Crude oil and the US dollar…
They’ve always gone hand in hand, worldwide. Oil is bought with greenbacks and the dollar rules the world’s economy.
That could soon change…
A year ago, almost to the day, China announced that any nation in the world could buy, sell or trade crude oil using the gold-backed Chinese Yuan. China also struck deals with Russia and the United Arab Emirates to trade with those countries in their currencies.
Unheard of – until now.
According to former Koch oil industry analyst and KCC commenter, Robertoe Anderson, “If Saudi Arabia chooses to sell oil in a currency other than the US dollar; most of the rest of the oil producing countries in the Middle East would surely do the same rather quickly.”
Robertoe knows a thing or two about oil. Unlike “rumored” newsletters no one seems to be able to find, 350 top oil executives subscribe to his.
Why? The world is coming to terms with our dirty little not-so-secret; that we’re printing money as fast as we can buy the ink and paper.
Every hour of every day, we are spending $200 million dollars we don’t have. Seven days a week, 24 hours a day.
Allow me to put that in perspective:
- Gratuitous Sports Fact: the Sports Business Journal reported the SEC’s Tennessee Volunteers are more than $200 million in debt. Enormous compared to surpluses at other college programs; but just one hour’s spending for the US.
- Michael Jackson died $400 million in debt according to Billboard magazine; just two hours spending for the US.
- At $200 million an hour, in two months, we exceeded the combined annual profits of the 100 largest companies in the Fortune 500.
I just looked at our online, real time debt clock and it hit $16 trillion dollars Tuesday, headed towards $20 trillion by the time Obama leaves office.
But we are the US, by God; why can’t we just print more money?
First, it’s illegal for our government to just “print money,” but we have a loophole. It’s called the Federal Reserve – which, by the way, is no more “federal” than Federal Express, Federal brand shotgun shells or Federal-Mogul.
The Fed plays a little game; it slips money to mega banks using a trick called the “US Treasury carry trade,” at interest rates approaching zero, who in turn use the cash to buy government debt.
Look it up, it’s a big reason why Bank of America and JP Morgan, among others, are full of fat cats.
Printing money can lead to skyrocketing inflation, but our tool to judge inflation rates, the Personal Consumption Deflator, shows its low and headed lower. The reason? Since 2009, when the Fed hired a third shift and started running the presses full time, inflation has rarely climbed above 2% a year.s
If that sounds fishy, the Fed also controls our equally phony baloney interest rates and has kept rates artificially low thanks to the Keynesians.
Adds Anderson, “Interest rates are going up; the dollar will be dropping and our drunken Congressmen spending is about to end.”
Therein lays the potential horror story.
Is there anything else the Fed does for us? Well, since the Fed was formed, the dollar has lost 96 percent of its purchasing power.
The more the world figures out our dirty little secret the more successful China may be in leading the effort to eliminate the dollar as the standard of the world. If that happens, the Great Depression may just be a blip on our financial radar screen.
Why?
We’ve been unique; we’re the only country in the world that doesn’t pay for its purchases or debts in a foreign currency. If a foreign country wants to buy oil from the Saudi’s, the oil is priced in dollars. They have to buy dollars first, and then buy the oil. We’re immune; whatever we want to buy we don’t have to acquire the money to pay for it, we don’t have to sell goods or services to get it; we PRINT IT!
If this continues our debts may no longer be able to be paid for in our own dollars or our creditors deeply discount the value of our freshly minted money to its true value.
This has never happened to us before and I think you need to be ready for this should it happen. This isn’t a prediction of doom and gloom, but show me how it can end any other way.
And I’d prefer you use facts, not blind allegiance to a system, person or party.
The Yuan’s value has been bolstered/manipulated by the Chinese government FAR more than the U.S. Dollar has by the Fed. With one key difference. The Chinese allow little to no transparency . No transparency = no trust = no thanks.
The U.S. Dollar has plenty of warts, but she’s still the prettiest girl at the bar.
Good points, Monarch. While she looks like the prettiest girl at the bar, I’m afraid it’s because the lights are dim and we’ve had too much Kool aid.
Still the best country in the world but I’m afraid we’ve got worse than rough water ahead of us.
Should I sell my coin collection now, or wait a bit?
Lib, not just yet, but you know you can trust me to be a lamp unto your feet, a light for your path. It’s like a tease bet, more than one thing has to align.
They day you see me do a story about selling out at the beach and moving to Costa Rica at the same time pork bellies dip, while Hearne quotes Glazer on his thoughts concerning the G4 summit and whether or not QE2 will shut down the Fed Reserve, sell your coins, stamp collection, your grandmother, anything, because the fecal material is about to be propelled into the rotating cooling device.
If you need personal advice, you know the closest of my friends, followers, readers and “dis3iples” can reach me at paul@paul4lifeloveandhappiness.com.
Economics is a galaxy out of my purview, but I have read again and again that the Real Estate bubble in China is a horror far more dangerous than the pretense of value associated with our American dollar.
Any nation caught holding Yauns when Mr. and Mrs. Chin find out their condo investment in completely unpopulated cities in the hinterlands is worthless will be better off with Dutch Tulips than funny money with pictures of that mass murderer Mao.
Power still stems from the end of a gun barrel, and for now, we still have the biggest guns, just like that chick at the bar.
Dude, Chuck, chick at the end of the bar……not a chick. Almost fooled me too.
Yeah, China is awash in ghost cities, GHOST CITIES!!!
If those books were ever opened up it would not be good.
Most modern economies are based on pure fiction.
A small, though fair point.
However you also need to consider a few other things:
Since WWII the United States has remained the world’s singular economic superpower, which is why most global trades continues to be conducted using the dollar. Short of a collapse of our monetary system, or an forcible coup d’état by the Tea Baggers and their supporters, that is unlikely to change any time soon.
And even if the dollar were replaced as the de facto global reserve it would far more likely be supplanted by the nearly ubiquitous Euro than the yaun – the world’s diminished gold reserves would see to that (plus no one seriously believes the modern world economy could be gold based ever again.)
Further the US is not the only nation-state to print money at the drop of a hat. All of the larger players do this: the EU, China, Russia et cetera…cries of ‘foul’ –like China’s yesterday– only surface when their investments (slightly over one trillion US) appear to be threatened.
Yes, the Fed is not government related, giving credence to those worthies decrying that the bankers are running the world. But the bankers have always pulled the world’s strings: did you sincerely think the world ran on honesty and good will? Hell, that’s why mankind invented gods and religion – to enforce some semblance of cooperation (and obedience to the powers that be) on mankind…
Good points, Nick. Agree with a lot of it but no, I’m no where near naive. I know we aren’t the only country who does this, but bottom line, we are managing a massive lie; you have to think that has a day of recconing.
(I would have said a financial come to Jesus day, but out of respect for you God/religion final comment I chose another term)
Maybe that would be a good topic for me to drag you through some time. About one in four men claimed to be the Messiah; I think there’s a reason one “historical” Jesus came out of that as the most significant figure in history.
I was going focus on why Hawaii consumes more spam than all 49 other States combined, that may have to wait as I desperately attempt to get Mysterious J all the way through just one of my stories.
sorry Wilson…this entire article is full of garbage!!!!!!
Michael Jackson broke at death? are you serious.
The world turning away from T bills? no way bud…they never will…they’ll
invest in Chinese money?….are you serious!!!!!!
low interest rates..hey Wilson…those companies you’re moving and the
new beautiful buildings they’re going to (Honeywell/amc)…where the
f*ck do you think that money comes from dude!
Obamas running up debt…obviously you slept thru economics class
because the majority of that is the medicare hole/2 unfunded wars and
the interest on the debt. i’mthinking 70%!!!!
arabs selling oil but not in American dollars…imagine that Wilson…have
younot picked up a paper in a year…we’re drowning in domestic oil….
last year was in fargo nd…between natural gas and oil we could close
down the entire arab world with what we got!!!!! Just found a new
field in Montana. Was in Lubbock, texas a month ago…wanna see some
oil…those fields are hitting 24/7….we saw one company go in and pay
4 million in cash for field trucks…this wasn’t even abig driller….we’re
shipping oil out now…exporting because of the cheating oil companies
get 4 billion in subsidies to screw the American concsumer…oil should
be about $2/gallon!!!!!!
let the Saudis use another currency…we’ll see them go down the drain
in about 8 hours….
America isn’t broke…we’ve got so much cash sitting in banks..
we’ve got the corporations and billionaires flushing money out of the
country at record amounts to avoid (illegally) paying taxes. The irs has
10,000 names of people who avoided tax payments in the billions…
they’re goingto go after them (probably not but nice to think about)…
the worst most ridiculous article I’ve ever seen….more rip and
read crap from drudge report.
check out your facts Wilson….totally wrong AGAIN~!!!!!
wish I could go further so understand there is no currency in the
world as strongas the American bill. Nothing!!!!!!!
When times get tough where do the foreign countries go…to American
money…everyone of them/
So when the p.o.s. republicans want us to gobad on our debts they’re
playing with fire and attempting to destroy the entire financial
fabric of this nation.
But I want to go back to Michael Jackson…since you’re such a
music aficionado….at death Michael had liquid assets over 1.2 billion
dollars. Since his death , his estate was making
about 300-400 milliondollars a year. He owned..yes owned the
beatle lic/pub rights to their music…owned at least 10 other
major artists rights in addition to his investments which many
people knew nothing abut. This guy was not broke as you say…
his personal wealth sheet was filled with assets bey ond what he
owed…..way beyond.
I suggest that nexttime before you write a financial articleor
one that’s taken from the ” woe is me” t party/right wing nut/
research offices that you consult Harley at law4life 1000….and
I can set you straight on the real financial and economic facts of the
real world. Plase stop this stuff….
hearne should be ashamed to even print this…. this article is way way off…
and it’s old old news that’s beenproven hudnreds of times to be
incorrect.
I’ve been to a flea market/junk sale where people sell their useless crap.
They sell old “furniture”/car batteries/quilts/old car parts/used clothing/
t shirts/framed velvet art from the 50’s etc. They line up to make some
extrq money to make ends meet. It’s great…its free enterprise and I
congratulate them for being entreprenuers~ However
I would not rely on anyone like that to give me fiancnial
information nor expect them to understand the economics and
finaincial markets or world. They don’t understand it. So before we see antoher article like
this contact me.I will setyou straight because this article should be deleted……
its a terrible terrible article tht looks like someone pulled pieces from WND
and put them on hearnes great site!!!!
remember…if you want the facts from someone who’s knowledgeable
in finance and successful…feel free to contact me.
that includes all kcc readers….
good luck
Harley
Michael Jackson, pedophile buggering piece of sh*t is no hero, with or without money.
http://www.nydailynews.com/news/national/michael-jackson-spent-35-million-cover-molestations-report-article-1.1386325
It never, never ceases to amaze me what the media will, by consensus cover up in order to promote a narrative.
The only thing sicker than “The Gloved One” and his demented, purient pursuits, is the parents who took the money in exchange for remembrances of those tender moments with MJ.
He should have been shot dead.
How anyone can listen to the music that sick family has produced over the years, knowing what a monster he was is beyond me.
Fu*k Elizabeth Taylor too. They all had to know.
….and despite ill informed people who type before they engage their brain and do 5 sec of research; he was a broke pedophile.
http://articles.latimes.com/2013/aug/12/local/la-me-ln-michael-jackson-debt-20130812
Sending your kids to spend the night with an effeminate man with the face of a poorly drawn anime character and who sings, “Beat it!”, while sporting a single glove — what could possibly go wrong?
If I owe Bank America $5,000 that’s my problem
If I owe Bank America $100,000 that’s their problem
85 billion a month going into the banks for speculation and to simply create at wealth effect.
Wonder how many times the public will get fleeced into owning bullshit stocks like Whole Foods, AT&T, Verizon, pick any high dividend stock.
We had a credit bubble that popped in 2008, we will still be deleveraging from that event for next 20 years. Extend and pretend and mark to fantasy. Easy cheap money is only way anything is even remotely being moved today. Cheap re-fi’s and 0% is our shove ready jobs.
Read a great comment today
“When your money is based on fiat only, it’s the height of folly to jeopardize the validity of that fiat” So We will kick the can for another 6 months and than another.
Monarch, Chuck, Dude, and Nick all said it better than I could have. Only thing I can add is,
“God Bless the Keynesians !!”
I’m here today to publicly OUT my friend Stomper; he’s either a doctor or farmer, because he can flawlessly and surgically separate the wheat from the chaff or the quarter horse from the steaming pile of dung in the field.
When are we having that drink and thanks for classing the place up, Mr Stomper. Much appreciated.
Thanks Paul; I’m much better in print, than I am in person. I’m better served to perpetuate the myth.
I’m mythless; what you see is what you get. It’s hard to dress up a sarcastic ass and make it look much different than what it is. If you change your mind, first ones on me!
>If this continues our debts may no longer be able to be paid for in our own dollars or our creditors deeply discount the value of our freshly minted money to its true value.
US Debt (bonds) are paid in US dollars only.
That should indicate the level of understanding of this issue by the author.
Balbo, true today. Nothing stops a foreign creditor from forcing a discount, exchange rate or currency conversion; that was the point. I have a firm grasp on “that’s how it’s always been,” that, however is not the topic.
The topic is, what could possibly lay ahead?
From working at sprint, home of the BBB bond, you should know that a country’s debt is evaluated and rated compared to the other options available.
Is there currently any other country or region which has looked better relative to the USA? Would you rather hold EU bonds or US bonds?
This is a problem created by the GOP because they fear, rightfully so, that if Obamacare is a success (and keep in mind it is just Romney’s Mass. plan which worked) then they won’t be in power for a very long time.
The truth is that we could balance our budget today, right now without austerity measures if we brought our military spending in line. We spend 57% of our discretionary spending on the military. We spend 17% of the total budget on the military (Not including VA benefits which are off the table). We spent 8.4 billion dollars buying 29 F-35 JSF fighters that nobody really wanted to fight in Afghanistan against a country that has no air force.
We cannot continue military spending at this pace. It is not healthy for our bottom line and it is not healthy for the republic itself to be so warlike and aggressive.
The chickenhawks will never let you touch their ‘guns’.
sorry boys…I can’t cure stupidity…but I try everyday…
mj wasn’t broke…maybe cash flow short…but his assets farv exceeded
his liabilities. Manyassets will never be known including the rights
to some of the most famous cartoon figures (worth 500 milliondollars)…
rights to the Jackson name/glove logo/licensing of everything commected
to his career (of which he was making millions)
so paul…if you take your assets that are liquid…minus liabilities…
then mj was not broke…not even close.
then you add in his future earning potential on those assets (billions of
dollars) and you and chuckles need to geto out the economic 101
book.
sorry boys…I know you loved Michael…but trying to compute his
worth is way over your head.
and we’re not even talking about other real estate investments/
furntirue….art…..memorabilia….we’re not even talking about
collecteor values…and put it all together…and mj was never
broke…
maybe bsome cash flow probomes….but never broke.
Now got to drudge report and do your nightly homework…thanks…
and it you’re good like flipper hearne will feed you some luscious
raw fish for dinner (ahhhhhhhhhhhhhhhhhh ahhhhhhhhhhhhh ahhhhhhhhhh)…
thanks
what the hell are you on about you glass-licking mongo?
+100
May I add lead paint-eating wrongo?
I enjoyed this line from our short bus problem child;
harley says:
October 16, 2013 at 6:56 pm
nice piece stomper (as in Mongolian stomper)….but you
rippd everything Wilson said to shreds.
Idid too…but got no rebuttal back…because the truth wins…
First he ignores the link proving him wrong and suggests he wins because of a lack of rebuttal. No, I win, because you simply learn to not engage the crazy dude living under the bridge in conversation, right or wrong.
I guess those wholive in section 8 housing
(hint….hint)….can complain all they
want and be jealous.
oh boy…the little man dropped his hat.
It seems I’m too fact oriented for this
crowd. I tryto educate these low level
students but they don’t catch on quickly.
class dismissed!!!!!
Bait away, Mr H man, bait away.