks.
The banks then started to make dollar-denominated loans using those Soviet dollar deposits and discovered that it was far better than making loans in all kinds of currencies, which was costly, cumbersome and less stable that dollars.
Thus, the Eurodollar system was born. And it continues to dominate to this day.
In the late last century, the Argentina banks had dollar denominated accounts. Lots of people opened them and used them as an alternative store of wealth to the Argentina peso. Not a problem.
One day, without warning, the government seized all these accounts and converted them to pesos at the current rate. The Courts held this action as legal as the account holders suffered no “loses”. Then, within weeks, the government let the valise of the peso “float” against the dollar. The depositors who formally had dollars, took a 50% haircut on their pesos.
Argentina soon fell into bankruptcy and hyperinflation, and remain their till this day.
“One day, without warning, the government seized all these accounts and converted them to pesos at the current rate. The Courts held this action as legal as the account holders suffered no “loses”. Then, within weeks, the government let the valise of the peso “float” against the dollar. The depositors who formally had dollars, took a 50% haircut on their pesos.
“Argentina soon fell into bankruptcy and hyperinflation, and remain their till this day.”
There was an official rate of 1-1 for the peso against the dollar and a black market rate of 3-1. The government converted the dollar accounts to peso accounts at the official rate in the year 2000 (and as a depositor you couldn’t convert at the official rate back to dollars) and then, as you say, some days later they started using the black market rate. One little old lady I was acquainted with had USD 200,000. That became $67,000 in the blink of an eye. After that Argentinians started keeping their dollars in their mattresses.
As for hyperinflation, Argentina has been through that several times since WW2. But it used to be a prosperous country before 1914.
I’m not an economist, but I can spot the strong horse, the not as strong horse, and the weak horse, so I can recognize that the Euro will fail before the US dollar does. That’s the canary in the coal mine lens through which I look at this.
Corollated: I’ve posted before that the ultimate power move to “save” the dollar would be to wreck the Euro and force Europe into using the USD. I don’t know if the brain trust is smart enough to do that, but it is ruthless enough.
The petrodollar, while important, is not as important as some folks make it out to be. It is roughly 10% of the reserve currency edifice, in terms of number of dollars involved. It could represent a different percentage in terms of confidence, hard to say what.
One doesn’t normally think of sodomy as an important factor in currency wars but in clown world it’s a critical point. Power A wants me to use its currency and demands I promote sodomy. Will sanction me if I don’t promote sodomy, sanctions I open myself up to by using its currency. Power B wants me to use its currency and doesn’t care about my country’s internal buggering norms. Hmmm. Hard choice.
“One doesn’t normally think of sodomy as an important factor in currency wars but in clown world it’s a critical point.”
That gives the phrase “turning the dongs into dollars” a whole new meaning.
> One doesn’t normally think of sodomy as an important factor in currency wars but in clown world it’s a critical point.
From petrodollar to pedodollar? Honk! Honk!
The whole EU project is evil. If they do indeed “suffer” the collapse of the Euro, it’s probably for the best. I don’t see them ever agreeing to use the Dollar. The sooner the EU breaks up the better.
Which entity lasts longer intact — The European Union or The United States of America?
What makes you think the Europeans won’t flip? Being the cowards that they are by following whatever stupidity we do, you don’t think they’ll look east and flip? WW3 over without a shot fired.
No, our politicians are bought by AINO. They won’t flip. You can see it with the reaction of Germany to the Nordstream fiasco.
We are going down with you on your way to hell.
I’d have to go with the US. The Europeanz still have enough residual nationality and individual culture to make breakup seem natural if not beneficial. US is older as a single entity and we really haven’t thought of ourselves as separate nations since the War of Northern Aggression.
The idea of getting them to use the USD derives from a hypothetical scenario in which they don’t have a better choice.
The better choice is to go back to using local currencies. The Euro was only introduced like 24 years ago. The Euro has been the root of monetary troubles for over 2 decades. Greece and Germany should not be using the same currency.
The whole EU project is one big exercise in expert management failure.
Before the Euro was implemented, I said that it was an awful idea. I was young back then.
The Southern European countries have been deindustrialized and impoverished because of the Euro but the system has not collapsed, thank you to the creative finance and constant propaganda our elites are so fond of.
Of course, the Euro is doomed to fail but, as the Keynes saying goes, “Markets can stay irrational longer than you can stay solvent.”. After decades of waiting my time to say “I told you so”, I am still waiting.
Agreed, Tarkas. I just learnt that the EU has decided to ban ICE cars by 2035. When did we vote on that? They are crazed megalomaniacs and their end can’t come soon enough.
Thank you for the laugh. I think we need the Zoar Index, aka the Internal Buggering Preference Index. Well done!
It’s telling that Russia and China were very prepared for the currency war and the sanctions against Russia. Putin knew that invading Ukraine was (potentially) going to be wider war than just military actions.
Putin and Xi have been working on this problem for a very long time. Both stopped adding to their treasury reserves around ten years ago.
But this war goes beyond governments and their holding of treasuries. A big part of this war will come down to whether the banks will want to continue using the dollar as their main currency for settlements and making loans. The Eurodollar system predates the petrodollar. Non-US Banks were making loans in dollars to non-US borrowers, not because someone forced them to do it, but because it made sense.
And that’s still the case today. That need for dollars also means that banks need to hold a lot of treasuries on their books.
The problem with unseating the dollar is that there’s really no good alternatives. When the British pound finally died, it was because the dollar was a better alternative. As bad as the Americans are, the yuan and the ruble don’t look much safer.
Then, there’s the issue that the neither China nor Russia run trade deficits, so how are companies, banks and governments supposed to get their currency. They also don’t have liquid and secure treasury markets. Finally, China doesn’t want to be the GRC. They’ve seen what it did to the US economy.
A GRC is extremely convenient. It’ll be hard to replace it with a multi-currency system. That said, the belligerence of the neocons is forcing the world to move toward that system. There really is no other choice. No one is willing to live under neocon rule anymore.
The BRICs face a very tall task. They
Great post and explanation. You (Citizen) know this, but for others’ benefit here I would just point out that there are trillions – yes trillions – of Eurodollar debts around the world that must be serviced or refinanced into something other than dollars to dislodge the dollar as GRC. This will take many many years.
You also importantly point out the Triffin Paradox. Perhaps Bitcoin could have solved this, maybe it still could, but The US is at war against Bitcoin too.
You’re correct. And you bring up a subtle but important issue. The dollar is the GRC, but the US treasury is the global reserve asset (GRA). There’s a difference.
The dollar could remain the GRC (or, at least, the main trading currency) while the treasury is unseated as the GRA. Central banks and banks hold treasuries to quickly access dollars in an emergency, but what if another asset – gold, bitcoin, some commodity-back asset – takes over the roll of treasuries?
I see that as more of a possibility that the dollar being unseated as the GRC.
That would be just as devastating to the US as losing the dollar as the GRC. It would mean that the world wouldn’t need to buy treasuries, which would mean that we would have to finance our own government debt, which would mean either higher interest rates (causing less spending) or monetizing the debt (inflation).
I’ve always seen this as about treasuries more than the dollar, though, obviously, they’re related.
Citizen: Was sharing your comment with my husband, and he said (re “which would mean either higher interest rates (causing less spending) or monetizing the debt (inflation)” that the feds are already doing both.
Interest rates are higher, but those rates haven’t hit the vast, vast majority of the federal debt. Not all the debt comes due each year. It’ll take around five years for the vast majority of the federal debt to rollover and need to be refinanced.
Only a small portion of the federal debt is currently being hit by the new, higher interest rates. But every month, that percentage grows. As it does, the govt will either need to cut spending, increase taxes or increase the deficit.
As to the Fed buying gov debt, that stopped last year. The Fed has been letting its balance sheet shrink since the summer. The private bond market is absorbing US debt issuance. We’ll see how long that lasts.
Regardless, as of the moment, the higher rates are only just beginning to impact the US govt budget and the Fed is not buying US bonds anymore.
I’m always surprised by how many of the men on this board have husbands.
Re: Russia being ready for sanctions, they obviously weren’t too ready, or they wouldn’t have lost that $300 billion that got seized by globohomo
If Russia wasn’t ready, it would have been on its knees by now.
They knew that sanctions were coming. They probably didn’t anticipate the seizing of the treasuries, but they were as prepared as they could be for sanctions.
The West didn’t seize $300 billion. That was the story early last year, but since then it has come to light that the West, in a search for Russian assets, could only find just under $40 billion. So the GAE can’t even be a competent thief.
The original Bloomberg article from same day is paywalled but is referenced here:
https://tass.com/economy/1574329
Also
https://theduran.locals.com/post/3588703/bakhmut-final-stage-eu-frozen-russian-assets-disappear
You know what, as I was typing that I was thinking that I shouldn’t be too trusting of figures propagated by globohomo’s regime media
It’s because the WH and the treasury dept kept the seizure secret from the Fed and the banks. When the WH announced it, the Fed and the banks were caught off guard. This gave the Russians time to grab their money.
But the reason that the WH kept it secret is because it knew that the Fed and the banks would oppose the move.
Neocons are dicks.
I remember hearing a Bloomberg radio bit favorably comparing the Russian economy to ours just before the Ukrainian invasion.
There is some question about that $300 billion, I read an article a while back that the EU wanted to give the money to the Ukraine, but when they tried they couldn’t find the cash
I suspect that much if whatever was seized (including shit like superyachts) was monies of the oligarchs, removed by these criminals and traitors from their own nation, so why the hell would Russia be sad about that? Obviously, they can get some PR mileage from grumping about these seizures, but their is that maskirovka again.
Even the pipeline bombings were painful to European nations in part, and if they are ever restored to service, you can bet there will be punitive consequences for the comprador Europeans.
Not so fast. Apparently, that 300bn has vanished off the face of the Earth. The word is that the Russkies got it back after all.
If the world is increasingly comfortable holding yuan
—
I want to quibble with this too. People will only trust it as much as the Chinese themselves do, which isn’t much. It might be more trusted than the dollar at some point, but that’s not saying much either.
There are many good reasons that wealthy Chinese have been parking some of their assets in US and Canadian real estate for at least a couple decades.
“Finally, China doesn’t want to be the GRC.”
Honest question, did the US not want it, either, or was it forced on us by conditions after the world wars?
It’s easy to look at GAE and our foreign elite and think raw ambition got us here, but I’m not sure the cart didn’t get before the horse, nor am I sure China could avoid the same fate if they stay on the same course.
You accumulate enough wealth, you eventually become a banker, even if you don’t want to, right?
To be the GRC, you have to run trade deficits. Otherwise, how will foreign businesses and central banks get the dollars that they need to buy, in this case, energy and food, which are sold in dollars.
(The world also needs dollars to service its dollar-denominated debts, though most of that comes from the Eurodollar system.)
So, the US has to run trade deficits. But which countries would it run trade deficits? Well, countries that use a lot of energy and need to import food. That would be manufacturing countries (energy) that also have a large population, so Germany and Japan originally and, later, China.
Basically, the petrodollar system meant that the US would run trade deficits in manufacturing. Naturally, this would devastate the US manufacturing sector, which is exactly what happened from the 1970s to today.
But the petrodollar system was great for Wall Street (it made the dollar the center of the financial world) and Washington (the dollar was a powerful weapon). Given that DC and NYC hate the Rust Belt, they were fine with that trade-off.
China, OTOH, doesn’t seem to hate its people, so it has no desire to lose it manufacturing sector to become the GFC. That’s why it wants a multi-currency world. There are economic costs to being the GFC which eventually cause the dominate power to decline and lose GFC status.
Triffin’s Dilemma.
I’m wondering what the Chicoms’ bargain with the Chinese is. Not knowledgeable about their politics.
If it’s increasing prosperity for power, isn’t that the same trap the US fell into? Americans have been bought off.
I guess the Chinese have a much larger internal market to develop, but I’m doubtful that they’re so virtuous to remain a nation of humble farmers and laborers, when it’s literally easier to get educated, get a desk job, and start investing. That right there would eventually demand trade deficits, right? And of course, I wonder if their ambitious could resist temptation if opportunity presents itself. Kind of like how when the Cold War ended, it was like somebody flipped a switch here.
I’m dumb on the financial and economic aspects, but I’m wondering how much human nature and internal politics play into these things.
And as far as Breton Woods, I don’t know much about it, but I do know the end of WWII was a revolutionary moment in the US. Different elite factions with different priorities grabbed the wheel.
I think the present is one of those globally revolutionary moments, and the players involved will be changed by it, I’m not certain how. Probably good to look at who’s on the come-up, what cultural trends are brewing, etc.
China’s turn started when Deng declared it’s glorious to get rich, or something like that.
How did Petrodollars push for trade deficits?
Read my other responses.
The US very much wanted it. You can read up on the Bretton Woods conference
Washington really wanted it.
The industrial heartland, not so much.
The queer Keynes tried to create a better system, but Washington crushed that idea because it knew that there was power in being the GFC.
Well, the Bretton Woods conference would seem to indicate that GRC was completely intentional. The Marshall Plan was entirely about making the US the reserve, for it placed cash in the hands of countries, creating US debt, in order for those countries to do buisness in US dollars.
True. But it was the Eurodollar system that emerged that really cemented the dollar as the GFC – along with the petrodollar deal. And the Eurodollar system grew organically. It wasn’t mandated by the US.
That’s why it’ll harder to unseat the dollar than people think. It’s not just about the US government. It’s about the Eurodollar system used by banks and companies around the world.
The questions was about the GRC. I do, however, completely agree with you about the lack of a sudden swap. Again, this reason is why I do not agree with those that expect an End-of-the-world event. I believe this is the end of the world as we know it – a gradual slide into decreasing quality of life. This is why I am also completely pessimistic about an event that awakens the masses. We will just get used to crappier and crappier lives.
Eloi-
I think you are correct about the slow decline. The controllers of the West are transitioning their societies to the Algerian model.
The biggest tell is how they’ve normalized people dropping like flies from coincidences, almost like that was the plan all along.
Thanks, that is a very helpful comment. From what I gather, the takeaway so far is not that the dollar will be replaced in the immediate future, but that it no longer can necessarily deliver a fatal blow. Exhibit A for the former is Russia survived and thrived to the apparent surprise of D.C. As you wrote in a responsive comment, Russia seems to have better prepared to deal with the economic sanctions than Washington anticipated.
Perceptions can be reality. The dollar still is king, but its power is diminished and it is no longer as vigorous even if the successor remains unknown. As Z wrote, extending its rule would require talent not apparent in the apparat. The takeaway from the Ukraine madness thus far is whether or not the end to American supremacy is near, its once-unchallenged dominance already is wounded. The contraction soon will begin if it has not already done so.
Yeah, you don’t need to completely unseat the dollar. You just need to be able to do enough trade – especially for energy – in other currencies to survive the sanctions.
My analogy is a highway system. Let’s say that there’s this big, well-designed highway system that lets you travel the country. It’s great, super convenient.
But over time, the cops that patrol the highway start to arrest people for no good reason and sometimes impound your car. Well, despite the ease and convenience of the highway system, you’re going to start looking for alternatives, but there are none.
So, some wealthy drivers get together and carve out some dirt roads. Sure, those roads aren’t as reliable or convenient as the highway, but there’s no cops on them either. You don’t even have to use the dirt road all the time, just when the cops start getting pushy.
You don’t need to completely replace the highway system to cause the cops to lose a lot of their power. You just need some alternative. And, btw, maybe over time, some people start to put down some gravel on those dirt roads, and then they pave a few of them. Next thing you know, there’s alternative highway system.
Also, don’t focus only on the dollar. Treasury bonds are the other part of this. If the dollar remains the GFC but companies, banks and central banks find an alternative to treasuries to store their wealth, that would cause the US the same amount of pain as losing the dollar as the GFC.
Jack, the question is even broader and probably scarier: how will the neoncons react when the dollar starts to fade, and consequently American global power? I see no evidence that they will be content with even being a big player in the major league. These nutters want total power. It’s a zero sum game for them.
They’ll go to war.
They know that the dollar is the key to US power. Let’s just say that neocons understand banking and trade. Allowing trade and banking in other currencies is the end of the US as world’s single great power.
We’ll still be extremely powerful, but we won’t have the ability to tell China and Russia what to do and we’ll have a much harder time bullying other countries by economic means.
I can’t see the neocons allowing that without some form of serious fight.
Russia and China are working on a new global currency, likely a few years out, Looks to be commodity/Energy/Gold backed. In the meantime the BRICS economies are now larger than the G7 ones (plus the rest of the EU).
Africa’s done with the old colonial powers, both Macron and Sholtz were openly mocked during their recent visits.
As the Arabs say, the dogs bark and the caravan moves on. Expect the yapping and yelping out of Washington to get increasingly shrill.
YES, give Z another Pulitzer for coining eternal terminology. “Dong into dollars” will now live in infamy as a double, triple, even quadruple entendre. But on to the topic at hand.
All fiat currencies are founded upon confidence in the issuer by the public-at-large. When that confidence evaporates, you get things like bank runs (see Silicon Valley Bank as an example). What the rest of the world sees in the USA right now is a dementia patient in the White House selling trannyism and endless sovereign debt as if it were a valuable commodity. And the coterie of politicians and string-pullers that surround him are equally insane. Finally, average citizen Joe Normie appears content to let “the good times roll” so no fix is in the offing. All of this is locked in with Fortified for Democracy vote manufacturing.
Why would any sane person anywhere on the planet have confidence in the USA? Or its currency?
I’ll play devil’s advocate here.
The Eurodollar system has been around since the late 1950s. It will not be unseated easily. How are banks and companies supposed to do business in yuan or rubles. Both countries have capital controls. Both countries have tiny and controlled treasuries markets.
The only other currency even in the universe of the dollar is the Euro and who wants to use that. Look, I hate the neocons, but that doesn’t change the fact that as of the moment, there’s no alternative to the dollar.
That said, the BRICs are working on building an alternative multi-currency system. But that will take time, and it will be hard to convince banks and businesses to adopt it. A GRC is incredibly convenient for trade and banking.
However, the insanity of the neocons is everyone’s best ally in pushing the world to move away from the dollar.
It is a bit of straw man here. My post clearly stated that the dollar is not going away. Instead, it will face competition with rival currencies. The Russians demanding and getting payment in rubles was a huge turning point. China is now demanding payment in yuan. Yeah, flim-flam companies selling useless apps are not issuing debt in yuan or rubles. No one is rushing to trade their euro bonds or treasuries for bonds in rubles or yuan or dong. Not yet, anyway.
The transition will take time, but the transition has started. There will be no rolling back to the 1980’s where the world was happy to let Washington control the global currency.
Totally agree. Both sides seem to be getting these developments wrong.
The dollar haters seem to think that this spells the immediate end to the dollar as the GFC. The other side acts like the trade deals are a joke because countries will likely take those rubles or yuan and convert them back to dollars.
That’s not the point. The point is that they’re breaking down the current system – both mentally and physically. They’re taking the first baby steps to creating alternative methods trade settlement and banking mechanisms.
It’ll take time. They’ll be mistakes. Etc. But the process has begun. The next big step is figuring out alternative reserve assets. Treasuries have as big a lock on the system as dollars.
Gold is the obvious choice. Yeah, it’s cumbersome, but you can also keep it in your own vault. A commodity-based asset could work but it might be too volatile.
Regardless, these issues can all be sorted out over time. The key is that the process moves forward.
If Brandon and the Fed succeed in pushing inflation into the hypersphere, then people everywhere will flee from the dollar just like a bank run. Black markets and barter will grow in the dark as a homegrown alternative, but right now Russia is doing everything right, showing great patience, and their currency is backed by ginormous O&G reserves, ditto for coal & key minerals, a substantial manufacturing base, and a dominant Slavic demographic. If (or when) US inflation exceeds 20%, the ruble is going to look pretty God Damn good as an alternative to the dollar. Where is the light at the end of the tunnel for the US economy? I don’t see it.
Recent arbitrary asset seizure and other abuses of what is supposed to be a transparent, fair, unbiased trade settlement currency is the greatest mistake the US has ever made. But don’t worry, Putin is a real jerk, so it is worth it.
We truly are run by fanatics who are high on their own supply.
I would place it third, behind the Civil War, and putting our thumb on the WW1 scale, which made WW2 inevitable.
Oh, 4th actually. I forgot about the $trillions we have spent for cheaper cotton a few centuries back.
Yes, a good point. Not only was that obsolete farm equipment a dead loss at the end of the War of Northern Aggression, but the losses have kept piling up, perhaps exponentially, given the spread of the contagion well beyond its initial effect.
Given that the Chinese Yuan has an exchange rate (more or less) pegged to the Dollar by the Chinese central bank, it is a long way from becoming an alternative to the Dollar. The functional reality of this Dollar-Yuan peg is that the Chinese reserve currency is the Dollar until such time as the Yuan floats freely versus the Dollar. Meanwhile, there are capital controls in China too.
That said, Zman is completely correct that economics always happens at the margin. The US has given the world plenty of reasons to find an alternative. So foreigners will chip away at the Dollar’s status gradually for the rest of our lives.
It will be a race between our total societal collapse and our currency’s reserve-status collapse.
This is correct. When Chinese get rich, they buy a lot of U.S. real estate. But with the U.S. regime unstable, the yuan and ruble still will be preferred for an increasing number of transactions. That will destabilize the dollar system. You see that in the recent rise in the gold price toward $2,000 from $1,800 (meaning a decline in the dollar’s value). For once, Peter Schiff is right, but still probably too alarmist. If the Fed pushes that back to $1,800, it will mean they are aware of the need for stabilization in the currency war, which will continue.
I sometimes wonder if a part of the reason why the US won’t negotiate a Russia/Ukraine settlement is that they can’t even agree on which faction would go to the negotiating table.
The US is in the middle of orchestrating a revolution against itself. It wants a new flag, a new history (more like a Year Zero), a new people, a new social organization (public/private racial caste and spoils system replacing a public of the latter but a private mostly meritocratic system), a new justice system. The revolution means waging war on its warrior caste.
That seems like a lot of tigers by the tail at the same time that your empire requires significant economic structural reforms that will already introduce political instability.
It is quite a remarkable and breathtaking … I don’t even know what to call it. As we go through the reforms you would think you would need to honor the people to get them to make the sacrifices and row in one direction. Instead they are waging war against the nation. How can you salvage the nation and the
There is something here that doesn’t meet the eye. It makes you wonder, is DC itself some bazaar that long ago gave up sovereignty and is run by the whims of whichever foreign sovereign can bribe some “American” satrap who holds political office or a powerful bureaucratic office?
It just feels like maybe there really is no America. It is a printing press and some nukes and whoever mans those buttons or pays whoever mans those buttons is really what America is. It is hard to make any sense of this dumpster fire.
I’ve begun to think of the GAE as nothing more than a bank with an army and some nukes, the army piece growing increasingly suspect.
The river of foreign money through DC has been a problem for years. There is so much of it that it is impossible to know who has been bought off for how much and how long.
“There is so much of it that it is impossible to know who has been bought off for how much and how long.” Answer: everyone for very little until they are dead.
It’s a good analogy But the US is no longer a bank, the safe deposit boxes are long gone.
It’s an ATM posing as a country..
Republicans being stuck in the 80s is one of their biggest turn-offs’ to me. Every politician and media personality from that era never shuts up about Reagan this and Reagan that. Democrats are focused on the future, while Republicans are focused on the past. Furthermore, there is no reason to believe things will get better because the people in power are a bunch of dingbats. Seriously, I cringe so hard when I listen to the authority figures in this country open their dumb mouths.
‘Member when the so-called “Reagan Battalion” assassinated Milo Y because he said some pedo stuff on a podcast?
Milo deserved it, but Reagan Battalion? What a stupid name. Not sure they even existed. But they had to invoke Reagan.
When I hear Reagan invoked, I get the same cringe as when I hear Lincoln.
The Reagan Battalion? is that like the conservative version of the Abraham Lincoln Brigade? They both have about equal relevance to people today.
Same here. They’re retarded kids hunting around for snacks when dinner is set at the table for them.
I flip flop between “they’re knowingly the lesser half of the uniparty” to “they’re just stupid”… It depends upon the day I guess.
As Z-man has pointed out repeatedly, the past is gone. We need to define a *new* future and strive towards that. The Left has no such problem as they strive to tear down what’s left of the past come what may. Those who can’t conceive of a new future, cling to the past and strive ineffectually to retrieve/rebuild it.
https://en.wikipedia.org/wiki/Rollover_(film)
There was a 1981 movie called “Rollover” starring Kris Kristofferson and Jane Fonda, in which the Arab oil countries inadvertently crash the global economy, sending the world into a Second Great Depression.
Starbucks is just coffee. McDonald’s is just a hamburger. When will we figure that out.
But haha they made Zman say dong.
Thoughts from a few years ago…
machciv.com/2022/03/03/the-ria/
It has been posited by others who are better informed than I that Fed Chair Powell is actually engaged in a war against the European globalists, on behalf of American banking interests. If so, then I am compelled to root for him. Not that I favor American banks or those who run them, but the alternative is a globohomo totalitarian state, run by the good folks at WEF who are slavering over the prospect of installing their brand of leadership over us. I do not think Powell is either stupid or uninformed, and am therefore inclined to accept this analysis. OTOH, the Biden cabal is composed entirely of stupid and ideologically driven lunatics whose goal is to deconstruct traditional America and replace it with a constituency that is either fully “woke” (i.e., intent upon stealing whitey’s stuff and redistributing it to all the queers, non-whites and other societal detritus whose votes they wish to garner) or represents the underclass which desires only the time and opportunity to prey upon the corpse of traditional America while getting high and buggering each other while awaiting the opportunity to do likewise to our children. Biden, of course is simply following the orders of his masters, whether here or in Beijing, Kiev or Brussels, in order to keep this corruption under wraps and keep the grift going. Thus, his priority is to keep the money machine cranking and handing out worthless dollars until the bust-out is complete.
Powell seems legitimately concerned about inflation but his only tool is on the demand side. Plus fighting nonstop fiscal stimulus.
Powell is in over his head, but yes, just about anyone is his position, dealing with what he has to deal with, would be in over their head.
Janet Yellen on the other hand…
I won’t pollute this post with a link, but her recent interaction with Kennedy in the Senate was disturbing. At a time of a multi-generational basket of financial issues the regime has a woman in charge who would be out on the street in her bathrobe muttering to herself were in not for a raft of handlers.
I saw some of her testimony, she is truly a moron. And to think she was Fed Chair too. How did we get a system that promotes idiots to authority? I can understand a closed system that those with the right connections and credentials move up, but one that selects for idiots I can’t comprehend. God help us as the fools replace the competent throughout the system.
If you think that the WEF runs things, you need to read beyond the usual CivNat sites. Also, if you think that Biden takes orders from any of those capitols, well, than your journey has just begun. A quick glance at his cabinet tells you all that you need to know about who runs the show.
WEF is just an organization of elites, not the other way around. It’s the equivalent of saying that McDonald’s runs the world if they met at a McDonald’s in Chicago instead of a hotel in Davos.
I largely agree. I do think Powell (and other big financial dogs) are way smarter than the political/media class, and despite working in the Swamp, they are not necessarily swamp creatures nor managerial goons.
They do have a lot to lose if they f**k things up. Sure, they can escape to New Zealand if SHTF, but they’d much rather live in Georgetown or Manhattan and be talked about on TV. At worst, in a collapse scenario, they’d be strung up. Down here among the dirt people, we tend to think that the elite are worry-less, but they are not.
Personally I think Jaime Dimon and his ilk just dismiss the crackpots in Washington. Biden can say whatever J*wish pansexual immigrant staffer tells him. He’s supposed to. But the real power is in the financial sector. I’ll bet the higher-ups in the financial sector are not into DEI, and I’ll bet many are more racist than we are.
You’re referring to the Tom Luongo “Theory of Everything.” He tried to explain it on the Duran podcast, but he’s a bit scatter-brained when he tries to explain his theory, and he uses a lot of jargon that’s hard to follow. Here’s the video:
https://rumble.com/v2efdjg-the-fed-and-the-ecb-w-tom-luongo-live.html
This blogger has broken down the theory into a coherent presentation:
https://harrisonburge.substack.com/p/jerome-powell-this-fourth-turnings
Ignore the opening stuff about the fourth turning and skip down to the “Team America” section. Briefly, the West is in a financial war between globalists like Klaus Schwab and George Soros (The Davos Crowd) and the FED backed NY banks. The Davos Crowd wants to collapse the US in a financial crisis in order to implement the great reset, which will set up a digital currency under control of the globalists. The FED and the NY banks like the commercial banking system because it makes them rich, and Powell has gone to war to destroy the Davos Crowd.
The Davos Crowd depends on dollars, and Powell has moved to destroy the offshore dollar market. The FED has stopped the flow of dollars into offshore banks and is raising interest rates to break the Europeans. The European central banks cannot print money, and they no longer can get money from the FED at 0% interest. The cost to their activist banks just went up, and so did their ESG, climate change, and transgender programs.
Interest rates will affect US banks too, but its collateral damage in the major war against the Davos Crowd. As Tom Luongo says, it’s a big poop sandwich and everyone has to take a bite, but the Davos Crowd has to take a bigger bite.
I don’t know what to make of Luongo’s theory. It is certainly plausible, but as you say, he has trouble explaining it. He’s also very defensive about it and won’t accept any criticism. That’s off-putting, but doesn’t mean he’s wrong. I guess we’ll find out.
Prior to 1973, the USD was backed by gold and the reputation of the the American government. After Nixon closed the gold window, all that was left was the reputation of the American government.
The reputation of the American government.
Notionally backed by gold. It was not *really* backed by gold. The world understood that America would create the necessary dollars to build out the empire and rebuild the provinces in Europe. No one would actually try to swap their dollar reserves for gold, as that would give the game away. Then France made a run on the gold reserves and Nixon closed the gold window, settling off a period of currency reform ending in the Louvre Accords.
Is interesting the degree to which Russia and China have been adding to gold reserves. At least to the degree you can get accurate numbers.
They did and then suffered the worlds first color revolution 😉
I don’t believe there is a solution for these currency wars except to let them play out on the trajectory the war is currently on. That trajectory in the West is raging inflation. There is no way off this train without a massive cut in spending to allow fed policies to work. Who believes our elites have the willpower to trim spending? The fed is in an inflation trap which cannot be exited without either demolishing Wall Street or unleashing a middle-class-destroying inflation. I think we know which choice our betters will make.
Epaminondas: To cut spending means to cut entitlement programs, particularly those beloved of White silents/boomers like Social Security, Medicare, and Medicaid, as well as those expected by blaq and mestizo baby mommas and daddies and their spawn, such as SNAP (food stamps). All together that’s 65% of the present budget.
That’s what so many who preach about cutting foreign aid miss (of course such a thing should not exist, but that’s beside the point). Or the MIC. We waste most of what we spend, regardless of budget category.
People are addicted to both cheap Chinese manufacturing and federal redistributive gibs. Both have been financed via exporting both manufacturing ability/jobs and exporting inflation caused by massive printing of fiat dollars backed by nothing substantive.
While it may not be strictly true that individual, hard-working White heritage Americans ‘deserve’ the hard economic times coming, the GAE most definitely does.
Social Security is a relatively easy fix. Raise the retirement age for young people to 70 and remove the income caps. The fact they can’t even do that tells you how impossible reform is. Medicare is the tough nut. Everyone needs healthcare, and it is expensive regardless of how it is paid for.
“For starters, the petrodollar is not a real thing. It is simply a term to express the fact that in the 1970’s the large oil producing countries agreed to use the dollar. … Now, why did the Saudis agree to price everything in dollars. The main reason is they got something for it in return. What they got is a guarantee that the United States would protect the kingdom from threats in the region”
There’s more to it than that. The US (Kissinger specifically) threatened military action if they didn’t price oil in dollars. Secondly, they couldn’t just do anything with the dollars. Specifically they couldn’t buy up US companies. They had to recycle their money through New York banks. These banks then accumulated so many “petrodollars” they didn’t know what to do with them and started lending them to any third world country that would take them. The various debt crises in the third world during the ’80s originated in these ill-conceived loans. Or if not recycle their money through US banks, the OPEC countries had to buy US treasuries. That’s why the Saudi king was complaining to Carter about high US inflation in the late ’70s — it meant the real rate on Saudi-held treasuries had become negative.
“That last part is important. Joe Biden, as Vice President, sided with the faction opposing Mohammed bin Salman, the current Crown Prince and Prime Minister of Saudi Arabia. …This is why the Saudis are now open to pricing their energy products in Chinese yuan and maybe other currencies.”
There’s some truth in this. MBS doesn’t like this worthless and contemptible creature. But it goes deeper. The structural realities have changed. Firstly, the dollar is no longer undergirded by a strong manufacturing economy. The only thing undergirding it is perhaps sales of wheat and other agribusiness products. Maybe add some weapon sales. The yuan is undergirded by a manufacturing economy. The ruble is undergirded by oil and gas. That is one key reality. Secondly, the US military is no longer able to function credibly as the muscle arm of the extortion gangster regime that is the USA. Other powers can provide not only security guarantees but also guarantees against a rapacious power like the USA. We should not underestimate the power of the US military in propping up the international acceptance of the dollar. Arguably it was unhappiness with the dollar standard that led to Saddam and Gaddafi beng ousted.
Behind all of this is the unhappy realisation that the USA is not acting as a stable hegemon. It is breaking any of the rules, or all of the rules, any time it feels like it. “The “rules’based international order”). If Russian assets can be sequestered and confiscated by the USA at whim, what security does any country have whose reserves are kept in dollars? If the USA can does do regime change at whim, who is next on the list?
Arshad-
Great comment.
The questions in your final paragraph also hint at the reasons CBDCs should be DOA.
The Nigerian people seem to realize CBDCs are worthless.
Will the US sheeple do the same?
“These banks then accumulated so many “petrodollars” they didn’t know what to do with them and started lending them to any third world country that would take them.”
The first sentence in a magazine article back in those days: “Imagine you had so much money you had nothing better to do with it than lend it to Peru.”
Lost on the normal news watcher in the US is that America gets at least as much of its power not from shiny sexy military toys, but from the ability to punish enemies with economic sanctions. This has been mightily enhanced with the global reserve status of the dollar. China and Russia are tired of this, and the whole world is getting wise to the long con that is exporting American debt via mass inflation.
Been interesting to see Russia resist not just the US military power, but the economic sanctions as well. It seems that a country can survive, even thrive, without a Starbucks OR a McDonalds.
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Middle East is a bit of a puzzle though. Hard to imagine China stepping up with military security guarantees with boots on the ground in the Saud Kingdom. China could bankroll it, Russia could Wager group contract it out. The Saudis don’t much care who their mercenaries are, as long at they do what they’re supposed to do.
Economic sanctions are a fools errand when dealing with countries that have vast amounts of hard assets that the world depends on. Russia would be the exemplar in that category, Iran trailing, but they’ve withstood 40+ years of sanctions because….oil & gas. What you are seeing now are poorer consumers of these goods (primarily energy) refusing to enter into a suicide pact with the US. We’re just seeing the tip of that iceberg right now. India is the most interesting one to watch. One of my kids is in the LNG shipping business and was at a global conference last fall in Italy. Was in a lot of closed door meetings with reps from these South Asian countries and even their energy ministry reps were crystal clear that they are not going to let their countries descend to chaos over a land squabble in Europe.
I have been pointing at India for a while now. They have a long relationship with Russia. Morjim Beach in North Goa is more Russian than Indian for this reason. On the other hand, India has serious conflicts with China, which America has been happy to stoke over the years. In the last year, India – Chinese commerce has increased 30%, in large part due to the mediation of Russia, but also the confluence of interests with regards to the American empire.
Its almost like Russia and China are going around the world and ending all the petty squabbles that the GAE fostered for decades, which constant division and strife prevented anyone from being able to counter or even resist the whims of the GAE. Almost like they are making a concerted effort to squlech the GAE’s divide-and-conquer strategy.
If Putin or Xi solve the Korea problem next, katie bar the door.
“It’s almost like Russia and China are going around the world and ending all the petty squabbles that the GAE fostered for decades,”
Thar’s exactly what they are doing and it’s crystal clear to anyone with half a brain. The satanic globo-homo empire has been sowing chaos and mayhem around the globe for decades. Now it’s getting its comeuppance.
Sanctions have never really worked. Both Cuba and Iran have both survived them to differing degrees. As for the Chinese in the ME, geopolitics, like nature, hates a vaccuum. The Saudis know that the US has reneged on its part of the petrodollar deal and is now seeking protection and security elsewhere. It’s quite staggering to see not just how quickly the neocons have destroyed 70 years of US diplomacy by bringing China and Russia together, but how in even less time, they have completely destroyed their long term strategy for the ME. Amazing times!
Short answer to “are the elites up to this?” No. Washington is the equivalent of the dissipated third generation being handed the family business. Literally. They’ve got all the “right” educational cattle brands and pedigrees, but most seem dumber than stumps. Apologies to stumps. I’m just a nobody with history degree (albeit a good one) who feels like I’ve been watching this come over the horizon for more than a couple decades. Timing was the only open question. Further to that theory is the elite is just smart enough to pick as much as they can off the carcass for themselves and their families and hunker down. Hoping the mob won’t come for them.
The elite are treating America (and by extension, the entire Western world) the same way Paul Cicero and his crew treated the poor indebted restaurant owner who came to Paulie for help in an early scene of “GoodFellas.”
“Now the guy’s got Paulie as a partner. Any problems, he goes to Paulie. Trouble with a bill, he can go to Paulie. Trouble with the cops, deliveries, Tommy…he can call Paulie. But now the guy’s got to come up with Paulie’s money every week. No matter what. Business bad?! F*** you, pay me. Oh, you had a fire?! F*** you, pay me. The place got hit by lightning, huh?! F*** you, pay me. Also, Paulie could do anything. Especially run up bills on the joint’s credit. And why not? Nobody’s gonna pay for it anyway. And as soon as the deliveries are made in the front door, you move the stuff out the back and sell it at a discount. You take a two hundred dollar case of booze and you sell it for a hundred. It doesn’t matter. It’s all profit. And then finally, when there’s nothing left, when you can’t borrow another buck from the bank or buy another case of booze, you bust the joint out. You light a match…”
We are now entering the bust out phase of the Global American Empire.
Sami, as someone with a good history degree, I’m sure you’ll recognise all the hallmarks of a dying Empire. The latter days of the Western Roman Empire saw an occassional diamond-in-the-rough decent emperor pop up, but the majority where the same feckless grifters and Beta-boy maroons we have to suffer in the West today