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Washington has exercised strict control over Iraqi oil revenues for the past two decades

(Photo credit: INA)

The Finance Committee in the Iraqi parliament made a statement on 31 January calling for the sale of oil in currencies other than the US dollar, aiming to counter US sanctions on the Iraqi banking system.

“The US Treasury still uses the pretext of money laundering to impose sanctions on Iraqi banks. This requires a national stance to put an end to these arbitrary decisions,” the statement said.

“Imposing sanctions on Iraqi banks undermines and obstructs Central Bank efforts to stabilize the dollar exchange rate and reduce the selling gap between official and parallel rates,” it added.

The Finance Committee affirmed its “rejection of these practices, due to their repercussions on the livelihoods of citizens,” and reiterated its “call on the government and the Central Bank of Iraq to take quick measures against the dominance of the dollar, by diversifying cash reserves from foreign currencies.”

Washington imposed sanctions on Iraqi Al-Huda Bank this week, under claims of laundering money for Iran. Several other banks have been hit with similar sanctions over the past year.

The statement came the same day a senior US Treasury official said Washington expects Baghdad to help identify and disrupt the funds of Iran-backed resistance factions in Iraq.

“These are, as a whole, groups that are actively using and abusing Iraq and its financial systems and structure in order to perpetuate these acts and we have to address that directly. Frankly, I think it is clearly our expectation from Treasury perspective that there is more we can do together to share information and identify exactly how these militias groups are operating here in Iraq,” the official stated.

…click on the above link to read the rest…

‘Playground of choice’: Iran mobilises to drive US troops out of Iraq

January 23, 2024

‘Playground of choice’: Iran mobilises to drive US troops out of Iraq

The US has the cudgel of the American dollar to prevent its expulsion from Iraq, but will the Biden administration use it?

When Iraqi Prime Minister Mohammed al-Sudani arrived in New York City in September for the UN General Assembly, a delicate truce was in balance between the two foreign powers that loom over Baghdad.

Iraqi paramilitaries, backed by Iran, had frozen their attacks on US troops in the country. Iraq’s new leader arrived in New York City amid the lull. He was feted on a circuit of swanky receptions with western businessmen and diplomats on the sidelines of the General Assembly, as he pitched Iraq’s oil-rich but corruption-riddled economy as an investment destination.

Four months later, the Iraqi leader is condemning Iran and the US for launching deadly strikes in his country and his investment pitch to the global elite at Davos Switzerland is overshadowed by his call for the US military and its coalition partners to leave Iraq.

Since the Hamas-led attacks on 7 October and the war in Gaza, Iranian-backed militias have launched at least 70 attacks on US forces in Iraq.

In early January, the US hit back with its most powerful response yet, launching a drone strike in Baghdad that killed Mushtaq Taleb al-Saidi, also known as Abu Taqwa, a senior commander in the Popular Mobilisation Units, an umbrella organisation of Iraqi state-funded and Iran-aligned, Shia militias.

Baghdad hit out at the strike as “a violation of Iraq’s sovereignty”. But no sooner was Iraq chastising the US for the strike, when Iran launched a barrage of ballistic missiles into the Iraqi city of Erbil, killing four people, including a prominent Kurdish real estate developer and his one-year-old daughter.

…click on the above link to read the rest…

Central Banks Will Keep Gobbling Gold in 2024

January 19, 2024

Central Banks Will Keep Gobbling Gold in 2024

The first half of 2023 was a record-breaking moment for central bank gold buying, led by none other than China and Russia. Organizations like the World Gold Council reported a staggering increase compared to 2022:

“On a year-to-date basis, central banks have bought an astonishing net 800t, 14% higher than the same period last year.”

Whether or not The January Effect will apply to the gold price as we finish the first month of 2024, there are plenty of indicators that the central bank buying spree will continue for at least the first half of the new year. Accelerating de-dollarization is just one factor, as powerhouses like China and Russia continue strategically moving further and further from the grips of USD hegemony.

Of course, actions by the Biden administration to isolate Russia with sanctions in the wake of the Ukraine conflict only provide further impetus for the Russians to continue divesting in any way they can from the US dollar. Combined with a volatile ruble and a wave of new American spending to feed its proxy wars in Ukraine and Israel, it only makes sense that Russia’s gold coffers will continue to grow.

You can also bet on China and Russia buying significantly more gold than what gets reported publicly, so the real numbers are always higher than they seem. As Jim Richards has pointed out many times, such as in this tweet from Q1 last year, countries like Russia and China hold gold acquired through off-the-books buying programs that far exceed what they officially claim:

“Central Bank of Russia reported a gain of 30 metric tonnes in its gold reserves. That’s after a year of flatlining more likely due to non-reporting than non-acquisition. Nice to see Russia back in the game.”

…click on the above link to read the rest…

More Golden (and Black-Gold) Proof: The Dollar is Totally Screwed

January 9, 2024

More Golden (and Black-Gold) Proof: The Dollar is Totally Screwed

Ever since day-one of the predictably disastrous and politically myopic insanity of weaponizing the world reserve currency against a major power like Russia, we warned that the USD had reached an historical turning point of slow demise and increasing de-dollarization.

We also warned that this would be a gradual process rather than over-night headline, much like the slow but steady death of the USD’s purchasing power since Nixon left the gold standard in 1971:

But as we’ll discover below, this gyrating process is happening even faster than we could have imagined, and all of this bodes profoundly well for physical gold, yet not so well for the USD.

Bad Actors, Bad Policies & Predictable Patterns

Regardless of what the media-mislead world thinks of Putin, weaponizing the USD was a foreseeable disaster which, naturally, none of DC’s worst-and-dimmest, could fully grasp.

This is because chest-puffing but math-illiterate neocons pushing policy from the Pentagon were pulling the increasingly visible strings of a Biden puppet at the White House.

In short, the dark state of which Mike Lofgren warned is not only dark, but dangerously dumb.

These political opportunists have forgotten that military power is not as wise as financial strength, which is why broke (and increasingly centralized nations) inevitably lead their country toward a state of permanent ruin preceded by cycles of war and currency-destroying inflation.

Sound familiar?

Despite no training in economics, Ernest Hemingway, who witnessed two world wars, saw this pattern clearly:

We also found “Biden’s” sanctions particularly comical, given that his former boss clearly understood the dangers of such a policy for the USD as far back as 2015:

…click on the above link to read the rest…

Confetti Dollar End of Ponzi Scheme – Bill Holter

November 30, 2023

Confetti Dollar End of Ponzi Scheme – Bill Holter

Precious metals expert and financial writer Bill Holter says the recent underreported announcement by the UBS CEO Sergio Ermotti in Switzerland that his bank might need a “rescue” is yet another sign on the short road to the end of the global Ponzi scheme backed by the US dollar reserve currency. Holter points out, “You’ve got a sick bank (Credit Suisse) that is being bailed out by another bank (UBS) that may turn out to be sick. My question is who is going to bail out these central banks? You have got the Fed with a $9 trillion balance sheet. The last time, the Fed went from $900 billion to $9 trillion. Can the Fed now go from $9 trillion to $90 trillion? Who is going to bail out the Fed? Who is going to bail out the US Treasury? Who is going to bail out the Bank of England, the ECB or the Bank of Japan? These central banks have completely blown up their balance sheet and have no ability to save anything. My question is who is going to save them?”

Can’t they cut interest rates again like they did in 2009? Holter says, “If they cut interest rates from here, you would see the dollar absolutely crash. The only reason the dollar has not crashed is interest rates have basically gone from 0% to 5%. They have done that in a year and a half which is the fastest increase in interest rates in all of history.”

So, rate cuts will devalue the dollar. Can you pay trillions of dollars borrowed in Treasury Bond back in confetti dollars? Holter says, “Yes, you absolutely can pay back your debt in confetti. It’s been done many, many times before as currencies get lost…

…click on the above link to read the rest…

De-Dollarization? China Completes First Digital Yuan Purchase For Cross-Border Oil Transaction

October 21, 2023

De-Dollarization? China Completes First Digital Yuan Purchase For Cross-Border Oil Transaction

De-dollarization continues accelerating with news of the Shanghai Petroleum and Natural Gas Exchange (SHPGX), a Chinese-backed exchange for trading energy-related products, settling its first cross-border transaction in digital yuan.

Chinese-based financial news outlet “Yicai” first reported PetroChina International bought one million barrels of crude oil using digital yuan on Thursday. It was the exchange’s first overseas oil settlement in digital yuan. However, the name of the seller was not disclosed.

SHPGX has made several transactions in yuan earlier this year: In March, PetroChina and TotalEnergies completed a yuan-denominated liquefied natural gas transaction on the exchange. According to the exchange, four such LNG transactions have occurred this year.

China’s central bank began the digital yuan project in 2014 and has piloted the electronic currency in numerous regions across China. The world’s second-largest economy has been preparing to use the yuan and its digital version in international trade and finance as an alternative to the dollar.

In August, Brazil’s President Luiz Inacio Lula da Silva called for BRICS nations to create a common currency as the world furiously searches for ways to circumvent the dollar-based financial system.

Brazil’s president said a BRICS currency “increases our payment options and reduces our vulnerabilities.”

The US shutting Russia out of the SWIFT messaging system that underpins most global payments in response to its invasion of Ukraine has supercharged the de-dollarization trend.

It remains to be seen who exactly PetroChina paid digital yuan for the crude oil, but it might not be out of the question that it was Russia, considering it’s been shut out of the SWIFT system, plus oil exports to China have hit a record high.

The Myth of the Invincible Dollar

October 15, 2023

The Myth of the Invincible Dollar

I write a lot about the national debt.

And most people don’t care.

That’s because there’s a widespread belief that the dollar is invincible.

It isn’t.

The prevailing attitude is that the US government can borrow and spend indefinitely. After all, it hasn’t caused a problem so far. But a long fuse can burn for a long time before it finally reaches the powder keg.

I don’t know how long we have before the debt bomb explodes, but I do know we get closer and closer every day. And sadly, very few people care enough to address the problem.

The recent government shutdown drama is a case in point.

A stopgap spending deal swept the shutdown threat out of the headlines, but it’s still there lurking in the shadows of the halls of Congress. If lawmakers don’t figure something out by Nov. 17, the government will be forced to shut down.

There isn’t much talk about a shutdown right now, but when people do discuss the possibility, they almost always focus on the mythical crisis that shuttering the federal government might cause. That sidesteps the real problem — out of control government spending.

Conventional wisdom is that Congress needs to do whatever it takes to avoid a shutdown. If that means maintaining spending at current levels or even increasing spending, so be it. The handful of intransigent members of Congress who want to hold out for spending cuts are always cast as the bad guys in this kabuki theater. As economist Daniel Lacalle put it in a recent article published by Mises Wire, “The narrative seems to be that governments and the public sector should never have to implement responsible budget decisions, and spending must continue indefinitely.”

…click on the above link to read the rest…

Hedging the End of Fiat

August 28, 2023

Hedging the End of Fiat

It is slowly coming clear that the fiat dollar’s hegemony is drawing to a close. That’s what the BRICS summit in Johannesburg is all about — rats, if you like, deserting the dollar’s ship. With the dollar’s backing being no more than a precarious faith in it, it is bound to be sold down by foreign holders. Being only fiat, it could even become valueless, threatening to take down the other western alliance fiat currencies as well.

How do you protect your paper wealth from this outcome? Some swear by bitcoin and others by gold.

This article looks at what is likely to emerge as a replacement currency system, and concludes that from practical and legal aspects, bitcoin and the entire cryptocurrency industry will fail with fiat, while mankind will return to gold, as it has always done in the past when state control over currency fails

Introduction

It is gradually dawning on market participants that the era of fiat currencies is drawing to a close. Monetarists, who first warned us of the inflationary consequences of the expansion of money and credit were also the first to warn us that the slowdown in monetary expansion would lead to recession, and since then we have seen broad money statistics flatline, with bank lending beginning to contract. This is interpreted by macroeconomists as the end of inflation, and the return to lower interest rates to stave off recession.

Unfortunately, this black-and-white interpretation of either inflation or recession but never both has been challenged by bond yields around the world which are rising to new highs. And the charts tell us that they are likely to go considerably higher. Consequently, conviction that inflation of producer and consumer prices will prove to be a temporary phenomenon is infected with doubt.

…click on the above link to read the rest…

What Are the BRICS Planning With the August 22nd Durban Accords?

August 14, 2023

What Are the BRICS Planning With the August 22nd Durban Accords?

What are BRICS planning with the Durban Accords?

Photo by Khashayar Kouchpeydeh

In my first explainer about the BRICS nations, you met the players and you know why their decisions affect the global economy. But why do their decisions affect us?

You need to understand that first – before the August 22nd Durban Accords will make any sense. (But once you do understand, you’ll be astonished…)

Professor Reagan’s class is now in session!

Global trade runs on U.S. dollars

Since World War II, the U.S. dollar has enjoyed the role of global reserve currency. You may have heard those words before – here’s what they mean…

Worldwide, when companies or nations transacting with one another don’t share a common currency, they use U.S. dollars. When a Chilean copper mine sells tons of raw ore to a Canadian refiner, they invoice (and get paid) in U.S. dollars.

Obviously, most nations don’t have a common currency (the exception is the Euro zone). So the use of dollars for international trade is simply huge, approximately 85% of the global total.

So the world relies on dollars to do business. That’s a great deal for us! That means, for example, that deficit spending and newly-printed money always have a home somewhere in the world. Simply because the world has to have dollars.

Like I said, that’s a great deal for the nation that exports dollars. It’s not such a great deal for everyone else…

“It’s our currency, but it’s your problem”

In 1971, President Nixon ended the convertibility of dollars to gold.

The rest of the world, to put it mildly, went nuts. The gold standard was supposed to prevent inflation – but it hadn’t (primarily because American citizens weren’t allowed to swap dollars for gold since 1933).

…click on the above link to read the rest…

Why the dollar is finished

July 23, 2023

Why the dollar is finished

Last week in my Goldmoney Insight, I analysed the rationale for a new gold backed trade settlement currency on the agenda of the BRICS summit in Johannesburg on 22—24 August. This article is about the consequences for the dollar-based fiat currency regime.

There is strong evidence that planning for this new trade settlement currency has been in the works for some time and has been properly considered. That being so, we are witnessing the initial step away from fiat to gold backed currencies. Without the burden of expensive welfare commitments, all the attendees in Johannesburg can back or tie their currency values to gold with less difficulty than our welfare-dependent nations. And it is now in their commercial interests to do so.

We have been brainwashed with Keynesian misconceptions and the state theory of money for so long that our statist establishments and market participants fail to see the logic of sound money, and the threat it presents to our own currencies and economies. But there is a precedent for this foolishness from John Law, the proto-Keynesian who bankrupted France in 1720. I explain the similarities. That experience, and why it led to the destruction of Law’s livre currency illustrates our own dilemma and its likely outcome.

It’s not just a comparison between fiat currency and gold. America’s financial position is dire, more so than is generally realised. The euro is additionally threatened with extinction because of flaws in the euro system, and the UK is already in a deeper credit crisis than most commentators understand.

Introduction

On 7 July, news leaked out and was then confirmed by Russian state media that the BRICS meeting in Johannesburg would have a proposal on the agenda for a new gold-backed currency to be used exclusively for trade settlement and commodity pricing…

…click on the above link to read the rest…

Lesson of the Day: If You Weaponize the Dollar and Confiscate Assets, Expect Retaliation

July 21, 2023

Lesson of the Day: If You Weaponize the Dollar and Confiscate Assets, Expect Retaliation

Russia seized the local assets of Carlsberg beer and yogurt maker Danone. It now threatens Austria’s Raiffeisen bank.

Russia Seizes Western Yogurt and Beer

As backdrop to the Raiffeisen bank story, consider the Bloomberg report, Russia Seize s We stern Yogurt and Beer.

President Vladimir Putin signed a decree in April allowing for “temporary” state control over the assets of companies or individuals from “unfriendly” states — which include the US and its allies.

Sunday’s move is the second time the Kremlin has used the decree to seize assets. Previously, Russia took control of utilities owned by Finland’s Fortum Oyj and Germany’s Uniper SE.

Russia and Ukraine accounted for about 13% of Carlsberg’s total sales and about 9% of operating profit in 2021. The company employs about 8,400 people in Russia and had previously separated the operations there from the rest of the group.

Carlsberg is assessing the legal and operational consequences. Fortum last week started a process of arbitration over the April seizure. But with Russia no longer concerned about appearing fair to western investors, it’s difficult to see how much recourse these or any other multinationals will have.

Procter & Gamble, Colgate-Palmolive and Philip Morris International have also remained. Coca-Cola HBC has the largest revenue exposure to Russia among European consumer-staple companies, Morgan Stanley said, saying the regional Coke bottler gets 12% of sales from that market.

Troubles at Raiffeisen Bank

Eurointelligence comments on Raiffei se n Bank Troubles.

After Russia took over Danone and Carlsberg, what fate is awaiting Austria’s Raiffeisen bank? The US and EU’s banking authorities pressure the bank for some time now to exit Russia, but progress is slow and risks are getting higher. After some failed attempts to swap assets with Russian banks in Europe, Raiffeisen is stuck between the rock and a hard place…

…click on the above link to read the rest…

Failures of an Economic Hitman in Turkey: Erdogan Re-elected

June 4, 2023

Failures of an Economic Hitman in Turkey: Erdogan Re-elected

President Erdogan’s re-election in Turkey is a monumental failure of Western pressure. Because of it, it’s time to take our eyes off Ukraine and look at a different theater of World War III with equal if not bigger implications.

Turkey is another in a now long string of failed Economic Hitman operations cum Color Revolutions. The last big one to fail was in Belarus in 2020 following the re-election of Alexander Lukashenko.

Turkey has been the subject of a seven-year campaign to be rid of Erdogan, beginning with the 2016 coup attempt organized out of the NATO airbase at Incerlik. Turkey’s been through a persistent five-year brutal devaluation of its currency, the lira, seeing it drop from less than 2 versus the US dollar to nearly 21 this week in the wake of Erdogan’s victory.

I’ve covered this story in detail (see my Turkey archives here) being one of the lone voices out there trying to parse Erdogan’s monetary policy actions which I’ve argued sought to de-dollarize Turkey’s foreign exchange liabilities and forge an independent path.

Erdogan, wily as a fox, has been deftly playing the US and Russia/China off each other for years, positioning Turkey simultaneously as a member of NATO, the gatekeeper to the Black Sea, and the financial and trade crossroads linking East and West.

The West’s campaign to overthrow President Assad in Syria beginning in 2011 couldn’t have gone forward without Erdogan’s help. He went along with it very willingly having been promised Turkey claiming Idlib province in the West and taking most of the north. Vladimir Putin accepting Assad’s invitation for assistance in fighting ISIS and Erdogan’s pets in Idlib (Hay’at Tahrir al-Sham or HTS) began the unraveling of those plans.

…click on the above link to read the rest…

America’s empire is bankrupt

May 2, 2023

America’s empire is bankrupt

The dollar is finally being dethroned

Let’s start with the basics. Roughly 5% of the human race currently live in the United States of America. That very small fraction of humanity, until quite recently, enjoyed about a third of the world’s energy resources and manufactured products and about a quarter of its raw materials. This didn’t happen because nobody else wanted these things, or because the US manufactured and sold something so enticing that the rest of the world eagerly handed over its wealth in exchange. It happened because, as the dominant nation, the US imposed unbalanced patterns of exchange on the rest of the world, and these funnelled a disproportionate share of the planet’s wealth to itself.

There’s nothing new about this sort of arrangement. In its day, the British Empire controlled an even larger share of the planet’s wealth, and the Spanish Empire played a comparable role further back. Before then, there were other empires, though limits to transport technologies meant that their reach wasn’t as large. Nor, by the way, was any of this an invention of people with light-coloured skin. Mighty empires flourished in Asia and Africa when the peoples of Europe lived in thatched-roofed mud huts. Empires rise whenever a nation becomes powerful enough to dominate other nations and drain them of wealth. They’ve thrived as far back as records go and they’ll doubtless thrive for as long as human civilisations exist.

America’s empire came into being in the wake of the collapse of the British Empire, during the fratricidal European wars of the early 20th century. Throughout those bitter years, the role of global hegemon was up for grabs, and by 1930 or so it was pretty clear that Germany, the Soviet Union or the US would end up taking the prize…

…click on the above link to read the rest…

World War Three Chronicles, Part 2

April 23, 2023

World War Three Chronicles, Part 2

As World War Three progresses with the proxy war in Ukraine grinding the nation and its war weary people into dust, we need to pay close attention to the second front. The systematic demolition of US Dollar Hegemony.

Part one of this series is embedded here: World War Three Chronicles, Part1

We are witnessing epochal changes in the global economy with the independent states, centred around the BRIC’s nations, now trading oil in their own currencies.
This development represents an existential threat not ‘just’ for US Dollar hegemony but for US military and industrial hegemony in what has rapidly become a multi-polar world.
China and to a lesser extent Russia are masters of “Soft Power”. The controlled demolition of US dollar hegemony is clearly underway.

Let’s take a field trip to the frontlines. Batton down the hatches, it’s going to be one hell of a transition, let’s hope we survive it! I would rate our chances as slim because of the mendacity existing in the USA and the impossibility of it meeting it’s debt obligations once the Greenback is no longer the worlds reserve currency.

“Brian Berletic and Danny Haiphong discuss the HUGE implications of Saudi Arabia taking steps to join China in forging peace in the Middle East.”

“The BRICS collective, comprising Brazil, Russia, India, China and South Africa, is working on a common currency in an attempt to ditch the US dollar and push back against America’s dominance. The move comes as Moscow and Beijing call for de-dollarisation in the face of Western sanctions”.
Dumping the Dollar: Will a new BRICS currency replace the US currency for trade?

“As the United States combats a recent flood of countries ‘de-dollarizing‘ – trading commodities in other currencies, the last thing that was needed was French President Emanuel Macron amplifying this message.“

…click on the above link to read the rest…

Time to trash Triffin

April 12, 2023

Time to trash Triffin

The dollar-based credit bubble is imploding, and emerging economies are seeking protection by accepting trade settlement in other currencies. The US policy of threatening regime change, currency destabilisation, or other means of ensuring nations remain in its sphere of influence are now failing.

Mainstream economists in the West insist the dollar is irreplaceable, and that as a trade settlement medium China’s yuan is strictly limited. Referring to Triffin’s dilemma, China would have to run deficits to provide the necessary currency liquidity. But they ignore the role of bank credit, which can be expanded at will to meet trade settlement demand.

Furthermore, China’s exchanges offer hedging facilities into physical gold, attracting Middle Eastern energy exporters away from petrodollars, until the new trade settlement currency planned by Sergey Glazyev comes into existence.

For evidence of Russia’s intentions to reintroduce gold into trade settlement, a translation of the semi-official position penned by Glazyev jointly with his deputy is appended to this article.

Increasing systemic risk in US, European, and Japanese banking systems is accelerating the movement of international trade settlement away from fiat dollars into safer havens. These are or will be ultimately backed by physical gold.

The world is changing before our eyes…

Quietly, informed opinion is beginning to accept that America has lost its global influence. Even Brazil, Argentina, and Mexico are openly planning for a future where their international trade will turn away from North America and Western Europe to an Asia firmly bound into the rules of China and Russia — rules that insist on evolving payments away from the dollar to their own currencies or into trade settlement currencies being planned.

…click on the above link to read the rest…

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