By Dave Kranzler
The 1944 Bretton Woods international monetary system as it has developed to the present is become, honestly said, the greatest hindrance to world peace and prosperity. Now China, increasingly backed by Russia—the two great Eurasian nations—are taking decisive steps to create a very viable alternative to the tyranny of the US dollar over the world trade and finance. Wall Street and Washington are not amused, but they are powerless to stop it… Now, ironically, two of the foreign economies that allowed the dollar an artificial life extension beyond 1989—Russia and China—are carefully unveiling that most feared alternative, a viable, gold-backed international currency and potentially, several similar currencies that can displace the unjust hegemonic role of the dollar today.
The above is an excerpt from William Engdahl’s essay, “Gold, Oil, Dollars, Russia and China.” The essay is a must-read if you want to understand how the dollar was cleverly forced on the world as the reserve currency and how it is about to be cleverly removed and replaced with a trade system that reintroduces gold into the global monetary system.
Unfortunately, the U.S. educational system presents a fraudulent account of world financial and economic history from Bretton Woods to present. Fed on a steady educational diet of U.S. propaganda, anyone raised and educated in the U.S. will wake up one day to an economic cold shower and eventual poverty unless they’ve taken the steps necessary to protect their savings (if they have any).
Let’s face it, the entire western monetary system is basically a fraud. It is privately made and privately owned, with the entire international payment system being controlled by the FED – which is totally privately owned – and the BIS (Bank for International Settlement, in Basle, Switzerland – also called the central bank of centrals banks). – from an interview with Peter Koenig, geopolitical analyst and a former staff-member of the World Bank
Without a doubt, the Russia-China led BRICS axis is working toward a “reset” of the U.S.-centric dollar reserve global currency system: “Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”
That quote was delivered by Putin at the annual BRICS summit in Xiamen, China. I don’t know how Putin could have more plainly, yet diplomatically, laid out the inevitable demise of the dollar’s status as the world’s sole reserve currency.
The news report from the Nikkei Asian Review of a gold-backed yuan oil futures contract to be traded in Shanghai was treated with predictable skepticism from the those who require an event to have already occurred in order to “see it.”
That report surfaced shortly after the BRICS summit in China. I suspect China intentionally has made the world aware of its plan to roll out this contract eventually well ahead of the actual event. China is imminently launching a yuan-denominated crude oil contract on the Shanghai Futures Exchange. Please note, for anyone skeptical of this event, that the announcement came from the vice chairman of the China Securities Regulatory Commission. I suspect that once this contract is trading smoothly with a high level of liquidity, the next logical step would be to enable the users of this contract to convert the yuan received for oil into gold. The gold-backing would be an incentive “sweetener” to use this contract instead of dollar-settled futures contracts.
A gold-backed, yuan-denominated oil futures contract makes sense certainly from the perspective that Russia and China are already settling Russian energy sales to China in yuan. They have also set up a mechanism by which Russia can convert the yuan received into gold. Furthermore, the Central Banks of Russia and China combined, are by far, the two largest buyers of gold in the world. Why else would Russia/China accumulate a massive Central Bank gold reserve other than to eventually reintroduce gold as a currency stabilizer and a trade settlement “equalizer” into the global monetary system ?
Introduction of an oil futures contract traded in Shanghai in Yuan, which recently gained membership in the select IMF SDR group of currencies, oil futures especially when convertible into gold, could change the geopolitical balance of power dramatically away from the Atlantic world to Eurasia. – William Engdahl, ibid.
The consequences for America as a whole will be catastrophic. Currently the parabolic issuance of U.S. Treasury debt is funded primarily by a recycling of dollars used to settle the majority of global oil trades. Once a dollar-alternative for settling oil trades is established, the amount of dollars available to finance U.S. debt-fueled consumption will rapidly decline. But it’s the ability of the U.S. to issue debt unfettered right now that keeps the U.S. economic system from collapsing. The Fed’s printing press will be the only alternative to immediate collapse. History has shown us what the end of that pathway looks like. It’s far worse than waking up and stepping into an ice-cold shower.