'Game Over! Dollar Dead! Gold $7000' part 2 [Patrick Willis © Jim Willie]
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The USGovt strategy to spread democracy is intended to disrupt the royals sitting upon peacock thrones, as much as to dislodge valuable resources. In North Africa the objective was to derail the planned European development with new industries, equipped with roll-off port facilities, run by cheaper skilled Arab labor. In the rest of the Arab MidEast, the objective has been to let loose a band of Keystone Cops that unseat the House of Saud itself in a most bizarre sequence of events. The overthrow of Mosni in Egypt required a huge financial assist by the Saudis, hardly a team effort with the Obama Admin clown show. The retreat from Syria has angered the Saudi Royal family in unspeakable terms. They have responded by threatening the shutdown of US Embassies in Saudi Arabia. Hidden in the many conflicts are the Pipeline Politics, which the USGovt cannot afford to reveal. Doing so would make crystal clear its ulterior motives, its weakened position, and the rise of the Natural Gas Coop led by the Russian Gazprom giant. Revealing the fading power of OPEC as the Saudi weapon to enforce the King Dollar scepter would accelerate the Dollar Alternative movement led by the Eastern Alliance. The Syrian War was all about blocking the completion of the Shiite Gas Pipeline from Iran. The US could not stop the Iran-Pakistani Gas Pipeline. The weakness of the USDollar will be made evident by the strangle of natural gas pipelines, mostly run by Gazprom. The US lost the Pipeline Wars to Russia long ago.
The Western population is slowly coming to grips with the rise of the Shiite majority in Iraq. Yes, the United States lost the Iraqi War. Yes, the United States will soon have lost the Afghan War, except for the heroin booty. Valued at over $800 billion in narco profit annually, it has been the big prize on the battlefield supported by soldier blood & guts. At an estimated $6 trillion all-in war cost, thank the Bush II Admin for another folly that equals one third of the national debt. The great turning point for the Global Dollar Politics lies in the massive changes underway with the Petro-Dollar. The Saudis urgently seek a new protector for the Persian Gulf. It will be China to wear the cape. The Saudis will soon announce acceptance for oil payments in Euro terms, in Yen terms, in British Pound terms, and most important in Chinese Yuan terms. The effect will be felt like a gigantic crash impact of a 7-story building hitting the ground, marking the Death of the Petro-Dollar. It has served as the foundation for the USDollar for 40 years, since the Arab 1973 Embargo. The resolution involved a grand pact, engineered by Kissinger. It called for recycling Arab Oil Surplus into USTreasury Bonds, used to fill the many national banking systems across the world. The unraveling of the Petro-Dollar standard will bring about colossal reformation of the many national banking systems. They will ditch the USTBonds in favor of a mix of Chinese Yuan and Gold bullion. Later the same Yuan will become partially gold-backed. Game over for the King Dollar!
The global resistance movement is accelerating with tremendous speed. Back in 2009, the Jackass stated that the first nations to depart the USDollar system would emerge as the leaders of the Next Chapter for the New Paradigm. The warning was that nations would find themselves in an urgent situation whereby maintaining the current USD/USTB system would bring about a death of their currency, bonds, banks, and economies. Conforming and adhering to the King Dollar allegiance would be a death sentence. In the last few months, since the retreat from the Taper Talk by the USFed, since the full outward adoption of QE to Infinity and ZIRP Forever, the world has come to conclude that the Reign of the King Dollar is over. They are noticing the collapse of the current system, due to continued hyper monetary inflation and full dependence on phony money, complete with amplified dispensation to the banker elite.
Alternatives to the USDollar are well along in design, approaching implementation for commerce, wherein the Gold Trade Standard will be installed. The impact waves will be powerful, sweeping aside the fiat paper currencies and their flimsy sovereign bond reinforcement, an implied foundation of debt. Never can a monetary system rest upon a debt foundation without a near complete destruction of capitalist systems. The hyper monetary inflation that has emerged as consensus central bank policy has resulted in global capital destruction, due to rising cost structure, a direct consequence of chronic monetary inflation of the exported variety. Monetary inflation kills capital. Exported monetary inflation kills foreign capital. We have challenged the clueless cast of economist hacks to rebuttal, but not a word has come. The QE to Infinity policy, with its rancid wreckage from ruinous bond monetization, is the epitome of capital destruction. The Keynesian School has presided over a ravaged field. The Von Mises School of sound money, of asset backed monetary systems, or Gold reinforced trade systems, will take over from the mad professors, the criminal bankers, and the narco dripped militarist hands.
It seemed like a comedy, a bad joke. The Obama Admin appeared to intentionally force a shutdown of the USGovt, even if temporary. An element of farce and lunacy prevailed. Black Swans were spotted swimming around the White House moat. The shutdown actually cost more than it saved, due to startup re-initializations of queer systems. From a perspective 3000 miles (5000 kms) south, the entire sequence of events appeared orchestrated by a hidden hand, to satisfy an ulterior motive, even to conduct a strange test. As the world watched in dismay and horror, the USGovt did shut down many offices and ports and parks. The incompetence of the political bodies was laid bare for all to see, the usual battle of entitlements versus taxes on the main. It was the socialists versus the communists actually, which never results in compromise. See history with Hitler versus Stalin. Sorry, forgot that Americans do not read history, study history, or learn from history. Evidence is the revered Weimar Printing Press usage, the adulation from financial market dependence, the taxation to oblivion, the repeat of the British folly and Soviet folly in Aghanistan.
The USGovt shutdown offered an unusual glimpse, much like a trial balloon, to test the reaction across the world. It was like the captain of the USS WhiteHorrHouse taking initial measures to scuttle the ship, just to see if anyone would jump in reaction, or retreat in horror, or notice at all. The gut tells me that the Chinese ordered the temporary shutdown in order to fine tune with delicate calibration many specific systems, which required a legal default on the books, although temporary. They wanted to conduct a test, to determine the reaction within the most complex financial contraption ever devised by man, the USTreasury Bond market. Its tentacles include the USTBond futures, the TNX options, the Interest Rate Swap contracts, the derivatives from the REMICs, the USAgency Bonds, the FOREX swaps, the Social Security Trust Fund, all coming under the Exchange Stabilization Fund umbrella. Nobody can adequately predict the effects within such a complex obscene twisted system built by mad professors and criminal minds, replete with back doors for presidential thefts. So the Chinese ordered a test. My joke recently has been that China lacks rainwater, no longer a secret. They have dried rivers that used to supply Beijing its water. Their arid land does not receive adequate rainfall. So China plans to convert its USTBonds and USAgency Bonds into water, by calling on their amplified liquidity characteristics.
A trial run for default could very possibly have been staged. The critical point of fracture and breakdown lies in the REPO Market. It is little known, little followed, and little understood. It serves as the vast overnight liquidity supply engine. Bear in mind that insolvency plus illiquidity equals bankruptcy. Translate to mean that the many important insolvent systems (big banks, government debt finance), if subjected to a sudden bout of liquidity halt, would be quickly thrust into a situation where failure and bankruptcy could result. The critical REPO Market suffered seizures in September, as the USTreasury Bond found itself not acceptable as collateral, from a legal standpoint, due to the temporary shutdown. The USTBond was all of a sudden a defaulted bond, not worthy of collateral for the overnight loans. So much for pristine paper. The trials in violent events have resulted in actual events, done by the guardians as my suspicion. The October Hat Trick Letter offered details on the complex situation, a trickle down sequence of wrecked systems.
The objective might be to arrange for a vast centrifuge operated by the US Federal Reserve, to dispense USDollars in cash redemption for USTBills, orchestrated by Chinese hands, mainly for their benefit. Operation Twist enabled the Chinese to swap out of long-term USTBonds in favor of short-term USTBills. Now they want out of them too. Witness the upcoming USD/ USTB/ REPO sequential default centrifuge. The USFed is not in a position to prevent it. The USDept Treasury is not in a position to stop it.