by Jim Willie, Gold Seek: Within the US borders, the population remains largely ignorant of the true significance of the global currency reserve concept. It is of paramount importance, yet almost never discussed in the financial press. The public within the United States simply assumes the country operates with the USDollar as its currency, with near blindness to its global role in trade and banking. The end of an era is coming, as the change will be powerful in its effect. The shock wave could hit this year in some form, in a manner to highlight its importance.
MEANING OF CURRENCY RESERVE The term is tossed around in common manner, often without an explanation of what it means. A strict meaning is followed by a practical meaning. The USDollar serves as global currency reserve, insofar as the USTreasury Bond is the standard for bank reserve core asset usage. Numerous countries have a core foundation to their national banking system. They maintain core assets and ratios. It is not gold bullion, but rather the USGovt debt. It is the USTBond denominated in USDollars. Of course, such practice is upside down and lunatic. Debt operating as core assets in the global banking system is utterly reckless, insane, and bound to force a systemic breakdown. Such is the heresy and risk from the banker cabal.
The practical side of global currency reserve system is that trade payments are standardized as being executed in USDollar terms. A crude oil shipment, a grain shipment, a container vessel shipment, they are paid in USD terms, often with short-term USTreasury Bills. Also, international contracts like for consulting services or for installation of IT systems typically are written for payment in USD terms. As a result, the nations set to pay for a shipment or contract maintain huge USTreasury stores in their banking systems, ready to complete the trade payments.
ULTIMATE LOST PRIVILEGE The King Dollar and its court of financial terror is destined to lose its privileged perch. The abuse to maintain the global USDollar financial system is universal and profound. It all engenders tremendous resentment and backlash in the form of resistance, together with concerted movements toward the non-USD platforms. The movements are emerging from the East. When the global reserve currency status is lost, the American public will face severe problems never before encountered. They will be very confused. They will be lied to in a big way. Consider the import price inflation, the supply chain shortages, and the civil disorder. Running the USEconomy and USGovt on an international credit card, without ever paying the bill, has a certain limited duration. When the reserve status ends, the privilege ends, and the shock begins.
EAST TO CONTROL TRADE PAYMENT The Eastern nations control significant manufacturing facilities toward the global economic output. Such is the case after a full generation of outsourced industry by Western corporations. At first it was the Pacific Rim in the 1980 decade. Then it was India, Brazil, and a host of other burgeoning nations striving for further development. The West controls the financial markets, with all the elaborate paper instruments, and all the sophisticated market rigging machinery. If it controls anything, the East controls the manufacturing sector. Therefore these nations, led by China and the Pacific Rim, within which is the key player Taiwan, are in a position to dictate the terms of trade payment. The standard as of now is the USTreasury Bill. This will ultimately change, and when it does, the USDollar will officially shed its global reserve status. The impact will be enormous. The Eastern nations, perhaps under the aegis of the Eurasian Trade Zone protective shadow, are in a position to demand alternative forms of trade payment. Consider the Chinese RMB currency, the Ruble currency, or soon the Gold Trade Note. With manufacturing prowess comes the power to dictate trade payment. The risk to the USEconomy is cutoff for supply into the many sectors, most visibly the retail sector. All the while, the One Belt One Road set of massive projects will be conducted outside the USDollar sphere.
CRUDE OIL AS NEXUS The initial impact is most likely to occur within the crude oil market. The key region for the Petro-Dollar defacto standard has been for 40 years the Arab Gulf Region. The OPEC oil cartel has been led by the Saudis, who operate as puppets for the Anglo-American helm and the banker cabal. The Saudis are in heated conflict with Qatar, as the Petro-Dollar has fractured in full view. The Saudis are in an ugly war with Yemen, in order to steal energy reserves. If truth be told, the Saudis are bankrupt and broken. Enter into the void the Natural Gas Cartel, led by Russia, Qatar, and Iran. It is in the formative stage here and now. The key event upcoming is for the Chinese to win the right to pay for Saudi oil in Chinese RMB terms. Following this will be Kuwait, Oman, UAE, and other Arab oil monarchies. The event will mark the final nails in the Petro-Dollar coffin, whose standard structure has been undergoing disintegration for three years.