Dollar Under Attack; China and India to Pay Iranian Oil with Gold; Global Currency War
(May 6) There has been much talk on alternative media outlets about the dollar being under attack around the world and that many countries are actively trying to replace the dollar as the medium of global trade. These are opinions of people who are very well-respected in the financial world. Of course, the main media outlets are virtually ignoring this story. The point is that the prices we pay are much higher, not because “things” go up but the value of our dollar goes down
The dollar has been propped up by world trade and in particular the oil trade since the early 1970s when President Richard Nixon got an agreement from Saudi Arabia that it would only sell its oil for U.S. dollars and the rest of the world followed suit. This created a huge demand for the dollar in global trade and has propped up our purchasing power for the past 40 years. (Source)
(April 24) India has reportedly agreed to pay Tehran in gold for the oil it buys, in a move aimed at avoiding US sanctions that target countries who trade with Iran. China, the number one buyer of Iranian oil, may follow India’s lead. The two Asian giants are already using their local currencies and other consumer goods for oil payment. The move comes as US and European Union sanctions against Iran have made it difficult for buyers to make dollar payments to Iranian banks. Observers said any gold payment to Iran not only accelerate the decline of the dollar and its role as world reserve currency but would also help boost the price of gold and further legitimize the movement to return to a gold standard. (Source)
(May 2) Brazil’s finance minister Guido Manteg insists that the aggressive policy actions taken by central banks in the U.S., Europe, and Japan to stabilise their domestic economies have been spilling over into emerging economies. Mantega who coined the term “Currency War” in 2010, has repeatedly blamed rate cuts by central banks in those countries for unleashing a “monetary tsunami.”
What is a currency war? In essence, it’s about the effects of printing “money for nothing”. There are reports circulating that in order to prevent the collapse of the entire global economic system in 2008, the US Federal Reserve secretly conducted the biggest bailout in the history of the world to the tune of over $16 trillion which it gave to virtually every major bank and financial institution in America, the EU and Japan.
At the end of April 2012, Japan (the world’s second most powerful economy) announced that they are following the US into the global Currency War. Japan plans to follow the example of the Federal Reserve and print up $61 billion of “new money” to inject greater liquidity into their already stagnant economy. In February 2012, the European Central Bank decided to inject €530 billion into the Eurozone banking system.
Politicians, concerned about their own countries’ competitiveness in global markets, complained that other countries are gaining an unfair advantage by cheapening their currencies, making their exports cheaper than those of their competitors. As political rhetoric heats up, fears are mounting that a global currency war may escalate — concerns explicitly expressed by the Brics countries — Brazil, Russia, India, China and South Africa.
The inevitable is on borrowed time. Or better yet, on worthless printed currency that will soon lose all of its value. No one will be able to halt what is just around the corner. And is there really gold in Fort Knox?