Russia declared war last week, and hardly anyone noticed. Of course, there isn’t a lot that anyone can do about it, and it won’t be much of a war. In fact, the declaration of war itself will pretty much mark the end of it.
What I’m talking about is the announcement by Gazprom Neft last Thursday that they were going to kill the dollar. Their announcement didn’t actually use the words ‘kill’ or ‘dollar’, but it was still an announcement of the intent to assassinate the world reserve currency that we hold most dear.
I think that it’s time to start sharpening my obituary writing skills.
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Russia Kills the Dollar
This is the Reuters headline that should have made the front page of newspapers everywhere:
The only thing that is keeping the United States of America alive right now is the Petrodollar. Oh… and the willingness of the United States to kill people for the purpose of keeping the Petrodollar alive. I ‘forgot’ about that.
Have you ever wondered why oil and natural gas is ONLY priced in US dollars?
You cannot buy oil or natural gas on the international markets in any other currency than the US dollar. This means that if you don’t have US dollars, you don’t get to heat your home or drive your car – unless you have your own oil and natural gas.
What do you do, to get US dollars?
Well, you have to make something that Americans want and exchange that ‘something’ for the dollars you need to buy the oil and natural gas that you want. And, you can bet that a lot of people are getting tired of playing the game of ‘keep Americans happy’.
However, if you stop playing the petrodollar game, you get invaded by the US military. You might think of Iraq, Libya and Syria as… object lessons …in what happens when you try to get out of the petrodollar game.
Unfortunately for the petrodollar, the US chose to overthrow the government of Ukraine and then threaten sanctions when Russia responded. That was a very bad move, and that means ‘game over’ for the petrodollar.
But wait, why is that so bad?
Why This Is Bad
Well, the tables will have been turned on the US. Instead of the rest of the world needing to coax dollars out of Americans to pay for oil and gas, now the US will need to work hard to coax oil and gas out of the rest of the world.
Do you know of anything that the US produces, that the world needs?
Well, there’s food, but China and Europe don’t want it because of the hormones and GMOs that we’re putting into it. Also the problem with food is that it requires cheap gasoline and diesel to produce it. So, the death of the petrodollar will make US food more expensive and less competitive.
Well… there’s, um… war. Yeah. …war. Oh, and pornography. Very few people in the world do pornography as well as the US. And, entertainment. America is really good at that. Of course, it’s getting to be a lot like the pornography.
Outside of that… I can’t think of ANYTHING that the US produces that the rest of the world would want – in exchange for oil and gas.
Can you think of anything?
Seriously. I can’t.
As I sit here in the middle of Taipei, I can’t see anything in my apartment that was made in America except Oreos, corn chips, Ritz crackers and the software running this computer. That’s it.
What is America going to do?
Well, America-as-we-know-it is pretty much just going to die.
Really. Are you ready for this?
(That’s a link. Do more than just think about it.)
If you find a flaw in my reasoning, have a question, or wish to add your own viewpoint, leave a comment. Your input is truly welcome.
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