Iran Sanctions, Emerging Markets And The End Of Dollar Dominance


by Brandon Smith, Alt Market:

The trade war is a rather strange and bewildering affair if you do not understand the underlying goal behind it. If you think that the goal is to balance the trade deficit and provide a more amicable deal for U.S. producers on the global market, then you are probably finding yourself either confused, or operating on blind faith that the details will work themselves out.

Case in point, the latest reports that the U.S. trade deficit is now on track to hit 10-year highs, after a 7% increase in June. This is the exact opposite of what was supposed to happen when tariffs were initiated. In fact, I recall much talk in alternative media circles claiming that the mere threat of tariffs would frighten foreign exporters into balancing trade on their own. Obviously this has not been the case.

Rumors of China committing to trade talks or “folding” under the pressure have been repeatedly proven false. Though stock markets seem to enjoy such headlines, tangible positive results are non-existent. While the world is mostly focused on China’s reactions, sanctions against other nations are continuing for reasons that are difficult to comprehend.

Sanctions against Russia have been tightened in the wake of the poisoning of Sergei and Yulia Skripal in the UK, even though we still have yet to see any concrete evidence that Russia had anything to do with the attack.

Sanctions against Iran have been reintroduced on the accusation that the Iranian government is engaged in secret nuclear weapons development. And again, we still haven’t seen any hard evidence that this is true.

Such sanctions, based on hearsay, rumor and “classified” data that the public is never allowed to review, present what amounts to an economic fog of war. What appears to be a chaotic mess, however, could actually be a distraction from a greater scheme.

I’m talking about what the IMF commonly refers to as the “global economic reset”. They tend to discuss it in vague fashion, but from what I have gathered from the IMF’s own documentation as well as what other major economic powers are calling for, this reset includes a path to de-dollerization. This means the end of the dollar as the world reserve currency, to be replaced with the SDR, a basket currency system controlled by the IMF.

The Iran sanctions, in and of themselves, do not represent a trigger for a global dollar dump. Though, globalists within the IMF might prefer that the average person or economic analyst believe this possible. In this way, they avoid blame for the potential fiscal suffering that would result when the dollar is displaced and stagflationary consequences strike.

A lot of dominoes have to be carefully and deliberately placed and knocked down in order for the dollar to lose its reserve status, but the process is well underway. The effects of sanctions on Iranian oil are a perfect example.

Rather than creating a “multipolar world” as mainstream propaganda suggests, we are seeing even more global centralization in the face of the trade war. In recent news, five nations including Russia and Iran have signed an agreement on the Caspian Sea. The longtime dispute over the resource rich region has suddenly ended as tariffs disputed with the U.S. accelerate.

Iran was initially reluctant to sign the deal, but its success now marks a milestone in Russia/Iran relations. To reiterate, two nations that have been sanctioned by the U.S. are now moving closer together for strategic and economic gain. But it doesn’t stop there.

Europe has expressed a distaste for Iran sanctions and is slow to reduce its purchases of Iranian crude and natural gas. In the process, EU nations would lose one of their largest suppliers of energy.  Both France and Germany are considering the use of alternative payment systems in order to sidestep the US and continue trade with Iran.  This move falls in line with reports that Germany is moving away from the US dominated SWIFT payment network to the Chinese based CIPS.

Natural gas is vital to Europe’s economy, including heating during winter months. Initially, before Iran’s export markets opened back up, the EU was heavily dependent on Russian natural gas and oil to meet its demand. With the threat of Iran sanctions set to return this November, guess which supplier is back in town.  Russia and Germany are set to sign an agreement on an oil pipeline called Nord Stream 2, which will increase Russian energy exports substantially. Donald Trump has attacked the proposal, claiming it makes Germany “a captive of the Russians”. This rhetoric, though, only seems to be hastening the process.

I would note that sanctions against Iran are the likely cause of elevated support in Europe for closer economic ties to Russia. Once again, we see the world moving closer together in centralization while the U.S. is being systematically cut out.

Iran has stated openly that it plans to defy U.S. sanctions and this defiance has been met with support not only from Russia, but also China. The Asian export and import powerhouse, already embroiled in a trade war with the U.S., has stated it will not cut Iranian crude imports, and has even suggested removing the dollar as the trade mechanism for oil purchases.

The Iran issue is igniting at an interesting time. Emerging market economies are facing considerable pressure as the Federal Reserve continues its interest rate hikes and balance sheet cuts in the name of fiscal tightening to combat “inflation”. As I have mentioned in past articles, U.S. banks and corporations were not the only recipients of Fed bailouts, QE and overnight loans. According to the initial TARP bailout audit, which only gives us a small glimpse into the amount of fiat pumped into the global system by the Fed, trillions of dollars were injected into foreign banks and companies.

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