Secret Meeting Discussing Dumping US Dollar As Oil Currency

The secret meeting between China, Russia, Japan and France with the oil pumping nations to discuss replacing the dollar with several different things including GOLD is not big news in the US.  But is big news in Europe.   The plan to somewhat control the out of control derivative swap markets is chugging along just like healthcare: impossible and unlikely to happen.


The demise of the dollar – Business News, Business – The Independent

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.


No alliance is forever.  No friendship is eternal.  And married people get divorced long before death does part.  Any realistic view of the world must include the concept that goals can diverge and things change.  This news is BIG news.  Note the ‘gold’ part: as I predicted, the oil pumping nations will join with China to enforce a gold standard on international trade settlements.


The main and maybe only reason I believe that gold will be returned to prominence is due to history: this is inevitable.  That is, there has to be some sort of absolute limit on money creation and this is usually the traditional way of restricting the ability to produce money by adding more zeros to pieces of paper.


Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

.The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years. .

Gold has regained its $1,000+ level today. My other prediction about gold is going to be equally true: any gold held by anyone in the US will be controlled or confiscated by the government if gold is needed to settle oil purchases. The US will try to use its military muscle to get oil deals but this won’t work for very long if the oil pumping nations join with China to yank our debts so that our ability to pay our bills collapses.

.The US has virtually NO FOREX holdings aside from a handful, very pitiful handful of yen and euros. And the remains of the gold that the government seized in 1933 and let the Federal Reserve use as its reserves. This will all vanish in a flash when the creditor nations who own a tremendous amount of our debts call in our chips.


Note that, as I predicted in the past, JAPAN is deeply involved in this. If both Japan and China pull the plug on us at the same time, we are totally wrecked.


The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China’s former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. “Bilateral quarrels and clashes are unavoidable,” he told the Asia and Africa Review. “We cannot lower vigilance against hostility in the Middle East over energy interests and security.”


The US has stupidly tried to push everyone into war with Iran.  This process almost seemed to have succeeded except China yanked Obama’s chain and forced him to heel.  Right now, there is speculation that the Dalai Lama wasn’t invited to the White House this time as he passed through DC to collect his fistfuls of dough.  Obama is obviously beholden to various economic powers but most Americans are unaware that the real powers lie overseas along with most of our jobs and much of our IOUs.


The US is having a nearly infantile debate about healthcare right on the eve of the possibility that we may have NO healthcare at all if China and Japan joins with the oil powers to force us to finally live within our means.  That means, no more IOUs handed out in lieu of gold.  Our present military and healthcare systems are due nearly entirely to creditor nations who have great desire to control what we do and where we do it.


In Afghanistan, a small base was overrun by angry natives who hate our guts and most of the Americans there were slaughtered.  The dark night shades of Vietnam hang over that outpost.  Obama and the Pentagon geniuses from hell are meeting secretly…HAHAHA….good gods….like our trade rivals/partners/allies.  And at this secret meeting will come some sort of policy vis a vis Afghanistan.  I hope it is written in blood!  They can slit their wrists and inscribe the horrors they plan in an appropriate ink.  And then hand the document to the devil who will file it in hell.


U.S. wants China, Germany to consume more –

Documents outlining the U.S. position ahead of the Sept. 24-25 Pittsburgh summit of Group of 20 leaders said exporters, which include China, Germany and Japan, should consume more, while debtors like the United States must boost savings.


“The world will face anemic growth if adjustments in one part of the global economy are not matched by offsetting adjustments in other parts of the global economy,” said the document obtained by Reuters.


U.S. President Barack Obama, cutting through the coded diplomatic courtesies, made the case more bluntly for a change in business as usual.


“We can’t go back to the era where the Chinese or Germans or other countries just are selling everything to us, we’re taking out a bunch of credit card debt or home equity loans, but we’re not selling anything to them,” he said on Sunday.


If Obama is serious, all he has to do is have normal tariffs and barriers.  These things existed throughout history.  Countries used these things for centuries to protect themselves.  This is why it is called ‘protectionism’.  Generally speaking, this word is a good word.  It means we don’t expose ourselves to dangers.  It means we have a castle that repels invaders!  How simple is this concept?


Alas, the word has been degraded into a curse.  So people recoil in horror when they hear about protecting themselves!  Instead, we beg the Germans to buy from us!!!!  And the Japanese who famously never want to buy from us, they should, too!  And China!  How infantile is this?   How do we get them to do this?  And what will we sell them?  Boeing jets?  They won’t buy from Boeing unless significant parts of these jets are built in their own castles!  DUH!  And I read in the Japanese news that Mitsubishi jets are making huge inroads in the US small-midsized jets!  And China has made it crystal clear, they will destroy Boeing with their own cheaper jets.


Chinese, DPRK leaders meet on bilateral ties, denuclearization of Korean Peninsula: This news from China shows that the US has been TOTALLY cut out of the North Korean negotiations.  China has hosted this very cleverly and is now in full control of the situation and both Japan and South Korea have to play along with China in this business.


World Media Summit to be held in Beijing:  HAHAHA.  What can we say about this?  The land of censorship will host the media!  Life’s many ironies.


ElBaradei: nuclear Israel number one threat to Mideast: And Obama, true to his masters, ordered El Baradei and the UN to not stop Israel’s nukes.  So, we support secrecy, proliferation and refusal to sign anti-nuclear bomb treaties while at the same time, we scream at Iran.  This is a total and utter failure worse than the Afghanistan disaster.  They are connected: we went from world sympathy on 9/11/1 to world contempt in record time, long before Obama.  He is just keeping the clown catastrophe on course.


That is, he has changed very little what is wrong here.  He did have people talk directly to Iran for the first time.  Duh.  And Iran then said they would have RUSSIA process their nuclear materials!  HAHAHA.  Next: they will do the same sort of thing with China.  Kiss our dominance dreams goodbye!  But again: I predicted this would happen!  Russia and China don’t care who runs Jerusalem.  They care very much, who runs world trade and finances.  We, on the other hand, are giving up all our sovereign powers and wealth so we can build a massive wall around Jerusalem.  This is so eerie: exactly like Russia building that wall around East Berlin.


And the news that the ruler of Iran is a Jewish guy is causing immense hilarity across the planet.  This may be the only proof that there really is this God and he has a very wicked sense of humor.


‘Abusive Swaps’ Would Be Banned Under Frank’s Derivatives Plan –

Legislation tightening oversight of the $592 trillion over-the-counter derivatives market would give regulators authority to ban so-called abusive swaps.


The Securities and Exchange Commission and Commodity Futures Trading Commission would get the power to “prohibit transactions in any swap” that regulators determine “would be detrimental to the stability of a financial market or of participants in a financial market,” according to a 187-page draft measure released yesterday by House Financial Services Committee Chairman Barney Frank.


Opaque financial products, including some derivatives, have contributed to almost $1.6 trillion in writedowns and losses at the world’s biggest banks, brokers and insurers since the start of 2007, according to data compiled by Bloomberg. Among fallen companies are Lehman Brothers Holdings Inc., the investment bank that filed for bankruptcy, and insurer American International Group Inc., which has been surviving on government loans.


The main problem is, of this creature—which limb do we cut off?  The Derivatives Beast is bigger than all economic systems on earth!  And if you cut off one limb, it grows back elsewhere.  This is why they want to create that stupid carbon trade derivatives market. They are drooling about how it will balloon until it will be bigger than all energy markets put together.  DUH!  So we just have to cancel out this entire business entirely as it is constructed and go back to the older commodities market systems from before 1980.


The mystery investor who is turning the tin market on its head – Telegraph

One fund has warrants for more than 90pc of all physical tin stocks because the market rules dictate that above this threshold, the buyer must lend out the commodity, if asked, at the cash price with no premium.


Industrial buyers are furious that they are paying up to $730 per tonne for immediate delivery more than it would cost them to buy three-month futures contracts, arguing this stranglehold on the market should not be allowed to happen.


Contango – where spot prices are lower than forward prices – is considered normal for tin because of the interest, warehouse costs and insurance incurred in carrying the metal. Backwardation – which is happening with tin today – is a sign of shortages to come.


Traders are also claiming that prices have only inflated so high – at other times plunging to extreme lows – because the dominant position has made the market illiquid and disorderly with distorted prices.


Yipes!  See how the commodity markets are roiling.  China has cornered many markets and who is this mysterious person?  A dragon, I bet.  China is intent on cornering all the hard metals.  Including gold.  This is why it pays to be a true capitalist and to become an international creditor power.  Someday, our nation might figure this out.

Fujii Says Japan Will Act If Yen Moves in ‘Biased Direction’ –

Japanese Finance Minister Hirohisa Fujii said the government will intervene if the yen shifts in a “biased direction.”


“If currencies show some excessive moves in a biased direction, we will take action,” Fujii told reporters after meeting counterparts and central bankers from the Group of Seven in Istanbul today. He declined to comment on whether the yen is moving in such a way.


The yen rose to an eight-month high of 88.24 against the dollar this week after Fujii said he opposed currency intervention in principle, spurring speculation the government wouldn’t step into the foreign exchange market. The 77-year old minister later revised those comments, saying he wasn’t an advocate of a strong currency and that Japan was open to intervention should the currency market move “abnormally.”


Fujii today said his comments about the yen “have been a bit misunderstood.” The minister said he faced no criticism from other G-7 officials at today’s meeting.


OOPS.  Spilled the beans.  Time to retract.  For now.  The former finance minister from the LDP group just committed suicide.  Unlike in the US, when politicians screw up, they fix it the hard way by killing themselves.  We are denied this satisfaction.  Instead, here, they become TV commentators or appear on reality shows or become preachers.  We can’t get rid of them.  Even if they go to prison, they pop back out and try to muscle their way into our homes via the media transmission systems.


BOE’s Tucker Says Largest Banks Pose ‘Special’ Risks to System –

Bank of England Deputy Governor Paul Tucker said officials still need to address the potential risks posed to the financial system by large banks such as JPMorgan Chase & Co. andBarclays Plc.


“We do not currently have the technology to resolve the biggest and most complex banks in an orderly way and this is not satisfactory,” Tucker said today on a panel discussion in Istanbul hosted by theInstitute of International Finance.


Tucker said he disagreed with a questioner’s comment that too much attention is being paid to financial institutions’ size instead of focusing on their interconnectedness.


U.K. authorities adopted a regime similar to the U.S.’s Federal Deposit Insurance Corp. to protect depositors after Northern Rock Plc became the first British bank to suffer a run in 150 years. That’s enabled authorities to shut smaller banks that fail, Tucker said.


“Nobody in the official sector thinks you can put JPMorgan Chase or Barclays through this regime,” Tucker said, citing the size of the two banks’ derivatives exposures as one impediment. “There is something special to do with size.” JPMorgan Chase, based in New York, is the second-largest U.S. bank by assets, while London-based Barclays acquired the U.S. business of Lehman Brothers Holdings Inc. after Lehman went bankrupt last year.


They are way too big and they already failed last September and should have been busted up but instead, Obama and Bush decided to save them all.  And so we lost immense political and economic power as a nation.  But JP Morgan didn’t lose power.  Nor did Goldman Sachs.  They and the other international bankers will be the ones who will be our jailers when we are pushed into debtor’s prison in order to pay off the $12 trillion in US debt plus the $12 trillion bail out schemes.  I wish they would imitate the Japanese and do hari kari instead.  Then, at least we will have some sense of justice here.

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55 responses to “Secret Meeting Discussing Dumping US Dollar As Oil Currency

  1. RS

    Protection and tarifs: excellent idea, Elaine. The time has come to implement these. An even better idea (due to Warren Buffett): allow imports only if these are offset by equal valued exports at the same time. In other words, imports and exports should balance at each individual trade at every day of the year. Allow oil imports only if paid for by exports of US merchandise.

    No trade deficits and trade surpluses, no excessive accumulation of excess “reserves” or excess “savings”. There is no need for gold if trade is always balanced.

  2. Machiavelli

    Elaine, why are you always talking from this “we” perspective, there is no “we”. You have the American people and a parasitic elite who currently is using America as it’s host. This elite does not care one bit about USA, they care about themselves, their power, control and bank accounts.

  3. billibaldi

    Elaine, Mish Shedlock did a post on Japanese steel production falling to a 40 year low.

    That was when Richard Millhouse Nixon was first President ( and John Gorton was prime minister of Australia.)

  4. DrKrbyLuv

    The UK Telegraph article, if true, is a bomb shell to our economy. I say “if” as the story hasn’t been verified and there seems to be some questions.

    “Oil states say no talks on replacing dlr”

    ISTANBUL/SYDNEY (Reuters) – Big oil producing nations denied on Tuesday a newspaper report that Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the U.S. dollar with a basket of currencies in trading oil.

    But top officials of Saudia Arabia and Russia, speaking on the sidelines of International Monetary Fund meetings in Istanbul, denied there were such talks.

    Asked by reporters about the newspaper story, Saudi Arabia’s central bank chief Muhammad al-Jasser said: “Absolutely incorrect.” He repeated the same response when asked whether Saudi Arabia was in such talks.

    Russia’s deputy finance minister Dmitry Pankin said: “We did not discuss this at all.”

    Then we have Mish saying it really doesn’t matter (I’m glad he’s not managing my portfolio!)

    Ridiculous Hype Over Secret Oil Meetings

    Once again everyone is hyperventilating over “secret” moves to trade oil in currencies other than the US dollar. Please consider The demise of the dollar by Robert Fisk.

    Supposedly Robert Fisk knows the plans but “Americans have not discovered the details”.

    Such “secret” talks surface about once a year and nothing ever happens. Yet, even if these talks led to actual actions, they are irrelevant for the simple reason it does not matter one iota what oil is priced in.

    I discussed this concept in Oil Pricing Unit Red Herring on November 18, 2007. At the time everyone was going gaga because Venezuela and Iran would supposedly not take dollars for oil.

    Ten Simple Facts

    1) Oil is priced in dollars.
    2) Oil trades in Dollars and Euros right now in spite of the pricing unit being dollars. OPEC has recently admitted this fact.
    3) Clearly oil does not have to be priced in Euros to trade in Euros, or for that matter priced in Yen to trade in Yen. The same applies to any major currency.
    4) Neither Venezuela or Iran hold any dollar reserves. To the extent that either is taking trades in dollars, there is clearly nothing forcing them to hold dollars. By extension there is nothing forcing any OPEC country to hold dollars if it doesn’t want to.
    5) It takes less than a second for Forex trades to take place. 24 hours a day, 7 days a week, one can sell any currency they want and buy any other currency.
    6) The above logic applies to any currency and any commodity.
    7) Nothing is stopping anyone at any time anywhere from selling dollars for whatever currency they want to hold. Nor is anything stopping anyone anywhere at any time from selling any major currency for U.S. Dollars.
    8) Because currency conversion is instantaneous no one has to hold U.S. dollars to buy oil, copper, gold, iron, lead, wheat, soybeans, or anything else.
    9) Dollars are held (or not held) for reasons totally unrelated to pricing unit. Some of those reasons are political, some are based on sentiment, some on trade patterns and trade relationships, and some to suppress the value of local currencies to improve exports.
    10) Currencies float and so do the price of oil and commodities. Pricing oil (or any other commodity) in Euros will not cause a price change in dollars. Look at gold which is simultaneously priced in everything as proof.

    Currencies Are Fungible

    Let’s put the horse in front of the cart where it belongs.

    You can get a price of oil in any major currency you want today because all major currencies are fungible. However, pricing oil in a basket of currencies would do nothing but cause confusion. The idea is ridiculous.

    Dollar Armageddon is not coming over a pricing unit, nor did the US invade Iraq for that reason. The story is nothing meaningless hype.

    I hope others may want to comment on what Mish has to say.

    I think he is missing the geopolitical aspects of such an arrangement. If this is true, China is flexing new muscle as Elaine has stated was inevitable.

    Gold by the way just set a new record…$1040 / Oz! Yes Lord!


  5. charlottemom

    Mish outlines why other currencies do not necessarily gain an advantage by removing dollar pricing for oil. BUT he neglects to mention the rest of the story.

    It’s the US losing oil pricing in dollars and other commodities – namely losing its reserve currency status. What he ignores is that this special currency status has allowed the US to run up higher speading deficits and allows US to purchase commodities at slightly lower prices than others. “Smaller currencies” must also pay a currency conversion fee when purchasing commodities in dollars as well.

    I think its the dollar reserve status being threatened that makes this potentially a game changer. The dollar pricing for oil is only part of the story.

  6. Matheus

    Mish is a spreadsheet head, his strategic view is 0.

  7. Joseppi

    “I wish they would imitate the Japanese and do hari kari instead.”

    Isn’t that exactly what is happening in a slow motion Kabuki theatrical way. It is also the process that is necessary for a new economic structure, which reflects the change in consciousness, to manifest.
    I believe/think that a complete breakdown of the system is necessary to rebuild into the next system that humans organize themselves with.
    Patching the present unjust and corrupt economic system with tariffs is a foolish bandaid at best.

  8. roger

    Mish understands ,charts , graph’s and the like of Goldman Sach ,but claiming no problems if $ are no longer accepted as payment for oil,just displays his enormous ignorance of the dynamics of a world in transition,these talks are old and still going on ,its a signal or one more cog in the downfall of western influence.

  9. Jim Dandy

    Mish is an idiot. He is presently going around and around with Denninger about the definition of “money” and “currency” and whether the federal reserve is a criminal enterprise.

    Kind of like watching two monkeys rattle each others cages while attempting to do high level calculus…puzzled looks all around.

  10. emsnews

    Money is an idea. Once people have other ideas, the money idea dies a harsh death. I noted years ago, the Chinese loved gold a great deal because it was ‘real’: physical as well as esthetic. This is the ‘dragon’ personality and certainly, the older Chinese culture that is reasserting itself is very, very dragon-like.

  11. Mike

    Mish is wrong on deflation because he is only looking at private credit. By itself, private credit is contracting which is deflationary… but the federal government is borrowing money from the Federal Reserve (the big banks) to periodically pay off the bad private debt held at the big banks. The public debt that is created is paid with interest and continues to grow, which is very inflationary. Mish, Denninger, and Zero Hedge are also stuck in the mindset that the world needs the U.S. consumer… which is completely false. All they have to do is look at the consumption data of the growing middle class of China, Brazil, etc. Now that the U.S. consumer is likely “dead”, there is no need to hold dollars or Treasuries to maintain a trade advantage over the U.S.

  12. the fool on the hill

    Construction of the Pentagon began on Sept. 11, 1941.

    I am sick so of the CIA. Aside from the more major atrocities they ruined music and just take the fun out of life in general.

  13. nah

    Russia and China don’t care who runs Jerusalem. They care very much, who runs world trade and finances. We, on the other hand, are giving up all our sovereign powers and wealth so we can build a massive wall around Jerusalem.
    It is so fucking spooky
    The main problem is, of this creature—which limb do we cut off? The Derivatives Beast is bigger than all economic systems on earth! And if you cut off one limb, it grows back elsewhere. This is why they want to create that stupid carbon trade derivatives market.
    if we reduce markets to Leninist commerce information control systems… how can we not be sold to monopolistic governments ‘see china and russia’ so that we can build walls of freedom for jesus

    dont forget the children

  14. nah

    afghanistan is a war… a laid back view of we should not fight wars and endure battle is fatalist…
    afghanistan is not worth it, the U.S. is… in a difficult mode of history suffering decades of military dillusion we are cursed to ‘redefine’ warfare
    i still hope we win

  15. Gary

    I dont know how “true” this story is right now.
    Maybe some big time Mideast bankers are pulling his chain feeding him BS for some kind of short term gain in the commodities mkts ?

    But what I do know is true is this:

    The dollar will eventually collapse all on its own due to the fact we have no middle class producing things, selling them to the rest of the world, drawing a decent paycheck in return, and then spending a bit in the marketplace as well as saving a bit for the future.

    Its that simple. Funny how the “educated” classes cannot see this. I’m an all around bozo and I can see it.

    Education, I think, may well be a guarantee of stupidity these days at least in finance and economics.

  16. justiceatsqualor


    For the sake of argument, who cares? Does it matters whether oil is quoted in dollars post-peak-oil?

    On the front side of the Hubbert curve, central banking allowed gnomes wealth and control by decreasing and directing some of the gain; on the back side of the Hubbert curve, emissions (energy) controls might allow gnomes wealth and control by increasing and directing the losses.

    Quoting oil in dollars was a way for gnomes to transmit increases in energy, production, and consumption during the front side of the Hubbert curve directly into credit expansion in a currency under their control. But after peak-oil, monetary/credit expansion will no longer be the mechanism for monopoly or the driver of western wealth, regardless of whether oil is quoted in dollars or sea-shells.

    The game has moved to Copenhagen and global emissions (energy) controls.


    ELAINE: That is a good way of putting it. Thanks! 🙂

  17. payAttention

    As I have predicted here, very clearly, refinery shut ins were coming. If you look at my comments from not twelve weeks past, I stated that a major refinery would be shut in on the East coast if we did not stop importing refined product here. While I guessed at Come by Chance in Newfoundland, Sun took the prize with Eagle Point in New Jersy. Goodbye 400 well paying, highly skilled jobs. It is amazing that we are willing to sacrifice our petro-chemical industry, where we are still competitive. While Ziff House responded with some concern, being Canadian, Dear Author ignored what I said.

  18. Joseppi

    “Money is an idea”

    Since money is an idea, beggars are billionaires and Americans are consumers non parallel….The collective definition of what constitutes money and how it becomes a social reality that is accepted, spent, collected and leveraged is in a radical process of change.
    In the near future, I do believe, the financial mechanics of the Central Bankers like the FED will be understood by the majority of users of money. Unfortunately, it will take a severe crisis of confidence to awaken the majority of users of the Ponzi money to understand that the present system is corrupt and unsustainable.
    Until then, the inflation/deflation debate will be the center of attention. A day will come when the imbalance reaches a critical mass, and the foreign acceptance of the American idea that debt is money will collapse. This event/process will cause an international redefining of the accepted idea of money.
    Ideas about money will be ignored by many, exchanged and dissected by others, securitized into beliefs by some, and leveraged into dreams and nightmares by the rest of us

  19. seraphim

    Question: Is Ahmadinejad a Jew like Hitler was a Jew? i.e. to”demonstrate” that antijewish sentiments are a “freudian”pathology totally divorced from reality?
    Or like a “Donmeh”, the cripto-jews masquerading like Muslims or Christians, but pushing secretly a Jewish agenda?

  20. if

    Sweden prepares for financial collapse in Latvia and major bank losses at home
    How will the russian bear react on all the financial/social turmoil at their gates?

  21. As things evolve it is evident that money serves as a resource – but only part of an integral process….and sometimes if not carefully managed can serve as an impedement…..

  22. emsnews

    If, Sweden is in very deep trouble due to lending to the Baltic states. Russia periodically sucks down these states when they flounder and will do it again in the future.

    The entire Warsaw/USSR system was lured into bankruptcy by gross overlending from Europe.

  23. JT

    “If, Sweden is in very deep trouble due to lending to the Baltic states. Russia periodically sucks down these states when they flounder and will do it again in the future.”

    Oh boy… Hopefully you don´t have many Estonian readers.
    Sweden gave a couple of billion to Lithuania. We´ll see in 6 months time if they have to devalue their currency or not, so far everything seems pretty stable.

    Sometimes the small give empires a lesson as you are about to learn in Afganistan.
    Here´s a PBS documentary about a war you never heard of but which had a lot of unintended results (some parts are in finnish). You´ll learn where molotov coctails come from 😉 and where a few hundred thousand sovjet soldiers lie.

  24. criticalcontrarian

    @DrKrbyLuv: while I understand what you are saying there is a very glossed over issue which impacts the value of the dollar, namely, growing unemployment, growing tax revenue losses (federal & state), negative credit availability for business, growing credit card debt, growing foreclosure numbers in prime real estate (residential & commercial), growing number of bankruptcies. Translated: No one to pay for all the paper being printed by the Fed. Period.

    11,000 people have been loosing their jobs per day since 2007, or 8 million job losses to date. Personal income tax collection down 31%, corporate down 72% in 2009, these are huge numbers. There is about $3 Trillion in real estate that is going to be a problem very soon, etc., etc., etc. If I know this, then so too does the smart money. So contrary to what some people believe, yes people do give a damn in what currency they are being paid for their hard assets and natural resources. If you don’t believe this, ask the holders of Zimbabwean debt.

  25. Jim Dandy

    Exactly right, Mike. Unlike the Weimar republic which issued its own debt, the US is “Borrowing” the deficit and will pay increasingly high interest to the banksters until the system buckles under its own weight

  26. Raymond in Guelph ON

    On the issue of “Sound banking is the basis of capitalism,” I believe Denninger is right and Mish is wrong. Denninger has also recognized protectionism as a way for the US to recover, while Mish is 100% free trade.

    However Mish’s post about the meaninglessness of oil being priced in dollars is a good analysis.

    By the way, the East Germans built a wall around West Berlin, to keep their “citizens” inside the iron curtain. The municipal boundaries of East Berlin were wall-free except for the section bordering West Berlin.

  27. charlottemom

    From 10/8 FT – Asian central banks intervened heavily in the currency markets on Thursday to stem the appreciation of their currencies against the US dollar amid fears that their exports could be losing ground against China.

    Is there a game of chicken afoot? Did Fed call asian on bluff? Or is this something else.

  28. Impatient patriot

    You are on the game. Seems like you have streamlined your attack to lazier like accuracy.

  29. emsnews

    The Weimar Republik owed an immense debt: the war reparations! This is what destroyed Germany so that Hitler, a protectionist, could declare bankruptcy and immediately arm Germany to attack those who wanted German debts paid off.

  30. @Elaine, Like Weimar Germany, we also have immense debts. So we are also likely to (s)elect our own corn-pone Hitler, as Kunstler predicted, and invade the creditor countries.

  31. The people how have disrupted the world economy are still in power hence progress will be slow and a long ongoing process.

  32. @SAKOFX: Bill Moyers this past Friday discussed this very thing with a very ticked-off Representative Nancy Kaptor and Professor Simon(?) Johnson of MIT.

  33. I got messy wit hmy burden of credit card debt. Could you give me some advice for beat it. Thank you

  34. Pretty soon the Goverment will control us. I’d say next 5-10 years.

  35. rodney

    i don’t think that it is likely that gold will make a comeback. the price of the commodity is in a positive feedback loop just like housing. it’s a bubble, pure and simple. the us is not like zimbabwe or weimar. zimbabwe owed massive debts denominated in a foreign country. It also destroyed its farmland/productive compacity. weimar owed massive reparations and it was destroyed from the first world war. the us owes no debts in any currency except the one it creates. the economy is nowhere near full employment. It would take a big chunk of spending to ignite inflation right now. sorry to rain on your deficit rants but your wrong.

  36. emsnews

    Gold is in a commodity bubble. Yes. I get attacked by gold bugs when I mention this terrible information. I am against bubbles in general, this is the good old hockey stick curve: never goes to infinity, it crashes at a key point which is easy to spot, when it looks like it will rise to infinity, suddenly.

    As far as inflation is concerned: we have global inflation fueled by reckless US borrowing using dollars. This is why there is this huge overhang of over $4 trillion FOREX money sitting in foreign accounts.

    If THIS money is suddenly unleashed, it will all flow back to the US as everyone frantically buys US assets and commodities (we lose ownership of our own stuff) and then this will be ‘hyperinflation’.

    We also would not be able to recirculate this paper money back outwards again if all the major traders refuse to deal in dollars.

  37. rodney

    spending comes before taxes. this is important. it is logial too. anytime you create a tax in a currency. you cannot collect the tax until you have spent. look at the subway system. it looks like they collect the tokens to pass them out. not so. they had to issue them first. what is really happening is whenever the government spends it adds dollar assets to the banking system. if it always spent and never taxed or borrowed they would build up and inflation would ensue. they tax and borrow to drain excess money from the system. this is how they regulate the interest rate. more money low interest no money high interest. the money doesn’t really come from anywhere. it doesn’t have to. the important thing is to issue enough to makethe goods and services pass easily and to allow for savings desires. if the subway doesn’t issue enough tokens whats gonna happen. empty seats on the train(deflation/unemployment). too much tokens not enough seats(high demand/inflation). this stuff is really simple. if everyone understood it they would demand more change.

  38. rodney

    there is not that much in paper money. I beleive the figure for cash is much less than that. I’m going to look that up. If you are speaking of bank reserves that is a whole different animal.

  39. rodney

    please explain how the money in the forex accounts turns into hyperinflation. you were vague on this.

  40. rodney

    like i said hyperinflation is not likely.

  41. emsnews

    FOREX accounts are HOLDING MONEY. When the operators want to SPEND this money, it pours out into world markets. This causes the price of things being bought by this entity to shoot upwards. Oil being the #1 thing.

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  43. lucky13

    So we are also likely to (s)elect our own corn-pone Hitler,

    Barry corn hole Obama!


    ELAINE: The Bushes were not ‘cornpone’ they were elite fascists. Clinton certainly is ‘cornpone’. Romney is rich bastard elite. Note how elites are fascists Hitlers. Ahem. Rich elites. So much for that saying which I thought was stupid way back when it was first made.

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  47. Noneyabiz

    “Remember that credit is money…”-Ben Franklin. “Forget that fractional reserves are not…”-My ass in a bonnet. Balanced trade? Isn’t the whole point of devaluing your nation’s currency to boost exports and profits for your CFR buddies? Why does no one report the immense Rockefeller investment in Russia? House of cards or built on The Rock. Time will surely tell.

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  50. luc

    ‘This is why there is this huge overhang of over $4 trillion FOREX money sitting in foreign accounts. If THIS money is suddenly unleashed’…

    what else can be done with it? Will it sit there for 10 years?

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