Another great, and insightful, article from Brandon Smith, at  This is the lynchpin, folks — The Petrodollar.



Even after seven years of writing macroeconomic analysis for the  liberty movement and bearing witness to astonishing displays of  financial and political stupidity by more “skeptics” than I can count,  it never ceases to amaze me the amount of blind faith average Americans place in the strength of the U.S. dollar. One could explain in vast  categorical detail the history of fiat currencies, the inevitable  destruction caused by inflationary printing and the conundrum caused  when any country decides to monetize its own debt just to stay afloat — often, to no avail.

Bank bailouts, mortgage company bailouts, Treasury bond bailouts,  stock market bailouts, bailouts of foreign institutions: None of this  seems to phase the gibbering bobbleheaded followers of the Federal  Reserve cult.  Logic and reason and wisdom bounce like whiffle balls off   their thick skulls. They simply parrot one of two painfully predictable  arguments:

  • Argument No. 1: There is no way foreign countries will ever  dump the U.S. dollar because they are so dependent on American consumers  to buy their export goods.
  • Argument No. 2: There is no way the dollar’s value  will ever collapse because it is the dominant petro-currency, and the  entire world needs dollars to purchase oil.

I have written literally hundreds of articles over the years  dismantling the first argument, pointing out undeniable signals that  include:

  • China’s subtle dumping of the dollar — using bilateral trade  agreements with other developing nations and, more recently, major  economic powers like Germany and Japan
  • The massive gold-buying spree undertaken by China and Russia — even in the face of extreme market manipulation by JPMorgan Chase and Co. and  CME Group Inc.
  • The dumping of long-term U.S. Treasuries by foreign creditors in  exchange for short-term Treasuries that can be liquidated at a moment’s notice.
  • The fact that bonds now are supported almost entirely by Fed  stimulus. When the stimulus ends, America’s ability to honor foreign  debts will end and faith in the dollar will crumble.
  • Blatant statements by the International Monetary Fund calling for  the end of the dollar’s world reserve status and the institution of  special drawing rights (SDRs) as a replacement.

The second argument held weight for a short time, only because the  political trends in the Mideast had not yet caught up to the financial  reality already underway. Today, this is quickly changing. The  petrodollar’s status is dependent on a great number of factors remaining   in perfect alignment, socially, politically and economically. If a  single element were to fall out of place, oil markets would explode with   inflation in prices, influencing the rest of the world to abandon the greenback. Here are just a few of the primary catalysts and why they are  an early warning of the inevitable death of the petrodollar.

Egyptian Civil War

I was recently contacted by a reader in reference to an article I wrote concerning the likelihood of civil war in Egypt, a civil war which erupted only weeks later.

She asked why I had waited until this year to make the prediction and   why I had not called for such an event after the overthrow of Hosni  Mubarak, as many mainstream pundits had. The question bears merit. Why  didn’t Egypt ignite with violent widespread internal conflict after Mubarak was  deposed? It seemed perfectly plausible, yet the mainstream got the  timing (and the reasons) horribly wrong.

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