REAL WORLD EVENT DISCUSSIONS

The death of the dollar?

POSTED BY: SIGNYM
UPDATED: Monday, August 27, 2018 14:05
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Monday, July 31, 2017 9:45 PM

SIGNYM

I believe in solving problems, not sharing them.


I'm posting this here because I don't know what to make of it.

I'm used to ZeroHedge always posting about the end of the stock market, the end of the Fed, the end of the dollar, the end of financial system ... the end of something. Ditto gold bugs ... they have been saying (for years) that the dollar is way overvalued and is bound to crash.

But lately ... within the past month or so ... all of those "out there" analysts are only talking about ONE thing, and it's the (planned) end of the dollar. According to them, it's not Russia or China manipulating this, it's the IMF.

So, as best as I can gather, it's supposed to happen like something like this:

The Central Banks will start to sell the assets that they purchased as part of "quantitative easing". Our Fed is already reducing its "balance sheet".

There is going to be a period of debt settlements among nations ... old bonds, even defunct or fraudulent bonds being paid off to square the books. For some nations, there will be debt forgiveness.

The petrodollar will disappear from use. (It already is fading, as Russia, China and Iran are settling their oil and gas payments in yuan, rubles, gold, and rials. IF China insists on receiving yuan from Saudi Arabia, that will be the death knell of the petrodollar.)

The USA will be required to close many of its foreign military bases because it can no longer afford them.

Nations will be required to use the IMF "special drawing rights" (SDR) for international exchange. In other words, they will have to use their currency to purchase SDR from the IMF; the exchange rate will float.

Once the dollar is doesn't have special international significance as either the reserve currency or for oil purchases, demand for the dollar will drop, and so will its value relative to the SDR. There will still be the USD for national exchange, but not international exchange.

The result will be massive inflation in the USA for goods that are sold internationally, even if produced in the USA. I've heard that this will happen mostly in stages, not suddenly and catastrophically.

China will mostly be advantaged under this arrangement.

*****

Normally I would just kind of shrug my shoulders, but both Trump and Christine Lagarde (IMF) have made some strange out-of-place comments about this. Trump said that he would not accept this new currency. New currency?? Christine Lagarde hinted that the IMF might relocate to China because, as pointed out by someone else "China, unlike other nations, actually pays its pledges to the IMF".

I know that China has been hot to trot to be the next global currency. They lobbied mightily - and won- a place in the current IMF SDR basket (along with the USA, Japan, UK, and EU). China and Russia combined have set up a complete international alternate financial system - the Shanghai (and soon to be Hong Kong) gold exchange (London gold fix), the BRICS bank (World Bank), the AIIB (IMF), its place in the SDR basket.

Both China and Russia have been purchasing gold like crazy, and Putin supposedly just spoke with the person who developed the Ethereum model.

It seems to me that the dollar will be replaced as the world currency; it's inevitable. The only thing keeping the value of our USD up is our military- we literally have to bomb nations into using it by bombing those who attempt to avoid it (Iraq, Libya, Iran). If some nation were to come to us with a billion dollars, WHAT could we sell them for that money?? More Treasuries?? More weapons systems?? So, how much is our money really worth??

The question is really when (not if) that will happen, and how badly will our dollar be devalued? 1:3? 1:10? And what will the new world currency be? Will it be the IMF SDR?? Or will the world eventually settle on some alternate, like a gold-backed cryptocurrency?

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Monday, July 31, 2017 9:52 PM

1KIKI

Goodbye, kind world (George Monbiot) - In common with all those generations which have contemplated catastrophe, we appear to be incapable of understanding what confronts us.


Good thing I have gold. Not that gold has any intrinsic value. But as a matter of exchange, people have to agree to use something. If it ends up being gold - or if gold buys rubles or yuan - then it's good to have gold.




Trump is not the problem. He set himself against the Deep State's agenda. And the Deep State's been heading for WWIII for years.
As for you, you're just a Deep State useful idiot, furthering its agenda. So I hope you enjoy cesium in your coffee. You've earned it.

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Tuesday, August 1, 2017 12:04 AM

6STRINGJOKER


This kind of has been my reasoning behind not really killing myself to work. People say, "but yeah... that's great, but shouldn't you be saving for retirement now?".

I don't think money as we know it will be worth much by then. There is going to have to be some sort of replacement or there will be riots and war and (at least I don't think) anybody wants that.

I just think a lot of people who think they are doing pretty well now are in for a rude awakening in the not-so-distant future. I think there are really only going to be the rich and the poor and very little in the area of gray.

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Tuesday, August 1, 2017 1:31 AM

WISHIMAY

There will be fire and brimstone and Earth will be destroyed!... in several billion years!----------------------------------------- "Well, so long Earth. Thanks for the air... and what-not." -Philip J. Fry


Sooo much DERP in one thread.....


You know what Venezuelans have traded their life savings for?

Toilet paper. Ammo for thieves. Flour. Eggs.

You know what a mountain of gold won't buy when there is no food?

FOOD.



You really think you'll have more gold than others when it comes to bidding for the last...whatever...?

If you do, good for you...but, yeah...I doubt that. Seriously.





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Tuesday, August 1, 2017 1:55 AM

1KIKI

Goodbye, kind world (George Monbiot) - In common with all those generations which have contemplated catastrophe, we appear to be incapable of understanding what confronts us.


Quote:

You really think you'll have more gold than others when it comes to bidding for the last...whatever...?
It depends. If there is literally nothing left to buy ... anywhere on the planet ... then no amount of anything remotely resembling money will be enough. But we're not talking about that. We're talking about the fall of the USD specifically. It's a whole different topic.




Trump is not the problem. He set himself against the Deep State's agenda. And the Deep State's been heading for WWIII for years.
As for you, you're just a Deep State useful idiot, furthering its agenda. So I hope you enjoy cesium in your coffee. You've earned it.

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Tuesday, August 1, 2017 3:34 AM

6STRINGJOKER


I don't think gold is really going to help anybody out. When the shit hits the fan it's going to be a buyer's market. When they know that wheelbarrows of USD can't put food on the table and you're not eating they'll get that gold pretty cheap.

Then there's always other people wondering how you're getting food when they're starving. Won't take long for them to put two and two together and now you have people coming for you.

I think in the new economy the skills you have will be much more valuable than shiny trinkets.

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Tuesday, August 1, 2017 6:33 PM

JEWELSTAITEFAN


Quote:

Originally posted by SIGNYM:
I'm posting this here because I don't know what to make of it.

I'm used to ZeroHedge always posting about the end of the stock market, the end of the Fed, the end of the dollar, the end of financial system ... the end of something. Ditto gold bugs ... they have been saying (for years) that the dollar is way overvalued and is bound to crash.

But lately ... within the past month or so ... all of those "out there" analysts are only talking about ONE thing, and it's the (planned) end of the dollar. According to them, it's not Russia or China manipulating this, it's the IMF.

So, as best as I can gather, it's supposed to happen like something like this:

The Central Banks will start to sell the assets that they purchased as part of "quantitative easing". Our Fed is already reducing its "balance sheet".

There is going to be a period of debt settlements among nations ... old bonds, even defunct or fraudulent bonds being paid off to square the books. For some nations, there will be debt forgiveness.

The petrodollar will disappear from use. (It already is fading, as Russia, China and Iran are settling their oil and gas payments in yuan, rubles, gold, and rials. IF China insists on receiving yuan from Saudi Arabia, that will be the death knell of the petrodollar.)

The USA will be required to close many of its foreign military bases because it can no longer afford them.

Nations will be required to use the IMF "special drawing rights" (SDR) for international exchange. In other words, they will have to use their currency to purchase SDR from the IMF; the exchange rate will float.

Once the dollar is doesn't have special international significance as either the reserve currency or for oil purchases, demand for the dollar will drop, and so will its value relative to the SDR. There will still be the USD for national exchange, but not international exchange.

The result will be massive inflation in the USA for goods that are sold internationally, even if produced in the USA. I've heard that this will happen mostly in stages, not suddenly and catastrophically.

China will mostly be advantaged under this arrangement.

*****

Normally I would just kind of shrug my shoulders, but both Trump and Christine Lagarde (IMF) have made some strange out-of-place comments about this. Trump said that he would not accept this new currency. New currency?? Christine Lagarde hinted that the IMF might relocate to China because, as pointed out by someone else "China, unlike other nations, actually pays its pledges to the IMF".

I know that China has been hot to trot to be the next global currency. They lobbied mightily - and won- a place in the current IMF SDR basket (along with the USA, Japan, UK, and EU). China and Russia combined have set up a complete international alternate financial system - the Shanghai (and soon to be Hong Kong) gold exchange (London gold fix), the BRICS bank (World Bank), the AIIB (IMF), its place in the SDR basket.

Both China and Russia have been purchasing gold like crazy, and Putin supposedly just spoke with the person who developed the Ethereum model.

It seems to me that the dollar will be replaced as the world currency; it's inevitable. The only thing keeping the value of our USD up is our military- we literally have to bomb nations into using it by bombing those who attempt to avoid it (Iraq, Libya, Iran). If some nation were to come to us with a billion dollars, WHAT could we sell them for that money?? More Treasuries?? More weapons systems?? So, how much is our money really worth??

The question is really when (not if) that will happen, and how badly will our dollar be devalued? 1:3? 1:10? And what will the new world currency be? Will it be the IMF SDR?? Or will the world eventually settle on some alternate, like a gold-backed cryptocurrency?


I don't see anything here that is news. This was already known before Obama did it. Once the petrodollar switched off of the U.S. Dollar as result of Bobo, then it was already known it would be difficult to reverse, or impossible. But Trump might be able to, if he wants to try.

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Tuesday, September 12, 2017 3:12 PM

SIGNYM

I believe in solving problems, not sharing them.


The next step in dollarization:

Quote:

De-Dollarization Accelerates: China Readies Yuan-Priced Crude Oil Benchmark Backed By Gold (Sept 3)

The world’s top oil importer, China, is preparing to launch a crude oil futures contract denominated in Chinese yuan and convertible into gold, potentially creating the most imporThe world’s top oil importer, China, is preparing to launch a crude oil futures contract denominated in Chinese yuan and convertible into gold, potentially creating the most important Asian oil benchmark and allowing oil exporters to bypass U.S.-dollar denominated benchmarks by trading in yuan, Nikkei Asian Review reports.

The crude oil futures will be the first commodity contract in China open to foreign investment funds, trading houses, and oil firms. The circumvention of U.S. dollar trade could allow oil exporters such as Russia and Iran, for example, to bypass U.S. sanctions by trading in yuan, according to Nikkei Asian Review.

To make the yuan-denominated contract more attractive, China plans the yuan to be fully convertible in gold on the Shanghai and Hong Kong exchanges.

Last month, the Shanghai Futures Exchange and its subsidiary Shanghai International Energy Exchange, INE, successfully completed four tests in production environment for the crude oil futures, and the exchange continues with preparatory works for the listing of crude oil futures, aiming for the launch by the end of this year.

“The rules of the global oil game may begin to change enormously,” Luke Gromen, founder of U.S.-based macroeconomic research company FFTT, told Nikkei Asia Review.

The yuan-denominated futures contract has been in the works for years, and after several delays, it looks like it may be launched this year.

Some potential foreign traders have been worried that the contract would be priced in yuan.

But according to analysts who spoke to Nikkei Asian Review, backing the yuan-priced futures with gold would be appealing to oil exporters, especially to those that would rather avoid U.S. dollars in trade.

“It is a mechanism which is likely to appeal to oil producers that prefer to avoid using dollars, and are not ready to accept that being paid in yuan for oil sales to China is a good idea either,” Alasdair Macleod, head of research at Goldmoney, told Nikkei.
tant Asian oil benchmark and allowing oil exporters to bypass U.S.-dollar denominated benchmarks by trading in yuan, Nikkei Asian Review reports.

The crude oil futures will be the first commodity contract in China open to foreign investment funds, trading houses, and oil firms. The circumvention of U.S. dollar trade could allow oil exporters such as Russia and Iran, for example, to bypass U.S. sanctions by trading in yuan, according to Nikkei Asian Review.

To make the yuan-denominated contract more attractive, China plans the yuan to be fully convertible in gold on the Shanghai and Hong Kong exchanges.

Last month, the Shanghai Futures Exchange and its subsidiary Shanghai International Energy Exchange, INE, successfully completed four tests in production environment for the crude oil futures, and the exchange continues with preparatory works for the listing of crude oil futures, aiming for the launch by the end of this year.

“The rules of the global oil game may begin to change enormously,” Luke Gromen, founder of U.S.-based macroeconomic research company FFTT, told Nikkei Asia Review.

The yuan-denominated futures contract has been in the works for years, and after several delays, it looks like it may be launched this year.

Some potential foreign traders have been worried that the contract would be priced in yuan.

But according to analysts who spoke to Nikkei Asian Review, backing the yuan-priced futures with gold would be appealing to oil exporters, especially to those that would rather avoid U.S. dollars in trade.

“It is a mechanism which is likely to appeal to oil producers that prefer to avoid using dollars, and are not ready to accept that being paid in yuan for oil sales to China is a good idea either,” Alasdair Macleod, head of research at Goldmoney, told Nikkei.



In fact, this would be preferable to ANY institution wanting to avoid the dollar. I don't know if you recall, but BNP Paribas got nailed with a $9 billion fine for trading with Iran. Now, France did not sign onto USA sanctions against Iran. But because oil is paid for in dollars, and in settling the payment it had to pass thru a BNP Paribas branch in the USA, the USA was able to nail the branch with a violation of USA law.

Once payments are made without dollars, the USA loses control of the exchanges and can no longer enforce its own laws against other nations.




-----------
Pity would be no more,
If we did not MAKE men poor - William Blake

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Tuesday, September 12, 2017 10:57 PM

JEWELSTAITEFAN


Quote:

Originally posted by 1kiki:
Good thing I have gold. Not that gold has any intrinsic value. But as a matter of exchange, people have to agree to use something. If it ends up being gold - or if gold buys rubles or yuan - then it's good to have gold.
>

Have you been able to convince any of your "friends" to buy diamonds for exchange value?

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Tuesday, September 12, 2017 11:09 PM

6STRINGJOKER


LOL diamonds...

After you buy that engagement ring she could trade it in for a Big Mac and fries after the divorce.

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Tuesday, September 19, 2017 1:56 PM

SIGNYM

I believe in solving problems, not sharing them.


Better a late post than never, I suppose ...

In another sign of de-dollarization, Venezuela is no longer accepting dollars for oil. It's pricing its oil in yuan instead. This goes along with the Iran-Russia deal which ignores the dollar, the Russia-China oil deal which excludes the dollar, and (more importantly) China's potential global move towards de-dollarization with the creation of the gold-backed yuan-based oil contract system. Since China is THE major oil importer, accepting oil from Russia and Saudi Arabia almost equally (Russia, China, Angola top three) http://www.worldstopexports.com/crude-oil-imports-by-country/ if China were to squeeze Saudi Arabia to accept yuan instead of dollar, that would be a major shakeup.

But I digress.

Whether or not this affects the dollar depends on Venzueula's size as an oil exporter.

Now, most people think of Venezuela (if they think if it at all) as a small starving oil-producing nation headed by a chubby socialist wanna-be with a funny mustache and preternaturally bushy hair

But Venezuela is the nation with the highest amount of PROVEN RESERVES ... not Saudi Arabia, Canada, Iraq, Iran, or Russia. https://en.wikipedia.org/wiki/List_of_countries_by_proven_oil_reserves

Furthermore, according to recent statistics, Venezuela exports about one-fifth of Saudi Arabia's production (2,000 Kbbl/day (thousand barrels per day) to Saudi Arabia's 10,000 Kbbl/day) ...
https://tradingeconomics.com/venezuela/crude-oil-production
https://tradingeconomics.com/saudi-arabia/crude-oil-production
... a not-insignificant amount of oil. While Venezuela's production has been higher in the past and is currently hampered by lack of spare refinery parts (thanks to economic sanctions), Saudi Arabia's oil production appears to be pegged where it is. I recall hearing, about ten years ago, that the Saudi oil fields were already depleted ("ruined" was the term used) and are having to be recovered with aggressive fracking and water-injection techniques. It's not something I've heard again until lately ... the point being that Venezuela has a lot of future headroom to increase its oil production, while Saudi Arabia may not.

So USA and Saudi policy may be time-sensitive- can the USA kill the current Venezuelan government before Saudi Arabia runs out of oil or before the world turns away from the dollar?

Lavrov will be visiting Venezuela, Cuba, and Brazil (also a major oil exporter) soon. Brazil, as you may know, is embroiled in a continuing scandal in which the least-corrupt official (President Dilma Rousseff) was impeached, only to have her replacement - bank/business-friendly Michel Temer- be indicted in the ongoing "carwash" scandal himself.

You should read this ... it's a nightmare of corruption, and probably describes Washington DC pretty well too.

https://www.washingtonpost.com/news/worldviews/wp/2017/09/13/meet-the-
corrupt-jailed-politician-who-has-the-rest-of-brazils-political-elite-terrified
/




-----------
Pity would be no more,
If we did not MAKE men poor - William Blake

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Tuesday, September 19, 2017 6:11 PM

6STRINGJOKER


And people wonder why I'm not busting my ass to save for retirement now that I own my home...

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Tuesday, September 19, 2017 6:23 PM

1KIKI

Goodbye, kind world (George Monbiot) - In common with all those generations which have contemplated catastrophe, we appear to be incapable of understanding what confronts us.


Is this relevant to the topic, Jack? Do you have any facts or logic on the topic to contribute?




Trump is not the problem. He set himself against the Deep State's agenda. And the Deep State's been heading for WWIII for years.
As for you, you're just a Deep State useful idiot, furthering its agenda. So I hope you enjoy cesium in your coffee. You've earned it.

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Tuesday, September 19, 2017 10:19 PM

6STRINGJOKER


Quote:

Originally posted by 1kiki:
Is this relevant to the topic, Jack? Do you have any facts or logic on the topic to contribute?




Question 1: Yes

Question 2: Nope. That is, nothing other than saying that saving money in your 401k might not lead to that wonderful retirement that they sell it to you as.



Guess you're being pissy with me still, huh Keeks?

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Thursday, October 5, 2017 1:55 PM

SIGNYM

I believe in solving problems, not sharing them.


EVEN SAUDI ARABIA IS GETTING INTO THE DE-DOLLARIZATION ACT

In order to understand the significance of that, you have to realize that it was the USA-Saudi deal under Nixon that created the "petrodollar" to begin with, and that Saudi Arabia has been THE cornerstone of the petrodollar for all of these decades.

Quote:

Russia, Saudi Arabia Announce Billons In Energy Deals, S-400 Missile System Purchase

Two days ago, when we previewed the first ever visit by a Saudi King to the Russian capital - a move which prompted Bloomberg to call Russian president Putin the "new master of the Middle East" - we pointed out that according to Russian Energy Minister Alexander Novak, a joint Russian-Saudi fund to invest in the energy sector will be announced during the forthcoming visit of the Saudi King to Moscow, and that the preliminary agreement to establish the $1 billion fund has already been reached.

Fast forward to today when diplomatic history was made on Thursday, when Putin met with the King of Saudi Arabia Salman bin Abdulaziz Al Saud - the first state visit to Russia by a reigning Saudi monarch

Salman bin Abdulaziz Al Saud is said to be suffering from advanced dementia. The real power is with his son Crown Prince Mohamed bin Salman. Nonetheless, Salman bin Abdulaziz is still THE King of Saudi Arabia, and this is a real turning point in relations.

Quote:

- and the launch of a new level of relations between the countries, as well as billions in new energy-focused deals. The Saudi monarch's visit comes after decades of strained relations. More recently, tensions were high over the war in Syria. Russia and Iran have staunchly backed Syrian President Assad while Saudi Arabia has supported the Sunni rebels fighting to oust him. However, relations began to improve in recent years and Salman's heir, Crown Prince Mohammed bin Salman, has held several meetings with Putin.

There are also common points: the Saudi kingdom, much like Russia, has been hit by the fall in oil prices since mid-2014. Despite regional disagreements, the world's two largest oil-producers found common ground on energy policy in November, when they led a deal between OPEC and non-OPEC states to cut production in a bid to shore up crude prices. So far that deal is holding and prices have recovered slightly to above $50 a barrel. In an apparent reference to the output deal, Salman told Putin on Thursday that Saudi Arabia is "eager to continue the positive cooperation between our nations in the world oil market, which fosters global economic growth."

After the meeting, as noted before, the two countries launched a joint energy investment fund worth $1 billion

For comparison, total oil revenues for KSA are about $130 billion per year, depending on oil prices

Quote:

which could include investments in natural gas projects and petrochemical plants. Among the deal signed, Saudi state oil firm Aramco, the world’s biggest energy company, signed a deal with Russian Direct Investment Fund (RDIF) and gas processing and petrochemicals company Sibur on joint projects in the area of oil refining. Amin Al-Nasser, Aramco chief executive said: "This marks a new milestone in business relations and partnerships with our counterparts in Russia. The visit by The Custodian of The Two Holy Mosques King Salman bin Abdulaziz Al-Saud to Russia will further enhance ties and will foster collaboration among Saudi and Russian companies on various fronts."

Aramco also signed a memorandum of cooperation with Russian state-owned oil company Gazprom Neft, to collaborate on drilling technologies and research and development areas, as well as employee exchange programs. According to the FT, Alexander Dyukov, chief executive of Gazprom Neft, said:

Given the ongoing macroeconomic uncertainties, it is of paramount importance that major oil producers coordinate their activities to improve the stability of the global oil and gas market. An important component of such engagement concerns sharing cutting-edge technological solutions and working together to improve efficiency in oil production and refining.

Putting the deals in context, trade volume between the two countries reached $2.8 billion last year, according to official Saudi press. Saudi Arabia's Public Investment Fund, the kingdom's sovereign wealth fund, announced in 2015 plans to invest $10 billion in Russia over the next five years, though only a fraction of that has so far been put up. In an unexpected twist, the two countries also agreed to cooperate in nuclear energy, agriculture, information technology; trade, investments and social development.

"We have a vast potential for developing cooperation in nuclear power. Saudi Arabia plans to launch a major nuclear power program," said Russian Energy Minister and Co-Chairman of the Russian-Saudi Intergovernmental Commission Aleksandr Novak.

"Nuclear power may become one of the basic sources and an extra catalyst for the development of various industries and innovation technologies in Saudi Arabia," he added. That Saudi Arabia , the world's largest oil exporter, is planning on using Russian help to build NPPs will certainly raise a few eyebrows.

In addition to importing Russian nuclear technology, the Saudis also appear ready to expand food imports from Russia, which is set to remain the world's biggest wheat exporter this year. Food security is a major concern for Saudi Arabia, which stopped local production of livestock feed and wheat due to water scarcity.

Novak said that for the first time a substantial delegation from Saudi Arabia, including about 200 representatives and 85 CEOs of large companies has come to Russia. "Eighty-five heads of the largest companies flew to Russia to establish links with Russian businesses and expand ties in all areas," the minister said.

Just as notably, Novak said that relations between the two countries have reached a “fundamentally new level recently,” Novak said. “Parliamentary contacts show good dynamics and the two countries business circles maintain intensive dialogue," he said, adding that that significant progress has been made. Novak added that work is underway on a roadmap for the mid-term development of trade, economic, scientific and technical cooperation between Moscow and Riyadh.

Putin and Salman are also expected to focus on extending the OPEC oil output cut agreement which has helped prop up oil prices. On Wednesday, Putin said he believes the oil cut agreement between OPEC and non-OPEC countries could be extended beyond March 2018. The next OPEC meeting is due to take place in Vienna at the end of November.

Relations between the two countries had traditionally been strained, especially during the Cold War when Saudis helped arm Afghan rebels fighting against the Soviet invasion. In recent years, however, strong relations between Saudi Arabia and the US have frayed, forcing Saudi Arabia to look for regional alliances elsewhere. Earlier on Thursday, Russian Foreign Minister Sergey Lavrov said Russia thinks highly of Saudi Arabia's role in arranging talks between the Syrian government and the oppositions in Geneva.

* * *

In a dramatic announcement as part of today's meeting, Saudi Arabia also announced it has agreed to buy Russian S-400 surface-to-air missile systems, according to Saudi-owned al-Arabiya television reported on Thursday. The countries also signed a memorandum of understanding to help the kingdom in its efforts to develop its own military industries, a statement from state-owned Saudi Arabian Military Industries said.

According to Reuters, SAMI said the MoU with Russian state-owned arms exporter Rosoboronexport came in the context of contracts signed to procure the S-400, the Kornet-EM system, the TOS-1A, the AGS-30 and the Kalashnikov AK-103.

While SAMI did not specify the number of each system or the value of the procurement deal, it said the procurement was “based on the assurance of the Russian party to transfer the technology and localize the manufacturing and sustainment of these armament systems in the Kingdom”, but provided no timeframe.

This means that after Iran and Turkey, the Russian war machine has expanded to Riyadh, which as a reminder bought hundreds of billions in weapons from the US this spring.

Is Israel next in line to buy Russian weapons?

* * *

While Salman's visit signals closer Russian ties with Sunni Arab Gulf states, Russia's support for its close regional ally, Iran is not expected to change. The U.S., meanwhile, remains Saudi Arabia's top weapons supplier and its most critical Western ally.

Some, such as Anna Borshchevskaya, a fellow at The Washington Institute for Near East Policy, says Russia has no capacity to replace the United States as Saudi Arabia's key ally. Others are not so sure. Cited by ABC, analysts said Salman's trip to Moscow is the clearest sign yet that Russia's strategy in the Middle East, including its high-risk show of military power in Syria, has paid off.

"A number of Gulf leaders have been going with greater regularity to Moscow and I think for a simple reason: Russia has made itself much more of a factor in key parts of the Middle East as the U.S. has taken a step back in some ways, particularly in Syria," said Brian Katulis, a senior fellow at the Center for American Progress.

Or, as Bloomberg put it, "the Israelis and Turks, the Egyptians and Jordanians -- they’re all beating a path to the Kremlin in the hope that Vladimir Putin, the new master of the Middle East, can secure their interests and fix their problems. The latest in line is Saudi King Salman."


http://www.zerohedge.com/news/2017-10-05/russia-saudi-arabia-sign-bill
ons-energy-deals-during-historic-king-salman-visit


I'm trying to understand what this all means. It looks to me like the Saudi oil fields are maxed out. The KSA has been trying to wean itself from oil production and diversify its economy, much like Russia is trying to do.

Several joint Saudi-USA geopolitical projects have turned out well for the Saudis: Iraq and Libya were destroyed as oil producers, and their rejection of the petrodollar was averted.

OTOH, other Saudi-USA projects haven't turned out so well for the Saudis: The USA plan to destabilize Russia by simultaneously dropping oil prices, instituting sanctions and engineering a forex attack on the ruble failed, as Russia (with its more diversified economy and partnership with China) simply outlasted the Saudis, leaving the Saudis with a deep deep budget hole (due to low oil prices). Also, the attempt to topple the Syrian government is just about failed, and the Saudi push into Yemen has been stalled by the Yemenis and countered by the Chinese port in Djibouti.

The Saudis would be in deep dog doo-doo with the USA if they started selling oil for other than dollars. But a co-investment with Russia in "oil refining" would allow for both Russia and Saudi Arabia to "launder" oil by oil blending: Russia can import heavy (USA sanctioned) Venezuelan crude (after all, what is the USA going to do... MORE sanctions on Russia and/or Venezuela? I think both those nations are beyond responding to that threat) and blending it with sweeter, lighter Saudi oil, and then selling it to whomever in whatever currency the joint project accepts. This extends the Saudi oil reserves and gives them one foot out of the petrodollar.

*****

AFA the Saudis buying Russian S-400s ... it seems like a deal-sweetner. Does the KSA really think it's about to be attacked by warplanes? Still, something of a statement and a poke at the USA.

*****

If I were a large holder of Treasuries and/or dollars, I would start to wonder whether the value of the dollar can be sustained much longer. I heard that there is something like $240 TRILLION in USD-denominated debt worldwide. That is three times the world GDP and IMHO it's completely unpayable.

If I were the BIS or the IMF I would be looking from on-high at the potential future usefulness of the USD. Being financialists themselves, they understand that their money-making model is based on debt. They have been ping-ponging this debt creation around the world for decades, sometimes requiring loose money policy from Japan or the EU or the USA or developing nations in order to "stimulate" the economy, but since the USD is the world reserve currency that debt is often created in USA dollars. At this point, the total USD debt is SO high that I think the masters of international finance have realized that they've flogged that horse as far as it can go. I wouldn't be surprised if they were going to jettison the dollar some time in the next five years.

-----------
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Monday, October 16, 2017 10:55 AM

SIGNYM

I believe in solving problems, not sharing them.


Quote:

Russia may soon issue its own official blockchain-based currency, the CryptoRuble

https://techcrunch.com/2017/10/15/russia-may-soon-issue-its-own-offici
al-blockchain-based-currency-the-cryptoruble
/

As the USA pushes the "sanctions" button harder, harming the economies of its presumed allies and partners (specifically the EU) they will have greater and greater motivation to defect from the USD as the world reserve currency and medium of exchange.

-----------
Pity would be no more,
If we did not MAKE men poor - William Blake

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Wednesday, October 25, 2017 12:46 PM

SIGNYM

I believe in solving problems, not sharing them.


Well, maybe. Or maybe not.

Quote:

"It's A Huge Story": China Launching "Petroyuan" In Two Months

China's plans for oil futures trading go back more than two decades, with the government introducing a domestic crude contract in 1993 and stopping a year later amid an overhaul of its energy industry. But in 2013, we first hinted at the birth of the petroyuan was looming...

In doing so China is effectively lobbing the first shot across the bow of the Petrodollar system, and more importantly, the key support of the USD in the international arena... setting the scene for the petroyuan.

And now, we are within two months of it becoming a reality as China prepares to roll out a yuan-denominated oil contract within the next two months...

"Approval of the trading rules by the securities regulator marks the clearance of a major hurdle toward launch of the contract," Li Zhoulei, an analyst with Everbright Futures, said by phone.



"The latest rules raised entry threshold for investors from the draft rules, which shows the government wants to avoid volatility when it first starts trading."

Which, according to Adam Levinson, of hedge fund manager Graticule Asset Management Asia, will be a “wake up call” for investors who haven’t paid attention to the plans.

A Yuan-denominated oil contract will be a “huge story” in the fourth quarter.



“The contract is a hedging tool for Chinese oil companies. We’re convinced Chinese oil companies will be anchor investors in the Aramco IPO.”

All of which fits with recent comments and actions from Russian and Venezuelan officials...

“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in a multi-hour address to a new legislative “superbody.” He reportedly did not provide details of this new proposal.

Maduro hinted further that the South American country would look to using the yuan instead, among other currencies.

“If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro also said.

Additionally, Levison warns Washington that besides serving as a hedging tool for Chinese companies, the contract will aid a broader Chinese government agenda of increasing the use of the yuan in trade settlement... and thus the acceleration of de-dollarization and the rise of the Petro-Yuan.

“I don’t think there’s any doubt we’re going to see use of the renminbi in reserves go up substantially”

MORE AT http://www.zerohedge.com/news/2017-10-24/its-huge-story-china-launchin
g-petroyuan-two-months


Unless China insists on paying for Saudi oil with yuan or gold, this is just another brick in the wall, not "the" event which will collapse the dollar. China made a number of currency and financial moves, including funding the BRICS bank and the AIIB (Asia Infrastructure and Investment Bank), gold exchanges in Hong Kong and Shanghai, a petro-yuan-gold futures market, and (with Russia) a SWIFT-alternative banking backbone, and becoming part of the Special Drawing Rights (SDR) club at the IMF.

Altho the dollar has fallen in value since its peak (approx 1984) it continues as the de facto standard for oil purchases (petrodollar) and reserve currency, partly because of weakness in the Euro. Part of this "lack of impact" from de-dollarization by China, Russia etc is that the economic and financial activities in the Eurasian arena don't pass through the BIS. For example, China's huge "one belt, one road" initiative doesn't factor into BIS calculations, and neither do the various oil-exchange agreements between Russia, Saudi Arabia, Iran, Venezuela and China, which are carried out either as barter or outside of BIS purview.

What I expect is that the USD will continue to dominate within the realm of its normal trading partners (the Mideast, the western hemisphere, and Europe, except possibly China) but its share of the world economy will shrink as trade and economic activity expand in southern and central Asia.

It would take a major shock ... the institution of a new global reserve currency by the IMF (for example, the issuance of a crytpocurrency backed by SDR) to push the dollar out of a "gradual fade" mode.

-----------
Pity would be no more,
If we did not MAKE men poor - William Blake

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Wednesday, January 10, 2018 8:19 AM

SIGNYM

I believe in solving problems, not sharing them.


While you guys ... that means you: SECOND, THUGR, KRAPO, and GSTRING .... have been pulling your porks over everything Trump-Russia ... you've let one of THE major geopolitical events go completely by you ...

As I last posted
Quote:

It would take a major shock ... the institution of a new global reserve currency by the IMF (for example, the issuance of a crytpocurrency backed by SDR) to push the dollar out of a "gradual fade" mode.


Well, that major shock might be about to occur. Not only has China issued/ activated a new "petro-yuan" (backed by gold) ...


Quote:

Treasurys Tumble, Futures Slide On Report China "To Slow Or Halt" Treasury Purchases

The treasuries complex has sold off aggressively across the curve after the following flashing red Bloomberg headline:

- CHINA OFFICIALS ARE SAID TO VIEW TREASURIES AS LESS ATTRACTIVE.
- CHINA OFFICIALS SAID TO RECOMMEND SLOWING OR HALTING TSY BUYING

As Bloomberg reports, "Officials reviewing China’s FX holdings have recommended slowing or halting purchases of US Treasuries, according to people familiar with the matter."



What does this mean?

IF true, it means that the USA has lost it's "petrodollar"edge. Since having the world's reserve/ petrodollar currency is what allowed us to run a trade deficit for DECADES ... buying goods with "funny money", without having any PRODUCTION to back it up .... once our dollar loses that status, we will be standing naked and without a credit card in the realm of world economies.

Decline not going to happen right away. What that means is that the USA will have to raise its interest rates to attract investors in Treasuries. Higher interest rates will make stocks and real estate and cryptocurrencies look less attractive. Bubbles will pop ... or at least, deflate.

Fun times ahead.

-----------
Pity would be no more,
If we did not MAKE men poor - William Blake

America is an oligarchy
http://www.fireflyfans.net/mthread.aspx?tid=57876

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Wednesday, January 10, 2018 8:45 AM

6IXSTRINGJACK

[/i]


This one is going to break their brains.

Of course, it will all be Trump's fault though.

No blame to be put on Obama here, and GWB is just way to far back to even remember.


Thanks for the Quantitative Easing though. Made the economy look good enough to enough people for long enough for nobody to notice there was a major problem until it was too late.


At this point, I just say fuck it. Let the chips fall where they may.

Do Right, Be Right. :)

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Saturday, March 10, 2018 4:23 PM

SIGNYM

I believe in solving problems, not sharing them.



Quote:

How China Is About to Shake Up the Oil Futures Market
By Sungwoo Park
March 7, 2018, 5:10 PM PST
From

China, the world’s biggest oil buyer, is opening a domestic market to trade futures contracts. It’s been planning one for years, only to encounter delays. The Shanghai International Energy Exchange, a unit of Shanghai Futures Exchange, will be known by the acronym INE and will allow Chinese buyers to lock in oil prices and pay in local currency. Also, foreign traders will be allowed to invest -- a first for China’s commodities markets -- because the exchange is registered in Shanghai’s free trade zone. There are implications for the U.S. dollar’s well-established role as the global currency of the oil market.

MORE AT https://www.bloomberg.com/news/articles/2018-03-08/how-china-is-about-
to-shake-up-the-oil-futures-market-quicktake


-----------
Pity would be no more,
If we did not MAKE men poor - William Blake

America is an oligarchy
http://www.fireflyfans.net/mthread.aspx?tid=57876

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Saturday, March 10, 2018 9:17 PM

6IXSTRINGJACK

[/i]


Oh joy.

Maybe the Chinese oil investors will speculate so hard that a single barrel of oil shoots to $19,000 like Bitcoin.

Do Right, Be Right. :)

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Friday, March 16, 2018 10:13 PM

SIGNYM

I believe in solving problems, not sharing them.


March 26: The Chinese petroyuan comes online.

Tick tock.

-----------
Pity would be no more,
If we did not MAKE men poor - William Blake

America is an oligarchy
http://www.fireflyfans.net/mthread.aspx?tid=57876

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Friday, March 16, 2018 10:41 PM

THGRRI


Quote:

Originally posted by SIGNYM:

March 26: The Chinese petroyuan comes online.

Tick tock.




Wow, do you still want us to believe you're American. It's obvious you can't wait for this to happen. Hey I know, hold you breath until the dollar collapses comrade.

Hey sig, can you see me laughing? No really, can you see me laughing? Tell me sig, how does this help Russia?


T

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Saturday, March 24, 2018 1:23 PM

SIGNYM

I believe in solving problems, not sharing them.


Ir wasn't China or RUSSIA!! that weakened the American dollar, but Washington DC and The Fed. Instead of hyperventilating about everything happening "over there", maybe you should have paid more attention to what was happening "over here".

The Chinese have no interest in killing the American dollar, because they have lots and lots of them - and our Treasuries - in their bank. OTOH, maybe this coming trade war will make them abandon the dollar -and our Treasuries - faster than they would have otherwise.

How did we allow our dollar to become so worthless?

Monday, March 26.
Tick tock.



-----------
Pity would be no more,
If we did not MAKE men poor - William Blake

America is an oligarchy
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Tuesday, March 27, 2018 11:11 AM

SIGNYM

I believe in solving problems, not sharing them.


Quote:

PetroYuan' Futures Launch With A Bang, Volume Dominates Brent As Big Traders Step In

As we detailed previously, China’s yuan-denominated crude oil futures launched overnight in Shanghai with 62,500 contracts traded in aggregate, meaning over 62 million barrels of oil changed hands for a notional volume around 27 billion yuan (over $4 billion). As OilPrice.com's Tsvetana Paraskova notes, Glencore, Trafigura, and Freepoint Commodities were among the first to buy the new contract, Reuters reports. https://oilprice.com/Energy/Crude-Oil/China-Yuan-Futures-Launch-With-A
-Bang.html


After an initial surge in volume that outpaced overnight transactions in global benchmark Brent crude in London, trading tapered off toward the end of the session

Within minutes of the launch, the price had gone up to almost US$70.85 (447 yuan) from a starting price of US$69.94 (440.4 yuan) per barrel. The overall price jump for the short trading session came in at 3.92 percent.

Many awaited the launch eagerly, seeking to tap China’s bustling commodity markets, although doubts remain whether the Shanghai futures contract will be able to become another international oil benchmark. These doubts center on the fact that China is not a market economy, and the government is quick to interfere in the workings of the local commodity markets on any suspicion of a bubble coming.

To prevent such a bubble in oil, the authorities made sure the contract will trade within a set band of 5 percent on either side, with 10 percent on either side for the first trading day. Margin has been set at 7 percent. Storage costs for the crude are higher than the international average in hopes of discouraging speculators.

MORE AT https://www.zerohedge.com/news/2018-03-26/petroyuan-futures-volume-dom
inates-brent-big-traders-step


How well this market functions, and how much it takes away from dollar-for-oil trade has yet to be seen; the initial surge in volume could be just clearing a backlog of demand.

Still, there's no doubt that this new oil contracts/ futures market, based on the yuan, WILL take away from petrodollar activity. Whether that's 5%, 10%, or more, time will tell.


-----------
Pity would be no more,
If we did not MAKE men poor - William Blake

America is an oligarchy
http://www.fireflyfans.net/mthread.aspx?tid=57876

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Wednesday, May 30, 2018 12:34 PM

SIGNYM

I believe in solving problems, not sharing them.


Thanks to sanctions against Iran, the death of the dollar is accelerated.

Both Xi Jingping and Putin have spoken out against the "dollar hegemony" in the past two weeks, saying that it is dangerous for the rest of the world. Until now, they have been silently separating themselves from dependency on the dollar: If anyone has been paying attention, they would have realized that China (with Russia's help) has constructed an entirely parallel financial and banking structure, including the AIIB and BRICS banks (international development banks parallel to the IMF and World Bank), the gold futures market and petro-yuan (convertible to gold), and a non-SWIFT payment system. A number of bilateral deals have been struck which avoid the dollar.

In addition, a lot of the emerging markets (EMs) currencies are in freefall, including Argentina, Turkey, Brazil, and (most recently) Italian bonds.

Quote:

Twenty three out of 24 emerging-market currencies tracked by Bloomberg fell, and MSCI’s broad gauge briefly slipped below its average price of the past 200 days -- an indicator seen as a harbinger for more losses.
https://www.bloomberg.com/news/articles/2018-05-15/not-a-single-emergi
ng-market-currency-advances-as-stocks-tumble

However, now that Chinese and Russian leadership are openly pointing out the risk involved with relying on the USD, are they ready to pull the plug?

And now, for the first time one of those non-USD bilateral deals does NOT include Russia or China at the other end.
Quote:

Gold for Oil: India and Iran Ditch Dollar – Report 286

https://www.forexcrunch.com/gold-for-oil-india-and-iran-ditch-dollar-r
eport
/



-----------
Pity would be no more,
If we did not MAKE men poor - William Blake

As long as you insist that everything is the Republicans'/ Democrats' fault, then you fail to grasp the REAL problem with American politics.

America is an oligarchy http://www.fireflyfans.net/mthread.aspx?tid=57876

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Thursday, June 7, 2018 1:31 PM

SIGNYM

I believe in solving problems, not sharing them.


Other nations are piling on to the anti-dollar bandwagon. The problem is not just "sanctions", in which the USA uses its dollar hegemony (or it is "hegemoney"?) to punish and "isolate" those it doesn't like, it's The Fed's recent dollar-tightening policy: Without raising interest rates, The Fed is selling assets off its books, reducing the amount of "dollars" floating through the system and making the USD more valuable in relation to other currencies. So in addition to Argentina, Brazil, Venezuela (under USA sanctions) and other South and Central American nations seeing their currencies (and bonds) implode, we're also seeing Malaysia, India, and Indonesia begging for mercy.

https://www.zerohedge.com/news/2018-06-06/dollar-king-indonesia-joins-
india-begging-fed-stop-shrinking-its-balance-sheet


The last time this happened, emerging market nations begged the IMF and the Fed Chair at Jackson Hole, WY for relief from the "strong dollar" policy which was driving their currencies into the ground, and the answer was "Erm... no".

Quote:

Fed’s Jackson Hole Participants to QE-Exit Whacked Emerging Economies: Drop Dead
Posted on August 26, 2013 by Yves Smith https://www.nakedcapitalism.com/2013/08/feds-jackson-hole-participants
-to-qe-exit-whacked-emerging-economies-drop-dead.html



This is a repeated problem for emerging markets. However, THIS time, there is an alternative to the USD - the Chinese yuan. The Chinese (and Russians) have set up an entire alternate structure to the IMF/ World Bank/ BIS/ SWIFT/ gold fix/ USD system, with their BRICS Bank/ AIIB/ non-SWIFT exchange/ gold-backed petro-yuan, and other nations are beginning to avail themselves of this alternative.

In addition to sanctioned nations (Iran, Venezuela, Russia) looking for non-dollar trade, India forging rupee-based bilateral deals with Iran and 14 African Central Banks are discussing using the yuan as a reserve currency

Quote:

There is growing momentum to adopt China’s yuan as a reserve currency in Africa
https://qz.com/1291372/chinas-yuan-gets-support-from-africa-central-ba
nks-to-replace-us-dollar-reserve
/



Emerging nations have gotten to the boil before, and some have had their currencies fall like dominoes, so it will be interesting to see how far off the dollar-path they're willing to tread this time.

-----------
Pity would be no more,
If we did not MAKE men poor - William Blake

As long as you insist that everything is the Republicans'/ Democrats' fault, then you fail to grasp the REAL problem with American politics.

America is an oligarchy http://www.fireflyfans.net/mthread.aspx?tid=57876

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Monday, July 30, 2018 3:52 PM

SIGNYM

I believe in solving problems, not sharing them.


Russia Explains Why It Liquidated Its US Treasurys
https://www.zerohedge.com/news/2018-07-30/russia-explains-why-it-liqui
dated-its-us-treasurys


-----------
Pity would be no more,
If we did not MAKE men poor - William Blake

"The messy American environment, where most people don't agree, is perfect for people like me. I CAN DO AS I PLEASE." - SECOND

America is an oligarchy http://www.fireflyfans.net/mthread.aspx?tid=57876

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Monday, August 27, 2018 2:05 PM

SIGNYM

I believe in solving problems, not sharing them.


I kind of randomly posted this in another thread, http://www.fireflyfans.net/mthread.aspx?tid=62643 but it really belongs here

Quote:

But FWIW I don't believe that the USA deep state (and the elite that they serve) will be allowed to run roughshod over the globe much longer. Sooner or later ... possibly even as soon as next year ... there will be a major defection from the dollar by one of America's major partners. It's one thing for China, Russia, India, Iran, Venezuela and Turkey to dump out of the dollar system for their own bilateral dealings with each other. But I'm looking at Germany and Russia: If Trump insists on sanctioning any company that deals with the Nord Stream2, while Germany absolutely requires its completion, what do you suppose will happen? Putin and Merkel met last week, and I'll bet you dollars to donuts that Merkel and Putin were strategizing how to weasel around sanctions. I can think of a couple of ways for Germany to do this: (1) The same way that they got around sanctions before, by creating subsidiaries in Russia or other sacrificial business entities or (2) taking the much bolder step of paying for gas in Euros using a non-SWIFT system.


I have been reading various statements from Germany, France, and Russia. Merkel and Macron are none-too-pleased that their investments in Iran were yanked by USA sanctions; in particular French petroleum company Total had their Iranian projects taken over by CNPC (China National Petroleum Corporation). That's one blown deal that made the M$M, but I'm sure there were many more. Also, threatened sanctions against the Nord Stream2 have pissed off Merkel because this gas pipeline is existential for Germany. Plus the forex war against the Turkish lira, and rising USA interest rates which have once again torpedoed emerging market currencies from Argentina to Indonesia, have once again reminded ... well, everyone ... of the risk in borrowing USD.

Putin has been saying that it's time to get off the dollar. German Foreign Minister Heiko Maas has said the same. https://www.theatlantic.com/international/archive/2018/08/germany-us-h
eiko-maas/568129
/ And now according to Bloomberg via Zerohedge

Quote:

EU Looking to Sidestep U.S. Sanctions With Payments System Plan

Germany and France said they’re working on financing solutions to sidestep U.S. sanctions against countries such as Iran, including a possible role for central banks.

The discussions, which also involve the U.K., are a signal that European powers are trying to get serious about demonstrating a greater level of independence from the U.S. as President Donald Trump pursues his “America First” agenda.

“With Germany, we are determined to work on an independent European or Franco-German financing tool which would allow us to avoid being the collateral victims of U.S. extra-territorial sanctions,” French Finance Minister Bruno Le Maire said Monday during a meeting with press association AJEF. “I want Europe to be a sovereign continent not a vassal, and that means having totally independent financing instruments that do not today exist.”

Trump reimposed the sanctions after pulling the U.S. out of the Iran nuclear accord in May, despite opposition from NATO allies and China and Russia. European companies including Daimler AG and Total SA have halted activity or backtracked on investment plans to avoid U.S. punishment but France and Germany and their European Union partners want business with the Islamic Republic to continue.


https://www.bloomberg.com/news/articles/2018-08-27/eu-looking-to-sides
tep-u-s-sanctions-with-payments-system-plan


If this plan helps Germany avoid NordStream2 sanctions, well ... so much the better. For them.

Yanno, either Trump is really stupid or he's looking to torpedo the USA currency as the petrodollar/ world reserve currency. I think that's a good thing because ti would allow the USA to manage it's own currency for national benefit, rather than the benefit of the international banks.

There is a guy - Jim Willie - who has been making the same predictions over and over for at least the past three years: There will be a "gold trade note" that comes into being. The USA dollar will go up and up and up in value and then it will disappear from international trade. It will be replaced by the "schiess dollar" which will have the same name and look the same but be valued very, very differently.

-----------
Pity would be no more,
If we did not MAKE men poor - William Blake

"The messy American environment, where most people don't agree, is perfect for people like me. I CAN DO AS I PLEASE." - SECOND

America is an oligarchy http://www.fireflyfans.net/mthread.aspx?tid=57876

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