Thursday, November 19, 2009

Collapse of the Greenback? Will the Dollar get an “Arab Oil Shock”?

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    • F William Engdahl
    • According to a leaked report from Arab Gulf oil producers, there have been a series of secret meetings in recent months between the major Arab oil producers, including Saudi Arabia, and reportedly also Russia, together with the leading oil consumer countries including two of the three largest oil import countries - China and Japan.


      Their project is to quietly create the basis to end a 65-year long “iron rule” of selling oil only in US dollars. As I document in my book, Century of War, following the 400% oil price shock of 1973, which was deliberately blamed by US media on “greedy Arab Sheikhs,” the US Treasury made a secret trip to Riyadh to tell the Saudis in blunt terms that if they wanted US military defense against potential Israeli attack, that OPEC must privately agree never to sell oil in currencies other than the US dollar. That “petrodollar” system allowed the US to run staggering trade deficits and remain the world reserve currency, the heart of its ability to dominate and control world financial markets until the crisis of the sub-prime real estate securitization in August 2007.

    • With that decline of the US dollar goes the lessening of the political power of the United States as sole economic and financial superpower. We face very turbulent waters ahead and gold not surprisingly is gaining in this uncertainty.