The Petrodollar Empire is faltering. Elon Musk knows this and warns that Washington would do well to reduce budget deficits.
WWIII and greenbacks
The dollar is fragile and the CEO of Tesla knows it. The billionaire has declared this Friday that he “Something has to be done about the national debt, otherwise the dollar will be worthless.”
This tweet was a response to declarations from Donald Trump's former national security adviser. General McMaster warns that the world could be “at the edge” of a third world war.
“I know that's a bit of a dramatic statement, but we have to take this risk seriously if we want to avoid the worst-case scenario. It is much cheaper to prevent a war than to have to fight it. »
Wise words, except that the general at the same time calls for the doubling of the defense budget… Knowing that it already reaches nearly 850 billion, or 20% of all tax revenues.
These numbers are such that even Treasury Secretary Janet Yellen is beginning to express her concerns.
“I wouldn't say I'm concerned about the current situation, but I am concerned about where we will go if we don't take steps to reduce the budget deficit”she declared to the US Congress.
Indeed, missiles, tanks, drones, frigates, are anything but productive investments. On the contrary. Simply, the petrodollar means that the United States can afford it. For the moment.
This miracle is due to the fact that the majority of global foreign exchange reserves are invested in American debt. This represents $7,500 which, instead of being converted into Saudi rials, Australian dollars or Venezuelan bolivars, adds to the American debt.
The result is that the dollar remains strong on the foreign exchange market, despite immense budgetary and trade deficits.
The end of “exorbitant privilege”
Washington can afford to run such deficits because the United States forces the entire world to trade in dollars.
As Michael Saylor says, “although it is unsaid, the United States' nuclear arsenal comes into play when nations buy Treasury bonds”…
The fact that central banks keep their foreign exchange reserves mainly in dollars (in treasury bills) allows Americans to enjoy a chronically deficit trade balance without the dollar sinking.
Unfortunately for the dollar, the BRICS intend to get rid of it. Saudi Arabia, Russia and China no longer want it. US debt held by the Chinese central bank increased from 1,200 billion in 2018 to 775 billion dollars today.
Even Japan, the largest holder of US debt ($1,170 billion), can hardly accumulate more. The BoJ had to sell some this week to stop the hemorrhaging of the yen, which has lost 50% of its value against the dollar since 2012.
The following graph shows that it is now printing money which finances the US budget deficit. The fact that the Fed is forced to plug the holes says it all…
The United States is forced to print (green) money to finance deficits. »
If the world no longer wants to finance the US debt, it will be necessary to reduce the deficits or risk seeing the dollar collapse sooner or later.
It's that or double military spending to try to scare Russia, China and the petromonarchies into buying Treasury bonds. This is the solution that General McMaster recommends.
Bitcoin to trade on equal terms
All the wars that the United States wages are ultimately aimed at protecting the petrodollar system. That is to say the fact that all the oil in the world (80% currently) is sold exclusively in dollars.
The entire foreign policy of the empire revolves around this monetary imperative. The 2014 US coup in Ukraine and the return of war to Europe (500,000 deaths in Ukraine) aimed to punish Russia for making dedollarization the BRICS priority.
The unwavering support for Israel is no exception. The aim is to scare Arab nations into selling their oil in rupees and yuan.
In short, the United States has two choices:
1) Agree to trade on equal terms, which amounts to reducing their abysmal deficits and tightening their belts a little.
2) Increase conflicts in order to provoke regime changes and/or default on the debt they owe to “rebel” nations.
Knowing that the United States and Europe have “frozen” 300 billion euros and dollars belonging to Russia. Not repaying China would dig the dollar's grave.
The world will then need a new international reserve currency. And what's better than bitcoin. It is a currency as well as a payment network (which therefore does not need SWIFT).
Stateless, uncensorable and existing in absolutely fixed quantity, it would be the ideal solution to calm international relations.
Because let's face it, there will be no third world war, let's be serious. Americans must reduce their lifestyle, period.
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