In a nutshell, any country that wants to purchase oil from an oil producing country has to do so in U.S. dollars. This is a long standing agreement within all oil exporting nations, aka OPEC, the Organization of Petroleum Exporting Countries. The UK for example, cannot simply buy oil from Saudi Arabia by exchanging British pounds. Instead, the UK must exchange its pounds for U.S. dollars. The major exception at present is, of course, Iran. This means that every country in the world that imports oil—which is the vast majority of the worlds nations—has to have immense quantities of dollars in reserve. These dollars of course are not hidden under the proverbial national mattress. They are invested. And because they are U.S. dollars, they are invested in U.S. Treasury bills and other interest bearing securities that can be easily converted to purchase dollar-priced commodities like oil. This is what has allowed the U.S. to run up trillions of dollars of debt: the rest of the world simply buys up that debt in the form of U.S. interest bearing securities. And all of this has worked out very nicely for the United States. It has created a massive demand for U.S. dollars and U.S. debt. But what would happen if the rest of the world rejected the petrodollar system and adopted a petrogold system instead? A recent article by Jim Willie discussed how a petrogold system might work... The crux of the non-US$ trade vehicle devised as a USDollar alternative will be the Gold Trade Note. It will enable peer-to-peer payments to be completed from direct account transfers independent of currency, and most importantly, not done through the narrow pipes and channels controlled by the bankers with their omnipresent SWIFT code system among the world of banks. The Gold Trade Note will act much like a Letter of Credit, serve as a short-term bill, and maybe even push aside the near 0% short-term USTreasury Bills that litter the banking landscape. Any bond or bill earning almost no interest is veritable clutter. The zero bound USTreasurys open the door in a big way for replacement by a better vehicle. The new trade notes will involve posted gold as collateral, whose entire system for trade usage will bear a massive gold core that also will include silver and platinum, maybe other precious metals. The idea is to avoid the FOREX systems, to avoid the USDollar, and to avoid the banks as much as possible in a peer-to-peer system that can be executed between parties holding Blackberry devices or simple PC to complete the payments on transactions. If Gold is ignored by the corrupt bankers, then Gold will be the center of the new trade system and the solution in providing a globally accepted USDollar alternative. And Russia and China would greatly benefit from a petrogold system. Today, Russia is the number one oil exporter on the planet. China is the number two consumer of oil in the world, and at this point they are actually importing more oil from Saudi Arabia than the United States is. Does it make sense that they should remain locked into a system that forces them to use U.S. dollars for all of their oil transactions? And now Russia even has the number one oil company in the world. The following is from a recent article by Marin Katusa... Exxon Mobil is no longer the worlds number-one oil producer. As of yesterday, that title belongs to Putin Oil Corp – oh, whoops. I mean the title belongs to Rosneft, Russias state-controlled oil company. Rosneft is buying TNK-BP, which is a vertically integrated oil company co-owned by British oil firm BP and a group of Russian billionaires known as AAR. One of the top-ten privately owned oil producers in the world, in 2010 TNK-BP churned out 1.74 million barrels of oil equivalent per day from its assets in Russia and Ukraine and processed almost half that amount through its refineries. With TNK-BP in its hands, Rosneft will be in charge of more than 4 million barrels of oil production a day. And who is in charge of Rosneft? None other than Vladimir Putin, Russias resource-full president. And Russian gas giant Gazprom supplies a huge percentage of the natural gas that Europe uses... Gazprom, the Russian state gas company, already has Europe wrapped around its little finger. Russia supplies 34% of Europes gas needs, and when the under-construction South Stream pipeline starts operating, that percentage will increase. As if those developments werent enough, yesterday Gazprom offered the highest bid to obtain a stake in the massive Leviathan gas field off Israels coast. Gazprom in control of Europes gas, Rosneft in control of its oil. A red hand stretching out from Russia to strangle the supremacy of the West and pave the way for a new world order– one with Russia at the helm. Russia and China have a tremendous amount of leverage when it comes to energy. What if they got together with a bunch of oil producing nations in the Middle East and decided to set up a system where oil is traded for gold? Would not much of the rest of the world go along with such a system? Of course if that happened the U.S. financial system would crash. We would no longer be able to export our inflation to the rest of the globe and prices would rise dramatically. Demand for U.S. government debt would go through the floor and interest rates on that debt and on everything else in our economy would skyrocket. Economic activity would grind to a standstill and the financial markets would collapse. And that would just be for starters. Most Americans simply dont understand that Russia and China have the power to collapse the U.S. economy by going to a gold for oil system. All they have to do is pull the trigger. The other day I wrote an article entitled Show This To Anyone That Believes That Things Are Getting Better In America which discussed all of the reasons why the U.S. economy is already collapsing. But as bad as things are now, this is nothing compared to what things will be like when the petrodollar dies. So pay keen attention to anything in the news about Russia or China suggesting that oil should be traded for gold. When Russia and China pull the trigger, things will get messy very quickly. From my friend John
Posted on: Fri, 28 Mar 2014 15:32:37 +0000
Trending Topics
Recently Viewed Topics
© 2015