The main threat to US National SecuritySubmitted by Ian56 on Sun, 09/30/2012 - 14:50
This is aimed at ordinary members of the general public, not people that are already Ron Paul supporters.
This is the main threat to US National Security.
Not some trivial side show like Iran or the Islamic Extremists.
This is what the US politicians and the media should be talking about, not Iran.
Greece, China, the Brics, oil and the risk to the USD's Reserve Status
The US is currently on a path towards the Greek situation. On current path, the US dollar's reserve status will not last.
In 5 years time the US will be in such a financial mess it will be next to impossible to sort it out - just like the Greek situation.
The Greeks got into their mess because the government overspent and money was too cheap, so the government had no incentive to reform and racked up massive unsustainable debts.
Does that ring any bells?
It is no good waiting for 2016.
That is too LATE America.
LAST chance America - if you do not want to turn into Greece.
I think you have already blown it.
It makes absolutely no difference whether you elect Romney or Obama, both will run $1.2tn to $1.5tn p.a. deficits, neither will cut any spending.
When the US is finally recognised as being bankrupt, it will no longer be able to afford ANY true National Security.
The main threat to National Security is spending too much money, strategic overstretch and counter productive interference abroad.
That's one of the main reasons the USSR collapsed (together with an inferior economic model).
The US has 1100 to 1300 military bases in 130 to 148 countries.
Cut military spending from the current $1,219bn p.a. and get government spending under control.
Confidence in the US dollar would drastically increase.
And it is no good saying that that will never happen because the US Dollar is the world's reserve currency and the Fed can print all that it likes.
Because other countries have different ideas.
The threat to the petrodollar system
US antagonism towards Iran has nothing to do with nuclear weapons.
It is about protecting the petrodollar system.
Just like the Iraq invasion.
Iran is proposing to sell oil in non USD, just like Iraq did in 1996.
But the antagonism towards Iran is having the opposite of it's intended affect.
It is accelerating moves away from the USD.
India basically thumbed it's nose at the US when it was asked to apply sanctions to Iran. It entered into wider trade deals with Iran avoiding the use of the USD.
China has significantly reduced US treasury holdings and is exploring non US dollar trade deals as per the one with Japan recently.
Russia has also reduced it's holding of US treasuries.
So we have China, Russia and Iran definitely exploring and activating non USD trade deals.
2nd string India, Brazil and Japan ae also exploring and activating.
That is a significant proportion of Global GDP in those countries.
And a couple of other tiny countries.
It is small time stuff so far, but you can see which way the wind is blowing.
These countries are testing the waters.
Anyone think USD might be at risk?
It seems to me that with the amount of US debt, the petrodollar system is like a house of cards - one tap and it will collapse. And China knows it.
The mountain of US debt is set to grow to circa $22tn+ in 4 years time, whether Romney or Obama is elected. ($22tn assumes GDP growth of circa 3%, the coming deep recession will see this figure go much higher.)
If you find any bilateral trade deals that avoid using USD, please let me know.
See if there are any more coming along.
Should the US Dollar lose it's reserve status :-
The consequences would be dire indeed.
The US runs a very significant trade deficit, circa $600bn p.a.
If other countries won't take USD as payment, how will the US pay for this deficit?
The answer is they won't be able to - the US has a relatively small amount of Gold - no one knows how much.
The US would be forced to export as much as it imports. A very sizeable economic adjustment.
And it does not matter one iota how many dollars the Fed prints. No other country will take them.
The US has to get it's budget deficits and the National Debt under control.
Otherwise it is a question of when, not if, the above scenario unfolds.
And Athens will come to the streets of New York and LA.
There have been a number of developments since this was written :-
Conference in New Delhi in March by the Brics where the possibility of setting up a sort of Brics bank was discussed. This would be a direct competitor to the Fed.
South Africa attended in New Delhi.
China has announced it will start issuing international Yuan loans.
A bunch of African countries are interested in setting up non USD trade deals with China.
Australia signed a currency swap deal with China to facilitate trade - bypassing USD.
The total holdings of UST's of foreign Central Banks has been going down - not up. US is still issuing debt to fund trillion plus deficits. Largest ever deficit in February - $200bn.
China and Japan dropping Dollar Cross Rate system. Japan now firmly in the China camp - not USA's.
Also news out today that Germany has given up on Greece (it was only a matter of time) and that Greece will leave the Euro and suffer around a 60% decline in the value of it's new currency when Greece leaves.
Also news out today that Obama is going to backstop the Derivatives market ($700 tn plus). US banks hold perhaps nearly half of that on their books.
There is no way any government can backstop the derivatives market, it is far too large.
Will China make the Yuan a gold backed currency?
The 11 International Agreements that spell the end of the petrodollar
Germany and China to conduct more trade in Euro's and Yuan which will further isolate the USD
Forbes :- Signs of the Gold standard emerging from Germany
China buys Gold, challenges US dollar
China to sell unlimited quantities of Russian oil in Yuan.
This is game changing news, if it is true (I have not seen it reported elsewhere yet).
It would bring forward the date when the US Dollar loses it's Reserve Status significantly.
Saudi Arabia and Nigeria are already doing trade and infrastructure deals with China.
If they decided to price their oil in something other than US Dollars, all hell would break loose in the global economy.
OPEC may follow suit.
The value of the US Dollar would fall by 50%+ in a short space of time.
If as reported, Russia is setting a precedent via China, it makes this far more likely.