China and Russia Have the US Dollar in its Crosshairs With New Agreement

There has been a lot of activity among Leftists to go behind the back of the federal government to get things done that they deem too important to wait around for approval.  In fact, some could argue that Barack Hussein Obama’s entire eight years in office lived by that creed.

A few months ago, Governor Jerry Brown went ahead and took a taxpayer-funded trip to China, of all places.  Why?  It certainly wasn’t a trip that would make the Golden State any money, because Lord knows if California knows how to do anything, it certainly knows how to spend money.  Making money, though?  That’s a bit of a stretch.

No, Governor Brown took this very expensive trip with security guards and staff in order to pen a meaningless deal with the Chinese over climate change!  Some would ask, “Why would he do this?”  The short answer is that, just like any politician, he just LOVES the sound of his own voice and seeing his picture in the newspaper or on CNN and MSNBC.

The long answer is that Leftists are absolutely infatuated with Communism.  They adore it, they emulate it, live it, breathe it, have sex with it…

Well, okay, that’s a bit much, but you get the picture.  Regressives in this country have such a crush on Communism as to put every other matter of national import to the side just to idolize and mimic it.  Look at the Obama visit to Cuba and Brazil.  That might as well have been a 1960s-style love fest on the beach with oysters, PCP and tie-dye shirts!

The point is that China, like Russia, has been an on-and-off, hot-and-cold partner of the United States for so many decades as to appear as if they are just fine and dandy with this whole relationship.  The Leftists just adore this because it SEEMS like everything is good, no one is threatening anyone militarily, and best of all, there is still travel available to Leftists to visit the motherland of Communism whenever they feel ready to return to their Mecca!

But for the economists and military advisers who have been watching the two super powers on the other side of the world for decades, there is a looming fear that something is brewing; something far more insidious than what is on the surface.  Months ago, Truth and Action reported on a situation that was taking form in the name of the Shanghai Cooperation Organization (SCO) where Russia and China were drawing into themselves like a magnet to metal shavings a vast collection of loosely-aligned countries that would, in their estimation, amount to “half of humanity.”

That’s a scary thing to hear, in the first place, but even more frightening is the fact that it’s not just an IF anymore, it’s a when.  They accounted for the size and the breadth, the scope of the organization by pure virtue of the many nations who are either involved already under treaty, waiting to be involved in the wings, courting the SCO to be involved, or are “outside observers.”  And make no mistake, it is HUGE.  Remember that they’re not just going after nearly every Muslim nation in the world, but also our allies as well.  Israel and India have shown interest!

They also accounted for military strength as well.  While not an “official military,” the SCO employs many thousands of troops and equipment and munitions in “exercises” ostensibly to combat radical Islamic jihadists, but that which could quite easily be formulated into a vast fighting force under ONE FLAG!

Scope and military strength under their belts, the SCO needs one more ingredient:  Money.  And now they have it.

In an effort to hedge against U.S. hegemony, and what could be a global game-changer, the world’s top oil importer, China, is preparing to denominate crude oil futures contracts in Chinese yuan to be convertible into gold. The move would allow oil exporting countries to bypass benchmarks denominated in U.S. petrodollars — creating what will almost certainly be the most critical Asian oil benchmark, according to a report by Nikkei Asian Review.

Typically, crude oil is priced in relation to Brent or West Texas Intermediate futures, both denominated in U.S. dollars.

The move by the Chinese will allow oil exporting countries such as Iran and Russia to bypass U.S. sanctions by trading in yuan instead of U.S. dollars. The move is a direct result of the U.S. proclivity to use the dollar as a weapon against countries that refuse to bend to the imperial will of the United States. To make the yuan denominated contracts more appealing, China intends to make the yuan fully convertible to gold on the Shanghai and Hong Kong exchanges.

“The rules of the global oil game may begin to change enormously,” said Luke Gromen, founder of U.S.-based macroeconomic research company FFTT.

The Chinese government wishes to internationalize the yuan, and conduct trade in yuan as it has been doing, and is beginning to increase trade with Russia. They’ve been taking these steps with bilateral trading, native trading systems and so on. However, when Russia and China agreed on their bilateral US$400 billion pipeline deal, China wished to, and did, pay for the pipeline with yuan treasury bonds, and then later for Russian oil in yuan.

This evasion of, and unprecedented breakaway from, the reign of the US dollar monetary system is taking many forms, but one of the most threatening is the Russians trading Chinese yuan for gold. The Russians are already taking Chinese yuan, made from the sales of their oil to China, back to the Shanghai Gold Exchange to then buy gold with yuan-denominated gold futures contracts – basically a barter system or trade.

The Chinese are hoping that by starting to assimilate the yuan futures contract for oil, facilitating the payment of oil in yuan, the hedging of which will be done in Shanghai, it will allow the yuan to be perceived as a primary currency for trading oil. The world’s top importer (China) and exporter (Russia) are taking steps to convert payments into gold. This is known. So, who would be the greatest asset to lure into trading oil for yuan? The Saudis, of course.

All the Chinese need is for the Saudis to sell China oil in exchange for yuan. If the House of Saud decides to pursue that exchange, the Gulf petro-monarchies will follow suit, and then Nigeria, and so on. This will fundamentally threaten the petrodollar.

And this is why it was so imperative that the Trump administration pen that military and trade deal with the Saudi government back in April/May of this year.  Without the express agreement of the Saudi government to this accord, it may very well have acceded to this overture by the SCO and begun its slow pull-out of its oil from a US dollar-dominated market.

This is important to note, particularly because, at the time of the agreement between the US and Saudi Arabia, United Arab Emirates and Israel, I pointed out that this was more of an insurance policy against the SCO and that the vast majority of countries aligned with that organization were in diametric opposition to Saudi Arabia.  Take, for instance, the events unfolding in Iran and in Syria.  Both of those nations seek to destabilize the Middle East, through Iran’s potential dominance in the area (especially in light of the short-sighted and asinine Obama/Kerry Iran Nuclear Deal) and through the instability of a Syria in full-out civil war.

With the help and military aid of the US, and a deal of armistice with Israel, this whole situation only benefits Saudi Arabia.  If they designed to pull out of the US accord and sign an oil deal with the SCO, that would literally be the beginning of the end for Saudi dominance in that region of the world.

Russia and China are now creating a new paradigm for the world economy and paving the way for a global de-dollarization.

“A Russian-Chinese alternative to the dollar in the form of a gold-backed ruble and gold-backed Renminbi or yuan, could start a snowball exit from the US dollar, and with it, a severe decline in America’s ability to use the reserve dollar role to finance her wars with other peoples’ money,” Engdahl concludes.

These developments are important and they are currently and quickly altering the economic landscape, but it’s important to note that these things are not being done without notice.  There may be movements toward solidifying economic opposition to the power of the US dollar, but one thing the SCO cannot do is rely on another powerhouse, and that is Europe.  The European Union’s (EU) iron grip on the economies of its 27 member nations has come at a huge price to the economic viability of the continent.

While it’s true that the EU has been duped into agreeing to the Islamization of Europe and while the Caliphate continues to spread like black cancer over the whole of that region, they will do nothing but continue to decline economically, because without a strong capitalistic system of government in place (as demonstrated by most of the Muslim nations) economic stability, viability, and entrepreneurialism is virtually non-existent.  The ongoing decline of the Eurodollar proves that outlook.

One thing is clear.  The next few years will show for sure whether this economic move by the SCO pays off and whether the United States acts proactively or reactively.  That will make all the difference in the world for America.

Source:  The Free Thought Project

Image: Epikaira