Risk to the PetroDollar from Iraq War

[keepmwlknfny]

Im sure that everyone at some point has read the whole "economists" view on how we will cash in our dinars in the states.....well part of that whole explanation is based on the fact that we will be using Dinar to buy oil from Iraq and maybe thats what people believe about the supposed other giants that are "proposed" to have massive amounts of dinar as well....I found this article and it goes into detail about the use of the petrodollar, how hurtful it will be to the US if countries deviate from using the USD to purchase oil, and also how part of the reason for wanting to oust Saddam was because he broke the agreement between all OPEC countries to use USD and he started demanding the Euro for payment of oil.....After reading all of this information, it seems even more doubtful that after all that, we are going to all of a sudden use dinar for purchasing our oil when it has such a negative affect on the USD and our economy. Not to mention what kind of signals we would be sending to the international community and all its OPEC members....how serious would they take us and the agreements to only use USD??? It would have more of a negative impact then anything else.....Which is why I dont put much faith at all into that economists view of the RV and how it would work.....It doesnt hold much validity to me anymore......Feel free to chime in on what you think about this article and its contents....I konw its kinda long, but it is VERY good information that we all should read, after all, this could have a very large impact on our future.....

Risk to the Petro Dollar from Iraq War and Iranian Crude Oil Echange

Commodities / US Dollar Apr 19, 2007 - 01:32 PM By: Jim_Willie_CB

The focus on gold and the USDollar alone lacks a crucial factor in maintaining the world currency reserve on its fragile pedestal. The PetroDollar is a term used to describe the close relationship between the USDollar and the crude oil export business dominated by Saudi Arabia , manifested in the superstructure of the global banking system. So one could say the oil world provides the pool from which the US $ exchange rate valuation is applied and enforced.

The gold community pays far too little attention to crude oil factors in my opinion, but Adam Hamilton does indeed. Gold investors love to point to Iran war tensions as a factor to lift the gold price, but they might overlook how the associated earthquakes in banking shift the very ground under the world currency reserve.

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Iran has begun to sell its oil in euro currency transactions, already to China , and next to Japan . The gold market should rejoice, when they are actually not paying attention to this grand development. Petro sales outside the US $ realm represent the first of several tectonic shifts in global banking. Direct impact is assured to gold, once the certain changes are realized to bank systems. Imagine Japan changing the emphasis of their entire FOREX reserves management because they purchase a large block of crude oil from Iran , and pay in euros. How much more Persian Gulf oil will China purchase? How much will their future bills be due in euro terms? This article contains a capsule summary taken from the energy section of the April Hat Trick Letter, with a finale based in dark humor.

As a preface, the Gulf Arab currency talks ended with little progress in Medina Saudi Arabia . The meeting was to work toward a monetary union plan by its deadline of 2010. Governor of the United Arab Emirates central bank Al-Suweidi cast doubt in January that the six key Persian Gulf oil producers could hammer out any currency exchange rate regime as preparation for a single currency. The group wishes to clinch a deal like what the European Union has in place. My gut says such a unified currency would help defend the USDollar and its unofficial oil standard, by means of a single controllable device. The USGovt and bankers might require this device in order to exert strong influence on the increasingly independent sheikdoms scrambling to prevent massive losses in the foreign reserves.

Great strain has come when Persian Gulf nations, friendly sheikdoms, decide to diversify their vast FOREX holdings away from US$-based securities. When Qatar last autumn announced some minor diversification of their national FOREX savings account, the US Military ordered a pullout of several thousand troops. There lies evidence of a connection, the quid pro quo in the protection game to fortify the sheiks in power, as they each sit atop national treasures. When South Korea in 2005 twice suggested similar diversification of their FOREX account, suddenly US Military exercises were conducted off their shore, visible from the office buildings. Anyone who misses the linkage between foreign reserves held in US$-based securities and US Military support for the global banking system is at best in need of broader exposure, and at worst ignorant, compromised, or deceived. The USDollar is backed by many forces and factors, including a powerful military on an increasing basis. For four years running, the military has had a prominent presence in the center of the Middle East , inside Iraq .

THE PETRODOLLAR BACKGROUND

The history of the PetroDollar could be described as a syndicate contract between the United States and Saudi Arabia to subsidize the USDollar, to prop up the Western banking system, to enable the Arab royals (sheiks & emirs) to continue to claim their national treasures as their private property. Without the contract, the United States would not be able to perpetuate the privilege abused by the USGovt and Wall Street, whereby money is printed at will, private entities benefit routinely, trillion dollar budgets are hammered out, and no process exists either for foreign participation or approval. Bear in mind that the Saudi economy has among the highest national debt per capita among prominent nations, and has a pathetic per capita income among its citizens. The Saudi royals have cornered their national treasure, invested broadly across the world in private accounts, in a manner which seems totally beyond simple reproach.

The USGovt requirse three extremely important concessions from the Saudi Royal family. They stand as cornerstones to the PetroDollar system (if not defacto standard):

• The Saudis must honor oil sales only in US$ transactions from their vast production fields across the kingdom. • They must recycle their vast ill-gotten wealth (due to its private nature) in New York and London banks, so as to support the US $-based banking system, and thus enable the funding of vast loan portfolios for Western usage. • They must purchase vast military weaponry in order to secure their grip of power and to keep stability in the hostile Persian Gulf region.

An aside, to drive home the point of corruption among Saudi royal families. The dirty little secret in Saudi business life is what is called ‘appropriation' among the citizens. The royals are attempting to halt the practice, but that is like Wall Street attempting to eliminate insider information used for profitable gain. Royal underlings extort independent business owners into selling their businesses for 10% of value, under threat of imprisonment on trumped up charges like tax evasion, sexual misconduct, or other serious crimes.

The basis of the PetroDollar contract is that the Saudis keep firm its foundation, that being a strong link between the USDollar and oil sales. A better description is that OPEC members, led in particular by the Saudis, have subsidized the USDollar since 1971 when Nixon broke the Bretton Woods Accord for the gold backed USDollar. That is why in my work, the name PetroDollar Standard has been used, despite the lack of any formal standard. It is a de facto standard. Such a link between oil and US$ serves as a fait accompli for entire national banking systems being US$-based in their foundations. The PetroDollar basis for banking is not well understood nor publicized. That is because its vulnerability is so huge, and US institutions take it for granted. Foreign nations discuss the concept, while US circles do not.

If the PetroDollar prop were to be removed, entire national banking systems like the Japanese or Korean or German would shift, which would come as a delivered shock wave to the USTreasury Bond complex. The USTBond system is the active working manifestation of the USDollar, the world reserve currency. Large blocks of FOREX reserves held in US$-based securities would undergo change if the system changed, all harmful to the USDollar. Nowhere has the vulnerable condition of the PetroDollar been more pronounced than in the year 2000 when Saddam Hussein demanded payment for oil in euro currency. Probably near the top in reasons why Iraq was annexed and its oil reserves commandeered, his euro-based oil sales remain near the bottom in stated reasons in the subservient US press & media, if mentioned at all. That issue has returned to the forefront, with Iran .

ENTER THE ISLAMIC REPUBLIC OF IRAN

Iran has, with some measure of hesitation if not trepidation, traveled down the same path as Saddam. Back in the summer of 2005, Tehran leaders indicated their intention to create an Iranian Oil Exchange by September of that same year on the Isle of Kish. For various reasons, they delayed. Back then my sources informed me that fear of connection with European and London banks was a deep concern. Once integrated, the Western banks could inflict damage by formal bank seizures or blockage in some manner. Tehran officials also were fearful of computer viruses injected by probing Westerners. Iranian leaders are not so much kooks as thieves, who like their Saudi counterparts, raid their national treasures. In Tehran the practice is more akin to ‘skimming' from operations whereas in Riyadh it is outright plunder of wealth.

On March 28-th, The International Herald Tribune provided an update on Iranian oil finances, with of course little or no coverage inside the US press. To do so would have put forth a secondary motive for pressure aimed at Iran by the United States . Their national affairs have been reported frequently, mainly nuclear in nature. Little focus has been given to tangents aligned with the oil business and banking systems tied to the PetroDollar itself. The IHT piece said “‘More than 50% of Iran 's oil income is paid in other currencies. We are reducing the dollar share and asking clients to pay in other currencies,' Sheibany said. Sheibany said that almost all of Iran 's European clients and some of its Asian customers have accepted making payments in non-dollar currencies.” This is the first public admission, or boasting, made by an Iranian official on non-US$ oil sales. This is highly significant, and could be construed as a realistic cause for war by those who choose to think without the usage of red state prisms or blue state prisms.

Iranian oil sales attack the fragile global banking system extended from the Western dominated financial world. There are only two important props to the United States Govt and Economy, according to William Engdahl: ownership of the US $ world reserve currency, and command of the US Military. This was conveyed at the Munich Gold conference last November in a brief private conversation. He is a brilliant man who has specialized in the political, financial, and military aspects of the oil wars, with particular emphasis on the United States versus Russia . See his website which concerns itself with Geopolitics & Geoeconomics (click here ).

Japan and China have been pushed into a corner by Iran . Of course, neither nation wishes to anger the United States . The precedent is important for payment in oil in euro transactions, much like a crack in the dike. If Chinese leaders were to push for all their oil imports to be purchased in euro terms, then the USGovt and its USDollar and its USTBonds have a big problem indeed. Japan continues to pay for oil sales from Iran in USDollars. Tokyo leaders are dragging their feet. Tehran leaders want euros for their oil sales, but to date do not demand euros, that is clear. Nippon Oil Corp, a major Japanese refiner, along with other purchasers from Japan , received ‘inquiries' from Iran to pay for oil sales in euros. It seems like Tehran wants Japanese firms to ‘volunteer' to pay in euros.

To further complicate the matter, the USGovt has pressured Japan not to purchase Iranian oil. The cited reason was ‘doing business with terrorist states' or something to that effect. Consequently, more Iranian oil has been purchased by China and South Korea . In the process Japan has been left vulnerable. Watch both Japan and China in this tug of war, the former subservient, the latter unruly. Details on these several relevant points are provided in the April report.

Something is worth stressing related to the Shanghai Coop Org cited at the end of the outlined points. The SCO has the potential muscle of OPEC for new energy supply but also the potential military power of NATO on the security side. Obstructing, undermining, and interfering with the SCO formation and cooperation might be an integral motive for the USGovt and US Military as it engages Iran on its embryonic nuclear program. SCO is a very big problem, also never mentioned in the US press.

Mixed into the dangerous bubbling cauldron is Israel , which has been openly threatened by Iran 's leader Ahmadinejad (aka My Dinner Jacket) in a manner to whip up emotion regularly. Mullahs are bad business men, who do not think or plan beyond the next few months, hence do not invest prudently in future oil production. Their refinery business leaks enormous amounts of oil and end product, as much as Iranian leaders leak blather as though addressed to school pep rallies.

This is a cat & mouse game, but a deadly one. A crack in the PetroDollar foundation coincides with US Military pressure put upon Iran for its ‘nuclear ambitions' when the true motive might be to avert fracture of the PetroDollar system. This is otherwise known as a protection racket coming unglued (see next section).

FLASHBACK TO APRIL 2005 ( FULL CIRCLE 360)

What is described on the periphery of the PetroDollar foundation is a protection racket. Financial support is provided, or money is outright extracted, from one wealth center or source (here the Saudis with USTBond support), in return for prevention of their ouster from corrupt rule and access to a national treasure. Check out my past public article “PetroDollar & Protection Racket” (click here ) from April 2005, which is still highly relevant today. Since the time of that written article, Norway has moved to sell oil in euro transactions in the Brent Crude market. The PetroDollar superstructure, so labeled since it includes not only transactions but also banking systems, is as shaky and weak now as the US Economy and banking system is vulnerable to the housing and mortgage crisis underway. That is not a coincidence in my view.

This article has resulted in more reader comments and kudos from fellow analysts than any other article penned by me, bar none. It hit a nerve. Here, two years late, the PetroDollar factor serves as the crosshairs for weapons aimed. The target is not Iraq but rather Iran . In fact the forces described are more relevant today than when written , since the Iraq War is going so badly, military forces are stretched fatigued recycled, more questions arise on accurate intelligence information (falsified or politically steered), and another war is seen as an additional morass and larger disaster potentially.

Taken as excerpts from the 2005 article, several quoted points made are:

• What we have is a system for purchasing minerals and resources, totally bound in US$ denomination pricing and transaction settlements. The most visible element is energy trade, whose supplies clearly make for the largest bill payments.

• The PetroDollar system is the practical commercial flipside, the visible evidence to the USDollar as world currency reserve in central banks. The financial effect is for banking systems across the globe to accumulate reserves in US$-based assets. What began as a checking account for oil payments has morphed into a gigantic bloated beast of a dangerous financial pyramid whose foundation has corroded and weakened as the USDollar bear market progresses.

• The EuroDollar was created for many purposes. One was to facilitate payment for energy supplies in US$ terms, without the necessary step to convert trade surpluses back to DeutscheMarks or Swiss francs or British pound sterling. A EuroDollar is a US $ held in European banks, not converted to local currency units, and serves as a buttress to support the PetroDollar system.

• The world is ‘obliged' to sop up and purchase all the debts we generate, whether they approve or not of our policies, behavior, tendency, or justification for military actions. Almost without enforced discipline, the US system has evolved with unchecked abuse on a massive scale.

• US federal debt, mortgage debt, and indirectly household debt are all absorbed by Asia . Exporters are somewhat bound to buy our US Treasury debt in order to continue selling in our market. Foreign central banks have few alternatives to sock away $20 to $30 billion per month, each month, every month.

• Asia feels obliged to continue, in order to keep their industries and work force busy (avoid unemployment), and to prevent their banking systems from imploding. They cannot abandon support for the USDollar, and demonstrate that support with frequent central bank interventions.

• The PetroDollar system is under new attack. Russia and fringe nations of OPEC are responsible for dissension. Their motive is self-preservation. Rather, they desire a stable or rising currency. If a nation can manage to trade a host of commodities (like oil, natural gas, copper, iron, cotton, coffee) in euro denomination, that national economy would be far less subject to the distress of systemic rising prices.

• The Iraq War [had] numerous grounds for its justification, surely the weapons of mass destruction among them (although not taken seriously by me here). Also, stemming the sale of Iraqi crude oil in euro denomination was another motive, which in my view was far more important even in March 2003, just as important two years later now. The PetroDollar system is that important to defend.

• OPEC refuses to confront the USA , since it owns no military and is quite dependent upon the USA for its protection. They sell us oil; we protect their leadership (see Kuwait and Saudi Arabia and Qatar ).

• The new Shanghai Cooperative Group represents a potential supply network which will have member nations of China , India , Russia , former Soviet Republics , and Iran as its core. Energy (crude oil & natural gas), industrial metals, and more are to be bought and sold by this new network, outside OPEC and its gaggle of disunity and diverse puppet strings held by Washington DC . The COOP is a direct answer to the corrupted OPEC cartel, which seems overly influenced by US leaders.

• Pricing oil in euros helps nations to reduce domestic price inflation within their own economies, and to add to incoming revenue from oil sales. Removal of the PetroDollar system [would] have a magnificent effect on the crude oil price or the USDollar exchange rate or US Treasury yields. An effect on currencys and bonds as a secondary effect. Then we might see a gold effect. An acceleration down with USDollar could trigger a world bank crisis.

[dflake]

Very informative read, thanks "keep". Sure wish "We the People" could find a way to cut the the "puppet masters" strings. Life would once again be "real". Peace.

[keepmwlknfny]

Very informative read, thanks "keep". Sure wish "We the People" could find a way to cut the the "puppet masters" strings. Life would once again be "real". Peace.

No problem!! Thought this would be good for those that like to stay informed about whats going on in our world and our economy.....adds another aspect as well to why we wanted to go into Iraq and get rid of Saddam....Its no wonder why we want Iran now.....they are doing what Saddam did...

[wingsofhope]

Great article Keep, thanks

[MrFnHappy]

Im sure that everyone at some point has read the whole "economists" view on how we will cash in our dinars in the states.....well part of that whole explanation is based on the fact that we will be using Dinar to buy oil from Iraq and maybe thats what people believe about the supposed other giants that are "proposed" to have massive amounts of dinar as well....I found this article and it goes into detail about the use of the petrodollar, how hurtful it will be to the US if countries deviate from using the USD to purchase oil, and also how part of the reason for wanting to oust Saddam was because he broke the agreement between all OPEC countries to use USD and he started demanding the Euro for payment of oil.....After reading all of this information, it seems even more doubtful that after all that, we are going to all of a sudden use dinar for purchasing our oil when it has such a negative affect on the USD and our economy. Not to mention what kind of signals we would be sending to the international community and all its OPEC members....how serious would they take us and the agreements to only use USD??? It would have more of a negative impact then anything else.....Which is why I dont put much faith at all into that economists view of the RV and how it would work.....It doesnt hold much validity to me anymore......Feel free to chime in on what you think about this article and its contents....I konw its kinda long, but it is VERY good information that we all should read, after all, this could have a very large impact on our future.....

Not much to add......

Quite some time ago I (and others) entertained the idea of a "petro-dinar". Arguably, it would be good for the dinar. Increased demand typically leads to increased value, and not only this, it would also bring dinars back to Iraq without any drain on the CBI's hard cash reserves.

The downside....reduced USD revenues, (which they currently depend on to run the country), and serious damage to the USD (the current cash reserve used to maintain the value of the dinar).

It seems to me that the downside outweighs the upside.

Of course this is JMO.

[keepmwlknfny]

[/b]

Not much to add......

Quite some time ago I (and others) entertained the idea of a "petro-dinar". Arguably, it would be good for the dinar. Increased demand typically leads to increased value, and not only this, it would also bring dinars back to Iraq without any drain on the CBI's hard cash reserves.

The downside....reduced USD revenues, (which they currently depend on to run the country), and serious damage to the USD (the current cash reserve used to maintain the value of the dinar).

It seems to me that the downside outweighs the upside.

Of course this is JMO.

So then technically, if they did try to use a "petro-dinar" it would be all around bad for both the dinar and the USD....if the dinars value is maintained by the current cash reserve which is kept in USD, and by the use of the dinar to pay for oil it would depreciate the value of the USD, they would kind of go hand in hand in destroying eachothers value.....seems like a no brainer to stay away from other currencies to purchase oil in the sake of the US and the american dollar! So in your opinion do you think that the so called plan to revalue written by a so called economist flawed and not feasible seeing as how its all based on the US and whoever else purchasing oil in dinar for YEARS to come?

[easyrider]

well first ill say great post keep. No matter how much the U.S wants to attack Iran i dont believe it will ever happen because there allies are way too deep with russia if we did in fact go to that extreme it would no doubt in my mind start WW3 so all we can do is ***** and moan about it pretty much kind makes u think whos running the show and what powers need to be wiped off this earth.

Whats going on is if the people can get rid of the governments and force them out like lybia, yemen, jordan, egypt we are breaking them down and forcing democracy to the middle east Iran will be all alone living in the stone age while they see every other ME country forming a new democracy the U.S has had this planned for decades and don't think other wise they haven't of you're are just fooling yourself we are trying to set ourselves up sittin pretty. Yes, we have tooken blows with our economy but don't think this will last forever. Eventually things have to turn around i doubt the powers to be wil let the U.S collapse completely.

Edited June 5, 2011 by easyrider

[keepmwlknfny]

well first ill say great post keep. No matter how much the U.S wants to attack Iran i dont believe it will ever happen because there allies are way too deep with russia if we did in fact go to that extreme it would no doubt in my mind start WW3 so all we can do is ***** and moan about it pretty much kind makes u think whos running the show and what powers need to be wiped off this earth.

Whats going on is if the people can get rid of the governments and force them out like lybia, yemen, jordan, egypt we are breaking them down and forcing democracy to the middle east Iran will be all alone living in the stone age while they see every other ME country forming a new democracy the U.S has had this planned for decades and don't think other wise they haven't of you're are just fooling yourself we are trying to set ourselves up sittin pretty. Yes, we have tooken blows with our economy but don't think this will last forever. Eventually things have to turn around i doubt the powers to be wil let the U.S collapse completely.

Thanks bro...Ill be on in a little FYI lol.....I think the US understood that we cant touch Iran at this point...they do have a couple of big allies behind them, so the next best thing to do is to instill democracy in the surrounding countries in the ME so that it will minimize Irans influence. And I def believe this has been a motive for going into Iraq and Afganistan as well....seems Egypt took care of itself and seems there COULD be a chance for a democracy set up there....as long as the muslim brotherhood doesnt gain control!!! China and Russia can mess things up for the US and the petrodollar on their own but you can be sure there will be followers that will do the same thing if they move forward with dropping the USD as the worlds reserve.....

[Dalite]

I am glad to see this issue see more discussion.

I have been trying to create awareness on this issue for nearly ten years.

For those who have questioned the correlation between the UST, cash in and oil payment, maybe this will broaden their understanding on the issues facing us.

A little further research will reveal the amount of traction Sadam was getting with OPEC prior to the 2003 invasion.

The UST had requested rescheduling of the 7 year cycle of Anti counterfeiting FRNs 6 months early in 2003 to offset the liquidity crisis looming as countries shed their USD reserves in favor of Euros.

After the invasion, the infusion was dropped back to it's regular scheduled dump.

At this point, it would also be good to be aware that the one hundred bill, scheduled for 2010 introduction has still not been released (AFAIK).

The anti counterfeiting Federal Reserve dump allows for tremendous increase in liquidity without bond liability.

It is one of the many ways that the Federal Reserve produces our number one export; inflation.

What is most unfortunate is that this information doesn't predict a rate and date for a RV, and will go mostly unnoticed here.

Also the length of the article and not referencing overnight riches in the first paragraph will also fail to gather the attention it justly deserves.

That alone, in a nutshell, explains why we have allowed ourselves to reach the perilous economic position that we face today.

[quadraph0nic]

Yes Keep I agree. Thanks for the info.

Here's a an article from time magazine about Sadam selling oil in Euros, its from 2000 but we went into Iraq in 2003. Somewhere in between there I imagined he may have been told or warned several times to not do it but like when he invaded Kuwait he just kept on going

http://www.time.com/time/magazine/article/0,9171,998512,00.html

Countries using dinars directly to purchase oil from Iraq...hmmm kind of like the Iraqi dinar becoming a new reserve currency after an RV???

When you take a look around and see how the world works these ideas we have are way out there....I mean people are assuming a whole bunch and getting way ahead of themselves.

How about an RV .01 - .05?? and I would be grossly optimistic by EXPECTING that!!

[MrFnHappy]

So then technically, if they did try to use a "petro-dinar" it would be all around bad for both the dinar and the USD....if the dinars value is maintained by the current cash reserve which is kept in USD, and by the use of the dinar to pay for oil it would depreciate the value of the USD, they would kind of go hand in hand in destroying eachothers value.....seems like a no brainer to stay away from other currencies to purchase oil in the sake of the US and the american dollar! So in your opinion do you think that the so called plan to revalue written by a so called economist flawed and not feasible seeing as how its all based on the US and whoever else purchasing oil in dinar for YEARS to come?

The short answer (IMO), is yes, it is flawed.

I'm not claiming I know everything and know how things will go down, but unless someone can present a reasonable scenario for a "work-around" to the issues I mentioned, based on what I know along with some common sense, the petro-dinar isn't "doable".

Please don't take the above as a personal "challenge" to anyone. It's all my opinion, and I'm open to new ideas. After all, it's hard to see the world with your eyes closed.

[keepmwlknfny]

The short answer (IMO), is yes, it is flawed.

I'm not claiming I know everything and know how things will go down, but unless someone can present a reasonable scenario for a "work-around" to the issues I mentioned, based on what I know along with some common sense, the petro-dinar isn't "doable".

Please don't take the above as a personal "challenge" to anyone. It's all my opinion, and I'm open to new ideas. After all, it's hard to see the world with your eyes closed.

No I agree with you, I dont take that as you professing how it will go down, its just Ive always kept that "economists explanation for an rv" in the back of my mind because not all of it sat right with me and I just wanted to ask your opinion to see if you were seeing the same I was, especially after reading this article....This is another reason why I keep looking in every nook and cranny for any and all info possible (keeping my eyes open) Cause there are alot of concepts that have been passed around these forums as a sure fire reason why this is going to make us millions and by nature I question all until it can be verified one way or another.....and it seems as if we have maybe come across a huge flaw in the whole premise of that supposed rv explanation.....thanks for your thoughts!

I am glad to see this issue see more discussion.

I have been trying to create awareness on this issue for nearly ten years.

For those who have questioned the correlation between the UST, cash in and oil payment, maybe this will broaden their understanding on the issues facing us.

A little further research will reveal the amount of traction Sadam was getting with OPEC prior to the 2003 invasion.

The UST had requested rescheduling of the 7 year cycle of Anti counterfeiting FRNs 6 months early in 2003 to offset the liquidity crisis looming as countries shed their USD reserves in favor of Euros.

After the invasion, the infusion was dropped back to it's regular scheduled dump.

At this point, it would also be good to be aware that the one hundred bill, scheduled for 2010 introduction has still not been released (AFAIK).

The anti counterfeiting Federal Reserve dump allows for tremendous increase in liquidity without bond liability.

It is one of the many ways that the Federal Reserve produces our number one export; inflation.

What is most unfortunate is that this information doesn't predict a rate and date for a RV, and will go mostly unnoticed here.

Also the length of the article and not referencing overnight riches in the first paragraph will also fail to gather the attention it justly deserves.

That alone, in a nutshell, explains why we have allowed ourselves to reach the perilous economic position that we face today.

I was hoping to get some good discussion out of this one! And I agree with you 100% that this wont get the attention it deserves simply because its not posted in rumors and talking about a huge RV tommorow....which is kinda sad.....and the fact that alot of people just want the flat out answers to all instead of having to do a little reading for themselves. Im not sure what all you are speaking about with the dumping schedule....do you mean basically the time to print new versions of our bills to help avoid counterfeit bills??

"The UST had requested rescheduling of the 7 year cycle of Anti counterfeiting FRNs 6 months early in 2003 to offset the liquidity crisis looming as countries shed their USD reserves in favor of Euros." Can you expand on that please? Thanks.....

Yes Keep I agree. Thanks for the info.

Here's a an article from time magazine about Sadam selling oil in Euros, its from 2000 but we went into Iraq in 2003. Somewhere in between there I imagined he may have been told or warned several times to not do it but like when he invaded Kuwait he just kept on going

http://www.time.com/...azine/article/0,9171,998512,00.html

Countries using dinars directly to purchase oil from Iraq...hmmm kind of like the Iraqi dinar becoming a new reserve currency after an RV???

When you take a look around and see how the world works these ideas we have are way out there....I mean people are assuming a whole bunch and getting way ahead of themselves.

How about an RV .01 - .05?? and I would be grossly optimistic by EXPECTING that!!

Yea I know right! LOL Lets start out simple....just RV the currency first hahaha It is a bit much to think all of a sudden after a revalue, that the dinar will be used widely to purchase oil by many different countries....just doesnt sit right with me!!! Im sure he was warned many times about it, or they at least let him know that we were on to him and his antics.....Im not so sure we can really afford to have the USD dropped as the worlds reserve and the currency used for oil transactions....

[Nelson0528]

Nothing to prevent an exchange at current rates form IQD to USD. Iraq will be generating additional USD revenues to back their currency through the sale of oil. Additionally, the USG will not be the primary buyer of the oil for US consumption ( our national reserves are at 97% the last time I saw the numbers published earlier this year); but, rather it shall be US companies purchasing it for raw materials in order to manufacture their petro-chemical products. So, other than the importance of the existance of the petro-dollar for the US economy; the IQD for oil issue is really a moot point. It simply doesn't factor into any significant economic impact; as far as I can see.

[Dalite]

Im not sure what all you are speaking about with the dumping schedule....do you mean basically the time to print new versions of our bills to help avoid counterfeit bills??

"The UST had requested rescheduling of the 7 year cycle of Anti counterfeiting FRNs 6 months early in 2003 to offset the liquidity crisis looming as countries shed their USD reserves in favor of Euros." Can you expand on that please? Thanks.....

Every 7 years, the design of the FRNs valued $20.00 and up is changed to " foil counterfeiting". This plan was adopted during the Clinton years. The second cycle was set to occur at the beginning of the fiscal year - October 2003. This allows the money supply to be nearly doubled, and greatly increases liquidity.

OPEC was making a credible run against the dollar with it's proposed petro euro requirement. Countries totally dependent on importing oil must maintain reserve currency for it's purchase; which had always meant the USD. Dependencies on oil didn't change, just the currency needed to meet those dependencies. The scramble was on to sell US debt and build reserves in euros.

Treasury predicted a liquidity crisis as the shedding of dollar reserves risked contracting the amount of debt issued by the Federal Reserve

The US is a debt-based economy. It cannot show economic growth without going deeper in debt. This is due to the fiat currency that was totally delinked from gold as a result of Nixon letting the Bretton Woods treaty sundown, then delinking the US from gold. Bretton Woods was an international treaty requiring gold to back international trade.

What you see today is what you got out of Nixon's choices.

[Dalite]

Nothing to prevent an exchange at current rates form IQD to USD. Iraq will be generating additional USD revenues to back their currency through the sale of oil. Additionally, the USG will not be the primary buyer of the oil for US consumption ( our national reserves are at 97% the last time I saw the numbers published earlier this year); but, rather it shall be US companies purchasing it for raw materials in order to manufacture their petro-chemical products. So, other than the importance of the existance of the petro-dollar for the US economy; the IQD for oil issue is really a moot point. It simply doesn't factor into any significant economic impact; as far as I can see.

The USD is totally debt based.

The only way the US can continue to show economic growth is by going deeper in debt.

Anything that lessens the demand for the USD threatens the fragile stability of the US economy.

Having OPEC switch to the Euro would finish what sub prime loans started.

We are facing a very rough road ahead. Trust me ( but verify), We don't need this.

Libya is also making noise about a gold backed currency requirement for oil.

The USD is under attack...

[sheepdog]

good article, thank you keep for all your good research and the info you provide to us.

[Nelson0528]

The USD is totally debt based.

The only way the US can continue to show economic growth is by going deeper in debt.

Anything that lessens the demand for the USD threatens the fragile stability of the US economy.

Having OPEC switch to the Euro would finish what sub prime loans started.

We are facing a very rough road ahead. Trust me ( but verify), We don't need this.

Libya is also making noise about a gold backed currency requirement for oil.

The USD is under attack...

I think we are addressing 2 completely different issues. Ultimately the IQD for Oil theory is bunk. The USG will NOT be the primary domestic consumer for Iraqi oil; US companies will be, and unless they have all invested in IQD (which I doubt is the case) there will essentially be NO IQD for Iraqi oil trading going on here in the US. Now foreign countries?... well, if the Petro-Dollar fails, then we will have something to worry about, as many foriegn governments own there petro-chemical industries. I shudder to think....

Edited June 5, 2011 by Nelson0528

[coldwarvet]

Thanks for the post, Keepm. Here are my thoughts:

1. The article is four years old. It DOES have a good analysis of what transpired within the global financial system, and why, but it also underplays the pervasive influence of US military power, not only in the Gulf region, but in the world at large. While the EU and Asia may whine about the US financial situation (rightly so, I believe!), they are unwilling to do more than that. Most key international decision makers know that if the USD collapses, and the US military resultantly contracts its presence around the globe, chaos would result. Just a few hot spots worth mentioning:

a. The Gulf. Not only does this involve propping up the Saudi regime, but also serving as a deterrent to full scale Islamic civil war (i.e., Sunni (Saudi) vs. Shiite (Iran).

b. Southwest Asia. With the recent pronouncement of China that a violation of Pakistan’s sovereignty would be considered an attack on China, we may be on the brink of a new Cold War, one more volatile than even the East-West struggle of the latter half of the 20th century. IMO, if a nuclear war were to start in any location of the globe, it would most likely start between India and Pakistan, with disastrous result globally.

c. Europe. While the Cold War with Russia has long since ended, Europe remains distrustful of Russia because of the brutish way she exerts her power with respect to her oil reserves.

d. The Taiwanese Straits. Without a strong US military as a deterrent, China would attack in a heartbeat.

e. Israel. The second most likely trigger for a nuclear exchange. Were the Arabs to attack Israel in a concerted way, especially if Iran was involved with their own nukes, I have no doubt that there would be a nuclear exchange. The ME would be a parking lot, and their oil reserves would be unusable for decades.

2. Since the US is the world’s largest consumer, neither China nor anyone else can afford to lose that market. China, France et al talk a big game, but they know that they can’t replace that huge economic hole if the US market goes under.

3. Many other nations beside the US have the same problem with the fiat-based financial system, for example, Greece, Ireland, Spain, etc. It was no coincidence that Alan Greenspan went on Fox Business Network to advocate for a new, asset-based financial system. It’s coming, and most if not all of the old assumptions about how currency is valued will go out the window when it arrives. With its huge natural resource reserves, Iraq is poised to be a major player in this system, but it won’t be if its currency simply RDs.

[Darin]

Interesting tidbit to add:

It was 1933 around this time of the year that the US moved away from the gold-backed currency.

Hmmmmm