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Timing the Collapse: Ron Paul Says Watch the Petrodollar

Good, new article on this important topic. A must read an as always upvote.

"By considering Ron Paul's words on the petrodollar, we will know when the dollar collapse is imminent."


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Dollar Doomers

I think I just coined a new phrase.

Pun intended.

Almost every new business created in America in the last 50 years was printed out of thin air, and the credit and debt were maintained in a non physical monetary way via computers.

How can a currency collapse if it is no longer a physical currency?

From a long term trend/perspective, has the US Dollar ever really collapsed?

The USD transcended the physical monetary world and became the first Digital currency in history.

Lower gas prices mean the average US consumer will save money at the pump and spend that money elsewhere on other goods and service.

Speaking of spending money at the pump, how many people pay for gas with cash vs. those who pay with credit/debit cards?

Many gas stations offer a lower price per gallon when using cash, but I would bet that most people today use their credit cards at the pump and rack up those mileage or cash back bonus points regardless of price.

Another reason why people don't use cash is because they simply don't use it anymore. Some people I know strictly use credit cards for everything they buy.

Think gold is old? Cash is old now too.

The, "petrodollar," is really a mostly cashless digital currency in the 21st century. Checks, debit cards, credit cards, and online digital payments dominate the business landscape.

Cash still exists, but even cash is now playing second fiddle to the digital king.

America went from gold, to cash, to digital dollars.


Because gold is severely limited, the Fed can't print enough cash to meet demand, and human production is limitless.

An unlimited currency for an unlimited potential - that is the USD.

The USD is really the US Digital Dollar, backed by an endless supply of energy called oil.

Never be afraid to ask simple questions.

Ron, Ron, Ron...think things

Ron, Ron, Ron...think things through.

How can you, a champion of how terrible taxes are, and their horrible burden on society, say that there is no built-in demand for the dollar? That it is just part of the transaction.

What do you think your taxes are paid in. That's right, US dollars. There is your huge demand right there.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

SteveMT's picture

It's a false demand for dollars because it's forced.

They don't care how high the price of oil goes as long as it is paid for in dollars, PetroDollars. That was part of the deal with the dollar remaining as the world reserve currency. If dollars are not used, we would make war with that country. If ISIS undercuts the market and sell their oil for $300/barrel, we don't care. They want dollars, so everything is fine. Likewise, we're not only forced to pay taxes, but we are forced to pay taxes in dollars. There is no choice involved. If we don't we go to jail. For those that can, the best thing to do is get out of this fiat system by getting into commodities.

"They don't care how high the

"They don't care how high the price of oil goes as long as it is paid for in dollars, PetroDollars."

Who is this they?

"That was part of the deal with the dollar remaining as the world reserve currency."

All speculation on your part. No actual fact.

"If dollars are not used, we would make war with that country."

Again, just a theory, not actual fact.

"They want dollars, so everything is fine."

OK...big lesson for you here. There are two different ways the dollar relates to oil. One, as the method of payment (you have to pay us in dollars), and two, as the global standard of accounting (oil is worth this much in dollars). The vast majority of countries that sell oil, including the US companies, don't care how they get their money. It is priced in dollars, but they'll accept whatever currency relative to that.

If countries only wanted payment in dollars, why don't Saudi Arabia, Iraq, etc. have these huge dollar stockpiles? Why don't they own a lot of US debt? Because that is what foreign holders of US dollars do, they buy US treasuries.

"Likewise, we're not only forced to pay taxes, but we are forced to pay taxes in dollars. There is no choice involved. If we don't we go to jail."

You are talking in a philosophical level. I would argue that no one is forcing you to pay anyone. You choose to work, you choose to get paid in dollars, you chose to live in America. Those are all your choices, and you have to abide by the consequences of those choices.

Under Ron Paul's gold standard, you were similarly "forced" to pay your taxes in gold-backed dollars. I don't see the difference.

"For those that can, the best thing to do is get out of this fiat system by getting into commodities."

Since the dollar has been on the fiat money, the economic growth of this country is unprecedented. Since the invention of the federal reserve, the livings standards of the average American has skyrocketed. I'll keep this system, thank you very much.

And, btw, getting into commodities...isn't that forcing people? What happens if there is alternative energy; suddenly, oil-backed dollars have no value! What happens as the gold reserves dry up? Suddenly the economy's growth will be hit by automatic deflation.

The last time humans truly use a system of money with full intrinsic value was when they bartered barley back in the old days.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

SteveMT's picture

"They" is the Fed. "They" is the government. One is the same.

Fiat systems must keep expanding to keep the Ponzi scheme going. Fiat system never contract. Fiat systems always eventually fail. When they do fail, real money like gold again surfaces until another fiat Ponzi scheme begins anew.

I guess that is a big lesson for you to hear.

The Saudi don't own a lot of US Treasuries because they produce/export next to nothing compared to their oil exports.
They have to import nearly everything they use including the workers because they don't do that either. The Saudis spend many of their dollars. That's why they don't own US Treasuries.

I guess that is a big lesson for you to hear.

"No one is forcing someone to work" is really a lame argument. Any occupation, any endeavor, or any past time one chooses to aspire to is already taxed. You argue against people living independently from government handouts. Do you actually want a nanny state? The Federal Reserve Act "forced" all citizens to use only notes issued by the Fed. The dubiously ratified 16th Amendment "forced" everyone to pay taxes. People can only be paid in dollars. There is no choice. Commodities can only be purchased with dollars, not chickens, wheat or gold. It's forced by the Fed/gov. Where do you live?

The difference with Ron Paul's "competing currencies standard" (it's not a gold standard, btw) is that the government would also be 10X smaller than it is now and so too would the taxes be 10X smaller. The difference is also that you are paying for something real (provided by the government) with something that is also real (metal) earned by real work. Imagine living in the real world again?

I guess your lesson continues with your taking a look around at our country.

Where are you looking to see this "unprecedented economic growth?" Your narrow window of view is very limited indeed. Look at Detroit, Flint, Camden; 47 states that are already bankrupt; bailouts for the TBTFs; every social program bankrupt; Amtrak, Postal Service, and Obamacare all bankrupt; and 47M on welfare. Where at you looking?

The printing presses of the Fed created this mess. You can have this corrupt system. Why are all of the politicians corrupt you may ask? If all that is needed is to flip a switch to create some more money out of thin air, then it's fairly easy to buy someone. You can have all of the corruption, all of the lies, all of the backroom deals, and all of the abject failure of the fiat system that goes with it.

If someone wants a bank account with fiat money versus a room full of real commodities, then that is their choice. There is no force involved. Barley is only short-term money, not long-term.

Money is defined by specific characteristics. Only gold fulfills all of these characteristics.
The characteristics of money can be divided into six different categories: Durability, portability, divisibility, uniformity, limited supply, and acceptability. With the ongoing fraudulent issues associated with counterfeit money, it is important to be familiar with these categories.
More at:

I disagree, that the standard

I disagree, that the standard of living of the average American has gone up since the start of the federal reserve. If 2014 technology dropped to 1914 level technology, the level of poverty in this country, compared with the level of wealth in this country in 1914, would shock.

Taxes suppress economic growth, lowering the demand for dollars.

Taxes shmaxes.

"Timid men prefer the calm of despotism to the tempestuous sea of liberty" TJ

Taxes do suppress economic

Taxes do suppress economic growth to a point, but I don't see how they necessarily cause lower demand for dollars.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

To simplify my comment below...

Just to summarize, this is when you will know the end is near:

When the US media starts promoting the release of the missing 9/11 documents, that means Saudi Arabia is making moves against the US dollar. The coverage of the documents is a threat to them not to do so.

If the documents are released, many Americans will be comfortable, maybe even demanding, an attack on Saudi Arabia.

That is when you know the end is near.

Saudi Arabia was deliberately kept as a 'backup' plan. Everyone in the government knew they were primarily responsible for 9/11. It's all according to plan, with the Petrodollar's life in mind.

Thinking the same thing today...

might not release the part that ties in the Bush family, but definitely will release parts that expose the Saudi govt. involvement, thus making the 'event' an act of war. They will have to figure out how to answer why it was not released sooner, but I'm sure they will think of something.

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. But no price is too high to pay for the privilege of owning yourself.
Friedrich Nietzsche

Ace in the ol' oil well.

How sheik, so to speak.

Love Ron, but a delinking will be met with US military FORCE

Ron and Peter are wrong on this, because they are good men, and they are assuming our government will do the right thing. The moment a nation delinks from the US dollar for gold, they will be attacked or a coup will be staged.

Want proof of my theory? Watch for the release of the redacted pages from the 9/11 commission report about Saudi involvement.

Those papers will be released to the public the moment the Saudi government starts making moves to get off the US dollar. Then there will be a war as the American people will be rightfully angry.

The reason the Saudis weren't attacked after 9/11 was because it's really the last option to maintain the US dollar reserve - sort of like a backup plan.

Only thing making this more difficult is if China/Russia unilaterally state they will defend any nation that delinks from the US dollar with their nuclear arsenal. Then things get interesting - a game of chicken. I am under the well educated opinion that the sociopaths that foisted this system on us, won't hesitate to allow a nuclear war. They will still attack Saudi Arabia. Who knows what happens next, but it will be Russia/China's move to make, and they're going to want to save face.

Not good for humanity.

Where is

Where is China building the biggest refinery? Can't remember if it is in Saudi Arabia or Iran ... But if OPEC breaks up and only USA buys oil in dollars, it will not matter ... are we gonna bomb everyone?

In related news . . .

Russia May Ban Circulation of US Dollar

Russia may ban the circulation of the United States dollar, according to Farid Akbarov of APA.

A bill has been submitted in The State Duma calling for the banning and terminating the circulation of USD in Russia.

If the bill is approved, Russian citizens will have to close their dollar accounts in Russian banks within a year and exchange their dollars in cash to Russian ruble or other countries’ currencies.

Otherwise their accounts will be frozen and cash dollars levied by police, customs, tax, border, and migration services confiscated.

If the law enters into force, it will be impossible to legally obtain cash dollars in Russia. The ban or termination of the US dollar will not apply to the exchange operations carried out by Russian Central Bank, the Russian government, ministries of foreign affairs and defense, the Foreign Intelligence Service and the Federal Security Service.

More about the ruble than the dollar?

A year ago 33 rubles would buy a U.S. dollar, Today it takes 47 rubles to buy a single dollar.

I imagine the Russians want to stop the inflation by increasing the demand. Putin is printing up a bunch of rubles to cover the loss of legitimate income as a result worldwide drop in oil prices, AND the loss of gas sales to the Baltic States.

"Timid men prefer the calm of despotism to the tempestuous sea of liberty" TJ

SteveMT's picture

Ron Paul's PetroDollar article from 11-20-13 back on zerohedge.

Ron Paul Says: Watch The Petrodollar

The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars or euros. The sooner the better.—Ron Paul

Dr. Paul is referring to the petrodollar system, one of the main pillars that’s been holding up the US dollar’s status as the world’s premier reserve currency since the breakdown of Bretton Woods.
Continued at:

I've been a huge fan of Ron

I've been a huge fan of Ron Paul since 2007, and I'm still a fan.

But I don't agree with him on the gold issue anymore, gasp.

Digital commerce changed everything, and I think that is the right way to go about business in a world literally full of unlimited potential - and resources.

The USD is now digital. Admittedly, most of us now pay our bills online and rarely use cash to make a car, mortgage, cell phone, or cable/internet bill payment.

Tying a digital currency that everyone uses today to a natural resource that is endless is the reason why the US Dollar won the long term race.

Few people buy, sell, or use gold anymore as a matter of simple everyday business transactions. Those days are history, and I think that is a very good thing for the entire world.

So long as people produce and reproduce, human production is infinite...endless. Zero's and 1's. Digital.

Gold is severely limited, and few people use it, or can afford to have it.

The future is digital.

Dr. Paul is a very smart man, but I do not think he understands the significance of how the US Dollar eclipsed the physical realm and became the first digital currency the world has ever seen.

It's a brilliant currency, because it is backed by an unlimited natural resource that was once thought to have been limited...perhaps intentionally.

It is not possible to suck the earth dry of oil and natural gas.

Ants can't drink an endless ocean.

Millions of years from now, oil and natural gas will still exist.

Will we?

Never be afraid to ask simple questions.

Backed by an unlimited natural resource?

I assume you mean human labor is the unlimited natural resource. The backing of this "brilliant" currency is future individuals' production, you know, that "full faith and credit" stuff we call debt. Being a nation, nay, WORLD of debt slaves doesn't seem like the best future for humanity.

That sounds so much like

people before the .com bubble burst. "It's a new paradigm". In our written history, hasn't viable, long-term currency only been based on scarcity? How can an endless resource be currency?

Yes, there will always be oil. The important figure to economies is how much can be produced per day. The daily flow rate is the valve by which price and scarcity can be linked to paper.

This makes sense

why we are so concerned about Iran accepting gold for oil payments.


I don't think Ron Paul is exactly correct on this issue.

In essence it's a financial/military agreement, like a protection arrangement. Ron Paul says, "This demand is artificial, since the US dollar is just a middleman in a transaction that has nothing to do with a US product or service". Well, not exactly true, it does have something to do with a service, that service is defense, the most important thing to a sovereign oil rich nation. I'm not justifying it, just saying. How long would Saudi Arabia last in an unstable world without US military protection? Those oil rich nations are low hanging fruit for the next military adventures state or rouge pirates looking for resources. Its our navy that keeps the sea lanes open for commerce and that's expensive. If they pull the petrodollar the US pulls defense because we won't be able to afford it and I don't think any other nation is able to be trusted or capable of doing what we do now.

So what are our alternatives?

Should we all be looking for a dip in Bitcoin to buy? Should we be looking for other alternatives such as the new Lightcoin (sp.?)...or just buy old silver coins? What is YOUR opinion?

PS. Please keep in mind that there are folks like me, who are unemployed and poor. I need to protect the very little that I have left.

Silence isn't always golden....sometimes it's yellow.

"The liberties of a people never were, nor ever will be, secure, when the transactions of their rulers may be concealed from them." - Patrick Henry


In the comments area of the link you provided some interesting information pops up about Libya. Including the IMF and DSK.

How does one "Internationalize"?

"You absolutely must be internationalized before the US dollar loses its status as the premier reserve currency. Internationalization is your ultimate insurance policy."

Sounds like diversify your

Sounds like diversify your currency holdings.

This morning's news

How timely a story. Look at today's news...

China, is now the world's top oil importer and is looking to establish a successful crude oil futures contract priced in yuan.

In an earlier story this week that went unnoticed, China's central bank announced that it no longer plans to increase reserves in the US. dollar.

China Fires Shot Across Petrodollar Bow: Shanghai Futures Exchange May Price Crude Oil Futures In Yuan

My first lesson in economics...

My father was employed by an oil company in the Northeast. When he retired, he made the statement that if the United States didn't find sources of oil closer to home, in 20-25 years, the United States was going to have severe problems. He retired in 1972.

For a long time, I believed he was talking about our energy needs, which he was in part. I'm ashamed to say I didn't question him about his statement until the early 1980's, when I asked him to explain to me what he was talking about, his answer was enlightening.

"Not only are our energy needs being controlled by foreign countries, he stated, the value of our money is tied to oil producing foreign countries, thus the value of our money is controlled by foreign countries. If the price of gasoline was $0.36 in 1972, if the price of gasoline is $1.30 in 1982, did the quality of gasoline purchased increase? No. Did the quantity of gasoline purchased increase? No. Then we have to look at what's happening to the value of the dollar. As the price of gasoline increases, the value of the dollar decreases, it takes more dollars to purchase a gallon of gasoline. Oil cannot be replaced. If you fill your tank one week, you'll be back at the gas station the next week to replace the fuel in the tank. There's no way to recover the fuel you purchased the week before, it's gone. It is lunacy to peg the value of our money to a non-renewal energy source controlled by foreign countries (he was correct)."

Fast forward to today, gasoline prices haven't been below $3.00 a gallon in nearly 5 years. Remember the price of gasoline in 1972, $0.36 a gallon. The higher the price of gasoline, the higher the price of a barrel of oil, the less our money is worth. The destruction of the US dollar has been going on since at least 1972, talk about long range planning.

I'm also ashamed to admit the conversation with my father in 1982, was my first lesson in economics.

Phxarcher87's picture

this is

ridiculous you sound like one of those guys who were saying Roam was going to fall...

James Madison

"Roam"....are you serious?

...and you call the OP ridiculous! Is the education in this country so poor that you don't even know how to spell Rome? Criminy!