The Biggest Moment in Megapolitics Maybe Just Weeks Away Now
In an overlooked article published in the Tehran Times on January 12th, 2012 Iran (the world’s second largest oil producer) made a shocking announcement…one that the western media establishment has suppressed…
It stated that starting this Iranian calendar year (which begins March 20th) Iran would make its first dramatic move away from the Petrodollar…
This is a game-changing move…one that I believe will spread around the world like wildfire…and which I predict by the end of fall will bring an end to the 39-year secular bull market in dollars.
America’s most popular investment will have finally reached its use-by date.
And the consequences for every single American will be so dire, it will be difficult at first to accept, let alone believe.
It’s why Washington has spent over ten years and four trillion dollars trying to thwart it.
And until recently it succeeded (if only just)…
The preservation of Petrodollar Power was the real reason we went to war with Iraq.
It is the real reason behind all the strife we are igniting today with Iran…
It’s the real reason why all our trade and economic, information and military wars are now reaching a boiling point…
It’s the real reason why – in yet another history-making event – Wikipedia and over 10,000 other web sites recently went dark…
And it’s the real reason why the wife of my sometimes friend Bill Clinton (and current Secretary of State) is trying to create draconian laws that (if passed) would deliver a terrible blow against the freedom of information…and why Hillary recently announced that “we are in an information war. And we are losing that war.”
In the past, western media outlets enjoyed a monopoly on the coverage of world news.
But today a growing number of viewers from across the world tune into various alternative foreign media outlets to get a fresh take on current events.
It’s a numbers game. And we are clearly losing that game.
For instance, the most striking example of this comes from the launch of the RT Media Empire…which within just seven years has become the most dominant and pervasive force in media of all time.
RT stands for Russia Today.
It currently holds a record number of viewers on YouTube, boasting overtwo thirds of a billion hits…
CNN International in contrast is struggling to reach an audience of just 1% of RT’s size!
And,more viewers in Washington and New York today tune into the English version of RT than tune into almost any other foreign-based international news channel.
The days of American media monopolies are over.
I predicted, 25 years ago, that this Megapolitical event would occur…long before the producers of these alternative media empires had even graduated from high school!
But mark my words: It is merely the symptom (and not the cause) of the real transformation that is going on in the world right now…and while this transformation will bring great peril, it will also bring great promise…and for those who keep listening – an opportunity for great profits too!
The Petrodollar Was the Ultimate Monopoly
The Petrodollar was a game-changing deal that Washington made with OPEC 39 years ago.
At the time OPEC wanted to create a Petrocurrency in which to trade its oil. This currency however was to be made up of a basket of currencies, which although was to include the dollar, was also to include gold, the Japanese yen, the French franc, the British pound and the German mark.
America had recently hit peak oil and had abandoned the gold standard.
After racking up enormous debts on a failed war (Vietnam)…we were fast running out of oil…of gold…and of money…
And the inflation monster, which had barely raised its head since World War II, was suddenly back from the grave…terrorizing the streets again…
Plus our supremacy was being challenged by the remarkable rise of the emerging markets of the East (like Japan, South Korea and Taiwan)…
Something had to be done.
And the Powers that Be, spied an ingenious little way to keep the empire’s engine running….
President Nixon convinced King Faisal of Saudi Arabia to accept U.S. dollars (and only dollars) as payment for oil. In exchange, he pledged to protect the Saudi Monarchy, and all its oil fields, from anyone who might choose to seize them…enemies like the Soviet Union, Libya and Israel, and many other interested parties.
The King agreed.
And by 1975, he had got all the other OPEC members to agree too.
The Petrodollar Was Born
And so successful was it, that it made the dollar go viral…and mounted Capitalism’s biggest monopoly ever…
It was a Megapolitical innovation that won for the Empire, and each and every citizen in it, all kinds of special privileges…
Megapolitics are the big events that change history.
They are usually either a technological or monetary innovation that tip the balance of power into the hands of its creators and alter the equation of the game.
Two of the greatest Megapolitical innovations of all time were gunpowder and Guttenberg’s printing press.
But they were technological innovations.
The Petrodollar is a monetary innovation.
But its impact in the last 39 years has been equally as powerful.
It was the deal that would rewrite history and shift the balance of power backheavily into America’s favor.
What it did was essentially create a 39-year secular bull market for dollars…as all oil-importing countries would now have to stuff their Central bank vaults full of dollars so they could pay for their oil.
Now in order to acquire those dollars, they would either have to borrow them off America, or they would have to work for it, by manufacturing and selling all manner of goods and products to us…
- The Japanese sold us Kawasaki’s and luxury cars.
- The Taiwanese sold us TVs, telephones and electronics.
- The South Koreans sold us air-conditioners, fridges, washing machines and all manner of modern conveniences.
- And the Chinese sold us toys and trinkets, gadgets and gizmos.
And while all these foreign oil-importing nations had to toil through sweat, blood and tears to earn their Petrodollars in order to pay for their oil, we merely had to print them…
A New World War Was Launched
But this war wasn’t a military one fought with guns and grenades.
This one was a consumer war fought with low-cost unskilled labor and mega-manufacturing plants.
The goal was to simply win the custom of the American consumer.
The reward was not kingdoms and countries, or gold and precious metals, but rather it was merely paper dollars, printed without limit, at virtually no cost, by the only institution in the world with the power to do so: the Federal Reserve.
It became like Christmas every day for the American consumer.
Santa would arrive at ports all over America, with sea-containers full of all sorts of goodies and gadgets, made by his worker elves at home…and sold at mercifully modest costs to the American consumer.
But it wasn’t just cheap goods that Americans won.
We also won cheap credit!
You see all these nations who were competing to sell goods to us began to accumulate vast stores of surplus dollars in their vaults. And rather than let these dollars just sit there and gather dust, they decided to lend them back to America and collect the albeit pithy (yet better than nothing) interest rate we gave them on the loan.
And thus the phenomenon, now infamously known as Petrodollar Recycling, was born.
And it was this phenomenon that gave birth to our unprecedented 30-year secular bull-market in U.S. bonds…(one Warren Buffett is quoted to have dubbed as one of the most “extraordinary” bubbles in financial history…a bubble by the way that is just moments away from bursting…with terrifying implications for every single American, particularly retirees and baby boomers whose pension funds and retirement accounts are simply stuffed with them – whether they know it or not! I’ll tell you how to prepare for the bursting of the American bond bubble in just a moment.)
The Petrodollar Privilege Had Power
In short: it allowed us to live beyond our means…print unlimited amounts of money at virtually no cost…spend more than we earned… consume more than we produced… import more than we exported…
It allowed us to borrow excessive amounts of money at obscenely low rates…and build up enormous trade and budget deficits with few adverse effects…
It allowed us to build a mighty military machine and undertake expensive missions right round the globe…
We expanded our Empire…and extended its reign…
Seen in this light, the importance of the Petrodollar comes into perspective.
You can see why we would be prepared to go to war over it.
The Petrodollar is now the last thread that is holding the American Empire together.
But it’s about to go poof…
Capitalism is About to Find Itself
Without a Currency
Iran has announced its historic launch of the world’s first commodity exchange that will trade oil in currencies other than the U.S. dollar…
This will mark OPEC’s latest attempt to move away from the Petrodollar.
In fact, in 2006, a report titled Iran Next U.S. Target sighted the launch of this exchange as Americas #1 threat, hailing it to be the real “economic weapon of mass destruction.”
The report was voted by alternative media outlet, Project Censored as one of the top 10 censored stories of the year.
By 2008, despite all U.S. efforts to crush it, Iran managed to successfully and silently get a version of this exchange up and running…
This first version of it, however, was merely to establish its validity on global commodity markets…So rather than actively engage in Petrodollar Warfare with America by selling its oil and gas in other non-dollar denominated currencies, it merely offered petroleum-based products instead…
But this year that is set to change.
Iran’s Oil Bourse will offer oil on the open market for the first time in currencies other than the U.S. dollar.
This is the real reason why we are levying sanctions on Iran, and anyone else who dares do business with them.
This is the real reason why we’re sending warships to the Strait of Hormuz, and why we’re accusing Iran of building Weapons of Mass Destruction.
But it doesn’t make sense.
The IAEA (International Atomic Energy Association) has just completed a full inspection of Iran’s nuclear capabilities, and confirmed that there is no evidence Iran has decided to actually build nuclear weapons.
What’s more, we have 2,150 nuclear warheads. And even by the most ambitious of estimates it would take Iran about 10 years to build two at most.
And if Iran’s two nuclear warheads by 2020 are so dangerous, then why have we allowed North Korea and Pakistan to build literally hundreds of them!
So now Washington is bullying the entire globe to boycott all trade with Iran.
But that doesn’t make sense either.
For example, Iran has been trading with mega-economies like India, Japan, South Korea for over two decades. These are not relationships that are going to be severed anytime soon by third-party sanctions. They’ve been trading over hundreds of billions of dollars worth of oil and other commodities with Asia alone for a long time…not to mention dozens of other nations.
Iranian oil is an integral part of many nations’ lifeblood.
And while America is running around bullying everyone with sanctions and saber rattling, nations the globe over are quietly and silently doing their own private little deals…deals that are collectively worth over a trillion dollars…
The World Has Begun to Blindside the Dollar
China, Russia, Brazil, Venezuela, Argentina, South Africa, Malaysia, Indonesia, South Korea, Columbia, to name but a few, are all doing directdeals and swaps with one another.
They’re basically blindsiding the dollar.
For example:
- The Dollar Has Drowned In The Yellow Sea! Hands down, Japan and China landed the biggest punch to the Petrodollar in December 2011 when the two G20 giants announced plans to dump the dollar and trade only in Yuan and Yen. Value: Minimum $339 billion.
- The BRICS Are Now Glued Together! Brazil, Russia, India and China (South Africa too) agreed to establish mutual lines of dollar-free credit. According to IMF figures – Value: $170 billion.
- You’ll Hear of Asian Contagion No More! Watch out for the “Chiang-Mai Multi-lateralized Initiative”! It is already in effect. And it links the economies of the 10 ASEAN nations – plus China, Japan, South Korea andthe Monetary Authority of Hong Kong in a super-liquid juggernaut kitty of non-dollar credit and local currencies. Value: $120 billion.
- Weeks Ago, Tsunami-Tattered Japan Threw India A $15 billion Lifeline. This “little” agreement gives India immediate access to $15 billion worth of yen to help it buy its Iranian oil.
- And the Silk Road is Now Being Paved With Yuan and Dirhams. On Tuesday, January 17th, 2012, China threw the dollar into one more ditch, when it penned yet another “greenback-less” agreement – this time with the United Arab Emirates. Value: $5.5 billion. And this is just one of more than ten such deals that we’ve seen inked by the Asian Giant in recent years.
The world has begun to enter an unprecedented new era of monetary co-operation. Instead of raising voices and guns – they are raising solutions.
And U.S. sanctions to curb the flow of Iranian oil are now hitting a kink.Though you won’t hear about this from the mainstream media (where the word Petrodollar has been practically banned since 2007).
But the word Petrodollar and the details of new Swap Lines are bandied about every day on alternative media stations like RT, Al Jazeera and China Central Television.
And this is just the beginning…
Commerce is Freeing Itself of Fiat Currencies
We are re-entering a New Era of Barter and Exchange.
To circumvent U.S. sanctions, Iran and China, even back in 2010, started their own little “oil-for-refineries” program. You see, Iran is not only far from atomic; it’s also far from modern…
With its creaky and crumbling infrastructure, OPEC’s second largest oil and gas producer can’t even refine its most abundant natural resource: crude oil… To this day, it still has to export nearly all of its crude and later import it back as gasoline, kerosene and other petroleum products – and they usually do this at a loss.
What’s more, it has new Super-Fields (that were discovered in 1999) that have boosted its country’s proven reserves to150 billion barrels – but this “little” asset has still hardly been developed.
So as China’s thirst for Iranian oil continues to grow (49% last year alone) and trade mechanisms to pay for it keep getting cut off, the two are swapping oil for infrastructure.
China’s already signed up to build what will become two of the largest oil projects Iran’s seen in years.
And this is just but one example, where the dollar has been cut out of foreign trade, and has been replaced by good old barter and exchange.
Iran’s oil swaps with various nations are projected to reach 500,000 barrels per day once the third phase of an ambitious plan to further barter and refine oil is completed. That’s more energy than the Department of Defense (the world’s largest single oil consumer) burns each day! These new pumps and pipelines are slated to come online in the next 12 months.
But it’s not only foreigners that are dumping the dollar.
Americans, displeased with Washington’s fiscal recklessness, are dumping it too!
A recent report in The New York Times has announced the birth of an entirely new currency in the U.S. – the BerkShare.
Also, Jim Rogers (one of the world’s shrewdest investors) has denounced the dollar too, saying if something isn’t done soon to resurrect it, it will “lead to a huge decline in the standard of living of U.S. citizens like nothing we’ve seen in nearly a century.”
And Bill Gross, the world’s biggest bond investor has advised all his clients that if they had just one investment idea, it should be an investment in a non-dollar, non-euro currency.
As Brazilian economist and strategist Ricardo C. Amaral, recently said:
“The US dollar served its purpose since the end of WWII and became the major foreign exchange reserve currency…(but) the days of the U.S. dollar playing that special role…has reached the end of the line…today that system is very sick.”
The Fiats are Falling
But all this is part of a much wider trend…one I predicted would occur in my book The Sovereign Individual in 1998.
In this book I alerted readers that we were about to go from an era of macro-states to micro-states…macro-currencies to micro-currencies…
In Europe in the 16th Century there were literally thousands of forms of exchange, and thousands of states (feudal systems).
Now Europe is down to 16 major states and one major currency.
But I believe the trend is about to reverse.
In fact, just like the break up of the Soviet Union, so too will we now see the break up of the European Union…and of the Euro…
But the greatest (and most shocking) event of all…the one that most Americans will not even be able to imagine, let alone believe…will be the break up of our own Confederacy, and of our own Currency…and of Capitalism itself. Sure the word will be bandied about, but it will take on a whole new form…
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