The Undeclared Currency War America is Losing

by lizard

The micro(brew) can seem so simple. It’s just trade and markets, supply and demand. Take this headline: Hong Kong Official Touts Trade, Business Opportunities for Montana:

Craft beer and beef from Montana could find an eager market in Asia, according to the most senior representative of the Hong Kong government in the U.S.

Clement Leung, Hong Kong commissioner for economic and trade affairs, was at the University of Montana on Tuesday to speak at a luncheon hosted by the Missoula Economic Partnership and the Montana World Trade Center. He addressed a crowd of local business leaders, lawmakers and academics about business opportunities, trade relations and the economic importance of Montana to Hong Kong and vice-versa.

There is nothing overtly nefarious in how this kind of business is navigated. Luncheons are very orderly. But beyond the luncheons, economic activity requires energy, and energy is the driving force behind all the proxy wars of the over-extended US Empire.

Enter Joe Biden’s son, Hunter, who just got into the Ukrainian natural gas business by joining the “team” of Burisma Holdings:

Burisma Holdings, Ukraine’s largest private gas producer, has expanded its Board of Directors by bringing on Mr. R Hunter Biden as a new director.

R. Hunter Biden will be in charge of the Holdings’ legal unit and will provide support for the Company among international organizations. On his new appointment, he commented: “Burisma’s track record of innovations and industry leadership in the field of natural gas means that it can be a strong driver of a strong economy in Ukraine. As a new member of the Board, I believe that my assistance in consulting the Company on matters of transparency, corporate governance and responsibility, international expansion and other priorities will contribute to the economy and benefit the people of Ukraine.”

Mark Tokarski put up a post about this great opportunity for Hunter Biden and Ukraine, and in the comment thread JC quickly makes some connections absolutely worth reading. I won’t quote it now because I’m hoping JC will turn his comments into a post ;)

Keeping this whole charade going is the Federal Reserve, possibly through covert bond-purchases laundered through Belgium. Why? Because the Fed is fighting an undeclared currency war to preserve the status of the dollar as the global reserve currency. That is a complex claim that comes with two bylines, one of them Paul Craig Roberts. here’s an excerpt:

Washington’s power ultimately rests on the dollar as world reserve currency. This privilege, attained at Bretton Woods following World War 2, allows the US to pay its bills by issuing debt. The world currency role also gives the US the power to cut countries out of the international payments system and to impose sanctions.

As impelled as the Fed is to protect the large banks that sit on the board of directors of the NY Fed, the Fed has to protect the dollar. That the Fed believed that it could not buy the bonds outright but needed to disguise its purchase by laundering it through Belgium suggests that the Fed is concerned that the world is losing confidence in the dollar.

If the world loses confidence in the dollar, the cost of living in the US would rise sharply as the dollar drops in value. Economic hardship and poverty would worsen. Political instability would rise.

If the dollar lost substantial value, the dollar would lose its reserve currency status. Washington would not be able to issue new debt or new dollars in order to pay its bills.

Its wars and hundreds of overseas military bases could not be financed.

That is the backdrop to the anti-dollar maneuverings. Now this from Zerohedge:

That Russia has been pushing for trade arrangements that minimize the participation (and influence) of the US dollar ever since the onset of the Ukraine crisis (and before) is no secret: this has been covered extensively on these pages before (see Gazprom Prepares “Symbolic” Bond Issue In Chinese Yuan; Petrodollar Alert: Putin Prepares To Announce “Holy Grail” Gas Deal With China; Russia And China About To Sign “Holy Grail” Gas Deal; 40 Central Banks Are Betting This Will Be The Next Reserve Currency; From the Petrodollar to the Gas-o-yuan and so on).

But until now much of this was in the realm of hearsay and general wishful thinking. After all, surely it is “ridiculous” that a country can seriously contemplate to exist outside the ideological and religious confines of the Petrodollar… because if one can do it, all can do it, and next thing you know the US has hyperinflation, social collapse, civil war and all those other features prominently featured in other socialist banana republics like Venezuela which alas do not have a global reserve currency to kick around.

Or so the Keynesian economists, aka tenured priests of said Petrodollar religion, would demand that the world believe.

However, as much as it may trouble the statists to read, Russia is actively pushing on with plans to put the US dollar in the rearview mirror and replace it with a dollar-free system. Or, as it is called in Russia, a “de-dollarized” world.

In seemingly unrelated news, it’s nearly the 100 year anniversary of the event that sparked World War I: the assassination of Franz Ferdinand (and his wife, Sophie) on June 28th, 1914. To conclude this post, I’ll end with a quote from Albert Einstein:

I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones.


  1. Big Swede

    Zero Hedge has the best comments. Here’s one from your ZH link.

    “They will spin it as good policy. You can pay off your 150K student loan with that gold from your dead grandpa’s teeth.”

    I say bring it on. Give onto Caesar that which is Caesars.

  2. troutsky

    I don’t get why people who know nothing about Venezuela insist on writing about it. As for energy, couldn’t we figure out a way to hook up Biden’s flapping jaw to a turbine?




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