Saturday, May 26, 2018

100 years after World War I the return of the Axis of Evil is appearing to be economic, and in the war between gold and dollar hegemony

2018 marks the 100th anniversary of the end of the War to End All Wars, and a victory by the Allies over the Axis powers.  Yet even as we have discussed many times in both articles and podcasts over the past few years, this current decade is appearing more and more to be incredibly similar to what took place globally during the same 10 year stretch in the 20th century.

These events that are so much similar in nature include the rise of populism and nationalism, extraordinary economic growth which would be followed by depression, empires maneuvering for control over other nations, and a buildup of tensions that led to a massive world war.

But while most conflicts in recent years have been small and primarily proxy in nature, one type of war this decade has certainly taken on a global feel.  Only this one is not military in nature, but economic.

Ever since the global financial crisis of 2008, nations and coalitions have risen to try to both counter and bring down dollar hegemony.  And whether it is the BRICS nations, emerging market nations, Russia, China, and in recent years the Middle East, all of them are in some aspect attempting to rebel from having to use the dollar is the world's singular reserve currency.

Which brings us to 2018.

In just the first few months of this year, several different moves have been made which seek to tip the scales away from U.S. control over the global financial system, and bring an end to the escalating credit system which potentially could collapse the globe under a mountain of debt.  And one new group that is rising to take on dollar hegemony is being labeled the 'Axis of Evil' by economist Jim Rickards, primarily because their gambit to kill or weaken the dollar appears to involve the use of gold.

A major blind spot in U.S. strategic economic doctrine is the increasing use of physical gold by China, Russia, Iran, Turkey and others both to avoid the impact of U.S. sanctions and create an offensive counterweight to U.S. dominance of dollar payment systems. 
This is the Axis of Gold. 
This gold-based payments system will dilute and ultimately eliminate the impact of U.S. dollar-based sanctions. 
Gold offers adversaries significant defenses against these dollar-based sanctions. Gold is physical, not digital, so it cannot be hacked or frozen. Gold is easy to transport by air to settle balance of payments or other transactions between nations. 
Gold flows cannot be interdicted at SWIFT, the international payment system. Gold is fungible and non-traceable (it is an element, atomic number 79), so its origin cannot be ascertained. 
We have a lot of data to support the claim that the Axis of Gold exists and is gaining strength. 
We know that for example, Russia has tripled its gold reserves in the last ten years. It’s gone from about 600 tons to over 1800 tons of physical gold, and is moving very quickly towards 2,000 tons. That’s an enormous amount of gold. 
China is also amassing physical gold at an astounding rate. Like Russia, it has tripled its gold reserves, officially from 1,600 tons to 1,800 tons. 
Iran also has an enormous amount of gold. Iran received billions of dollars in gold from the Obama administration as bribes to join in the now discredited nuclear deal (the “JCPOA” or Joint Comprehensive Plan of Action) to limit Iran’s nuclear weapons program. 
Turkey is also acquiring enormous amounts of gold, which should not be surprising given Turkish president Recep Erdogan’s recent comments questioning the role of the dollar in global trade. 
So that’s the Axis of Gold. Again, evidence for this Axis of Gold is overwhelming. 
I have contacts in the national security industry community who have, in their own roundabout way, been able to confirm that to me, so it’s very clear that’s what’s happening. 
I’ve warned the Pentagon and the Treasury Department about this threat for years. But the message has yet to sink in. The U.S. is still unprepared for this coming strategic alternative to dollar dominance. - Daily Reckoning
When the U.S. closed the gold window back in the 1970, they created the paper futures market as a means to manipulate and control the price to protect their soon to be policies of money printing and monetary expansion.  And this out of all the different weapons nations large and small could use to try to break America's monopoly over global finance, more than anything it is the one recognized form of money that seriously has the potential to break the back of the fiat dollar.

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