Petrodollar Warfare

This week we have been looking at the role of oil as the world's currency. Yesterday, we discussed the impact of Iraq's move from using the US dollar (USD) in oil transactions to the euro. Very swiftly and effectively, the US military moved in to take control of the country's oil exports and disposed the Iraqi dictator.

This was just another step on the global chessboard of oil geopolitics. As other countries switched away from the USD, the American hegemony was definitely being threatened (see post from yesterday). America's willingness to use military force even against our allies' support to defend its economic interests does not seem to have reduced the number of oil exporters considering switching to the euro as they recognize that their use of the dollar enables the US to build up its military strength.

Iran went even as far to develop their own oil commodity exchange, or Iranian Oil Bourse. Although the scheduled opening was delayed from early 2006 to February 17, 2008, the exchange opening now offers another marketplace to trade oil. The other two major oil bourses are the New York Mercantile Exchange (NYMEX) in New York City and the International Petroleum Exchange (IPE) in London. The new bourse in Kish, Iran, however will not deal with the US dollar. The transactions will be made in Iranian rial, Japanese yen, Russian ruble, euro and other major currencies.

These actions make Iran the next likely target of US military aggression. Last year, Iran asked Japan to begin to buy oil in Japanese yen. In September, Japan's Nippon Oil agreed that future transactions for Iranian oil will be in yen. This will definitely reduce the need for Japan to hold on to USD reserves, of which Japan has more than $900 billion. Why would you want to hold on to a rapidly depreciating asset?

China is not far off in this respect. China's burgeoning economy is nearly at double digit yearly growth, and thus their thirst for oil is rapidly increasing. China already has $1.53 trillion in USD reserves as of the end of 2007. Why would Japan and China need to hold on to these USD reserves if it can purchase oil from Iran in their own currency?

So is the US military still in Iraq for the purpose of training the Iraqi police, or are they there for the buildup of operational military bases for the expected aggression with Iran? But that won't be the media story for the intervention. The current diatribe in the media is aimed at Iran's nuclear weapon program. Evidently, Washington can not come up with more ingenious stories to scare the public other than big guns, biochemical warfare (WMDs), and nuclear armaments. Never mind if there is no validity to the stories, as long as it induces fear. Terror and big guns is the reigning scare tactics.

As with most military conflicts, it has little to do with religious beliefs and nationalistic opinions, and everything to do with money. The US is closer and closer to losing its free lunch of doing all transactions with the USD and maintaining their hegemony. However, as I have pointed out in previous posts, this may play right into their hands of devaluing the dollar and ushering their new North American currency, the Amero.

Remember the Hegelian dialect discussed during the History of Money series (beginning January 20, 2008 in this blog). First, if you cannot accomplish what you want, create a conflict against something bad (terrorism), do many of the steps needed to under cover of the conflict, and then offer a solution to the problem that would have never been accepted in the beginning without the conflict - thesis, antithesis, and then synthesis. Was 9/11 really the work of terrorists, or an elaborate ruse? Hitler used the same tactic in 1933 when the German Reichstag parliament building was burned down and he blamed Communist arsonists.

If you want to make up your own mind considering 9/11, watch the following 2 hour video at this link www.loosechange911.com/finalcut/.

The more you think on these things, the more you will question the integrity of our government. Are we really the land of the free or the home of economic slaves?

There will be more of oil geopolitics this week. Stay tuned ...

You who are simple, gain prudence;
you who are foolish, gain understanding.

Listen, for I have worthy things to say;
I open my lips to speak what is right.

My mouth speaks what is true,
for my lips detest wickedness.

All the words of my mouth are just;
none of them is crooked or perverse.

To the discerning all of them are right;
they are faultless to those who have knowledge. Proverbs 8:5-9 (NIV)

If you have comments or questions, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com