The World Is Dedollarizing

The World is Dedollarizing

Peter Koenig

What if tomorrow nobody but the Unites States would use the US-dollar? Every country, or society would use their own currency for internal and international trade, their own economy-based, non-fiat currency. It could be traditional currencies or new government controlled crypto-currencies, but a country’s own sovereign money. No longer the US-dollar. No longer the dollar’s foster child, the Euro. No longer international monetary transactions controlled by US banks and – by the US-dollar controlled international transfer system, SWIFT, the system that allows and facilitates US financial and economic sanctions of all kinds – confiscation of foreign funds, stopping trades between countries, blackmailing ‘unwilling’ nations into submission. What would happen? – Well, the short answer is that we would certainly be a step close to world peace, away from US (financial) hegemony, towards nation states’ sovereignty, towards a world geopolitical structure of more equality.

We are not there yet. But graffities are all over the walls signaling that we are moving quite rapidly in that direction. And Trump knows it and his handlers know it – which is why the onslaught of financial crime – sanctions – trade wars – foreign assets and reserves confiscations – all in the name of “Make America Great Again”, is accelerating exponentially and with impunity. What is surprising is that the Anglo-Saxon hegemons do not seem to understand that all the threats, sanctions, trade barriers, are provoking the contrary to what should contribute to American Greatness. Economic sanctions, in whatever form, are effective only as long as the world uses the US dollar for trading and as reserve currency.

Once the world gets sick and tired of the grotesque dictate of Washington and the sanction schemes for those who no longer want to go along with the oppressive rules of the US, they will be eager to jump on another boat, or boats – abandoning the dollar and valuing their own currencies. Meaning trading with each other in their own currencies – and that outside of the US banking system which so far even controls trading in local currencies, as long as funds have to be transferred from one nation to another via SWIFT.

Many countries have also realized that the dollar is increasingly serving to manipulate the value of their economy. The US-dollar, a fiat currency, by its sheer money mass, may bend national economies up or down, depending in which direction the country is favored by the hegemon. Let’s put the absurdity of this phenomenon in perspective.

Today, the dollar is based not even on hot air and is worth less than the paper it is printed on. The US GDP is US$ 21.1 trillion in 2019 (World Bank estimate), with current debt of 22.0 trillion, or about 105% of GDP. 

According to Forbes, about US$ 210 trillion are “unfunded liabilities” (net present value of future projected but unfunded obligations (75 years), mainly social security, Medicaid and accumulated interest on debt), a figure about 10 times the US GDP. 

 In addition, there are about one to two quadrillion dollars (nobody knows the exact amount) of so-called derivatives floating around the globe. A derivative is a financial instrument which creates its value from the speculative difference of underlying assets, most commonly derived from such inter-banking and stock exchange oddities, like ‘futures’, ‘options’, ‘forwards’ and ‘swaps’.

This amounts to a humongous worldwide dollar-based pyramid system. Imagine, this debt comes crashing down, for example because one or several big (Wall Street) banks are on the brink of bankruptcy, so, they claim their outstanding derivatives, paper gold (another banking absurdity) and other debt from smaller banks. It would generate a chain reaction that might bring down the whole dollar-dependent world economy. It would create an exponential “Lehman Brothers 2008” on global scale.

No-Deal Brexit More Likely As Johnson leads In Polls

Chance of no-deal Brexit rises as Johnson leads Hunt

The chance that Britain will leave the European Union without a deal is the highest since October 2017, economists polled by Reuters say, as arch-Brexiteer Boris Johnson looks set to take over as prime minister next week.

Johnson was the face of the 2016 campaign to quit the EU and has said he would be willing to leave on Oct. 31 without a deal. The median forecast of that happening was 30% in the July 15-18 poll, up from 25% last month and 15% in May.

“The likelihood of a Boris Johnson premiership and the rhetoric which has surfaced during the campaign suggests that this outcome is more likely than we previously believed,” said Peter Dixon at Commerzbank.

With Jeremy Hunt, Johnson's rival for the premiership, also keen to display his credentials as a hard Brexiteer, sterling GBP= has plunged this week to lows not seen in over two years as investors price in the growing risk of a disorderly Brexit.

Lawmakers voted on Thursday to make it harder for the next prime minister to try to force a no-deal Brexit, giving some support to sterling, and a strong majority of economists polled still think the two sides will eventually settle on a free-trade deal, as they have since late 2016, when Reuters first started asking the question.

But in second place this month was the more extreme option of leaving without a deal and trading under World Trade Organization rules.

The third most likely outcome was the other compromise option of Britain remaining a member of the European Economic Area, paying into the EU budget to maintain access to the single market yet having no say over policy.

Fourth place went to cancelling Brexit.

As the chance of a hard Brexit has increased, so has the likelihood of a recession. The median forecast for one in the coming year was 30% and of one in the next two years was 35%, up from 25% and 30% respectively in June’s poll.

On The Brink Of World War 3: Here Are 5 Major Developments Within The Last 48 Hours…

Has a war between the United States and Iran become inevitable? That is what some in the mainstream media seem to be claiming, but let us hope that is not true, because such a war would mean immense death and destruction. If the Iranian regime felt that their survival was at stake, they would throw everything in their entire arsenal at the United States and Israel, and they would unleash Hezbollah to commit horrific acts of terror all over the globe. That would include acts of terror inside the United States, and most Americans have absolutely no idea how nightmarish it would be to have Hezbollah terrorists striking soft targets all across the country. And in order to quickly win a war against Iran, the U.S. would probably have to use nuclear weapons, and that is a line that we do not want to cross. This wouldn’t be anything like our wars in Afghanistan and Iraq, but very few people seem to understand this.

And within the last 48 hours, such a conflict has gotten much, much closer. Here are 5 of the most important developments…

#1 According to President Trump, the U.S. Navy shot down an Iranian drone over the Strait of Hormuz. The following comes from NBC News…

President Donald Trump on Thursday said that a U.S. Navy ship “destroyed” an Iranian drone over the Strait of Hormuz — the latest in a series of tense incidents between Washington and Tehran.

Trump told reporters at the White House on Thursday that the USS Boxer — a U.S. Navy amphibious assault ship — “took defensive action” against the Iranian drone that had “closed into a very, very near distance, approximately 1,000 yards.”

The drone was “threatening safety of the ship and the ship’s crew” and “was immediately destroyed,” he said.

#2 The Iranians denied that it was their drone. So either the Iranians are lying (which is a very real possibility), or someone else may be trying to start a war between our two nations. When asked about the drone, Iranian Foreign Minister Mohammad Javad Zarif seemed to indicate that the drone which was shot down did not belong to them…

“We have no information about losing a drone today,” Zarif told reporters at the United Nations before a meeting with Secretary-General Antonio Guterres.

#3 But the Iranians have admitted that they have seized a Panamanian-flagged, UAE-based oil tanker. According to Iran, the tanker was seized because it was illegally smuggling Iranian oil “to foreign customers”…

The tanker was seized by Revolutionary Guard forces on July 14 after getting intercepted south of Iran’s Larak Island in the strategic Strait of Hormuz amid allegations that the tanker was smuggling fuel from Iranian smugglers to foreign customers.

It remains unclear to which country or company the tanker belongs but a tanker based in the United Arab Emirates disappeared earlier this week.

#4 The U.S. State Department has condemned Iran for seizing the tanker, and U.S. officials are demanding that they immediately release it…

In a statement, a State Department spokesperson said the U.S. “strongly condemns the Islamic Revolutionary Guard Corps Navy’s continued harassment of vessels and interference with safe passage in and around the Strait of Hormuz.”

“Iran must cease this illicit activity and release the reportedly seized crew and vessel immediately. We will continue to work closely with our allies and partners to ensure the Iranian regime’s extortion tactics and malign activities do not further disrupt maritime security and global commerce,” the spokesperson said.

#5 It has been announced that the U.S. is deploying 500 troops to Prince Sultan Air Base in Saudi Arabia. As tensions with Iran continue to rise, the number of troops being staged at this base is likely to increase dramatically. The following comes from CNN…

Five-hundred troops are expected to go to the Prince Sultan Air Base, located in a desert area east of the Saudi capital of Riyadh, according to US two defense officials. A small number of troops and support personnel are already on site with initial preparations being made for a Patriot missile defense battery as well as runway and airfield improvements, the officials said.

The US has wanted to base troops there for some time because security assessments have shown Iranian missiles would have a difficult time targeting the remote area.

I don’t know who is doing those “security assessments”, because the truth is that Iranian missiles can easily reach that base.

For a while there it seemed like things had cooled off a bit in the Middle East, and many were hoping that the threat of an imminent conflict had been averted.

Unfortunately, things are now more tense than ever, and a single mistake could set off a chain of events that nobody is going to be able to stop.

On Thursday, Iran’s foreign minister made the following very ominous statement…

“We live in a very dangerous environment,” the Iranian foreign minister, Javad Zarif, said Thursday at the United Nations before news of the drone was made public. “The United States has pushed itself and the rest of the world into probably the brink of an abyss.”

The Risk Of Nuclear Reactors On Fault Lines

With Fukushima American Style Only One Big Quake Away, Experts Warn

By Stefan Stanford

The July 11th story over at Common Dreams republished at Zero Hedge two days later is enough to give any prepper pause. Titled "The Quake To Make Los Angeles A Radioactive Dead Zone", their story reported that had the previous Friday’s 7.1 earthquake and other ongoing seismic shocks hit less than 200 miles northwest of Ridgecrest/China Lake, ten million people in Los Angeles would now be under an apocalyptic cloud, their lives and those of the state and nation in radioactive ruin. (ANP: Map at the top of this story showing all of the nuclear power plants in California close to the San Andreas Fault is courtesy of Nuclear.News.)

Warning within their story that due to two cracked, embrittled, under-maintained, unregulated, uninsured, an un-inspected atomic reactors at the nuclear power plant at Diablo Canyon, an earthquake in that region could bring about a likely human death toll in the millions and property losses in the trillions, their story also reported this.:

The forever damage to our species’ food supply, ecological support systems, and longterm economy would be very far beyond any meaningful calculation. The threat to the ability of the human race to survive on this planet would be extremely significant. 

And while so far Diablo Canyon and the rest of the nuclear power plants near the San Andreas fault line have dodged a bullet, as Common Dreams reports, at least a dozen faults have been identified within a small radius around the reactors. The reactor cores are less than fifty miles from the San Andreas fault, less than half the distance that Fukushima Daiichi was from the epicenter that destroyed four reactors there. From their story they explain what might happen should a large quake hit that region with a warning that the company maintaining them is totally unprepared and bankrupt.: 

Their cores would be melting into the ground. Hydrogen explosions would be blasting the site to deadly dust. One or both melted cores would have burned into the earth and hit ground or ocean water, causing massive steam explosions with physical impacts in the range of Hiroshima and Nagasaki. The huge clouds would send murderous radioactive isotopes into the atmosphere that would permanently poison the land, the oceans, the air… and circle the globe again and again, and yet again, filling the lungs of billions of living things with the most potent poisons humans have ever created.

In 2010, badly maintained gas pipes run by Pacific Gas & Electric blew up a neighborhood in San Bruno, killing eight people. PG&E’s badly maintained power lines have helped torch much of northern California, killing 80 people and incinerating more than 10,000 structures.

Now in bankruptcy, with its third president in two years, PG&E is utterly unqualified to run two large, old, obsolete, crumbling atomic reactors which are surrounded by earthquake faults. 

Diablo cannot withstand an earthquake of the magnitude now hitting less than 200 miles away. In 2014, the Associated Press reported that Dr. Michael Peck, the Nuclear Regulatory Commission’s site inspector at Diablo, had warned that the two reactors should be shut because they can’t withstand a seismic shock like the one that has just hit so close.

The NRC tried to bury Peck’s report. They attacked his findings, then shipped him to Tennessee. He’s no longer with the Commission. 

Decades before disaster struck at Fukushima Daiichi, millions of Japanese citizens marched to demand atomic reactors NOT be built in a zone riddled by fault lines, washed by tsunamis. In California, ten thousand citizens were arrested demanding the same. Diablo’s owners hid the existence of the Hosgri Fault just three miles from the site.

A dozen more nearby fault lines have since been found, capable in tandem of delivering shocks like the ones shaking Ridgecrest. No significant structural improvements have been made to deal with the newfound fault lines.

Debt, Default And Depression

The Three 'D's Of Doom: Debt, Default, Depression

by Charles Hugh Smith

"Borrowing our way out of debt" generates the three Ds of Doom: debt leads to default which ushers in Depression.

Let's start by defining Economic Depression: a Depression is a Recession that isn't fixed by conventional fiscal and monetary stimulus. In other words, when a recession drags on despite massive fiscal and monetary stimulus being thrown into the economy, then the stimulus-resistant stagnation is called a Depression.

Here's why we're heading into a Depression: debt exhaustion. As the charts below illustrate, the U.S. (and global) economy has only "grown" in the 21st century by expanding debt roughly four times faster than GDP or earned income.

Costs for big-ticket essentials such as housing, healthcare and government services are soaring while wages stagnate or decline in purchasing power. 

What's purchasing power? Rather than get caught in the endless thicket of defining inflation, ask yourself this: how much of X does one hour of labor buy now compared to 20 years ago? For example, how much healthcare does an hour of labor buy now? How many days of rent does an hour of labor buy now compared to 1999? How many hours of labor are required to pay a parking ticket now compared to 1999?

Our earnings are buying less of every big-ticket expense that's essential, and we've covered the gigantic hole in our budget with debt. The only way the status quo could continue conjuring an illusion of "prosperity" is by borrowing fantastic sums of money, all to be paid with future earnings and taxes.

At some point, the borrower is unable to borrow more. Even at 0.1% rate of interest, borrowers can't borrow more because they can't even manage the principal payment, never mind the interest. That's debt exhaustion: borrowers can't borrow more without ramping up the risk of default.

When wages are stagnant and big-ticket items are soaring in cost, that leaves less available to service more debt. We can cover expenses by borrowing more for a while, but there's an endgame to this trick: even at zero interest, servicing the debt exceeds income.

Marginal borrowers default, and the resulting losses collapse marginal lenders.Recall that every debt is somebody else's asset and income stream. When a student defaults on a student loan, that erases the asset and income stream of a mutual fund, pension fund, etc.

In other words, defaults are not cost free. They wipe out assets and income streams, never to return.

For the past 20 years, the trick to escaping recessions has been to lower interest rates and flood the financial system with new credit. If everyone would just borrow more and spend every cent of the new money, the economy will start "growing" again.

But we've reached the point where most wage earners can't borrow more, corporations shouldn't borrow more and the top tier of earners no longer want to borrow more. Governments can always borrow more, but eventually servicing the ballooning debt starts crowding out other spending, and the solution--borrowing more to cover the interest payments--spirals out of control.

Lowering interest rates and giving banks and financiers "free money" doesn't increase wages or household incomes or corporate profits. Nor do these monetary tricks magically turn marginal borrowers into creditworthy risks.

Borrowing more to fill the hole left by declining purchasing power only works in the short-term. We've burned the 20 years that this trickery can work, and now we face the endgame: borrowing more only increases defaults, which trigger losses in wealth and income that will be measured in the trillions.

Take a look at systemwide debt in the U.S. Does this look remotely sustainable? If the answer is yes, you might want to dial back your Ibogaine consumption.

"Borrowing our way out of debt" generates the three Ds of Doom: debt leads to default which ushers in Depression.