Fiat Dollars Could Soon See Significant Decline

[courtesy Google Images]

Result? Because you couldn’t purchase crude oil on the international market without first acquiring some US dollars, the fiat dollar–no longer backed by gold or silver and intrinsically worthless–became implicitly backed by crude oil.

Result? ”Petro-dollars”.

Result? The “petro-dollar” was recognized as the World Reserve Currency.

For the past 40 years, the fiat dollar’s perceived value has been primarily based on its standing as World Reserve Currency, which, in turn, was largely based on the dollar’s standing as “petro-dollar“.

In A.D. 2000, Saddam Hussein threatened the petro-dollar’s hegemony by selling Iraqi crude for euros. Our government retaliated by concocting some cock-and-bull story about Weapons of Mass Destruction, invaded Iraq in A.D. 2003, hanged Hussein and hung around for nearly nine years while we decimated Iraq. Why? To protect the petro-dollar.

But the Iraqi War was in vain in that, once we became ensnared in the Iraq War, other nations began to sell their crude oil for currencies other than the dollar. Result? The dollar’s status as petro-dollar began to slide as did the dollar’s perceived value.

Recently, the geniuses in the Obama administration precipitated the overthrow of the government of the Ukraine . . . which ultimately resulted in Russia annexing Crimea . . . which has caused Obama to threaten Russia with economic sanctions.

But there are a couple of problems with Obama’s threats.

1. You can screw with most politicians because they are fundamentally whores. If the money’s right, they’ll do anything you like. But Vladimir Putin is no punk. He sees himself as a hero, a warrior, a man destined to revive Russian power. He may even think he’s called by God. As I read Putin, he’s not looking for trouble, but if trouble comes, he will not run.

You can’t buy such men. You can’t tempt such men. If you want to mess with them, you’d better be ready to go the distance, because they will. Putin will not put up with Obama’s crap. Insofar as Obama has messed with Putin, Putin will make it his business to make Obama pay for his arrogance. The Obama administration was stupid, criminally stupid, to help overthrow the previous government of Ukraine and thereby antagonize Putin. Putin will impose a “cost” on the Obama administration.

2. Russia is the world’s #1 oil-producing country. It provides 13% of the world’s total petroleum and 25% of western Europe’s natural gas. Until recently, Russia accepted US dollars in payment for its crude oil and natural gas.

But, remember, the primary support for the illusion of fiat dollar value is its remaining stature as World Reserve Currency and petro-dollar. So, if Obama sanctions Russia, Russia may counter by refusing to take more fiat dollars as payment for its petroleum products. If Russia refuses to take dollars for petroleum, more nations will almost certainly follow suit. As more nations boycott the use of fiat dollars for the purchase of petroleum products (and in global trade), the “petro-dollar” will become less “petro,” less in demand, and therefore of lower value. Fiat dollars currently held in foreign countries as World Reserve Currency and as the one media needed to purchase crude oil will be viewed as no longer necessary and start to flow back into the US. Result? Increased domestic inflation.

If that flow of incoming dollars becomes a flood, we might see hyperinflation. If we see hyperinflation, the dollar’s demise should follow in 12 to 24 months.

There are a series of dominoes in this analysis that might or might not topple. But they could topple. And the first domino is the Obama administration’s willingness to antagonize Russia. How many dominoes will, in fact, topple remains to be seen.

The number of dominoes and the speed at which they fall may depend more on how many third-party countries decide to follow or reject Russia’s lead, than on the overt acts of the US or Russia. That means that, once started, this process could fall out of control. If Russia intentionally or accidentally starts an international stampede to dump dollars, we just might see a dollar collapse that is sudden and soon.

But, even if the fiat dollars manages to survive for another five years, the fact that the Obama administration started tipping this line of dominoes is evidence that our government is either criminally stupid or intends to cause a significant drop in the dollar’s value.

Here’s video from Greg Hunter at USAWatchdog.com that lists some of the details of the Russian/US currency war and at least implies that we could see a significant fall in dollar value within the next few months.

video 00:14:41