Tuesday, June 24, 2014
Orders from Riyadh – Part 1 – The Birth of the Petrodollar System
After I thought my way through yesterday’s article, things have become a bit clearer. And, this has allowed me to understand the morning news a little better.
As I said yesterday, if the petrodollar system falls, the American Empire falls. This means that whoever controls petroleum, controls the American Empire.
We invaded Iraq twice to preserve the petrodollar. We’ve been training and arming jihadis in Syria to preserve the petrodollar. And, we seem awfully reluctant to do ANYTHING to ISIS because of the petrodollar.
Oh, and we’ll have a nuclear war because of the petrodollar. I almost forgot about that one.
Orders from Riyadh
What an amazing set of circumstances. Because of the deal made back in 1973 between Nixon and Faisal bin Abdulaziz Al Saud (friends call him King) of Saudi Arabia, America’s foreign policy has been captured by Islam.
Whoa. I can’t believe that I just wrote that, but it’s true.
The true leaders of Islam, the ruling family of Saudi Arabia, have America on a leash. If America doesn’t do what the House of Saud tells them to do, wellll… they just have to hint at how great the Chinese yuan would be as the new petro-currency… and, America will salute and obey.
And yes, the situation really is that bizarre.
Let me take a moment to go over again why this is true, because I know that this is almost too incredible to believe. And, I only believe it because I did the math. So, let’s DO the math.
It Starts With World War II
At the beginning of World War II, everyone was afraid that Germany and Japan would win, so they shipped their gold to the safest place on the planet – America. Austria, France, Britain, China and a bunch of other people sent their gold bullion to America, for safe-keeping.
After World War II was over, America was the only country with all of her industrial capacity undamaged, so she became the manufacturing powerhouse of the world. And… she had all the gold.
Bretton Woods Agreement
Furthermore, the US dollar was still on the gold standard, so it was natural for all the major currencies of the world to put themselves on the gold standard by tying their currencies to the US dollar. It was just a logical thing to do. We call this the Bretton Woods Agreement.
Oh, and since the Soviets were such a big threat, they left their gold in the US.
All of this concentrated a tremendous amount of financial power in the hands of the US, and as Lord Acton wrote in 1887:
Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men.
Well, like I said, America couldn’t keep her hands out of the cookie jar and started to print more dollars than she had in gold. And, that worked fine as long as the other nations of the world didn’t figure this out.
And, they didn’t – for about twenty-something years.
This allowed the US to build up a big military, a space program and buy votes… I mean… invest in a welfare state. The fox was in charge of the hen house, and the chickens had no idea.
Bretton Woods Agreement Ends
Unfortunately, for the US, the chickens (Britain, France, Germany, etc.) started to figure out that the US wasn’t playing fair.
However, since the price of gold was set at $35/ounce, the chickens decided to buy back their gold and get out of the ‘hen house’. The process started out as a trickle, and then became a flood. All the dollars that the US government had been printing were starting to come home to roost, and the US treasury was going to run out of gold. And THAT could not be allowed to happen.
That’s why Nixon took the US dollar off of the gold standard on August 15th, 1971. That solved the problem about the declining gold reserves, but it was replaced by a much bigger one.
How was America going to fund Lyndon Johnson’s welfare state AND the cold war with the Soviet Union?
The Oil Problem
As Richard Nixon and Henry Kissinger dithered over what to do about this problem, another situation was raising its ugly head – oil.
During the late 1940s, America stopped being an exporter of oil and became a net importer. In the 1950s, 10% of all oil consumption was imported. In the ’60s, it was 18%. And then, in 1970, US production of crude oil peaked. American imports of oil were going to accelerate, right at the time when the US dollar was going to get weaker and weaker.
This meant that the might of the United States was going to weaken, right at the height of the Cold War. It also meant that the rich and powerful in the US were going to be less rich and powerful, and we JUST. COULDN’T. HAVE. THAT.
Henry Has An Idea
However, Henry Kissinger is one of the smartest psychopaths ever to hold political office in the US, and he figured out something that would fix all of America’s ‘problems’ and ensure her hegemony for decades to come:
The Petrodollar System
We can’t be certain when Henry approached King Faisal of Saudi Arabia with this idea. But, Faisal was a smart dude, and wouldn’t have jumped on this without some serious thinking. Faisal also had some problems of his own.
Saudi Arabia’s finances were a mess, and she had a lot of oil wealth under the ground and no military power to protect it. He didn’t like the Communists, but he wasn’t really impressed with the Americans, either. Egypt had been his biggest military threat, but they’d been trounced by the Israelis, so you can imagine that he was taking a ‘wait and see’ approach – as he thought about Kissinger’s offer.
All of that takes time, which is why we don’t know when the petrodollar idea was presented to the Saudis.
Saudi Arabia Agrees
Then came 1973. Israel won big and could have gone on to utterly destroy Syria and Egypt, but Israel was stopped by the US. And THAT demonstrated America’s leash on Israel and America’s willingness to yank on it.
That settled it for our boy Faisal. The US could be trusted to do what he wanted them to do, so he signed the Technical Cooperation Agreement on February 13th, 1974.
And THAT was the birth of the Petrodollar.
(And THAT is also why the US Federal Government has always been an enemy of Israel.)
…why is all of that important?
I’m glad that you asked that, but I’m not done yet. You need to understand a few things first.
So, If You Want Oil, You Need Dollars
This petrodollar system meant that, if you wanted to buy oil, you had to have US dollars to buy your oil.
I’ll answer that question tomorrow. In fact, I’ll do more than that. I’ll talk about the amazing and mind-blowing implications, and why YOU are in a heap of trouble if you don’t pay attention and prepare. And, later on, we’ll even talk about why this petrodollar system will end in nuclear war.
Credit to OmegaShock.com