The unsustainable fascist police state of America seems to be nearing its end as Russia and China ink a deal to trade oil without ever touching the US banking system.
Zero Hedge reports:
Several months ago, when Russia announced the much anticipated “Holy Grail” energy deal with China, some were disappointed that despite this symbolic agreement meant to break the petrodollar’s stranglehold on the rest of the world, neither Russia nor China announced payment terms to be in anything but dollars. In doing so they admitted that while both nations are eager to move away from a US Dollar reserve currency, neither is yet able to provide an alternative.
This changed in late June when first Gazprom’s CFO announced the gas giant was ready to settle China contracts in Yuan or Rubles, and at the same time the People’s Bank of China announced that its Assistant Governor Jin Qi and Russian central bank Deputy Chairman Dmitry Skobelkin held a meeting in which they discussed cooperating on project and trade financing using local currencies. The meeting discussed cooperation in bank card, insurance and financial supervision sectors.
And yet, while both sides declared their operational readiness and eagerness to bypass the dollar entirely, such plans remained purely in the arena of monetary foreplay and the long awaited first shot across the Petrodollar bow was absent.
According to Russia’s RIA Novosti, citing business daily Kommersant, Gazprom Neft has agreed to export 80,000 tons of oil from Novoportovskoye field in the Arctic; it will accept payment in rubles, and will also deliver oil via the Eastern Siberia-Pacific Ocean pipeline (ESPO), accepting payment in Chinese yuan for the transfers. Meaning Russia will export energy to either Europe or China, and receive payment in either Rubles or Yuan, in effect making the two currencies equivalent as far as the Eurasian axis is concerned, but most importantly, transact completely away from the US dollar thus, finally putin'(sic) in action the move for a Petrodollar-free world.
Look for our dear leaders to stage a war soon. We took out Iraq when they tried to deal oil in Euros. We took out Libya when they tried to deal oil in gold. And the US state will do everything in its power to start a shooting war with Russia and China for attempting to derail US dollar hegemony.
The true pathetic state of the US economy will soon be unmasked as ever more oil deals are done without the involvement of US dollars. The only reason US treasuries are still being bought and sold by foreign states is because they need dollars to conduct oil trades. With a global market for oil in currencies other than dollars, the need for foreign governments to buy US treasuries is greatly reduced.
Eventually foreign states will start dumping their treasury holdings, which will either cause interest rates to rise, or the Fed to print enormous sums of money to prevent rates from rising. If interest rates rise, the US state becomes bankrupt. If the Fed prints, the dollar becomes worthless. There are no other alternatives.
The US finds itself in this position because it destroyed its industrial base with money printing, taxation and enormous regulatory burdens. We produce nothing here, which means the dollar should be worth next to nothing. A currency is only worth the tradable products a nation produces. We presently don’t produce anywhere near enough tradable goods to support the dollar’s present purchasing power.