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Profoundly
significant news came out of the Middle East on Monday January 23, 2012. The headline via DEBKAfile* reads:
India to Pay Gold Instead of Dollars for
Iranian Oil. Oil and Gold Markets
Stunned
Within
the body of the report were gleaned these crucial items:
1.
India has become the first buyer of
Iranian oil to agree to settle purchases in gold.
2.
China is expected to follow India's
move.
3.
Approximately 40% of Iran's total oil
exports are consumed by India and China.
4.
Settling oil transactions in gold
enables Tehran to circumvent the EU's upcoming freeze on Iran's Central Bank
assets and the oil embargo announced Monday January 23rd.
5.
Due to the magnitude of the transactions
proposed, the price of gold is expected to rise and the Dollar's value
depressed on world markets.
6.
The EU currently accounts for
approximately 20% of Iran's oil exports.
7.
The transactions are to be facilitated
via two Indian state owned banks and a Turkish state owned bank.
8. Financial
mechanisms have also been implemented between Iran and Russia for the settlement
of oil purchases in currencies other than the US Dollar.
At
this point in time it is unnecessary to rehash the dismal state of fiscal and
monetary affairs that plague the US.
Excluding the willfully delusional, it is clear to any honest analyst
that the gargantuan debts of the US can never be paid in full with dollars
retaining current purchasing power.
Further, with the insatiable need to issue exponentially growing
volumes of debt to keep the welfare/warfare state hobbling along, who would
willingly continue to finance such a debacle? All that's left to supports this
failing fiat experiment is an entrenched, yet deteriorating, reserve currency
system to which there has not been a functioning alternative to date.
It
is because of this macroeconomic environment, and the policies that gutted a
previously productive goods producing economy, that the only tool left for
the US to maintain the status quo is to defend at all costs the Dollar's
reserve currency status....and its foundational component the Petro
Dollar. This is most likely the
motive behind the quickening drumbeat to go to war with Iran. If keeping the world safe from rogue
states with nuclear capabilities were the sole motive, than why have North
Korea and Pakistan been given a pass?
Unlike
the invasion of Iraq, whereby that oil rich nation had no allies come to its
aid or at least none with the wherewithal to dare protest in a meaningful
way, the Iranian crisis is developing into a far more serious geopolitical
happening. Just as most wars are
a smokescreen for behind the scenes power plays between the various ruling class, the events unfolding in the Persian Gulf look to be
such in spades. What will shock
the world when the actions reported above are fully digested is the choosing
of sides and the clandestine development of alternative financial mechanisms
by those nations previously believed not ready or unable to challenge the
Western elites.
Following
years of speculation as to the fate of the US Dollar and the lengths to which
Western bankers would go to defend the system that serves them so well, could
today's headlines be the proverbial ringing bell? Unfortunately, the actions
of most bankrupt and overextended empires is to march its people into
a calamitous war. As with all
historically recorded futile endeavors in defending the indefensible (i.e. a
debt based paper monetary system), the most likely financial survivor will
again be gold.
Chris Blasi
Neptune Global
Chris Blasi is President of Neptune Global Holdings LLC
(www.NeptuneGlobal.com) and a guest contributor to both www.FinancialArticleSummariesToday.com and www.munKNEE.com
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