The collapse of the petrodollar
Last updated on December 6th, 2017 at 02:55 pm
âIf you were unlucky enough to be living in Russia during the end of the cold war, you would have seen big changes. Those with previous wealth begging for food, KGB agents and the police abandoning their posts to protect their families and mobster rule quickly replacing the old communist authority rule.â
But a Soviet Union style collapse couldn’t happen here, right?
After world war two and during the 1950s and 60s, the US and Britain were a beacon of hope for the majority of the world. Although an iron curtain had fallen over Europe, most countries of the world held us in high regard for standing up to the Nazi and Japanese oppression.
Today the majority of the world view the US and Britain as the oppressors, the evil empires and this may come as a surprise, but the close âspecial’ relationship with the US that our country is so proud of could be our undoing.
Since the war years, the US foreign policy has been based upon keeping the wheels of the âindustrial military complex’ based economy turning. Unfortunately, this has built up a lot of hatred them around the world over the last 65 years. Our alignment with the US may not have been an excellent long-term strategy.
The suffering and humiliation of the Russian people during the collapse caused by the US and the UK policy during that time of energy abundance.
Twenty-five years later, and our energy abundance has waned, and the new Russian dominance could put the whole of Europe’s fragile economies at risk with an ex KGB agent pen.
Unfortunately for us, Russia is not our only problem!
The petrodollar has been the world standard for the exchange of oil throughout the world since 1971, and as such allowed the US to export some of its inflation problems abroad – but I digress.
Coming full circle, it was hyperinflation (runaway inflation) in Germany after world war one that caused the rise of Hitler and world war two. Another example of those with previous wealth begging for food, police abandoning their posts to protect their families and in this case, Nazi rule quickly replacing the old authority.
The world is now turning against the petrodollar.
Brazil, India, Russia and China and more recently South Africa (Brics) is a community of the world’s largest economies. Unlike our western politicians and banks who only have foresight for the next election, these countries plan more long-term strategies together.
These countries recognise that the petrodollar has a very limited lifespan and with both the US and the UK economies, printing money (QE) to prop up our savings, they have been proven correct.
Your average country was only able to buy oil and energy in dollars and thus converting it into food, utilities and infrastructure for their populations. The Brics trade zones have set-up a competing world currency to bypass the petrodollar entirely and are spreading like wildfire amongst developing nations.
This system has been dubbed the new silk road, allowing nations to trade without the costly nature of the petrodollar to their economies. Bypass the US-based dollar! The world’s governments are sticking two fingers up to the aggressive US foreign policies and aligning themselves up with the new dominating economies of the 21st century.
Our nations âspecial relationship’ with the US could drag us down with it, as the desperation of quantitative easing and its effects begin to slide into hyperinflation.
As the world’s nations, one by one begins to view the petrodollar as toxic and convert to the new Brics system, the current economic house of cards, so precariously balanced since the credit crunch will topple.
The Brics system has done for world trade what Trip Advisor has done for the holiday business.
Those with previous wealth will beg for food, the police will abandon their posts to protect their families and gangland rule will quickly replace the old authority rule.
As the world increasingly views the US as a bully with six decades of aggressive foreign policies, the UK considered as the bully’s best friend. The disdain felt around the world for us cannot be understated.
Globalisation has allowed the underdog nations to say no, to the bully in the playground who to continually take dinner money. The world sees US foreign policy as the guy who pulls up in his Hummer, kicks down their door, eats their food, take a dump on the carpet and speeds off while tearing up the lawn.
The mutually beneficial relationships through the Brics system are designed to work long-term for each member. By comparison, we have earned our living through the military industrial complex that only picks on third world countries and to get an outsider’s perspective; the world is sick of it.
Our old cold war enemy, Russia alongside China, have aligned and adopted the capitalist strategy, firstly through desperation, then more lately to beat us at our own game. One by one the countries of the world is saying âme tooâ.
Unfortunately for us, the US-induced strangulation of the Russian economy that brought about the end of the cold war has never really been forgotten by the Russian people. The global change towards the Brics system will have unpredictable effects on all western economies.
Now we find a quarter of a century later; it is the rest of the world now building the gallows with the BRICS countries holding the schematics to finally rid themselves of America’s ‘self-centred’ foreign policy.
That âspecial relationship’ doesn’t quite look so unique anymore.
So again I ask, could a Soviet Union style collapse happen here?