Tags: What Could Pull the Rug Out From Under the Dollar

What Could Pull the Rug Out From Under the Dollar

By    |   Monday, 13 Feb 2012 09:02 AM

Back in the 1970s, we sealed a good deal with the Saudis. If you’ve ever wondered why Saudi Arabia seems to always side with us and much of the rest of the Middle East doesn't, you can refer back to this deal done in 1973.

What was it?

President Richard Nixon cut a deal with Saudi Arabia’s King Faisal to only accept payment for their oil in U.S. dollars and to invest their excess profits back into our U.S. Treasurys. In return, we’d offer to protect their oil fields from nations like Russia, Iran and Iraq.

Then, just two short years later in 1975, all of the members of OPEC agreed to sell their oil only in U.S. dollars. This ensured huge demand for the U.S. dollar and U.S. Treasurys which solidified the dollar’s reserve status.

Many people refer to this as the “petro-dollar system.”
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Now here’s the problem. Part of the U.S. dollar’s valuation depends upon its grip on the oil industry. If it were to lose that position, then the dollar would run a huge risk of losing its reserve status and costs of fossil fuels would rise even more for Americans.

It’s for this reason that the U.S. has gone to great lengths to protect its petro-dollar system. This system remained unchallenged up until November 2000.

France and some other EU members convinced Saddam Hussein to sell Iraq’s oil in euros and not dollars.

In just under 2 ½ years (March 2003), the United States invaded Iraq under the pretense of them having nuclear weapons. However, none were found…but they knew that anyway. But it didn’t matter once we were in the middle of it. Americans were “bought in” then. So the government was able to sell America one bill of goods while going in for a completely other reason: the preservation of the petro-dollar system.

Any idea what the Iraqi’s sell their oil in today? You guessed it…not euros but back to U.S. dollars.

Then back in April 2002, Iran began discussing how it could sell its oil in euros and not dollars. And look at what’s happening right now. We’re threatening to invade them too. For what reason? Nukes. Now they may or may not be making nukes. And if they are, we ought to stop them.

However, one thing is for sure…they’re for sure looking to preserve the petro-dollar system. Remember, if the sinking dollar was to have to be used to purchase oil in euros or any other currency that has risen overall against it through the last 10-30 years, our costs would skyrocket!

Then here’s another “coincidence.”

In February 2011, Dominique Strauss-Kahn (DSK) who was the director of the IMF called for a new world reserve currency.

Amazingly, just three short months later, he was forced out of his role because he was alleged to have sexually assaulted a maid at the hotel he was staying at. This was a perfect setup because DSK has been known to be promiscuous and have affairs, etc. so the “shoe seemed to fit.”

France’s Christine Lagarde was put in his place. Since then, there hasn’t been a huge ruckus about replacing the dollar as a reserve currency at the IMF. Coincidence right?

You see, if ANY other currency (even gold, etc.) were to replace the dollar as a reserve currency, much of the “need” for the dollar would be over and it would plummet even faster which would take down the standard of living considerably for Americans and no politician would be able to stay in office if that happened on their watch. You see, for politicians it’s largely all about “staying in office” and doing whatever it takes to solidify that.

So is there a good chance that the U.S. will invade Iran? Sure. We’ve temporarily cut them off from dollars. So now they’re trying to sell their oil in gold or yen. Well, that’s all the excuse the U.S. would need to invade. They just simply need to “sell” the American people on the idea of nukes being there.

And this time they’d better be smarter about it. They’d at least better ship a nuke over there and take a picture with it as “proof.” Ha-ha! Seriously, I know that truly having nukes is no joking matter but we’ve already said that Iraq had them and they didn’t.

Yet you can be sure we’ve got our hand on their oil and that it will continue to be sold ONLY in dollars, not euros or anything else.

As you know, today countries like Brazil, Russia, India and China (the BRICs) are all talking about ways to buy oil in other things than the U.S. dollar.
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I’m not sure where all of this will end. But one thing I know…the U.S. has a lot of vested interest in seeing the petro-dollar system remain intact and they’ve proven that they’re willing to use force to ensure that happens.

I’m not against the military. I’ve had grandparents that served faithfully in WWII and an uncle that was in the Navy later on.

I’ve encouraged my 16 year old son to go into the Air Force when he graduates high school. So I’m not anti-military. I’m just not for the excuses that politicians make up to go to war and to stay in office.

I am for defending our country. Without a strong military, we wouldn’t be a free nation…we’d be an enslaved nation. So a big “Thank You” to all of you who have faithfully served your country.

But let’s just not be fooled by our politicians and don’t take everything they say, “Hook, line and sinker.”

About the Author: Sean Hyman
Sean Hyman is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of Money Matrix Insider. Discover more by Clicking Here Now.


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2012-02-13
Monday, 13 Feb 2012 09:02 AM
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