“The single biggest change in capital markets, maybe of all time”

The century-long global hegemony of the U.S. dollar may have ended today.
That's not an overstatement.
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Today marked the launch of the petroyuan.

China’s launch on Monday of its crude futures exchange will improve the clout of the yuan in financial markets and could threaten the international primacy of the dollar, argues a new report by Hayden Briscoe, APAC head of fixed income at UBS Asset Management.
“This is the single biggest change in capital markets, maybe of all time,” Briscoe said in a follow-up telephone interview.
...Already on Monday, Unipec, the trading arm of Asia’s largest refiner Sinopec, has inked a deal with a western oil major to buy Middle East crude priced against the newly-launched Shanghai crude futures contract.
This helps cement the exchange’s viability and challenges the petro-dollar system, in which oil deals are executed in dollars. This would decrease demand for the greenback and boost U.S. inflation.

If Washington was waiting for the petroyuan launch to fail, they were disappointed.
Commodity trading giants Glencore Plc and Trafigura Group jumped right in.
petroyuan.jpg
Interestingly, the petroyuan is backed by gold, thus reintroducing gold to the monetary system for the first time in 47 years.
This makes a total reset of the rules for gold-skeptics, who probably won't realize that everything has changed.

If you were wondering why Trump has launched both a trade war and a military build-up against China, look no further than this.

China passed the U.S. in 2017 as the world's biggest consumer of oil.
What makes that important to the petrodollar is that both Russia and Iran, two of the world's largest oil producers, had already agreed to sell their oil to China priced in Yuan.

If you were wondering why Trump is rattling sabers at Russia and Iran, look no further than this.

I was informed at a White House meeting that U.S. diplomats had let Saudi Arabia and other Arab countries know that they could charge as much as they wanted for their oil, but that the United States would treat it as an act of war not to keep their oil proceeds in U.S. dollar assets.
This was the point at which the international financial system became explicitly extractive. But it took until 2009, for the first attempt to withdraw from this system to occur. A conference was convened at Yekaterinburg, Russia, by the Shanghai Cooperation Organization (SCO). The alliance comprised Russia, China, Kazakhstan, Tajikistan, Kirghizstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia. U.S. officials asked to attend as observers, but their request was rejected.
The U.S. response has been to extend the new Cold War into the financial sector, rewriting the rules of international finance to benefit the United States and its satellites – and to deter countries from seeking to break free from America’s financial free ride.
...The U.S. plan was to hurt Russia’s economy so much that it would be ripe for regime change (“color revolution”). But the effect was to drive it eastward, away from Western Europe to consolidate its long-term relations with China and Central Asia.

Repeated rounds of international sanctions have failed to cow Russia, and the reason is China.

In a symbolic blow to U.S. global financial hegemony, Russia and China took a small step toward undercutting the domination of the U.S. dollar as the international reserve currency on Tuesday when Russia’s second biggest financial institution, VTB, signed a deal with the Bank of China to bypass the dollar and pay each other in domestic currencies.

We didn't arrive at this point suddenly in 2014 or 2016.
Russia began making plans to be independent of the combined power of Washington and Wall Street years before we started hitting them with sanctions. They've spent the past decade cutting non-dollar trade and financial deals with China, India, and Iran.
China has been busy too. Russia, Iraq, Indonesia and other countries have joined in non-dollar trades.

When the White House suspended US aid to Pakistan, Islamabad announced that the Chinese yuan can be used for bilateral trade and investment activities.

Recently Russia announced they had a parallel system to SWIFT.
Put all that dry timber together, and then add a spark - the 2016 election - and you have the real reason for the Russia hysteria.

The petrodollar has lasted for over 41 years, and has been the driving force behind America’s economic, political and military power. It would be ironic, indeed, were the tensions with Russia inadvertently to become the driver of America finally losing its petrodollar card.

Without all this global demand for dollars, combined with our enormous budget and trade deficits, the dollar's value will fall and interest rates will rise.
Those cheap foreign-made goods will get a lot less cheap. Meanwhile, all that debt that saturates every part of the economy will get more burdensome and eventually produce a tidal wave of defaults.

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57 users have voted.

Comments

dervish's picture

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29 users have voted.

"Obama promised transparency, but Assange is the one who brought it."

@dervish
The FBI couldn't find a Russian plot, but I just did.

Do you think I should call MSNBC and tell them about this plot?
Do you think Rachel Maddow would do a whole special about the petroyuan?

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20 users have voted.

Rachel #DerpFace

Rachel_0.jpg

"Teh Russians?! ZOMG!!"

@gjohnsit

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13 users have voted.

JVolvo2

dkmich's picture

I would be on the side of destroying Amerika's epire.

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26 users have voted.

"Religion is what keeps the poor from murdering the rich."--Napoleon

*donate to c99 *like us on Facebook *follow us on Twitter

@dkmich
means the end of our military empire shortly after.

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32 users have voted.
Daenerys's picture

@gjohnsit

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24 users have voted.

This shit is bananas.

@Daenerys
1956: End of Empire

But it wasn't Britain's military allies which mattered in the final analysis; it was her political foes. They most obviously included the Soviet Union and its allies, who were given a glorious opportunity to attack western imperialism (and deflect world attention from their own brutality in crushing the simultaneous Hungarian uprising).

Much more telling than Soviet condemnation was the disapproval of the Eisenhower administration in the USA. Washington was appalled by the Anglo-French-Israeli invasion of the canal zone and the Sinai. The action threatened to destabilise the strategically vital region, and strengthen Soviet links with liberation movements around the world. It raised global tensions in an age dominated by the nuclear arms race and recurring superpower crises. More viscerally, it was viewed with distaste as a nakedly imperial exercise in a post-imperial age.

Eden, a master of self-delusion, thought he had received a nod and wink of approval for the invasion from John Foster Dulles, the US secretary of state. He should have checked with Dwight D Eisenhower, who was enraged by the action. He forced through the UN resolution imposing a ceasefire, and made it clear that in this matter at any rate, Britain would have no 'special relationship' with the USA.

The final straw for Eden came when the Treasury told the government that sterling, under sustained attack over the crisis, needed urgent US support to the tune of a billion dollars. 'Ike' had a crisp reply: no ceasefire, no loan. The invaders were ordered to halt, and await the arrival of a UN intervention force.

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Bollox Ref's picture

@gjohnsit

given his health issues and medication.

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16 users have voted.

Gëzuar!!
from a reasonably stable genius.

@gjohnsit

Thank you.

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15 users have voted.
gulfgal98's picture

@gjohnsit I truly hope that is the case.

I have posted here in the past that if there was an end to the petrodollar, there would be some hard times ahead, but they would be worth it in the long run.

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27 users have voted.

"I don't want to run the empire, I want to bring it down!" ~Dr. Cornel West

"There is no instance of a nation benefitting from prolonged warfare." Sun Tzu

@gulfgal98

As long as The Psychopaths That Be don't go nuclear in a universally fatal hissy fit...

People like me'll die, but we, The Disposables, would have anyway, and at least some of the life on the planet has a little more more chance, or time, at any rate.

On the other hand,the uber-authoritarian, micromanaging (rogue or imitative PTB?) Chinese President-for-life has just set himself up for assassination, as there's no other way of getting rid of him.

That's another problem The Psychopaths That Be have created, by working to maximize evil and kill off the very concept of human decency throughout the world; dog-eat-dog is mindlessly destructive and messy and consumes the world on which it stands.

Virtually everyone they've installed/permitted, or who has fought their way, into power, has come into power, not government. Yuuuuuge difference. The one between a murderous madhouse suicide and a civilized, sustainable survival.

But perhaps with more balanced global threats - and a (somehow achieved?) cessation of interference in human societies and natural tendencies to move toward a humanistic democracy within a caring and responsible society - something survivable will come of it Doesn't seem likely, but in turmoil, perhaps the right options can be found and achieved.

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4 users have voted.

Psychopathy is not a political position, whether labeled 'conservatism', 'centrism' or 'left'.

A tin labeled 'coffee' may be a can of worms or pathology identified by a lack of empathy/willingness to harm others to achieve personal desires.

@gjohnsit And you know who will bear the brunt and it's not the 1%.

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19 users have voted.

@The Voice In the Wilderness
I only mentioned the silver lining. Not the huge cloud at its center.

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Pricknick's picture

for those that will be affected the most.....basically anybody who's not part of the 1%.
For any chance of the world surviving, we must fall.

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Regardless of the path in life I chose, I realize it's always forward, never straight.

Anyone have any thoughts on this?

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@SoylentGreenisPeople
I've been an owner of physical gold since 2002.
That being said, gold will never, ever make you rich, but it does do a good job of retaining purchasing power.

The other thing you could do is purchase foreign government bonds, but you have to have an idea of their fiscal situation.

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@gjohnsit

As the dollar loses its value, gold's purchasing power stays constant.

Well, in this day and age, when banks pay virtually no interest, I'd be happy just with that.

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13 users have voted.

@SoylentGreenisPeople stops, does it?

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dfarrah

Pluto's Republic's picture

@SoylentGreenisPeople

Sometimes you catch a permanent bump. It is about double what it cost in 2007. But what isn't?

Going into this storm, it's difficult to predict gold, except for its inverse relationship to the dollar. People who are attempting to make gains on the road ahead are "internationalizing" some of their assets. If they are out of the markets and holding dollars, they exchange those dollars for several different foreign currencies to hold instead. Euros, Yuan, currencies from oil-producing nations are pretty solid. Some US banks offer foreign deposit accounts.

Inflation is the scariest potential adversity. That's one reason that some people hold bags of junk silver coins. It is always liquid now that there are pawn shops on every corner of America. They pay spot price for silver, which changes hourly. That way they can sell a few coins as needed. The value of the rest goes up with inflation. Right now, 4 quarters is worth about $12. I might buy a couple of bags, now that I think about it. Got to have a good hiding place, though.

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earthling1's picture

will trade for four 275 x 16 snow tires.

S/

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earthling1's picture

for six hens.

S/

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CB's picture

@earthling1

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Pluto's Republic's picture

@CB

Toilet paper is the new gold.

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QMS's picture

@CB @CB Know your comments are half in fun, but what about a sub-thread here that is serious on a new exchange? For instance:

Exchange 1:
Offered: One large sized black insulated coat, canvas outside, waterproof, mid length, like new.

EX 1: Trade interests: Someone in need or working with a good charity program, preferably personal contact with recipient, plus cost of shipping.

It may become something we can do to help our community? Oil bucks mean less all the time. See a need to work in a new value system.

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6 users have voted.

Intelligence is being redefined as the ability to repeat ever more complex instructions.

QMS's picture

Venezuela got sanctioned by US, started their own trade chips. China, Russia, Iran are all mature economies. They don't need US, World Bank, IMF restrictions. US forced them away from fair trade. The next domino to fall will be the compromised states within the EU. Then the greedsters won't have many more carcasses to clean. The US consumerism thing is going to get peeled, but the earth needs a rebalancing anyway. Just hope the fascist oligarchy doesn't throw a nuclear tantrum.

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37 users have voted.

Intelligence is being redefined as the ability to repeat ever more complex instructions.

@QMS

. . . in the face of waning influence and power, is the fear of the day among those in the know, isn't it?

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@SoylentGreenisPeople are they really that dumb to give up the financial bleeding yet? The profits they'll have once we really and finally all are wage slaves literally for food? But with everything rapidly going to shit, they might just be stupid enough to lob a few to cull the herd and think they'll survive? They are psychopaths though, selfish, narcissistic, living in a bubble. And if they think they'll lose all their glory and power, God help us all. Some days I wish almost wish they'd just do it and end the suspense. Those are the really bad days.

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Pluto's Republic's picture

@lizzyh7

All they really own are a few numbers in a digital ledger somewhere. Some zeros, and a handful of decimal points.

Who's going to honor that if the US defaults?

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Neither, for example, was Versailles. Perhaps someone else said it first but he nails the eventual result of the 1% rapaciously fucking over the 99%

@Pluto's Republic

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JVolvo2

Pluto's Republic's picture

@JVolvo2

One cannot help but feel how many words were wasted for so many years to get to where he goes in ten easy minutes.

I'll not look at the Hamptons in quite the same way.

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15 users have voted.

@Pluto's Republic

As usual, straight to the heart of the matter. They own data-dot symbols - and multiple properties of the sort they've permitted banksters to steal.

Is this where outright cannibalism between the Monsters Of The Universe begins as the war-lords move in on each other?

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3 users have voted.

Psychopathy is not a political position, whether labeled 'conservatism', 'centrism' or 'left'.

A tin labeled 'coffee' may be a can of worms or pathology identified by a lack of empathy/willingness to harm others to achieve personal desires.

The Aspie Corner's picture

And it's well deserved. Too bad the bourgeoisie will never be hit with it. Fuckers.

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CB's picture

This latest move should push it down for good. Many of the OPEC countries now need the cash, especially KSA and the other GCC countries for domestic purposes.

How The Petrodollar Quietly Died, And Nobody Noticed

The US shot itself in the foot when it pushed down oil prices and added sanctions to hurt Russia. Russia responded by decreasing its dependence on oil revenues to balance its budget. It also created huge internal markets for import substitution. It also triggered currency swaps and the new Petroyuan gold backed oil futures market.

Russia has also opted to back the Ruble with gold - now at about 30% - the highest of any country. As I like to say, Putin is a master of Judo. He is using America's greatest strength and re-directing it right back at itself. The more aggressive the US becomes, the more stupid its moves will become and it will hurt itself even more. With China and Russia on the rise, the US is no longer sitting in the catbird seat.

China, Russia and other countries have been quietly getting all their ducks in a row for the coming collapse of the US dollar dominance in world markets. The trick is to let it collapse gently. I think these countries can squeeze a few more trillions from American's pockets before it all collapses and it becomes payback time for the US. I'm guessing this will occur sometime between 2020 and 2025.

Lets watch what happens to the US dollar on the Forex market. The US$ is down 12% vs the Euro and down 6.5% vs the Renminbi and Ruble YTD.

With the US importing much of its consumer goods, this is going to hurt the ordinary person the most. The extremely wealthy have their bugout hideaways in foreign nations to avoid the pitchforks and torches in the case that Homeland Security is not up to the challenge.

As the Chinese are want to say, we live in interesting times.

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27 users have voted.

@CB think that, despite the temptation, China or Russia want the us to collapse. I base that thought on nothing but overall impressions.

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dfarrah

CB's picture

@dfarrah
Its a huge money maker for them. What they want is the US hegemonic grip on the world's economies as well as the US$ as the world's reserve currency to end. The US can give itself unlimited loans at close to zero interest that it uses to finance and maintain its empire/wars while outsourcing inflation to other nations.

The US has to learn how to play nice with other nations or eventually face destruction. We are now re-entering a multi-polar world after only a few decades of the 'New American Century' and the neocons that have taken over Washington are pissed.

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28 users have voted.

@CB countries want to make business, not war.

It seems that when people talk about Russia or China, the underlying assumption is that these countries want to destroy the US. Maybe these people assume the same of Russia and China because the US is always chomping at the bit to take over other countries.

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dfarrah

@CB

apart from the internet. (Easy for me to say; I wouldn't have a cell-phone if I was paid to carry one, even just for the principle of the thing.)

...With the US importing much of its consumer goods, this is going to hurt the ordinary person the most. ...

Is it possible for local production to respond with an increase, thereby cutting back on transport cost, global pollution and the profits made by those transporting goods? That money - paid by consumers - instead perhaps going to small local producers, cottage industries, worker-co-ops? Circulating within the local economy?

Perhaps crowd-funded investment in the future of small business or something of the kind? I dunno, seems as though there may be an opportunity here for not only self-employment but an end-run around corporate monopolies while at least feeding and clothing the people.

How many people used to dabble in clay pottery and might have kilns around to make dishes on a small scale, for example? Neighborhood exchanges and the like, as underground survival tactics, not just small business, per se, with the dispossessed creating their own survival economy, until (optimistic phrasing, lol,) democracy can be brought in? I know that this has been started in a number of areas already, from where this could potentially expand - and needs to...

Although there I'm still thinking in middle-class terms, not inner-city, even though I'm living in those conditions now... we can't even have a garden here, although my roommate's starting tomatoes, peppers and the like and if the pots of transported raspberries have survived the winter on the open back porch, we'll have those ...

Most of us simply don't have the capacity to prepare, but perhaps enough can manage somehow.

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4 users have voted.

Psychopathy is not a political position, whether labeled 'conservatism', 'centrism' or 'left'.

A tin labeled 'coffee' may be a can of worms or pathology identified by a lack of empathy/willingness to harm others to achieve personal desires.

Lookout's picture

they ran out of trees (as fuel) to smelt it.

The petro-dollar was always a fuelish idea.
https://www.zerohedge.com/news/2016-05-31/secret-story-how-saudi-petrodo...

The word “petrodollar,” according to the Los Angeles Times, was coined in late 1973, and introduced into English by New York investment bankers who were courting the oil-producing countries of the Middle East. Soon enough, as that paper wrote, the petrodollar had become part of “the world’s macroeconomic interface” and crucial to Kissinger’s developing Middle Eastern policy.

https://www.commondreams.org/views/2015/09/28/debacle-inc-how-henry-kiss...

What about buying yuans?

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24 users have voted.

“Until justice rolls down like water and righteousness like a mighty stream.”

earthling1's picture

@Lookout
How can we and is it legal to invest in yuans?
For those of us who are fortunate enough to have an accessable 401k, changing dollars into rubles or yuans seems smart.

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@earthling1

They might cut off The (relative) Poors by making it legal only when bought in bulk, though, or via such as Delaware stealth finance industries, thus giving Biden's stomping ground yet another boost...

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2 users have voted.

Psychopathy is not a political position, whether labeled 'conservatism', 'centrism' or 'left'.

A tin labeled 'coffee' may be a can of worms or pathology identified by a lack of empathy/willingness to harm others to achieve personal desires.

Bollox Ref's picture

Britain, France, Spain, Portugal, etc., still function as countries/societies after the end-of-empire. Sweden survived the loss of its Baltic empire in the 18th C., and is regarded today as a social democratic example.

All 'good' things come to an end. Less guns, more roses.

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31 users have voted.

Gëzuar!!
from a reasonably stable genius.

All the European nations and the U.S. expelling Russian diplomats today will cure everything.

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18 users have voted.
snoopydawg's picture

@Mickt

Even though Britain hasn't shown Russia the evidence of them poisoning Skripal, May was able to talk 5 other countries to stand with her. This was after she got many countries to kick Russian diplomats out of their country. But who needs evidence anymore when the PTB have decided to get their war on? Look for a false flag event to happen during the games which will be blamed on Russia. Most of the players have stated that they are still going to participate.

BOYCOTT BACKING Six countries are planning state boycotts of the 2018 World Cup in Russia to show solidarity with Britain
Officials from Poland, Iceland, Denmark, Sweden, Australia and Japan are ready to snub their invitations from Moscow

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The Democratic Party under Bill Clinton transformed itself into the traditional Republican Party, and the Republican Party moved, was pushed, so far to the right it became insane

CB's picture

American soldiers now so dumbed down they get their lessons in comic book form.

Apparently Russian cyber forces are now so advanced, the US military is powerless to stop them. Nothing new here. After all, a dozen Russians and a hundred grand against several billion managed to get the Trumpster elected in order to destroy America. It is obvious the US has lost the cyber war to Russia.

Enjoy.

SILENT RUIN (PDF)

Our Science Fiction Prototype begins in the year 2027. Romania and Moldova
have united, crossing a red line for Russia. Tensions are high as both NATO and
Russia conduct training missions on each side of the border. When both forces’
front-line autonomous forces deviate from their submitted plans... the robots
engage...triggering a full conflict.

The fight is fast. With superior EW capabilities, the Russians launch a cyber
attack that jumps the autonomous forces and targets the manned tanks.
Russian tanks roll into the city and converge on the US embassy....

Repaired link addy

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The Liberal Moonbat's picture

@CB https://en.wikipedia.org/wiki/Private_Snafu

Even "The Greatest Generation" were treated by their commanding officers like the undereducated teenage goobers most of them were - of course, they were treated to the vocal talents of Mel Blanc, and some of the early art of he-who-would-become Dr. Seuss!

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CB's picture

@The Liberal Moonbat
The low scorers went to the front first.

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11 users have voted.
dervish's picture

@CB Here is another one

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4 users have voted.

"Obama promised transparency, but Assange is the one who brought it."

@CB

the ubiquitous comic-book villain, and this works better in a comic-book scenario. Besides which, TPTB live in a self-generated 'Virtual Reality' based on characters and fictional worlds from speculative fiction where biology doesn't matter any more than does the rest of reality, and which they believe they can actually make real by clapping really hard as they drain the world for never-enough money.

And they're warning soldiers (and incidentally us) that they're switching to the use of AI killer robots (the details of which - assuming they're actually ready-to-go, not that they'd ever be reliable* - they evidently don't want to show anyone yet, so are using comic-book illustrations) as well as drones, (which will also apply to us and free them from having to pay militarized police and mercenaries for 'population control' - population terrorization - and war-crimes) so who needs non-billion/trillionaire humans anymore anyway, as we have virtually nothing left for them to drain?

This mess had better collapse soon, and take The Psychopaths That Be down with it...

* Autonomous entities incapable of ethics and empathy, which also combine to create what we term conscience, are by definition psychopathic. If programmed to kill independently, big, fat old 'DUH' they're going to become uncontrollable at any point in time, if it suits them to shred their creators or other humans they're supposed to be assisting. Skynet, even if on an individual basis, indeed...

But these are idiots letting infective novel organisms loose into the environment all over the planet for freaking profit, so what could you expect? Only psychopaths would want to live in dystopian novel-worlds and work toward this; they always figure that they're exceptional and will escape all consequence themselves. Comes with having that human/survival portion of the brain missing/not functioning...

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3 users have voted.

Psychopathy is not a political position, whether labeled 'conservatism', 'centrism' or 'left'.

A tin labeled 'coffee' may be a can of worms or pathology identified by a lack of empathy/willingness to harm others to achieve personal desires.

Hawkfish's picture

Inflation erodes debt, which is good for the debtor class. This is also how Britain got rid of its public debt in the 19th century if I remember Piketty right. More expensive imports means it is cheaper to make stuff domestically, increasing employment.

So I can see how this sucks for the oligarchy and the creditor class, but the flip side of that is that what’s bad for them is good for everyone else.

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18 users have voted.

We may find that we’re all alone
In the dream of the proud.
- Pink Floyd, On the Turning Away

I'm pretty sure that Wall Street won't like the effects of the Petro-Yuan, resulting in a reduced demand for the petrodollar, producing an oversupply of the US dollar and its devaluation against other currencies on the global currency exchange, ultimately making those (multinational corporate) imports to the US more expensive for US consumers.
It should be pointed out that certain domestic (Main Street) advantages can come from a devalued dollar. US exports, especially agriculture exports would become more affordable on the world market. A devalued dollar would also incentivize domestic production/manufacturing (due to a devalued dollar making imports more expensive).
Both of these effects of a devalued dollar (US exports becoming more affordable on the world market combined with an incentives to increase domestic production/manufacturing) would work toward reducing US trade imbalances (i.e. better deal for US exports combined with a worse deal for US imports).
Not to mention the helpless situation of having an exchange currency that can be manipulated against by every other country in the world, without having any feasible means of retaliation.

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15 users have voted.

Mike Taylor

Pluto's Republic's picture

@Mike Taylor

Not to mention the helpless situation of having an exchange currency that can be manipulated against by every other country in the world, without having any feasible means of retaliation.

First you have to find a foreign merchant who will accept US Dollars, in the first place.

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@Pluto's Republic
Nah. We're their biggest customer. They will always take US dollars, unless they want to shut down a significant percentage of their own production and export market, which would be ok with me. We need to be making more of our own stuff.

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14 users have voted.

Mike Taylor

Steven D's picture

This makes war more likely than not in my opinion, whether with Iran, or with Russia directly.

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11 users have voted.

"You can't just leave those who created the problem in charge of the solution."---Tyree Scott

in order to trade on world markets. That unwinds a huge capital advantage that the US has enjoyed. No only that but the US has not had to actually pay for its trade deficits since creditor nations were content to keep their surpluses in dollars or dollar investments.

My opinion is that the US has been able to print as much money as it wants and avoid inflation precisely because of trade with China. That printed money finances some economic activity which eventually results in salaries somewhere. Those folks buy consumer goods. If an inexhaustible supply of cheap goods are not on the market then those fake dollars become inflation wedges, chasing after smaller and smaller product production.

It really is unbelievable that the US and her "Coalition" partners think that they are the world. That's less than a billion people in a 7.5 billion person world, not to mention that the real economic activity has its centroid well away from the US.

Why does the US think that it can continually wage war on the majority of the planet's populations? For me the only explanation of US behavior is that it is in a state of continual war, in many forms from soft to hard against everyone. It explains the mentality of exceptionalism...in war the focus is only on winning. In war propaganda is whatever you can generate, becoming marketing against other nations without any hindrance of objectivity.

Edit: fixed Tr/Billion

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12 users have voted.

Capitalism has always been the rule of the people by the oligarchs. You only have two choices, eliminate them or restrict their power.

IowanX's picture

@ StevenD The only war option--and it's really stupid strategically--is to gin up an attack on Iran driven by *something* in Syria. But why, and how does it work? Let's say it starts, Iran's oil infrastructure does/does not get blown to bits--Iran bought the Russian S-300 air defense, but who's to say that the Russians aren't putting in the newer S-400s, so we don't know how our "attack" on "nuclear infrastructure (i.e. "oil fields") works. Presumably Saudi Arabia and Israel would be"prepared" to pile on, in defense of the Petrodollar, or religious whatever. Will they? You're right to be wary, but it's pretty murky, and Team Trump isn't smart on its best day, and isn't wise at all.

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8 users have voted.
Song of the lark's picture

The yuan is loosely pegged to the dollar. Here is a short explanation from Charles Hugh Smith. A brief reminder that central banks have been working over time in the last decade to devalue many currencies. Christ the Japanese printed a quadrillion yen. The Swiss have been in panic mode at the rising value of the franc buying billions in US stocks.
Here is the explanation for the above misguided.
“In the good old days circa 2009-2014, central banks acted in concert to flood the global banking system with easy low-cost credit and push the U.S. dollar down, effectively boosting China (whose currency the RMB/yuan is pegged to the USD), commodities, emerging markets and global risk appetite.

That convergence trade blew up in mid-2014, and the global central banks have been unable to reverse history. In a mere seven months, the U.S. dollar soared from 80 to 100 on the USD Index (DXY), a gain of 25%-an enormous move in foreign exchange markets in which gains and losses are typically registered in 100ths of a percent.

This reversal blew up all the positive trades engineered by central banks: suddenly the yuan soared along with the dollar, crushing China's competitiveness and capital flows; commodities tanked destroying the exports, currencies and economies of commodity-dependent nations; carry trades in which financiers borrowed cheap USD to invest in high-yielding emerging markets blew up as currency losses negated the higher returns, and global risk appetite vanished like mist in the Sahara.

The net result of this reversal is global markets have struggled since mid-2015, when the headwinds of the stronger dollar finally hit the global economy with full force.”

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CB's picture

@Song of the lark

China Drops The Yuan's Strict Peg To The US Dollar
Dec 12, 2015 @ 10:01 AM 18,226

This is a useful move by the Chinese authorities, at least when viewed from Beijing. They've decided to stop pegging the yuan (or renminbi, to taste) to the US dollar. It's still pegged of course, they're not ready for a proper free market just yet, but they are now pegging it to a basket of currencies rather than just the dollar. This does indeed make sense for them for at least two reasons. Although it's also likely, in effect, to increase the howling about how China is a currency manipulator. Which it is of course, just not the manner that most accuse it of.
...

The yuan has actually appreciated against the dollar by about 6.5% YTD. The reasons for this is that the value of the dollar has gone down over 12% on the FOREX markets YTD.

BTW, one has to understand the terminology in the money markets. When the US changes the monetary value of the US$ to its benefit it is called fiscal management. When an independent state does it, they call it currency manipulation.

The net result will be that your shoes and underwear will now cost an extra 10% (Wally Mart always adds extra when the cost goes up) next year. Of course, Americans can learn to make their own underwear and shoes (if they can still remember how) but the workers will have to be paid $6.00/hr. Food at a restaurant in China is about 3 times less (cost of living comparison). It would be more advantageous if Americans moved to China to make their underwear and shoes. They could live better. Except for milk and gasoline - stay in America if you buy a lot of those items. But, if you take a bus and drink beer, you could go four times as far and get twice as drunk in China.

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@Song of the lark
...or isn't backed by PMs.

That being said, all those factories in China are real.

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Song of the lark's picture

is without a doubt complex. Gjohnsit is correct in his assessment of a kind of unraveling, due to currencies. Still some would say another petro currency may make markets more stable rather than spell doom. In the same way that the SDR of which China is a member adds to stability of markets. The gold conundrum is also problematic. There is probably not enough gold in the world to back major currencies. It's all based on faith ( really science, stable economics, nuclear weapons, and food security and ability to create credit (debt). Climate change will shortly unravel most of these factors. Ice nine (loss of faith in fiat currencies, or debt creation will cause the collapse and it will be global.

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CB's picture

of China's Petroyuan project. It currently comprises 68 countries which contains 65% of the world's population and 40% of the global GDP (2017). Many of these are currently low or underdeveloped and have the greatest potential for rapid market advancement.

Welcome to the world's largest trading corridor.

Not only does the Petroyuan bypass the US$, it directly links oil payments to physical gold - the yuan is now freely convertible to gold. This payment system has been welcomed by the BRICS (Brazil, Russia, India, China & South Africa) along with Iran, Venezuela, Nigeria and Angola. These are large producers/consumers of gold and/or oil. If there was still a viable Libya or Iraq they would have also welcomed this. Actually, the Petroyuan could pull those countries back from the dark ages IF the 800 pound gorilla in the region would allow that to happen without bloodshed and carnage.

Take note that many of these countries are currently in America's military cross-hairs in a last ditch effort to maintain the Empire of Chaos. The writing is on the wall. The New American Century is now waning. The question is, will the US decline gracefully to become an equal among equals or will it have a tantrum and try to destroy the world if it can't be in charge of the playground.

I believe the continuing loss of full spectrum dominance by the Atlanticists is behind their current stupid and rash decisions against Russia and China as well as in the MENA region. All they will accomplish is to increase their rate of decline.

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QMS's picture

@CB by the Atlanticists...not only is it speeding the demise of their influence, it is also preventing opportunities to engage and profit. Shhh, don't let the pentagon know about the silk road. They may decide to bomb it. Wink

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Intelligence is being redefined as the ability to repeat ever more complex instructions.

CB's picture

@QMS
for US corporations, banks, WTO, IMF and World Bank. They know all about the BRI but they can now only put up some roadblocks. The Atlanticists spent the last 3 decades gazing at their own wonderful navels believing that no other nation in the world could ever become as superior as they. After all, it was god's will. It was the end of history.

....until China and Russia pulled the curtain.

China and Russia have become an insurmountable foe. Between the two, they have more true allies in the unaligned world. They have formidable military defenses, huge economic power, burgeoning economies, their own banking, credit and payment systems, greater access to resources and rare earths, very high intellectual and manpower resources, extremely large untapped consumer base, modified capitalist/socialist political systems AND operate on a win-win basis with their partners.

The winner-take-all Empire of Chaos doesn't know how to handle this. It's been bred out of their genetics. Greed is Good was their mantra for the last half century.

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earthling1's picture

@CB
Allow me a summary of your summary.
Historically, world commerce has been a seafaring endeavor, beginning with Marco Polo connecting by sea Europe and the far east.
Those with the most powerful navy controlled the sealanes.
China is rebuilding the ancient "Silk Road" and bypassing the sealanes, which relegates the most powerful navy on the planet obsolete.
An embargo on the Americas would crush the Western World.
Now we know why TPTB are in such a panic. A quadrillion dollar naval empire is facing collapse into uselessness.
Not just warships, but oil tankers, cargo, container, bulk shipping vessels would become obsolete.
The collapse of North American Empire would be profound.
IMHO.

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CB's picture

@earthling1
also encompasses sea lanes. China actually had the world's largest maritime force in the early 1400's, before they scrapped it.

Of course, anything that challenges US world hegemony is taken as a military threat.

China's OBOR pressuring all global chokepoints, seeks to displace US from Indo-Pacific:

Washington: All global chokepoints are currently under pressure from China's One Belt One Road (OBOR) initiative through which Beijing intends to displace the US and its allies from the Indo-Pacific region, a top American commander told lawmakers on Thursday.

"One Belt One Road is, in fact, much more than just an economic engine that China is undertaking," Admiral Harry Harris, commander of the US Pacific Command told members of the House Armed Services Committee during a Congressional hearing on Indo-Pacific region.
...

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earthling1's picture

@CB
but with short hops to Indonesia and Austrailia, every other market is accessible by land routes. Even Africa can be accessed through Iran.
In the event of an economic war, even the polar route can be circumvented.
The only continents blockadable will be the Americas and Australia.
Check and mate.

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earthling1's picture

@earthling1
the link up of Iran/Iraq/Syria/and Lebanon is starkly shown.
The Crescent Road is what our rulers are fighting.
IMHO.

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Pluto's Republic's picture

@earthling1

...throughout the Eastern Hemisphere has another advantage the world has not experienced before:

Cheap shipping that cuts up to a month off of shipping by boat. That's a game changer for all those nations, especially the many land-locked ones. What's more, it speeds up the velocity of money due to more rapid transactions — which translates to a significant economic boost. China's plan was to lift them all out of poverty, which will go a long way toward putting a stop to their exploitation by international assholes. (They know who they are.)

I guess this is what communism looks like these days.

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@CB

It's no fun unless it all ends in tears for the other guys.

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Psychopathy is not a political position, whether labeled 'conservatism', 'centrism' or 'left'.

A tin labeled 'coffee' may be a can of worms or pathology identified by a lack of empathy/willingness to harm others to achieve personal desires.

QMS's picture

@CB wasn't programmed to effectively deal with land based conduits. So why is it we need another dozen warships?

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QMS's picture

Agreed CB, well stated. Sad how the usa's see the world in 'algined' with us or 'unaligned' against us. Equals the stupidity of the bush proclamation again us or forest. The solution to our plight is simple if seen in clear light. Stop fighting the rest of the world for resources. Join the rest of the world instead and cure the waste disease.

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earthling1's picture

@QMS
it is too late. Our rulers have done pissed off the rest of the world.
The OBOR is unstoppable now.
Our overwhelming naval superiority has forced the African/European/Indo-China-Asian continents to abandon the sealanes altogether.
The largest trade bloc on the planet will be inaccessable to American naval power.

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QMS's picture

@earthling1 can see the restrictions against the US military, which the 'non-aligned' countries are putting up for their own national defense, is advertising the weakness of the global elite, hiding behind ever bigger weaponry. It is not too late. Nations are creating new currencies and independent internets. Large populations around the world are working with their 'across the border' neighbors to repair the damages. It may come to an all out rebellion before there are too many starving. People will fight back. It is not over by a long shot.

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Pluto's Republic's picture

@QMS

China has offered to build a high speed rail system from Bejing to Chicago so that the US can join the 21st century, too.

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QMS's picture

@Pluto's Republic @Pluto's Republic May be some trouble with the trans pac tunnel tho. It would be more expedient for the
Chinese to just buy Chicago.

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Intelligence is being redefined as the ability to repeat ever more complex instructions.

@earthling1

is self-defeating and unsustainable?

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Psychopathy is not a political position, whether labeled 'conservatism', 'centrism' or 'left'.

A tin labeled 'coffee' may be a can of worms or pathology identified by a lack of empathy/willingness to harm others to achieve personal desires.

QMS's picture

@Ellen North the US concept of defending murican interests with military might is bound to have negative consequences. The neo-libs won't take responsibility after the empire collapse. Nor will the gov. They made me do it! A weak defense in the Hague. My hope is to see the warmongers brought into an international court to be sentenced for war crimes, crimes against humanity, treason and theft. Once their war toys don't work anymore, they are exposed as the war profiteers they are. That is outlawed in our constitution, BTW.

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Intelligence is being redefined as the ability to repeat ever more complex instructions.