Showing posts with label US Dollar. Show all posts
Showing posts with label US Dollar. Show all posts

Wednesday, December 31, 2014

Outlook for the New Year — Paul Craig Roberts

Outlook for the New Year — Paul Craig Roberts


The Outlook for the New Year

Dear Readers: The conflict that Washington has initiated between the West and Russia/China is reckless and irresponsible. Nuclear war could be the outcome. Indeed, Washington has been preparing for nuclear war since the George W. Bush regime.

Washington has revised US war doctrine in order to initiate conflict with a first strike nuclear attack.

Washington has discarded the ABM treaty in order to build and deploy anti-ballistic missiles that are intended to prevent a retaliatory strike against the US. Washington is engaged in a buildup of military forces on Russia’s borders, and Washington is demonizing Russia’s government with false charges.

As the Bush/Obama regimes dismantled the safeguards put in place in order to minimize the risk of nuclear war, no protests came from the American public or the media. Washington’s European vassal states have also been silent.

Washington’s drive for hegemony has brought nuclear insanity to the world.

Moscow and Beijing understand that they are Washington’s targets. As Larchmonter explains, Russia and China are conjoining their economic and military capabilities in order to protect against Washington’s attack. Read what Larchmonter reports. Open the URL in my column below and run your cursor over the bottom of the page and click “page fit.” Choose 50% and readable text will fill your screen.

Washington’s demonization of Saddam Hussein, Gaddafi, and Assad were preludes to military attacks on Iraq, Libya, and Syria. In view of these precedents, it is reasonable to regard Washington’s demonization of Vladimir Putin as a prelude to military action.

Russia is not Iraq, Libya, or Syria. Russian war doctrine states that Russia can use nuclear weapons in response to a nuclear or conventional attack on Russia. For the world to sit silent while Washington’s arrogance provokes Armageddon telegraphs total political failure. Where are the voices in behalf of humanity?


The Outlook for the New Year

By Paul Craig Roberts
Washington has shaped 2015 to be a year of conflict. The conflict could be intense.
Washington is the cause of the conflict, which has been brewing for some time. Russia was too weak to do anything about it when the Clinton regime pushed NATO to Russia’s borders and illegally attacked Yugoslavia, breaking the country into small easily controlled pieces. Russia was also too weak to do anything about it when the George W. Bush regime withdrew from the ABM treaty and undertook to locate anti-ballistic missile bases on Russia’s borders. Washington lied to Moscow that the purpose of the ABM bases is to protect Europe from non-existent Iranian nuclear ICBMs. However, Moscow understood that the purpose of the ABM bases is to degrade Russia’s nuclear deterrent, thereby enhancing Washington’s ability to coerce Russia into agreements that compromise Russian sovereignty.
By summer 2008 Russian power had returned. On Washington’s orders, the US and Israeli trained and equipped Georgian army attacked the breakaway republic of South Ossetia during the early hours of August 8, killing Russian peacekeepers and civilian population. Units of the Russian military instantly responded and within a few hours the American trained and equipped Georgian army was routed and defeated. Georgia was in Russia’s hands again, where the province had resided during the 19th and 20th centuries.
Putin should have hung Mikheil Saakashvili, the American puppet installed as president of Georgia by the Washington-instigated “Rose Revolution”, and reincorporated Georgia into the Russian Federation.
 Instead, in a strategic error, Russia withdrew its forces, leaving Washington’s puppet regime in place to cause future trouble for Russia. Washington is pushing hard to incorporate Georgia into NATO, thus adding more US military bases on Russia’s border. However, at the time, Moscow thought Europe to be more independent of Washington than it is and relied on good relations with Europe to keep American bases out of Georgia.
Today the Russian government no longer has any illusion that Europe is capable of an independent foreign policy. Russian President Vladimir Putin has stated publicly that Russia has learned that diplomacy with Europe is pointless, because European politicians represent Washington’s interest, not Europe’s. Foreign Minister Sergei Lavrov recently acknowledged that Europe’s Captive Nation status has made it clear to Russia that Russian goodwill gestures are unable to produce diplomatic results.
With Moscow’s delusion shattered that diplomacy with the West can produce peaceful solutions, reality has set in, reinforced by the demonization of Vladimir Putin by Washington and its vassal states. Hillary Clinton called Putin the new Hitler. While Washington incorporates former constituent parts of the Russian and Soviet empires into its own empire and bombs seven countries, Washington claims that Putin is militarily aggressive and intends to reconstitute the Soviet empire. Washington arms the neo-nazi regime Obama established in Ukraine, while erroneously claiming that Putin has invaded and annexed Ukrainian provinces. All of these blatant lies are echoed repeatedly by the Western presstitutes. Not even Hitler had such a compliant media as Washington has.
Every diplomatic effort by Russia has been blocked by Washington and has come to naught. So now Russia has been forced by reality to update its military doctrine. The new doctrine approved on December 26 states that the US and NATO comprise a major military threat to the existence of Russia as a sovereign independent country.
The Russian document cites Washington’s war doctrine of pre-emptive nuclear attack, deployment of anti-ballistic missiles, buildup of NATO forces, and intent to deploy weapons in space as clear indications that Washington is preparing to attack Russia.
Washington is also conducting economic and political warfare against Russia, attempting to destabilize the economy with economic sanctions and attacks on the ruble. The Russian document acknowledges that Russia faces Western threats of regime change achieved through “actions aimed at violent change of the Russian constitutional order, destabilization of the political and social environment, and disorganization of the functioning of governmental bodies, crucial civilian and military facilities and informational infrastructure of Russia.” Foreign financed NGOs and foreign owned Russian media are tools in Washington’s hands for destabilizing Russia.
Washington’s reckless aggressive policy against Russia has resurrected the nuclear arms race. Russia is developing two new ICBM systems and in 2016 will deploy a weapons system designed to negate the US anti-ballistic missile system. In short, the evil warmongers that rule in Washington have set the world on the path to nuclear Armageddon.
The Russian and Chinese governments both understand that their existence is threatened by Washington’s hegemonic ambitions. Larchmonter reports that in order to defeat Washington’s plans to marginalize both countries, the Russian and Chinese governments have decided to unify their economies into one and to conjoin their military commands. Henceforth, Russia and China move together on the economic and military fronts. http://www.mediafire.com/view/08rzue8ffism94t/China-
Russia_Double_Helix.docx

The unity of the Bear and the Dragon reduces the crazed neoconservatives’ dream of “an American century” to dangerous nonsense. As Larchmonter puts it, “The US and NATO would need Michael the Archangel to defeat China-Russia, and from all signs Michael the Archangel is aligned with the Bear and its Orthodox culture. There is no weapon, no strategy, no tactic conceivable in the near future to damage either of these rising economies now that they are ‘base pairs.’”
Larchmonter sees hope in the new geopolitics created by the conjoining of Russia and China. I don’t dispute this, but if the arrogant neoconservatives realize that their hegemonic policy has created a foe over which Washington cannot prevail, they will push for a pre-emptive nuclear strike before the Russian-Chinese unified command is fully operational. To forestall a sneak attack, Russia and China should operate on full nuclear alert.
The US economy–indeed the entire Western orientated economy from Japan to Europe–is a house of cards. Since the economic downturn began seven years ago, the entirety of Western economic policy has been diverted to the support of a few over-sized banks, sovereign debt, and the US dollar. Consequently, the economies themselves and the ability of populations to cope have deteriorated.
The financial markets are based on manipulation, not on fundamentals. The manipulation is untenable. With debt exploding, negative real interest rates make no sense. With real consumer incomes, real consumer credit, and real retail sales stagnant or falling, the stock market is a bubble. With Russia, China, and other countries moving away from the use of the dollar to settle international accounts, with Russia developing an alternative to the SWIFT financial network, the BRICS developing alternatives to the IMF and World Bank, and with other parts of the world developing their own credit card and Internet systems, the US dollar, along with the Japanese and European currencies that are being printed in order to support the dollar’s exchange value, could experience a dramatic drop in exchange value, which would make the import-dependent Western world dysfunctional.
In my opinion, it took the Russians and Chinese too long to comprehend the evil that has control in Washington. Therefore, both countries risk nuclear attack prior to the full operational capability of their conjoined defense. As the Western economy is a house of cards, Russia and China could collapse the Western economy before the neoconservatives can drive the world to war. As Washington’s aggression against both countries is crystal clear, Russia and China have every right to the following defensive measures.
As the US and EU are conducting economic warfare against Russia, Russia could claim that by wrecking the Russian economy the West has deprived Russia of the ability to repay loans to the European banks. If this does not bring down the thinly capitalized EU banks, Russia can announce that as NATO countries are now officially recognized by Russian war doctrine as an enemy of the Russian state, Russia can no longer support NATO’s aggression against Russia by selling natural gas to NATO members. If the shutdown of much of European industry, rapidly rising rates of unemployment, and bank failures do not result in the dissolution of NATO and thus the end of the threat, the Chinese can act.
The Chinese hold a very large amount of dollar-denominated financial assets. Just as the Federal Reserve’s agents, the bullion banks, dump massive shorts onto the bullion futures markets during periods of little activity in order to drive down the bullion price, China can dump the equivalent in US Treasuries of years of Quantitative Easing in a few minutes. If the Federal Reserve quickly creates dollars with which to purchase the enormous quantity of Treasuries so that the financial house of cards does not implode, the Chinese can then dump the dollars that they are paid for the bonds in the currency market. Whereas the Federal Reserve can print dollars with which to purchase the Treasuries, the Fed cannot print foreign currencies with which to buy the dollars.
The dollar would collapse, and with it the power of the Hegemon. The war would be over without a shot or missile fired.
In my view, Russia and China owe it to the world to prevent the nuclear war intended by the neoconservatives simply by replying in kind to Washington’s economic warfare. Russia and China hold all the cards. Not Washington.
Russia and China should give no warning. They should just act. Indeed, instead of step by step, Russia and China could simultaneously use the counter-measures. With four US banks holding derivatives totaling many times world GDP, the financial explosion would be the equivalent to a nuclear one. The US and Europe would be finished, and the world would be saved.
Larchmonter possibly is correct. 2015 could be a very good year, but pre-emptive economic moves by Moscow and Beijing could be required. Putin’s current plan seems to be to turn away from the West, ignore the provocations, and mesh Russia’s strategic and economic interests with those of Asia. This is a humane and reasonable course of action, but it leaves the West untroubled and undistracted by its economic vulnerabilities. An untroubled West remains a grave danger not only to Russia and China but also to Americans and the entire world.

Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Roberts' latest books areThe Failure of Laissez Faire Capitalism and Economic Dissolution of the West and How America Was Lost.
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Tuesday, December 21, 2010

The US Dollar: Too Big to Fail? By Jerry Western and Lorimer Wilson - www.resourceinvestor.com


The US Dollar: Too Big to Fail?

Published 12/16/2010 

Those in the US power structure know what the plan is should the US dollar fail. They are not admitting publicly that there is even the remotest chance that it could happen but, rest assured, there is a plan.  There is always a plan.  To paraphrase Franklin Roosevelt, nothing happens by chance in government, so don’t be caught up in such a “surprise” event – whatever it may be and whenever it occurs.

The US dollar really is everyone’s problem.  There are more dollars in circulation worldwide than any other currency – perhaps more than all other currencies combined as a full two-thirds of the rest of the world’s foreign reserves are denominated in US dollars.  It’s also true that two-thirds of all dollars circulate outside of the United States.  They have long been the choice of exchange on the world’s black markets.  The reason is because they are so recognizable and accepted everywhere else; in other words, liquid and fungible.  They have also tended to keep their purchasing power value relatively constant until recently.  That's why many nations peg their currency to the dollar.  It also helps that it is still the world reserve currency.
 
The above virtues being touted there are too many of them anymore and the law of supply and demand states that the more of something there is, the less value it has and the less demand there is for it.  The world is becoming saturated with US dollars and many are looking for alternatives. As such, it is only a matter of time before the dollar does fail. When, how, and at what speed are all that are left for debate.

Failure of the dollar would be noticeable in many ways and when it does fail we won't have to ask if it has – we'll know. 

Failure of the dollar will mean many things.  It will mean that it is no longer recognized as having or retaining value.  In other words, confidence in it will be greatly or entirely diminished.  We only hold dollars (or any currency), not because they have value themselves, and not that we find them useful, but because the perception that others will accept them for goods or services.  We hold them because we have confidence that we will be able to pass them on at a later date.

A failure would mean that, at a minimum, the cost of everything, but especially anything we import, would rise dramatically.  In a worst case scenario, dollars would not be accepted in any quantity for goods or services, either domestic or foreign.

What would some of the possible triggers for a decline in the US dollar?

1. The Chinese could start selling their US bonds and Treasuries.  This would make interest rates rise, collapse demand for new offerings and make dollars return to the US, thus stoking domestic inflation.

2. The dollar could suddenly or gradually stop being the world reserve currency.  This would cause the value of the dollar on the Forex (currency market) to fall against other currencies, possibly setting off a self-fulfilling hyper-inflationary event.

3. Another currency could become backed by gold before the dollar. This would set off a scramble to convert dollars into that currency and causing the dollar to fail as people try to get rid of them to buy the other currency.

The above are just a few of the possible scenarios that could precipitate the failure of the dollar.  The important point is that this failure is not only possible but likely, and likely to happen sooner rather than later.

How could the demise of the US dollar be avoided?

1. We could collectively start living within our means. This would stop the debasement of the currency but such an effort would be politically and socially unacceptable to both the government and the people.

2. The US could implement a new currency. The problem with such a “solution” is that the problem wouldn’t go away by simply erasing zeros on the currency.  The inflation dynamic would still be present if no other action were taken in conjunction with such action.

3. The Fed could hyper-inflate the economy. Such an effort would only be a temporary solution and not a cure, however.  The US government has already caused a bubble in the dollar, bond, and Treasury markets.  The bailout schemes of the last few years necessitated [that] trillions of new dollars be created.  This is the path we have been on for some time and it has masked the problem to a certain extent but this ‘solution’ would by no means be a cure.

4. The US government could default on its debt obligations. Heck, the US already defaulted on its internal obligations in 1933 and to its external creditors in 1971. The US continues in default every day by issuing more dollars than can ever be redeemed at their current purchasing power.  It is the chosen path, the inflation path.  The question, however, is whether the US would default en masse on all of its remaining obligations all at one time?  If so, it would be a moon shot for gold, silver and all commodities immediately following the default.  This would likely be done at the most advantageous time (night, holiday) for the government and the worst time for you, leaving you without time to prepare or protect yourself.

5. The Fed could revalue the US dollar in terms of gold. This is already happening gradually and goes hand-in-hand with the previous two scenarios.  In this scenario, instead of the US defaulting on its obligations or re-valuing the currency, it could re-value the price of gold in dollars announcing that it would pay (buy) a certain (higher) price for gold on the open market.  This would have the effect of immediately re-valuing every ounce of gold on the planet.  It would then be possible to cover our outstanding debt with our gold reserves (if they're all there), leading to a de-facto gold standard.

6. Return to a gold standard. This seems to be inevitable at some point.  How we get there and the ultimate price established for an ounce of gold are up for debate.  In all likelihood, plans are already afoot and this will be a ‘surprising’ event for most when, not if, but when it does happen.

7. A combination of the above. This is also very likely. The price of gold will simply be allowed to rise to clear the market.  They revalued gold with the stroke of a pen in the 1930's and could very well do it again.  All that needs to be done is for the government to state that it will now purchase gold for a set dollar amount and then all gold, everywhere, would be worth that amount.  Like an equity trading on a stock market, it's the last trade at the margin that sets the value of every other stock of the company.

Conclusion

Someone, somewhere, in the US power structure knows what the plan is but isn’t telling us - but rest assured - there is a plan.  There is always a plan.  To paraphrase Franklin Roosevelt, nothing happens by chance in government.  Don’t be caught up in such a ‘surprise’ event - whatever it may be and whenever it occurs.

Take note: Holding physical gold is your lifeline in any of the above scenarios.

Jerry Western is author of the newly available book, “Got Gold? Get Gold!” which is available online and at major book retailers. Lorimer Wilson is editor-in-chief of FinancialArticleSummariesToday.  Western provides a Model Portfolio Service listing his top Precious Metal picks and weighted rankings available by e-mailing westernoutlook@yahoo.com with the word "peek" in the subject line while Wilson offers a free weekly "Top 100 Stock Market, Asset Ratio & Economic Indicators in Review."