Russia in 'secret' international talks to ditch dollar - pap
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Russia in 'secret' international talks to ditch dollar - paper
MOSCOW, October 6 (RIA Novosti) - Russian officials have held "secret meetings" with Arab states, China and France on ending the use of the U.S. dollar in international oil trading, Britain's Independent newspaper reported on Tuesday.
The countries are reportedly seeking to switch from the dollar to a basket of currencies including the euro, Japanese yen, Chinese yuan, gold, and a new unified currency of leading Arab oil producing countries.
"Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars," the paper said.
The Independent said the meetings have been confirmed by Chinese and Arab banking sources.
"These plans will change the face of international financial transactions," a Chinese banker told the paper.
"America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."
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End to USA financial dominance in the works?
Looks like it's the end for USA's ambitions for global dominance.
The dollar then did not become a ‘petrodollar’ although Kissinger spoke about the process of ‘recycling petrodollars.’ Instead what he referred to was the initiation of a new phase of US global hegemony in which the ‘petrodollar’ export earnings of OPEC oil lands would be recycled into the hands of the major New York and London banks and re-lent in form of dollar loans to oil deficit countries like Brazil or Argentina, creating what soon came to be known as he Latin American Debt Crisis.
The dollar at that time had been a fiat currency since August 1971 when President Richard Nixon first abrogated the Bretton Woods Treaty and refused to redeem US dollars held by foreign central banks for gold bullion. The dollar floated against other major currencies, falling more or less until it was revived by the turbo change of the 1973-4 oil price shock.
What the 1973 oil shock achieved for the sagging dollar was a sudden injection of global demand from nations confronted with 400% higher oil import bills. At that time, by postwar convention and convenience, as the dollar was the only reserve currency held around the world other than gold, oil was priced by all OPEC members in dollars as a practical exigency.
With the 400% price rise, nations such as France, Germany, Japan and other importers suddenly found reason to try to buy their oil directly in their own currencies—French Franc, German Deutschemarks or Japanese Yen—in order to lessen the pressure on their rapidly declining reserves of trade dollars. The US Treasury and Pentagon made certain that did not happen, partly with some Kissinger secret diplomacy, bullying threats, and a whopping big US military agreement with the key OPEC producer, Saudi Arabia. At that time it helped that the late Shah of Iran was seen in Washington to be a vassal of Kissinger.
The point was not that the dollar became a ‘petro’ currency. The point was that the reserve status of the dollar, now a paper currency, was bolstered by the 400% increase in world demand for dollars to buy oil. But that was only a part of the dollar story. In 1979, following the accession to power of the Ayatollah Khomeini in Iran, oil prices shot through the roof for the second time in six years. Yet, paradoxically, later that year the dollar began a precipitous free-fall, not rise. It was no ‘petrodollar.’
Foreign dollar holders began dumping their dollars as a protest to the foreign policies of the Jimmy Carter Administration. It was to deal with that dollar crisis that Carter was forced to bring in Paul Volcker to head the Federal Reserve in 1979. In October 1979 Volcker gave the dollar another turbo-charge by allowing interest rates in the US to rise some 300% in weeks, to well over 20%. That in turn forced global interest rates through the roof, triggered a global recession, mass unemployment and misery. It also ‘saved’ the dollar as sole reserve currency. The dollar was not a ‘petrodollar.’ It was the currency of issue of the greatest Superpower, a superpower determined to do what it needed to keep it that way.
The F-16 dollar backing
Since 1979 the US power establishment from Wall Street to Washington has maintained the status of the dollar as unchallenged global reserve currency. The role, however, is not a purely economic one. Reserve currency status is an adjunct of global power, of the US determination to dominate other nations and the global economic process. The US didn’t get reserve currency status by a democratic vote of world central banks, nor did the British Empire in the 19th Century. They fought wars for it.
For that reason, the status of the dollar as reserve currency depends on the status of the United States as the world’s unchallenged military superpower. In a sense, since August 1971 the dollar is no longer backed by gold. Instead, it is backed by F-16’s and MI Abrams battle tanks, operating in some 130 US bases around the world, defending liberty and the dollar...
http://www.globalresearch.ca/index.php?context=va&aid=2076