Toshio Matsuda, Samurai Lecturer, Commentator & Intl Economist
|(This issue is submitted to a Washington D.C., Seattle, and Zurich think-tank as the English edition of “Straight from Shoulder”.)
"Straight from the shoulder " by Toshio Masuda-Samurai Lecturer
December 03, 2019
( Free of charge to the people I met)
Additional comments to the Samurai Lecture of November 28.2019, in Dubai
Subject: The fate of the US dollar and the world’s economy
I have outlined to you problems with the US dollar being used as an international key currency; they have been caused mainly by the Central Banking System that allows the Federal Reserve Bank (in which the US Government does not own even a single share) to emit the US dollars.
Presidents Lincoln, Garfield, Kennedy and Reagan, who tried to transfer the authority to emit the US dollar from the FRB to the government, were all assassinated or (in the case of Regan) injured in an attempted assassination.
Freedom of central banks to issue US dollar has been safeguarded by all possible means, throughout the US recent history.
During his presidential campaign in 2016 Donald Trump insisted, like his predecessors, that the FRB should be abolished. Yet he is still alive and, so far, has not faced any physical threat.
Let’s take a look at how the US dollar has been protected since the end of World War 2.
The US dollar has acquired its role of an international key currency due to its gold standard: the Bretton Woods System of 1944 provided for the exchange rate of 35 US dollars to 1 troy ounce of gold.
Some time later, when the United States was facing a huge demand for its dollar to finance the Vietnam War and the country’s domestic needs, it became impossible to maintain the existing gold parity. This led President Nixon to abolish the guaranteed convertibility of US dollar into gold. The so-called Nixon Shock occurred on August 15, 1971.
Losing its gold parity sent the dollar on a downward path of devaluation, which in turn led Henry Kissinger to enter into an agreement with the King of Saudi Arabia, who promised to sell its oil exclusively for the US dollars, in exchange for the country’s guaranteed security.
Other Gulf nations followed the Saudis’ example.
From then on the US dollar has been protected by the Middle East oil-producing countries, as petro dollar.
Since 2005, the US has been developing its shale oil production, which now yields more than the Saudi Arabia’s oil output.
The US has slipped from No. 1 position as the Saudi Arabia’s main oil buyer; this place is currently occupied by China, who now demands that the Saudi Arabia accepts yuan as the means of payment.
Saudi Arabia refuses to do so, because of its existing agreement with the US.
However, when the Iran -backed Houthis attacked Saudi’s oil installations, the US did not spring into Saudis’ defence. President Trump shrugged off the incident by saying that the “Saudi Arabia should defend itself ”.
Trump has no wish to protect his biggest competitor (Saudi Arabia) and wants to withdraw the US military forces back to the US.
Trump doesn’t want to buy oil from his competitor either.
China buys twice as much Saudi oil as does the United States, and the Saudis endeavour to meet this demand.
Trump’s trade war with China hits the US economy harder than any harm it inflicts on China. Consequently the US dollar gets weaker while the Chinese yuan gets stronger, which means that China buys its imported oil for less and less cost while the US has to pay more and more for it.
As Saudis and other Gulf nations are no longer obliged to use the US dollar in their oil trading, the petro dollar system is collapsing and the US dollar will start devaluing. Politics alone cannot change the reality of the US dollar’s world domination and since the Central Banking System is used as a tool to control finances of the US and the world, the only way to reform the present dysfunctional CBS is ”Scrap and Build”.
A collapse of the US dollar could be the only way of forcing to the FRB to turn away from operating outside the government and enter into the government structures, where instead of creating cash it would control the government debts, as nowadays “Debt is Money”.
Trump’s trade war strategy leads to weakening of the US economy and consequently weakens the dollar.
Trump’s sanctions against Iran, Russia and other countries lead to the reduction in the use of dollar and therefore to its weakening.
It is not Trump who is killing the US dollar; it is the Market that does it.
The reason why Trump has not been assassinated like Kennedy, who tried to strip the FBR of its authority to emit dollar and hand it back to the government, is due to the fact that the will of the FRB is currently changing the way it controls the US and the world.
Trump gives the impression of fighting the FRB during daytime, but at night he climbs into the same bed with it.
This is just a glimpse of the truth lurking behind the scene.
Samurai Toshio Masuda
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Written by Toshio Masuda