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  #1  
Old 07-18-2012, 06:35 AM
Franc Tireur Franc Tireur is offline
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11 International Agreements That Are Nails In The Coffin Of The Petrodollar

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Is the petrodollar dead? Well, not yet, but the nails are being hammered into the coffin even as you read this. For decades, most of the nations of the world have used the U.S. dollar to buy oil and to trade with each other. In essence, the U.S. dollar has been acting as a true global currency. Virtually every country on the face of the earth has needed big piles of U.S. dollars for international trade.

This has ensured a huge demand for U.S. dollars and U.S. government debt. This demand for dollars has kept prices and interest rates low, and it has given the U.S. government an incredible amount of power and leverage around the globe. Right now, U.S. dollars make up more than 60 percent of all foreign currency reserves in the world. But times are changing. Over the past couple of years there has been a whole bunch of international agreements that have made the U.S. dollar less important in international trade.

The mainstream media in the United States has been strangely quiet about all of these agreements, but the truth is that they are setting the stage for a fundamental shift in the way that trade is conducted around the globe. When the petrodollar dies, it is going to have an absolutely devastating impact on the U.S. economy. Sadly, most Americans are totally clueless regarding what is about to happen to the dollar.

One of the reasons the Federal Reserve has been able to get away with flooding the financial system with U.S. dollars is because the rest of the world has been soaking a lot of those dollars up. The rest of the world has needed giant piles of dollars to trade with, but what is going to happen when they don't need dollars anymore?

Could we see a tsunami of inflation as demand for the dollar plummets like a rock?

The power of the U.S. dollar has been one of the few things holding up our economy. Once that leg gets kicked out from under us we are going to be in a whole lot of trouble.

The following are 11 international agreements that are nails in the coffin of the petrodollar....
Read the entire article at: http://theeconomiccollapseblog.com/a...he-petrodollar

What are your thoughts on this?
 
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  #2  
Old 07-18-2012, 07:08 AM
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Zap Zap is offline
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My thoughts are that it is about bloody time!
Not until the US dollar is abandoned as the reserve currency, can the rest of us take a serious look at our own currencies and see how they too, are fiat and created from nothing, backed by nothing.
Sooner or later we're going to have to return to real money, gold and silver.
The sooner, the better.
 
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Old 07-18-2012, 07:14 AM
Franc Tireur Franc Tireur is offline
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Originally Posted by Zap View Post
Sooner or later we're going to have to return to real money, gold and silver.
The sooner, the better.
Exactly, perhaps that's why all the central banks are buying gold and silver. The most interesting part is that emmerging countries are buying massively gold and silver too.

I would like to ask one thing: Where is the US gold and who really own the gold?
 
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Old 07-18-2012, 07:17 AM
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Zap Zap is offline
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If the gold is in the US, then the US owns it.

Remember... If you don't hold it, you don't own it.

Our generation is, for better or worse, going to learn the difference between paper fiat currency and real money.
Most of us are going to learn that lesson the hard way.
 
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Old 07-18-2012, 07:31 AM
Franc Tireur Franc Tireur is offline
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Quote:
Originally Posted by Zap View Post
If the gold is in the US, then the US owns it.
Well, the gold may be in US, but is it owned by the US (governement) or the private bank cartel owners aka Federal Reserve?
 
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Old 07-18-2012, 07:43 AM
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If the Federal Reserve holds the gold, then they own it.
And if they can defend it against the US military, then they will continue to own it.
 
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Old 07-19-2012, 08:47 AM
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Bernard Bernard is offline
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Petrodollar has significant risks unrelated to international treaties too. See here where UBS acknowledges hyperinflation risk:
Quote:
... So here it is: "Hyperinflation Revisited" from Caesar Lack, PhD, economist.
...
Ultimately, hyperinflation is a fiscal phenomenon; that is, hyperinflation results from unsustainable fiscal deficits. Peter Bernholz notes that historically, cases of hyperinflation have been preceded by the central bank monetizing a significant proportion of the government deficit. After investigating 29 hyperinflationary episodes, 28 of which happened in the 20th century, Bernholz writes: "We draw the conclusion that the creation of money to finance a public budget deficit has been the reason for hyperinflation."

When government deficits become unsustainable, austerity is often the first reaction. Austerity is deflationary, recessionary, and painful. If the austerity necessary to balance the budget is deemed to be too painful, a government can either choose to default or to inflate the currency.

If the country concerned has its own currency, it will usually choose to inflate it. If government finances do not improve sufficiently, confidence in the currency may evaporate at some point and hyperinflation may arise. Hyperinflation is more closely related to deflation than to "normal" high inflation, as hyperinflation can be viewed as the result of a failed attempt at printing money to avoid the deflation that would be caused by austerity.

In our view, there is some risk that hyperinflation could arise in one or more large currencies. As a consequence of the burst credit bubble, we are seeing unsustainable government deficits in many large countries. Deleveraging and austerity are deflationary and recessionary. Central banks around the world are fighting these deflationary and recessionary tendencies by massively easing monetary policy. ...
...
Countries at risk

Bernholz notes that preceding a case of hyperinflation, government deficits usually amount to more than 20% of government expenditures, and that deficits amounting to 40% or more of government expenditures clearly cannot be maintained.

Of the Top 10 deficit countries, India, the US, Japan, Spain and the UK all exhibit government net borrowing above 20% of government expenditures (Table 1). However, Spain does not have its own currency and therefore cannot trigger hyperinflation on its own. The government net borrowing of the Eurozone as a whole amounts to only 11% of total government expenditures.

The euro is therefore not a prime candidate for hyperinflation, as long as the core countries do not leave the currency union. Although India is one of the Top 10 deficit countries, an outbreak of hyperinflation there would be of relatively minor concern to the global investor. Unlike the US and the UK, Japan is a creditor nation and not a debtor nation. In fact, Japan has the world's largest net international investment position (see Fig. 4), while the US is the world's largest net debtor. We think that a creditor nation is less at risk of hyperinflation than a debtor nation, as a debtor nation relies not only on the confidence of domestic creditors, but also of foreign creditors. We therefore think that the hyperinflation risk to global investors is largest in the US and the UK.
...
More (incl. charts and indicators to watch): http://www.zerohedge.com/news/ubs-is...cal-phenomenon
 
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