Thursday, June 29, 2017

Middle East Realignment Driven by China's Drive to End Petrodollar Dominance

China's goal is to become the leading economic superpower and to move the world away from the US dollar. They have been forming alliances with Middle Eastern countries including Iran, Qatar and Turkey. The petrodollar system is the primary reason the US dollar is still the world's reserve currency as oil producing countries like Saudi Arabia do not sell their oil in currencies other than US dollars. Without this agreement, the US dollar would eventually lose its role as the global reserve currency. China has been working with countries in the Middle East to sell their oil in yuan and thereby weaken the US. 

The Chinese strategy has been to internationalize their currency via a number of different projects (see list below). A Zerohedge report in April articulates how China and Russia are joining forces to bypass the US dollar in global trade. The Shanghai Cooperation Organization (SCO) described as a ‘Eurasian political, economic, and security organization’ is one of the means of executing that vision. Its members include China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan. Earlier this month, India and Pakistan were admitted as members. These countries are expected to further enhance their economic relations via trade. For China to successfully meet its goals, a larger base of countries must join this block. 

Iran
According to this report, bilateral trade between China and Iran grew to $31.2 billion in 2016. Iran is currently listed as having ‘Observer status’ in SCO. As Russia has long wanted Iran to attain full membership status, China recently signaled its support. Incidentally, Iran announced earlier this year that it would stop using the US dollar in its official statements. Iran and China conducted a naval drill in the Gulf a few weeks back.

Turkey
President Tayyip Erdogan implied last December that Turkey is taking steps to allow commerce with China, Russia and Iran to be conducted in local currencies. A Chinese report confirmed that to 'increase the trade volume and foreign investments between Turkey and China, and decrease their dependency on the US dollar during financial transactions, China and Turkey have started direct trading with their local currencies'. Current trade volume of $28 billion is expected to increase.
Turkey even dropped hints at shuttering the Incirlik air base to US air operations. With the US support of the Kurds in their fight against ISIS, there may be a stronger motivation to act. In fact, Turkey refused German lawmakers access to the base leading Germany to announce plans to withdraw 280 troops, as well as surveillance planes and refueling jets, from the Incirlik air base. If you are interested in understanding the historical importance of thie Incirlik air base read this and this. Turkey is listed as a ‘Dialogue partner’ in SCO.

Qatar 
Over two years ago, Qatar launched the first Chinese yuan clearing hub in the Middle East. According to Qatar's central bank governor, Sheikh Abdullah bin Saud al-Thani, it would create ‘the necessary platform to realize the full potential of Qatar and the region's trade relationship with China’. Since it opened, Industrial and Commercial Bank of China has cleared more than 590 billion yuan ($86 billion) in transactions in Qatar. Zheng Chunyi, General Manager of ICBC Doha, confirmed that ‘Qatar, the United Arab Emirates and Kuwait are the most active Middle East countries using the RMB clearing center for direct payments with Chinese mainland and Hong Kong’. 

Iran-Turkey-Qatar Axis

The newly formed Iran-Turkey-Qatar axis (as evidenced by events such as this, this and this) is tied together by each countries' burgeoning relationship with China. While Russia has a greater military presence in the Middle East (via Syria) and draws the most attention from Russia-phoebes in the US, China is the key financial player. Together, both Russia and China have emerged as a direct threat to US supremacy in the region. Although Iran has always had better relations with China, Turkey and Qatar have been solidly aligned with the West as each country still maintain US military personal at their bases.  Perhaps, both countries are hedging their bets based on a calculation that will see a rising China and declining US.

The Petrodollar

Since the inauguration, President Trump has not mentioned the 28 page document (known simply as ‘The 28 pages’ and discussed during the campaign) which implicated members of the Saudi Arabian government for their involvement in the 9/11 attacks on the World Trade Center. He in fact visited Saudi Arabia last month, participated in a sword dance and signed off on a $110 billion weapons deal. Why? The answer is the petrodollar. The key part of this agreement is that the US must defend Saudi Arabia as long as they sell their oil in US dollars.

It would appear that China is taking no chances and is working on pushing Saudi Arabia into its sphere of influence. Byron King from the Daily Reckoning speculates that China is looking to modify its terms of its oil trade with Saudi Arabia as follows:  
'China is currently modifying the terms of its oil trade with Saudi Arabia. Specifically, China is working on a deal to pay for Saudi oil using Chinese yuan. This effort poses a direct threat to the security of the dollar. If this China-Saudi deal happens — yuan for oil — it’s another step closer to the grave for the petrodollar, which has dominated global finance since 1974.'

Whether the speculation is true or not, the threat to the US dollar as the reserve currency is real. The petrodollar system is under an attack directed by China.

From a US perspective, options are limited and further actions like a US invasion of Syria could make the situation worse. Since the US military has decided to back the Kurds to fight ISIS, there is less of a chance to win back Turkey. In my opinion, the best option would be for the US to maintain the current petrodollar system as long as possible until a new one backed by cryptocurrencies is ready. I outlined this in my prior post titled Global Currency Reset Happening Now as Bitcoin Price Explodes. Unfortunately, the US Senate doesn't have a clue. 

Projects that will Further Internationalize the Chinese Yuan

- China's yuan inclusion in the International Monetary Fund's currency basket
- China International Payment System (CIPS) is an alternative payments system to SWIFT
- Asian Infrastructure Investment Bank (AIIB) is an international financial institution that will finance infrastructure projects in the Asia region
- Bilateral Currency Swap Lines completed between China and over thirty counterparties to enable greater overseas trade of the yuan
- Silk Road Gold Fund to facilitate gold purchase for the central banks of member states
- Shanghai Gold Exchange launched to set a new benchmark price for gold bullion

Sunday, June 18, 2017

The Secret Reason Why Many Conservative Media Figures Won’t Denounce Alex Jones


Currently under fire for her controversial interview with Alex Jones, Megyn Kelly tweeted the following a few days back:
“…How does Jones, who traffics in these outrageous conspiracy theories, have the respect of the president of the United States and a growing audience of millions? 
President Trump, by praising him, appearing on his show, and giving him White House press credentials, has helped elevate Jones, to the alarm of many. Our goal in sitting down with him was to shine a light – as journalists are supposed to do – on this influential figure, and yes – to discuss the considerable falsehoods he has promoted with near impunity.”
Legitimate question - why does Alex Jones have the respect of President Trump? As a presidential candidate, President Trump in fact said that Alex Jones has an ‘amazing reputation’. To date, he has not revoked his statement about Mr. Jones thereby making him conspirator-in-chief. So, in light of this, how can anyone take President Trump seriously? But curiously, as the NY Times states, many conservatives have never publicly denounced Alex Jones.

I have constructed a hypothetical conversation between Rush Limbaugh and President Trump which will provide the answer to why conservatives won't denounce Alex Jones:

PT: Rush, great to see you.

RL: Mr. President, great to see you. You know, I’ve been meaning to ask you, and I say this with all due respect, but why are you so fond of this Alex Jones guy? I remember calling him a Democrat kook years ago. He is just nuts.

PT: Uh, huh. Well, Rush..

RL: No really, Mr. President. I don’t think you are helping yourself by associating with him.

PT: Rush, you and I know all about fake news.

RL: Sure, drive-by media, but..

PT: Let's start with the Kennedy assassination, you don’t actually believe the official Warren Commission report, do you?

RL: No, of course not. Wait, you’re not going go all National Enquirer and implicate Ted Cruz’s dad for this?

PT: Well..

RL: Sir, this is crazy. My theory is it had to be the mob or Castro but..

PT: Rush, you know the CIA admitted that it covered up the assassination and there are still missing documents.

RL: Ok, fine, but that was over 50 years ago and we all know about that.

PT: Well, you know what my buddy, Bruce Willis, said to Vanity Fair in 2007 - he was afraid of getting killed:

“They still haven't caught the guy that killed Kennedy. I'll get killed for saying this, but I'm pretty sure those guys are still in power, in some form. The entire government of the United States was co-opted. One guy did it? I don't think so.”

RL: Ok, what does this have to do with anything? Look - I get all the Clinton conspiracies. We all know about the Clinton body count. I covered the Seth Rich murder conspiracy on my show. Sean [Hannity] laid out how he felt last October. You brought up Vince Foster during the campaign. But 9/11 being an inside job? Do you know how crazy that is?

PT: You know about the $2.3 trillion missing from the Pentagon.

RL: Yeah, whatever, that kind of stuff happens.

PT: Rush, you know there was no way those buildings were brought down by fire.

RL: Here we go.

PT: Look, I am a builder and know everything there is to know about building structures. I even said so on 9/11 during an interview that there were bombs in those buildings.

RL: Ok…

PT: Rush, you read the 28 pages right?

RL: Yeah, basically faulted elements of the Saudi government. And, why are we still friends with the Saudis anyway?

PT: Don’t you find it curious how close the Bush family is to the Saudis?

RL: Yeah, but they didn’t have anything to do with it. Why, George W. Bush is a fine man. You are not going with this Bush did 9/11 theory are you?

PT: Let’s just say the Bushes are not so innocent in all this. Just view this.

RL: Is this stuff true?

PT: Of course, these are official government documents and there is lots of circumstantial evidence. Its also plain common sense.

RL: Huh.

PT: Make sense?

RL: Yeah, I guess I finally understand why the Bushes and Clintons are such good friends. And all the new world order stuff..

PT: Yeah.

RL: I also get why you were so tough on Jeb. Wait, so why are we fighting all these wars – Afghanistan, Iraq, Libya. For goodness sake, I was selling Club Gitmo t-shirts!!

PT: Rush, you’re not the only one. Talk to Congressman Walter Jones. He went from calling out France, you know, the whole freedom fries thing to deeply regretting his support for the Iraq war. He even said a few years back that Dick Cheney is probably going to hell.

RL: Wait, so Ron Paul has been right all along?

PT: Ron Paul, good guy – can never be president – but very honest man.

RL: So, Sandy Hook? Pizzagate? Are they all true?

PT: Look, not all conspiracies are true. There are some crazy ones going around. I even heard of one that Jared is a Mossad agent. All the truth will come out eventually.

RL: So, what do we do?

PT: Well, don’t worry, there are plenty of us who know. Alex is one of the leaders. Until we reach a critical mass, we can’t go public yet. Information will come out in pieces. Look, we have gotten the concept of the deep state out there. Before my inauguration, barely anyone had even heard of it. So, we are making tremendous progress, tremendous. Still a lot of hate, a lot of division. We need to come together. In the future, expect more revelations. Like what my buddy Vladimir said. He just accused the CIA of planning the JFK assassination. And you remember how I hinted about not having any columns when I spoke to the CIA?

RL: Ok, I get it. So, what I am going to do?

PT: Rush, the choice is yours, I understand the risks and won’t ask you to do anything you aren’t comfortable with doing. The truth will get out, regardless of what happens to me. It’s up to you to choose which side of history you want to be on.

RL: Thank you sir. This conversation never happened.