2012: The fall of the US Dollar hegemony

In what is becoming the hottest economic trend among developing nations, India is making moves to trade gold directly for Iranian oil, with China and possibly Russia to follow.  

Via Russia Today:

India has reportedly agreed to pay Tehran in gold for the oil it buys, in a move aimed at protecting Delhi from US-sanctions targeting countries who trade with Iran. China, another buyer of Iranian oil, may follow Delhi’s lead.

The report, by the Israeli-based news website DEBKAfile, states that Iran and India are negotiating backup alternatives with China and Russia, should the US and EU find a way to block the gold payment mechanism.

The move by India to bypass the U.S. dollar is not surprising given the recent trend for industrial economies to eschew the Federal Reserve controlled, Oil/military-backed U.S. Dollar.   Developing countries do not like what the US Dollar represents, and are making moves to get out as quietly and quickly as possible.  The power of the Western financial cabal is failing.  As you may remember, the criminal group running Washington D.C. tried to lock Iran out of the US financial system in order to push them into a war.  Although this has caused hyperinflation in Iran, the above article shows that moves are being made to circumvent the financial weapons of mass economic destruction.  (As an aside, it also shows what currency actually has real value in the end, and proves the thesis of my entire blog: those who have the gold make the rules.)

I wrote in 2011 that Gaddafi was a proponent of a gold-based African currency called the Dinar which would allow African nations to escape the grip of debt-based US currency and develop their own natural resource potential, a move that likely had him killed.

India and Japan sign new $15bn currency swap agreement

China, Japan to back direct trade of currencies

China signs currency swap deal with UAE

India, Iran to settle some oil trade in Rupees

So what does all this mean?   It means that the reality of trade deficits are (finally) manifesting in the destruction and rejection of the unit of exchange.  In layman’s:  The chickens coming home to roost, so to speak.

In this case – the United States Dollar is being targeted.  What has long been predicted by Austrian free market economists is now seemingly coming into view.  Simply put; the goods and services represented by the total number of outstanding United States Dollars is far disproportionate to what exists in the real world.  We simply do not make enough actual goods that foreigners with reserves can purchase.

More productive economies such as India, Russia, China and Japan are dissatisfied with the value that their US Dollar holdings represent and therefore are trying to diversify out of the US debt market without destroying the value that their holdings still have.  This is to be done through a tactically planned series of swaps, corporate acquisitions, commodity purchases, and eventually outright selling of treasury holdings.  What we are witnessing are the first quantifiable steps to the end of the US Dollar hegemony around the world.  For Americans, eventually this will manifest in the destruction of your currency because the only people willing to take US Dollars will be those who are forced to do so by law – which would be US citizens and US businesses.  In this environment you would expect to see the US Dollar begin to reflect more accurately the productive capacity of US companies which is far less than what the current exchange rate indicates, aka, a HUGE decrease in the purchasing power of your money!!  Get ready for the ride!

11 thoughts on “2012: The fall of the US Dollar hegemony

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