Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
This Dividend Aristocrat Is Leading the 5G Revolution - 22nd July 19
What the World Doesn’t Need Now is Lower Interest Rates - 22nd July 19
My Biggest 'Fear' For Silver - 22nd July 19
Reasons to Buy Pre-Owned Luxury Car from a Certified Dealer - 22nd July 19
Stock Market Increasing Technical Weakness - 22nd July 19
What Could The Next Gold Rally Look Like? - 22nd July 19
Stock Markets Setting Up For A Volatility Explosion – Are You Ready? - 22nd July 19
Anatomy of an Impulse Move in Gold and Silver Precious Metals - 22nd July 19
What you Really need to Know about the Stock Market - 22nd July 19
Has Next UK Financial Crisis Just Started? Bank Accounts Being Frozen - 21st July 19
Silver to Continue Lagging Gold, Will Struggle to Overcome $17 - 21st July 19
What’s With all the Weird Weather?  - 21st July 19
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Iran and the Dying Days Of the US Empire

Politics / US Politics Jun 26, 2019 - 01:56 PM GMT

By: Raul_I_Meijer

Politics

Something’s been nagging me for the past few days, and I’m not sure I’ve figured out why yet. It started when Donald Trump first called off the alleged planned strikes on targets in Iran because they would have cost 150 lives, and then the next day said the US would do sanctions instead. As they did on Monday, even directly targeting Trump’s equal, the “Supreme Leader Khameini”.

When Trump announced the sanctions, I thought: wait a minute, by presenting this the way you did, you effectively turned economic sanctions into a military tool: we chose not to do bombs but sanctions. Sounds the same as not doing a naval invasion but going for air attacks instead. The kind of decisions that were made in Vietnam a thousand times.


However, Vietnam was all out war (well, invasion is a better term). Which shamed the US, killed and maimed the sweet Lord only knows how many promising young Americans as well as millions of Vietnamese, and ended in humiliating defeat. But the US is not in an all out war in Iran, at least not yet. And if they would ever try to be, the outcome would be Vietnam squared.

Still, that’s not really my point here. It’s simply about the use of having the world reserve currency as a military weapon instead of an economic one. And I think that is highly significant. As well as an enormous threat to the US. The issue at hand is overreach.

While you could still argue that economic sanctions on North Korea, Venezuela and Russia are just that, economic and/or political ones, the way Trump phrased it, comparing sanctions one on one with military strikes, no longer leaves that opening when it comes to Iran. The new Iran sanctions are a preliminary act of war. Simply because of how he presented them. He explicitly stated that he swapped one for the other.

There are quite a few people who have been harping on the demise of the USD as reserve currency for a long time, and I always think: look, nobody wants the yuan, let alone the ruble. There’s no trade being executed in these currencies. So taking over from the USD is a pipe dream.

But that may very well change, and perhaps very fast too, if the US uses the dollar not as an economic weapon (and there are plenty issues with that already), but as a military one. That would potentially hugely speed up any efforts to move away from the buck in international trade.

For the simple reason that it becomes unreliable. Traders hate that, they can’t have that. A reserve currency must be neutral -to a point-. The world of trade doesn’t want the yuan because Beijing controls it and can therefore change conditions and values overnight. But if and when the US uses the USD as a military tool, it essentially risks doing exactly the same: it deneutralizes the USD.

Using the USD as an economic weapon is ugly, but something global trade can deal with. A military weapon, though, is something else altogether. And I see no sign that Trump understands this. The thing is, using your currency, which also happens to be the world reserve currency, as a military tool, means you’ve become a threat to everyone, the entire globe, overnight.

And people don’t want to live that way. Not Iran, not Russia, not China, not Europe, no-one. It’s one thing to use the USD for sanctions. But it’s a real different thing to use it as just a military alternative to “bombing a country into obliteration”.

What Trump did comes awfully close to signing the death warrant for the USD as the global reserve currency. And it’s really only because he and his people weren’t paying attention. He could have phrased the entire thing differently, and it would have been business as usual, a business that Moscow and Beijing are actively trying to undermine, but they could have waited a bit longer reacting.

Now, however, their plans have to be sped up. They’re going to be buying a lot of gold, as they’ve already been doing, they’ll try to do their mutual business in their own currencies backed by this gold, and they’ll speed up alternatives-to-USD plans with other countries in their neighborhood. Because they have no choice anymore.

I see Tyler Durden reporting that the US threatens to throw a Chinese state-owned bank out of the SWIFT system, and I think: great idea. Why not force China to quit the reserve currency system, the petrodollar, outright?! Why not force it to hasten the Asian/Russian alternative trade model into existence? What a great and lovely idea.

The US should today make friends. It should preserve the reserve currency status of the USD for as long as it can, by convincing allies and foes alike that it will protect its neutrality in global trade. But Trump and his people are doing the exact opposite, they’re playing all-on-red.

The US no longer has the economic, political or military might to dictate to the entire world any terms it wants to. Those days are long gone. That ended in Vietnam. Trump’s living in the last century, while Bolton and Pompeo, they live in their own time and world.

But yeah, sure, perhaps this is what the dying days of an empire MUST look like. Maybe there’s a model to follow and there’s no escape, maybe it’s all written in the stars. Like Rome and Greece and Genghis Khan. Maybe things simply just have to play out. Still, looking at that Trump statement about the new Iran sanctions that started me off, it doesn’t feel all that smart.

By Raul Ilargi Meijer
Website: http://theautomaticearth.com (provides unique analysis of economics, finance, politics and social dynamics in the context of Complexity Theory)

© 2019 Copyright Raul I Meijer - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Raul Ilargi Meijer Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules