THE END GAME FOR AMERICA
By now, you should be getting angry at your government, as well as a little annoyed with me, since I have been pointing out everything that is wrong with our country without offering any solutions. This will be the last “historical” post. Normally I post on Sundays, but I felt that this information was too important to withhold. After reading you should have enough information to make reasonable assessments of where America is and where we are going. If you promise to read this information carefully, then I promise to switch gears and make some suggestions regarding what you can do for yourself to prepare for the hard times ahead. If you do not understand the history of our dollar, you can’t appreciate where we are now, and you will be less likely to do anything to prepare yourself. The government can always keep printing money, can’t they? So far, so good.
America was the only industrial power not devastated by WWII. In July 1944 delegates from 44 nations met at Bretton Woods, New Hampshire and agreed to “peg” their currencies to the U.S. dollar, the only currency strong enough to qualify for international currency transactions. Member nations were required to establish a parity of their own national currency in terms of the dollar (pegging). The dollar was attractive to the winners in the war because each dollar was based on 1/35th of an ounce of gold. This gold was supposed to be in the U.S. Treasury. The value of gold was fixed by law at 35 dollars an ounce. The U.S. agreed to convert any dollars into gold at that price. Unlike gold, dollars earned interest and could be transported anywhere. Thus the world gradually adopted the dollar to trade international commodities like oil, wheat, soybeans, and corn.
Fast forward to the Nixon administration. Tricky Dick and the administrations preceding him printed far more money than could be backed up by our gold. The Vietnam War had cost $500 billion and President Johnson had cranked up the social programs of the Great Society. When France asked to see real gold instead of the dollar bills, Nixon knew that he could not let the world see how little gold we had. So in 1971 the Bretton Woods agreement fell apart as Nixon abandoned the gold standard and declared that the U.S. dollar was now a fully floating fiat currency. Now here comes the interesting part.
Recognizing that the U.S. and the rest of the world were going to need increasing amounts of oil, and that Saudi Arabia wanted to sell its oil to the U.S., which was the world’s largest consumer of oil and had the largest economy by far, Nixon made a historic agreement whereby Saudi oil must be purchased by all countries in U.S. dollars. In exchange for this, the U.S. agreed to protect the Saudi royal family (not the people of Saudi Arabia) from its neighbors, including Israel. By 1974, all oil-producing countries had agreed to this protection arrangement and most commodities in the world were traded in dollars.
The petrodollar deal has been a windfall of unimaginable wealth for the U.S. As every nation grew and needed more oil and commodities, it first had to sell something to get dollars, or borrow dollars from the International Monetary Fund. Every nation had to keep a supply of dollars and U.S. Treasuries to trade with other countries. Currently there are $5.5 trillion dollars of U.S. Treasury bonds in the banks of other countries. Americans hold an even larger amount of Treasuries. These must be rolled over when they mature and new Treasuries provided at current rates.
As the world grew, the U.S. enjoyed a massive pool to dilute fiat dollars created far out of proportion to world productivity or tax revenue. Think Santa Claus money. Dollars began to pile up around the world as America ran a larger and larger trade deficit. China owns 26 per cent of our debt, and continues to lend those dollars back to us to buy cheap Chinese goods. It is estimated that the extra dollars we print allow us to skim a trillion dollars off of other countries each year by making them pay for the depreciation of our dollar. We have been able to buy commodities, grow our military, and create an entire society based on our unique ability to print dollars and spread them all over the world while artificially holding interest rates down. The dollar has been the “reserve currency” of the world since the 1970s.
Being the reserve currency of the world is a nice gig if you can get it, and keep it. However, other nations have grown tired of this racket. As the value of the dollar decreased due to all of the extra dollars we print, the cost of oil and commodities has been pushed up around the world. This is a classic case of too many dollars chasing too few commodities. The world looks at fat, lazy Americans creating a society built on printed and borrowed money, while many countries work harder each year to maintain the American lifestyle. How would you like to live in a country that could not produce enough food and you had to buy corn, wheat, and soybeans at inflated prices to support the American dream? Forty per cent of the American corn crop goes to gasohol, a Santa Claus handout to mid-west farmers, while other countries have starving people. We are using food that the world needs to fuel our vehicles. Every other country knows that producing alcohol from corn consumes more energy than energy created, but we keep forcing this failed green energy on Americans for political and ideological reasons.
The world has rotated many times since America began to print endless amounts of money for other countries to use in international trade and for our own social programs. New centers of wealth and natural resources have emerged on the world stage, like the BRIC countries (Brazil, Russia, India, and China). Their economies are growing as ours is stagnant. China now buys more oil from Saudi Arabia than the U.S. does. Despite the current problems with the euro, China continues to trade many things in euros. It has also started an aggressive program of buying up oil fields and oil companies from around the world. Very clever. They are not buying oil with dollars. They are buying oil fields and oil companies with Yuan. Several oil-producing countries have almost completely broken away from the dollar scam. Think Russia, Iraq, Libya, Venezuela and Iran.
Funny how we seem to get into military conflicts with countries that try to quit our protection racket. Have you ever considered that the last Iraq war to unseat Saddam Hussein wasn’t just about WMDs? Saddam was trading Iraqi oil in euros and other currencies. He was annoying for other reasons, but nobody in the mainstream media has ever made the connection with our militarism in the Middle East and our need to keep the petrodollar scam going. Could be a coincidence, you think? The first thing the U.S. demanded after the invasion of Iraq was a return to the oil for dollars program. Venezuela hates us, but we currently have the only refineries that can process their heavy crude. The Chinese have promised to fix that.
The U.S. has crushed weaker countries that tried to abandon the dollar, but it cannot control larger countries that do not conveniently have terrorists or dictators we don’t like. Politics in the Middle East has changed. Militant Islam understands the dollar scam well. America’s support for Israel has undermined its relationship with many oil-producing countries. Iran now trades its oil in any currency except dollars, and even accepts commodities from other countries as payment, despite the U.N. sanctions against this. Interesting how you only hear about their possible nuclear weapons development. I’m not saying that Iran doesn’t represent a threat. I’m just asking if the threat isn’t like the WMDs in Iraq. Yea, it’s probably a coincidence that they sell their oil for currencies other than the dollar.
Other countries are thirsty to deal in currencies that are not in the toilet. Officials from China, India, Brazil, Russia, and South Africa recently met in China to discuss expanding the use of their own currencies in foreign trade.
Last year Standard & Poor’s declared that U.S. Treasury debt no longer deserved to be considered among the safest investments in the world. The U.S. has had AAA rating for 70 years, but no more.
Recently, while hardly anyone in the U.S. press said a word, China signed an agreement with the United Arab Emirates to trade oil for Yuan. This is the first of the old OPEC oil-producing countries to openly break with the dollar.
It is Saudi Arabia that is in the cat-bird seat. And it appears that they just signaled their decision. They no longer need U.S. protection. The U.S. is no longer their biggest trading partner. They have a new best buddy, who promises not to rip them off. Again, almost unmentioned in American newspapers, Saudi Arabia and China have just teamed up to build one of the largest refineries on earth, a behemoth at the Saudi Arabian Red Sea port of Yanbu. The project will be completed by 2014 and costs $8.5 billion. The U.S. does not have any refineries in Saudi Arabia.
Please note that the Red Sea location avoids the Suez Canal and the Strait of Hormuz. Also note the shrewdness of the Chinese. Refining the oil in Saudi Arabia means that their tankers will be carrying a much more valuable cargo back to China. This means lower costs. China has already removed the dollar from their trade with Russia. China is negotiating with Brazil for a similar deal right now. Singapore wants to trade commodities in Yuan instead of dollars.
Do you see an unstoppable trend here? Almost every nation on earth would be better off using another currency besides the dollar for trade, thanks to Uncle Samdusky and his Santa Claus money and American greed. The only shoe left to drop is Saudi Arabia openly announcing that it will sell its oil in a basket of currencies. I am arguing that they have already done this with the joint-venture with the Chinese. The Chinese are buying gold like never before, probably as a hedge on the collapse of the dollar. If little UAE (United Arab Emirates) can look the U.S. in the eye and tell us to take our dollars and shove them, can the rest of the oil-producing countries be far behind? Don’t listen to what Saudi Arabia is saying. Look at what they are doing.
When Mr. Obama refused to approve the XL pipeline from Canada through the Great Plains, he spit in the eye of one of our closest allies and neighbors. The Canadians naturally want to develop their resources and get them to markets. They wanted to ship their oil to us, Mr. Obama said no. A few days ago the Chinese oil giant CNOOC made a $15.1 billion bid for a Canadian oil-sands firm called Nexen, Inc. The Chinese would be glad to help with a pipeline that does not pass through the United States. Welcome to North America, China. And goodbye to all of the jobs that the XL pipeline would have created in the U.S. The Canadian government must approve this deal, but Mr. Obama’s actions are driving them to make the Chinese the developer and recipient of their enormous resources.
In the twinkling of an eye, any day or any week or any month from now, the U.S. economy could be crushed by a simple agreement among a very few countries on whose faces we have tread for so long. They only need to agree not to extend us any more credit, to stop buying out debt to use in international trade, to trade in their own currencies. It is clearly in their best interests to do this if China can guarantee their safety.
Once our petrodollar scam on the world is over, there is little reason for other countries to use the dollar for international trade unless they are buying something from the United States. We have given the world every possible reason to give the dollar a pink slip, and Obama’s stated policy of continuing trillion dollar deficits makes it plain to the world that we cannot end our addiction to Santa Claus money on our own. In the past 12 months alone, the value of the dollar has decreased 7.4 per cent.
I think this could be the end game for America, the event that acts as a pin to a huge balloon. The rest of these key oil-producing countries may thumb their nose at us one at a time or all in one day. It doesn’t matter in the long run. The important thing is for you to see this trend and to fully understand what it means. The benefits to the world of using a basket of currencies instead of America’s dollar for trade are too great to ignore, especially when much of the world is in financial distress. The fall of the euro and the crumbling of the eurozone economies has given the dollar a short reprieve. Soon, life in America as you know it will be changed forever. The U.S. will no longer be able to print unlimited amounts of money and foist it on the world for international trade while holding interest rates down. The U.S. will have trouble borrowing. Unlike Greece, no one is able to bail us out even if more debt were the answer.
Twelve other developed nations have stronger currencies than the United States, and these countries are not full of people addicted to Uncle Samdusky’s Santa Claus money. Why should foreign countries hold large amounts of U.S. Treasury bonds once they can buy oil and commodities cheaper with their own currency, or with gold? Wouldn’t they flood the world with dollars and U.S. Treasuries, driving their value even further down the septic system? The cost of commodities for almost every nation in the world would go down, except in the United States. I have seen estimates that the dollar could be devalued by 50 per cent almost overnight if we were not the reserve currency of the world.
Mr. Obama’s energy secretary said that he had to figure out a way to get gasoline to $8 a gallon. By Golly, I think he’s done it. Our ideological pursuit of magic green energy and our failure to develop our own oil and NG reserves to achieve energy independence have got to be two of the stupidest national security decisions of all time.
This is what happens when a country is run by partisan ideology, Santa Claus money, and an amateur president. A free market best determines where capital should go. In a free market, failures are quickly dealt with, without bailouts. Investors lose money, but they become better investors. When government has unlimited amounts of Santa Claus money to throw at their ideology, and can manipulate the tax code to reward and punish, it is the government running the economy, rather than the free market. I could provide you with a list of Mr. Obama’s failed ideological projects, but do not have room here.
None of Mr. Obama’s ineptitude could have been possible without the consent of the ideologically bankrupt American media, which sold us all out. Had the American media vetted Mr. Obama properly, this man with an unknown past, hidden financial donors, a cozy relationship with Marxist radicals, no foreign policy experience, no business experience, no accomplishments as a Senator, an autobiography full of lies, and hidden academic records would never have gotten the Democratic nomination.
Do you understand why a retired emergency physician is warning you about impending disasters? The mainstream media are so heavily invested in partisan politics that they are willing to turn a blind eye to the most inept president in the history of this country. I don’t claim to be an economist. I pay little attention to what our government says or the mainstream media report. I know that all of the government’s economic numbers are lies. I did my homework. I look at what other countries are doing, and what Mr. Obama is doing, and what Congress is not doing, and try to draw reasonable conclusions. Isn’t this the job of a free press?
On July 12, 2012 Mr. Obama illegally ended welfare reform, a reform that had reduced the welfare rolls by almost half. Welfare recipients are now relieved of any responsibility to work, or look for work, or train for a job. You can get away with stuff like this when the press is your lap dog and your attorney general is a crook himself. You can say one thing for Mr. Obama. He’s looking ahead, for himself. Pack those food stamp rolls. Pack those welfare roles. Pack those union votes. Pack those illegal immigrants. This is called “spreading the wealth” by increasing the size of government. I think I know where this road leads.
WESTERN CIVILIZATION IS GOING DOWN THE TUBES. WE HAVE TRILLION DOLLAR DEFICITS NOW AND PROJECTED FOR YEARS. OUR GREENBACK IS BEING ABANDONED AS THE RESERVE CURRENCY OF THE WORLD. WE ARE HOPLESSLY IN DEBT. A WORLDWIDE FINANCIAL CRISIS IS SHAPING UP——- AND THE MEDIA IS CONCENTRATING ON GAY MARRIAGE, CHICKEN SANDWICHES, AND MR. ROMNEY’S TAX RETURNS.
Neither candidate has even brought up the tremendous sacrifices that will have to be made soon. For the mainstream media to allow both candidates to act as if life will go on in the U.S. as it has in the last half century is treason, in my view. Not one single time has the mainstream media asked either candidate to specify exactly how they would dramatically cut big government. This is now the most important issue of our lives and our nation’s life.
Think about this. If you had a tremendous investment in Saudi Arabia, and you had the largest standing army in the world, how long would it be before you needed a military base in Saudi Arabia to protect your interests and provide security for your new, best buddy? China represents the dynamic, industrious, powerful new world emerging. There is no reason for Saudi Arabia to place all their bets on the corrupt, bankrupt, narcissistic world-bully of the past.
Think about this. The U.S. needs a war with Iran to halt the abandonment of the dollar and reassert itself as the dominant world power, to which oil producing countries need to pay protection money. And, of course, restore Iran to the dollars for oil scam. There is no doubt that we have the military capability. The president of Iran has made the same mistake as Saddam Hussein. Expect to hear more about the nuclear threat of Iran. Don’t be surprised if war breaks out. Protection money works two ways. You pay and we protect you. You don’t pay, we invade you for WMDs unless you have big friends in China or Russia.
In subsequent posts, I would like to discuss what measures our bankrupt country is likely to take when the music stops, following the examples of what other failed democracies have historically done. No more Santa Claus. The U.S. now has approximately $16 trillion of debt and nearly $80 trillion in unfunded liabilities, with few friends in the world. If you are not scared now, you need to go back and re-read this post. Then rethink the policies of Mr. Obama and Mr. Bernanke. Mr. Obama and Mr. Bernanke appear to view America’s problem as a lack of liquidity, rather than a government-induced debt problem. If they had one complete brain together, they would already be cutting government spending and regulations in draconian fashion. Are you ready for another round of QE (quantitative easing) at the expense of the rest of the world? What else can the U.S. do to piss off the Saudis and the Chinese and the Canadians, while hastening our own collapse?
If you are beginning to feel uncomfortable with Uncle Samdusky’s hand on your thigh and in your pockets, you are welcome to share this post with your friends. Think this through for yourself and your family. If I’m wrong, and I truly hope that I am, you don’t need to change a thing about the way you live or the way you think about our government. Uncle Samdusky’s got your back. Personally, I don’t believe that we will need to worry much about the conservative vs. liberal issues of the past. Most of these issues should never have been the business of the federal government to start with. Our issues will be about massive unemployment and what to do when government’s checks stop coming. Or when they arrive, they aren’t worth anything. This is true for state and local governments, who can’t delay the process of going bankrupt by printing dollars. The Federal government can’t bail them out anymore.
The U.S. is going to survive, but it’s going to get ugly. Count on a lot more violence in our daily lives as Santa Claus money dries up. I’m not saying that our financial collapse could start at any time. I’m saying it has obviously already started. Just look for the signs of insolvency in your local and state governments first. Watch for cutbacks in everything, layoffs, broken promises, a breakdown in infrastructure, less firemen, less teachers, less policemen, massive loss of government pensions and benefits, and higher taxes on everything. San Bernardino is the third city in California to file for bankruptcy this summer, after Stockton and Mammoth Lakes. The city council of San Bernardino suspended debt payments, stopped paying into the retiree health fund, and imposed a hiring freeze. Coming to a city near you…and a state…and a country.
Can you see any possible way the United States can change its fate with the president we have and the aristocratic thieves in Congress who created this gargantuan mess over many decades? If you can see where my thinking is flawed, then speak up. It’s okay to disagree. I don’t claim to be infallible. I’m searching for some other possible end game myself. It’s not reassuring that Mr. Romney reportedly has over $100 million in foreign banks and investments, where hopefully his own government can’t confiscate the money or inflate it away. Good for him. He’s thinking ahead, for himself.
As an emergency physician I drove to work for almost four decades thinking about how I would be tested on my shift. In any busy emergency department you are always tested because you have no idea what kinds of nightmares or how many nightmares you will be asked to manage at the same time. Frankly, I was almost never tested the way that I feared the most on any given night. Nobody can really foretell the future. Nevertheless, sooner or later almost every nightmare I ever had came true. Because of my fears, I prepared myself to deal with those nightmares. I’m scared for my country. We are so unprepared for this.
Charles C. Anderson M.D. FACP, FACEP
http://www.amazon.com/author/thrillerguy
