Does the phrase, "It's all Greek to me", give an indication as to why
I entered the Rehabilitation field, instead of financial management?
Carl Jarvis...lost between Athens and Sparta
On 6/15/20, Miriam Vieni <miriamvieni@xxxxxxxxxxxxx> wrote:
American Exceptionalism Is on the Ropes and the End of the Petrodollar Is
Nigh
From the border wall rhetoric to trade wars, Trump is effectively setting
up
the implosion of the dollar and couching it as pseudo nationalistic
populism.
by Raul Diego
June 15th, 2020
By Raul Diego
The pressure on the global economy imposed by the measures to curb the
COVID-19 pandemic threatens to erode whatever confidence the world still
has
in the U.S. dollar as a viable reserve currency. A shortfall in U.S.
domestic savings, dropping to 1.4 percent of national income, brought on by
the drawn-out shutdowns and structural changes to the ways of doing
business, such as the phasing out of brick-and-mortar business
establishments and the substitution of human labor with robotics, may be
the
canary in the coal mine of the upcoming economic paradigm shift.
Among the visible signs that a global monetary reset is in the offing is
the
state of currency speculation markets, which are progressively moving away
from the dollar as illustrated by the $1.5 billion slash in short positions
in the previous week, the largest in six weeks. A more inconspicuous red
flag might be the decreasing power of the U.S. Federal Reserve to affect
markets as it has over its relatively short existence with a mere word here
or the moving of an interest rate point there.
Just five days ago, Fed chair Jerome Powell declared in a press conference
that the U.S. banking system was "so much better capitalized, so much
stronger, better aware of its risks, better at managing its risks, [and]
more highly liquid.", that it represented a "source of strength" in this
environment of widespread economic pain. In former years, just these words
from the head of the U.S. central bank would have been enough to shore up
any misgivings by market participants. But exactly the opposite occurred.
A day after Powell's remarks, "every major Wall Street bank tanked."
Citigroup, Bank of America, and JP Morgan Chase all lost 13.37 percent,
10.04 percent, and 8.34 percent respectively amid a broader market decline
that recorded a 5.89 percent drop in the S&P 500. The reason Powell's words
failed to have an effect can be traced to the underlying reality which is
revealed by the $6.23 trillion in emergency repo loans that these "highly
liquid" banks have received over the course of a few months.
Trumpian Chaos
Trump's man at the Treasury Steve Mnuchin, also continues to offer only
election-year rhetoric, playing down the severity of the current crisis
while the Fed rolls out the same bailout programs it used during the 2008
financial meltdown and has even added new ones, like the Main Street Loan
Facility and the yet-to-be activated Municipal Liquidity Facility to
support
lending to city, state, and county governments.
The long-running deficit, last reported to be $498.4 billion, held by the
U.S.' current account, facilitated by the dollar's reserve currency status,
is running head-on into "exploding government budget deficits" in the
middle
of a global shutdown, which could drive domestic savings far deeper into
negative territory, spelling doom for the "greenback."
EU Foreign Policy Chief Calls for Rapprochement with Russia and End of
"American-led System"
In a recent address, EU top diplomat Josep Borell hinted at a desire to
improve relations with Russia and an end to the "American-led System"
MintPress News | Raul Diego | May 27
This is being exacerbated and, in real ways, driven by the Trump
administration, which has shown a consistent trend towards isolationism and
protectionist economic policies. From the border wall rhetoric to trade
wars, Trump is effectively setting up the implosion of the dollar and
couching it as pseudo nationalistic populism.
The President's base is being led down the primrose path with empty
promises
of a revitalized American industrial Valhalla as the virtual tentacles of
an
automated and digitized economy with little use for their labor encircles
us. In addition, the ongoing process of a China decoupling, an integral
part
of the petrodollar/reserve currency paradigm, will likely be the bookend
for
the dollar era should they decide to flood America with its own worthless
money.
A Short Exercise
When Henry Kissinger made a deal with the Saudis to only accept dollars for
their oil in exchange for a captive world market, the petrodollar was born
and United States' currency became the world's de facto reserve currency.
The system has been in place since the 1970s and has been enforced by
market
mechanisms, economic sanctions, and at the point of a gun. It substituted
an
older, semi-global financial order based on gold, destroyed deliberately
over several decades starting with the Great Depression and unfolding right
up to the end of World War II.
The world's financial order would, henceforth, be directly and indirectly
tied to the single most important natural resource of the twentieth century
and the strongest military power on earth, which had, since the end of the
war, morphed into what Eisenhower had presciently warned about just a few
years removed from the end of that conflict.
Kissinger Saudi Arabia
Kissinger, left, holds hands with Saudi Foreign Minister Omar Saqqaf prior
to his departure from Riyadh, Nov. 9, 1973. Harry Koundakjian | AP
The Military Industrial Complex had already been gestating during the war
itself, but when the U.S. dollar became the coin of the realm, its
influence
over world affairs grew exponentially and gave the American political
establishment leverage to affect the fate of other nations to an
unprecedented degree, as well as the power to its financial institutions to
mold capital markets to their whim.
As we near the 50-year milestone of this crucial shift in the global
balance
of power, its usefulness has begun to wane and a new system, virtually
untethered from any fungible commodity or physical proxy, is being
introduced by the very power structure it helped create. Confident in its
grip over the mechanisms of global commerce in both physical goods and
information, the dollar is being retired in favor of a digital currency
system - an exercise that requires sacrificing the tightly-managed
reputation of the world's only superpower.
Losing Face
The mass civil disobedience now occurring in the streets of every major
city
of the United States also points in the direction of an inevitable crash of
the dollar. It is yet another symptom of America's precipitous fall from
the
perch as the world's police. The domestic crisis now unfolding mirrors the
diminishing prestige of the United States around the world.
Manipulating the Message: Police Attacks on Free Press and the Fencing in
of
Humanity
Journalists and dissidents are being targeted by police in the land of the
free. Is it as simple as out of control police or something more?
MintPress News | Raul Diego | Jun 5
Recent actions by the Trump administration against the International
Criminal Court (ICC) and the Court's response underscores the reality of
what is on the horizon. After the ICC initiated an investigation into U.S.
actions in Afghanistan, Trump issued sanctions and visa restrictions
against
the ICC citing threats to "U.S. sovereignty".
The Court issued an official statement denouncing the measures as an
"attempt to interfere with the rule of law and the Court's judicial
proceedings", and publicly calling out the U.S. government for effectively
attacking "the interests of victims of atrocity crimes, for many of whom
the
Court represents the last hope for justice."
Given the unprecedented nature of both the domestic and international
conflicts now afflicting America, as well as the immediate economic stress
brought on by the forced shutdowns and accumulated decades of debt, a
severe
crash could mark the end of the petrodollar and, consequently, the end of
global American hegemony before the end of the first half of the
twenty-first century.
