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The Dollar and The Axis Of Evil   [Copy link] 中文

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Post time 2014-8-2 19:00:44 |Display all floors
The Dollar and The Axis Of Evil

31 July 2014.

On August 15, 1971, President Richard M. Nixon shocked the global economy when he officially announced the ending of the system of international convertibility from U.S. dollars into gold.

Thereby bringing an official end to the Bretton Woods agreement of 1944

Two years later, in an effort to maintain global demand for U.S. dollars, another system was created called "the petrodollar system."

In 1973, a deal was struck between Saudi Arabia and the United States in which every barrel of oil purchased from the Saudis would be denominated in U.S. dollars.

Under this new arrangement, any country that sought to purchase oil from Saudi Arabia would be required to first exchange their own national currency for U.S. dollars.

In exchange for Saudi Arabia's willingness to denominate their oil sales exclusively in U.S. dollars, the United States offered weapons and protection of their oil fields from neighboring nations, including Israel.

This petrodollar system, or more simply known as an "oil for dollars" system, created an immediate artificial demand for U.S. dollars around the globe.

And of course, as global oil demand increased, so did the demand for U.S. dollars

According to the agreement, the United States offered military protection for Saudi Arabia's oil fields, and agreed to provide the Saudis with weapons, and perhaps most importantly, guaranteed protection from Israel.

The Saudi Royal Family knew a good deal when they saw one.

They were more than happy to accept American weapons and a U.S. guarantee to restrain attacks from neighboring Israel.

Naturally, the Saudis wondered how much was all of this U.S. military muscle was going to cost.

What exactly did the United States want in exchange for their weapons and military protection?

The Americans laid out their terms. They were simple, and two-fold.

The Saudis must agree to price and sell all of their oil for U.S. dollars only.

In other words, the Saudis were to refuse all other currencies, except the U.S. dollar, as payment for their oil exports.

The Saudis would be open to investing their surplus oil proceeds in U.S. debt securities.


You can almost hear one of the Saudi officials in a meeting saying: "Really? That's all? You don't want any of our money or our oil? You just want to tell us how to price our oil and then you will give us weapons, military support, and guaranteed protection from our enemy, Israel? You've got a deal!"

However, the U.S. had done its economic homework.

If they could get the Saudis to buy into this deal, it would be enough to launch them into the economic stratosphere in the coming decades.

By 1974 and the petrodollar system was fully operational in Saudi Arabia.

And just as the United States had cleverly calculated, it did not take long before other oil-producing nations wanted in.

By 1975, all of the oil-producing nations of OPEC had agreed to price their oil in dollars and to hold their surplus oil proceeds in U.S. government securities in exchange for the generous offers by the U.S.

Nixon and Kissinger had successfully bridged the gap between the failed Bretton Woods arrangement and the new Petrodollar system.

The global artificial demand for U.S. dollars would not only remain intact, it would soar due to the increasing demand for oil around the world.

And from the perspective of empire, this new "dollars for oil" system was much more preferred over the former "dollars for gold" system as its economic requirements were much less stringent.

Without the constraints imposed by a rigid gold standard, the U.S. monetary base could be grown at exponential rates.

Today, virtually all global oil transactions are settled in U.S. dollars. (There are a few exceptions)

The easiest way to obtain U.S. dollars is through the foreign exchange markets.

This is not, however, a viable long-term solution as it is cost-prohibitive.

Therefore, many countries have opted instead to develop an export-led strategy with the United States in order to exchange their goods and services for the U.S. dollars that they need to purchase oil in the global markets.

Japan, for example, is an island nation with very few natural resources. It must import large amounts of commodities, including oil, which requires U.S. dollars.

So Japan manufactures motor vehicles etc. and ships them to the United States, and immediately receives payment in U.S. dollars.


The Primary Benefits of the Petrodollar System

The Petrodollar system has proven tremendously beneficial to the U.S. economy.

In addition to creating a marketplace for affordable imported goods from countries who need U.S. dollars, there are more benefits.

In essence, America receives a double loan out of every global oil transaction.

First, oil consumers are required to purchase oil in U.S. dollars.

Second, the excess profits of the oil-producing nations are then placed into U.S. government debt securities held in Western banks.

The petrodollar system increases global demand for U.S. dollars.

It increases global demand for U.S. securities.

It gives the United States the ability to buy oil with a currency it can print at will.

It should come as no surprise that the United States maintains a military presence in much of the Persian Gulf region, including the following countries: Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates, Egypt, Israel, Jordan, and Yemen.

As the U.S. dollar loses purchasing power, several oil-producing countries have begun to question the wisdom of accepting a depreciating paper currency for their oil supplies.
Today, several countries have attempted to move away, or already have moved away, from the petrodollar system.

Examples include Iran, Syria, Venezuela, and North Korea or "The Axis Of Evil".


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Post time 2014-8-2 22:31:13 |Display all floors
So why dont all those other Countries who continue to hold the US dollar as their currency reserve, dump it ?
Your own mind is a sacred enclosure into which nothing harmful can enter except by your permission. Arnold Bennett

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Post time 2014-8-2 22:34:53 |Display all floors
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Post time 2014-8-2 22:38:47 |Display all floors
mxposher Post time: 2014-8-2 22:34
Cos BRICS haven't said "GO!" yet....

Lets 'go' on it then, yeah ?

Nobody seems to the far...
Your own mind is a sacred enclosure into which nothing harmful can enter except by your permission. Arnold Bennett

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Post time 2014-8-3 10:05:52 |Display all floors
There's more.

The Great Satan insists that all dollar transactions go through banks in the thieved state of Amerika. This is how they're able to impose sanctions on banks in non-thieved states.

AND Saudi Arabia is the swing-producer in OPEC. It also prices its oil based on the average of the price in the futures market; the tail wagging the dog. In other words the money-changers on Wall St. control the oil price.

This is now all falling apart. The promise to limit the price of oil between $10 and $30 a barrel has been defaulted on just as they defaulted on gold in 1971; the biggest default in all of history. With the thieved state of Amerika now having the worst deficits in all of history, no one will accept the worthless paper any more, which is why Saddam Hussein, the late and great Hugo Chavez and Colonel Gaddaffi all dumped the "worthless paper" and why the Great Satan murdered each of them. But Iran, Venezuela, Free Korea et al. all continue to dump the worthless paper. The only thing nations will now accept is gold; NO CREDIT.
Compounding is the magic ingredient.

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Post time 2014-8-3 10:39:33 |Display all floors
^ if that's the case then China is in deep sh!t
I'm just here for the money

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Post time 2014-8-3 10:45:19 |Display all floors
Russia and China are working together to dump the dollar as the reserve currency..
if you want something in life get off your backside, and do it yourself!! don't rely on others to do it for you

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