by Lady Michelle-Jennifer Santos, Chief Visionary Founder & Owner
June 22, 2014 (TSR) – President Barack Obama and U.S. politicians have opened the Pandora’s box when theyarrogantly and aggressively slapped economic sanctions on Russia and have never calculated the serious consequences for the United States. While the US spins disinformation and distraction machine bombards the world, Russia makes preparation for the next decisive steps to hit where it really hurts. In recent years, there have been rumblings by nations such as Russia and China about the need to change to a new system, but nobody has really had a big reason to upset the status quo. However, that has now changed. Russia is now getting ready to pull the trigger on a “de-dollarization” plan and pull the rug under the U.S. global dominance.
Some say that since the US dollar is not pegged against anything, it would take a serious event to trigger a ‘crash.’
Ukraine has now become the tipping point. The crisis has caused Russia to completely reevaluate its financial relationship with the United States. If Russia starts trading a lot of oil and natural gas for currencies other than the U.S. dollar, that will be a massive blow for the petrodollar, and it could end up dramatically changing the global economic landscape.
President Putin has given the direct threat, as Voice of Russia reported, stating that it is time for the attack on the dollar to commence. This is a departure from the previous message on March 28 which stated:
“Russia is fully in control of the petrodollar and could cause the Dow Jones industrial average to plummet as it has never done before. One can wave the Stars and Stripes as long as one likes, but it’s a fact that the Russians can turn the US economy upside down . . . So far, Moscow has been in no rush to resort to extreme measures. Russia is going to react in a mirror-like way . . .”
In fact, the Russian government has held a meeting to discuss “getting rid of the US dollar in Russian export operations” according to Voice of Russia:
Russian press reports that the country’s Ministry of Finance is ready to greenlight a plan to radically increase the role of the Russian ruble in export operations while reducing the share of dollar-denominated transactions. Governmental sources believe that the Russian banking sector is “ready to handle the increased number of ruble-denominated transactions”.
According to the Prime news agency, on April 24th the government organized a special meeting dedicated to finding a solution for getting rid of the US dollar in Russian export operations. Top level experts from the energy sector, banks and governmental agencies were summoned and a number of measures were proposed as a response for American sanctions against Russia.
The “de-dollarization meeting” was chaired by First Deputy Prime Minister of the Russian Federation Igor Shuvalov, proving that Moscow is very serious in its intention to stop using the dollar.
This is a big deal: Russia is the largest exporter of natural gas and the second largest exporter of oil in the world. Should Russia start asking for payment in currencies other than the U.S. dollar, that will essentially end the monopoly of the petrodollar and cripple US for good.
Iran and China, who wants world peace, are on board:
Of course, the success of Moscow’s campaign to switch its trading to rubles or other regional currencies will depend on the willingness of its trading partners to get rid of the dollar. Sources cited by Politonline.ru mentioned two countries who would be willing to support Russia: Iran and China. Given that Vladimir Putin will visit Beijing on May 20, it can be speculated that the gas and oil contracts that are going to be signed between Russia and China will be denominated in rubles and yuan, not dollars.
China has been strategically hoarding gold to back its yuan and ready to move away from the U.S. dollar for quite some time, calling for a “new international reserve currency… to replace the dominant US dollar” and has led the BRICS efforts to dislodge the dollar from its position as the main global currency, but the “sanctions war” between Washington and Moscow gave an impetus to the long-awaited scheme to launch the petroruble and switch all Russian energy exports away from the US currency .
For decades the US has benefited to the tune of trillions of dollars-worth of free credit from the greenback’s role as the default global reserve unit.
But as the global economy trembled before the prospect of a US default last month, only averted when Washington reached a deal to raise its debt ceiling, China’s official Xinhua news agency called for a “de-Americanised” world.
It also urged the creation of a “new international reserve currency… to replace the dominant US dollar”.
In March, China opened two centers to process yuan-denominated trade flows, one in London and one in Frankfurt. Recently, China visited the Great Britain and both countries have agreed to trade directly with their respective currencies, bypassing the dollar.
Now the music has turned slowly in crescendo.
Sergey Glazyev, the economic aide of Russian president Vladimir Putin, outlined a plan for “undermining the economic strength of the US” in order to force Washington to stop the civil war in Ukraine and warmongering abroad. Glazyev believes that the only way of making the US give up its plans on starting a new cold war is to crash the dollar system.
According to VoR, Glazyev, who is also the mastermind behind the Eurasian Economic Union, published an article in Russian Argumenty Nedeli, arguing that the United States is trying to provoke a Russian military intervention in Ukraine, using the junta in Kiev as bait. If fulfilled, the plan will give Washington a number of important benefits. Firstly, it will allow the US to introduce new sanctions against Russia, writing off Moscow’s portfolio of US Treasury bills. More important is that a new wave of sanctions will create a situation in which Russian companies won’t be able to service their debts to European banks.
Glazyev is the same person who in early March was the first to urge Russia in dumping US bonds and abandon the dollar in retaliation to US sanctions. The strategy worked because even as the Kremlin has retained control over Crimea, western sanctions have silently stopped. Moreover, it didn’t hurt Russia as USA has planned, but backfired: The Russian central bank reported the country’s 2014 current account surplus may be as high as $35 billion, up from $33 billion in 2013, and a far cry from some fabricated “$200+ billion” in Russian capital outflows which Mario Draghi was warning about recently. Glazyev was also instrumental in pushing the Kremlin to approach China and force the massive and historic natural gas deal with Beijing which took place not necessarily at the most beneficial terms for Russia. Strategically, it did because the two nations have bypassed the US dollar by doing direct trade in their respective currencies.
According to Glazyev, the so-called “third phase” of sanctions against Russia will be a tremendous cost for the European Union. The total estimated losses will be higher than 1 trillion euros. Such losses will severely hurt the European economy, making the US the sole “safe haven” in the world. Harsh sanctions against Russia will also displace Gazprom from the European energy market, leaving it wide open for the much more expensive LNG from the US.
Co-opting European countries in a new arms race and military operations against Russia will increase American political influence in Europe and will help the US force the European Union to accept the American version of the Transatlantic Trade and Investment Partnership, a trade agreement that will basically transform the EU into a big economic colony of the US.
Glazyev believes that igniting a new war in Europe will only bring benefits for America and only problems for the European Union. Washington has repeatedly used global and regional wars for the benefit of the American economy and now the White House is trying to use the civil war in Ukraine as a pretext to repeat the old trick.
Glazyev’s set of countermeasures specifically targets the core strength of the US war machine, i.e. the Fed’s printing press. Putin’s advisor proposes the creation of a “broad anti-dollar alliance” of countries willing and able to drop the dollar from their international trade. Members of the alliance would also refrain from keeping the currency reserves in dollar-denominated instruments. Glazyev advocates treating positions in dollar-denominated instruments like holdings of junk securities and believes that regulators should require full collateralization of such holdings. An anti-dollar coalition would be the first step for the creation of an anti-war coalition that can help stop the US’ aggression.
Unsurprisingly, Sergey Glazyev believes that the main role in the creation of such a political coalition is to be played by the European business community because America’s attempts to ignite a war in Europe and a cold war against Russia are threatening the interests of big European business. Judging by the recent efforts to stop the sanctions against Russia, made by the German, French, Italian and Austrian business leaders, Putin’s aide is right in his assessment. Somewhat surprisingly for Washington, the war for Ukraine may soon become the war for Europe’s independence from the US and a war against the dollar.
Glazyev is not alone. Igor Sechin, the CEO of Rosneft, the biggest Russian oil company and a close ally of Vladimir Putin. Both have been very vocal in their quest to replace the dollar with the Russian ruble. Now, several top Russian officials are pushing the plan forward.
For decades, virtually all oil and natural gas around the world has been bought and sold for U.S. dollars, has been a massive advantage for the country’s economy.
The existence of “petrodollars” is one of the pillars of America’s economic might because it creates a significant external demand for American currency, allowing the US to accumulate enormous debts without defaulting.
Since everyone has been using it to trade with one another, creating an endless global appetite for the U.S. currency. It is of this reason that the value of the dollar is artificially high, and it has enabled Americans to import trillions of dollars of super cheap products from other countries like China. Should other nations stopped and bypass the dollar to trade with one another, the value of the dollar would plummet dramatically.
As the de facto global currency, this has also increased demand for American debt. Major exporting nations such as China and Saudi Arabia end up with giant piles of US dollars, which has kept the country afloat. In turn, those same nations often reinvest their dollars into securities that can rapidly be changed back into dollars if needed. One of the most popular ways to do this has been to invest those dollars in U.S. Treasuries. This has driven down interest rates on U.S. debt over the years and has enabled the U.S. government to borrow trillions upon trillions of dollars for next to nothing. This is what Vladimir Putin meant when he called USA a parasite to the world.
When the rest of the world starts moving away from the U.S. dollar, all of this would change. Americans won’t have their same lifestyle anymore, and would pretty much become like a Third World country, unable to afford even the trinkets at their dollar stores and Wal-Mart.
Therefore, in order for the current US standard of living to continue, it is absolutely imperative that everyone else around the globe continues to use their currency.
When Russia really does pull the trigger on a “de-dollarization” strategy, the rest of the planet will more than likely start following their lead.
Consider the recent UN Group of 77 (G77) plus China, the largest multilateral block of 133 countries from Latin America, Africa, Asia and Oceania, who concluded a summit in the eastern Bolivian city of Santa Cruz last week. They called for an end to poverty by 2030 and adopted a declaration calling for a new world order that is equitable, stable and peaceful with ancient values. All 133 countries want “inclusive” development with Russia and China, but without the United States. Add that with the Non-Aligned Movement, who boasts 120 nations and 17 observer states. Both at the two largest blocs at the United Nations.
USA with Israel, the two main warmongering nations on the planet who follow “exceptionalism” and above the international laws, will be isolated from the world. The Americans will experience what Germany experienced right before World War II when the Deutsche mark was worthless.
Peter Schiff, the noted economist, who has been a fierce critic of the Federal Reserve and its policies for years, gave much alarming warnings than usual: “The Fed knows that the U.S. economy is not recovering,” he noted. “It simply is being kept from collapse by artificially low interest rates and quantitative easing. As that support goes, the economy will implode.”US DoD war games in 2009 showed that if Russia and China teamed up, they have the capacity to severely damage the dollar. This is something Putin has been working towards as a long-term goal.
The U.S. dollar is no more a safe haven because Williams says, “Historically the dollar has been the safe haven in a political or financial crisis, but that hasn’t been the case for four or five years now. Instead, what you have seen is a flight to other traditional safe havens such as gold and the Swiss Franc. The dollar has lost its magic. Nobody wants to hold it. So, if the Russians follow through and convince the rest of the world that they are going to do it and it looks like China may join them, a lot of countries will want to dump dollars and get out ahead of the crowd.”
This is the true Apocalypse they have been prophesying about but have not been able to figure out, until now.