Jim Willie: The Coming Isolation of the US Dollar

“The typical human reaction to any infection, vermin, danger, or toxicity is to stand back, to isolate the agent, to trap it, to prevent its further spread or release, then to remove it in a safe secure way if possible using trained professionals. Eventually decisions must be made on the level of acceptable risk on the removal, like what is willing to be lost or damaged or killed in the process. Risk analysis, cost trade-offs, and minimization decisions must be evaluated and executed. The toxic agent in global trade, global banking, and global bond market is the USDollar. In 2009, the Jackass began making a certain firm point. Those nations that depart from the entire USDollar system early will be the leading nations in the next chapter, with stronger foundations, richer solvency, emerging economies, healthier financial markets, efficient credit engines, growing wealth, stronger political helm activity, and better functioning systems generally.“

“Imagine a contaminated blood system that infects, corrupts, and destroys all interior organs from the spread of the toxin. Those nations that stick with the crumbling USDollar system stubbornly will find a horrible fate with devastating effects, rampant economic damage, broken financial markets, sputtering credit engines, tremendous loss of wealth, wrecked supply lines, poverty spreading like wildfire, ruined political structures, social disorder, isolation from the rest of the world, and a fast ticket to the Third World. That is EXACTLY what is happening in the last several months. A division has begun, as the East has been busily installing the next generation platforms, as related to trade, banking, and commercial integration.”

“The division between East and West actually accelerated when the extremely ill-advised decision for Iran sanctions was made by an increasingly desperate United States Govt and its handler on the Southern Med. The division continues, matures, and develops with each passing month.”

“The Asians partners and players even rejected the United States from the entire Asian trade zone, but did include Australia and New Zealand. The incredibly stupid naive US-led plan, the Trans-Pacific Partnership, attempted to create a trade zone with Asia which would have blocked China.”

“A Paradigm Shift is taking place, and the ASEAN-China summit gave proof positive in a seminal event of the vast changes in progress.”

“The late November Asian summit meeting held in Phnom Penh included 15 Asian nations, which represent half the world’s population. They decided to form a Regional Comprehensive Economic Partnership that excludes the United States.”

“The US will be isolated, so as to protect the rest of the world from its fascist exhibitions and deep manifestations.”

“In the 1960 and 1970 and even 1980 decades, the favorite currencies off the standardized tables of commerce were the USDollar and DeutscheMark. At one time in the Soviet Union and the Soviet Bloc of Eastern Europe, more USDollars and DMarks were in circulation than official Russian Rubles or Polish Zlotys or Hungarian Forints or whatever. … Under a strange bizarre compromise arranged to assimilate East Germany and to conceal the French sovereign debt, the Euro Monetary Union and the common Euro currency was born. It is now in the process of disintegrating. So the powerfully strong and stable German DMark went away.”

“No exposure to alternative currency held under the table was discovered in beach locations to the south or modest hotels in the green hills to the north. But friends reported stories. My older brother spent two months in Germany and Czechoslavakia, with ample stories of hoarded USDollars and DMarks. Store owners and wise families were eager to obtain USD and DM currency, even young kids. He and some ambitious friends heard stories of vast black market activity in Russia, where the US$100 bill was a favorite. In that era, Gold was not an item of pursuit or stored wealth. Times have changed radically, and Gold is the new store of value.”

“Times have changed with the sunset of the DMark and the toxicity of the USDollar. The people, the shop keepers, the business men, the small financial firms, they all have been turned upside down in recent years as they struggle to find a safe place to store wealth. Money has been corrupted. … As a result, all those people, the shop keepers, the business men, the small financial firms, have been discovering Gold & Silver bars and coins.”

“Their combined actions have resulted in an implicit isolation of the USDollar, even an isolation of the Southern European sovereign debt. Swiss havens have grown, in parallel with Gold havens. The toxic monetary plague has been identified, and its toxic sources too. They are the US Federal Reserve and the Euro Central Bank.”

“My personal background has taught me well that a corrupt system never corrects itself. …The US system will remain broken until it collapses, never to be corrected until after its collapse.”

“Only an external force will result in change. When the USDollar is further isolated, that change will come.”

“The Gold price will not rise from internal forces to push up value, in response to central bank monetary policy or shortage of COMEX inventory. The Gold price will rise from external forces in USDollar isolation, along with isolation of the big banks in the US and London. Their gold inventory will be removed, returned, and drained. In time, the USDollar will widely be rejected in trade.”

“The process of isolation is not just now beginning. It is a process well along.”

“immediately following the Lehman Brothers death … the major foreign players located primarily in the East began to feverishly prepare for new platforms on trade and banking. They sought to develop an alternative. For the last 20 to 25 years, a backwards principal has been at work. It dictated that the USDollar would prevail in reserves management, actually the USTBond as vehicle. The rules for trade surplus recycle were constructed to lean toward usage of the USTBonds. Therefore, the global trade would be dominated by USDollars. In other words, banking would dictate trade settlement. That is backwards, and keenly exhibits the brute force of the USDollar hegemony. Also the crude oil payments have been standardized in USDollars, ever since the Saudis cut a major deal with the USGovt and UKGovt in the mid-1970 decade after the famous embargo. Protection came to the Saudi regime and Persian Gulf emirates, in return for exclusive USDollar payment on trade for oil. The Petro-Dollar defacto standard is the primary plank behind the USDollar global trade patterns shown for over three decades. It is coming to an end, a sunset.”

“The Iranian sanctions put forth by the USGovt and adopted by the EuroZone nations have contributed more to unwinding the USDollar trade system than any event in decades. It sounded the death knell for the USDollar. It hastened numerous nations to seek a US$ alternative. It provided a fertile environment to fashion new trade settlement mechanisms. It pushed Turkey into acting as a gold bullion intermediary role in the provision of gold for usage in trade settlement.”

“When an independent highly reliable gold trader source was asked to confirm the role of Turkey as a test case in developing gold based trade settlement, he gave a tacit confirmation.”

“Turkey will serve in my view as a critical swing nation in the movement to create a non-US$ trade settlement system. The new system will be decentralized, meaning not funneled through the major banks, not passing through the USFed as clearing house. Turkey will be essential in the formation of the Eurasia trade zone.”

“First comes the Asian trade zone (the US excluded), and next comes the hand shake between the Asians and Europeans to create Eurasia.”

“Across the new trade zone and its diverse commerce, the USDollar will not be at the center. It is in fact being isolated, since it is a toxic agent. Everything US$-based is crumbling, from currencies to bonds to banks to credit lines to economies.”

“Only those who adopt a Gold strategy will survive the powerful storm underway, as it intensifies. Great wealth is being destroyed, and only Gold & Silver will enable that survival by the construction of lifeboats. Paper wealth is being blown away, as only hard metal assets will prevail. Add energy and farmlands.”

“China has made numerous bilateral swap accords with other nations. As the label indicates, they are deals cut between China and another nation to freely use Chinese Yuan from a credited account that will retain equilibrium. So far many nations have signed up and even renewed deals. The list of nations includes Brazil, Russia, Japan, and India. One might be correct to include all of Asia on the list, as nations like South Korea and Taiwan and Vietnam freely trade in Yuan transactions. The first major signal that the bilateral swaps have taken hold sufficiently to undermine the USDollar through a new trade foundation will be the complete arena of Asian trade being conducted in Yuan transactions.”

“The latticework of bilateral swaps has created the critical mass of a global blanket with no centralized control room, no choke points with bank transactions, no SWIFT code ticket taker. The bilateral swap accords work to build a critical mass that isolates the USDollar from an entirely new foundation for trade.”

“The COMEX is under constant unrelenting pressure. They must shift around ill-gotten precious metal inventory in order to avoid a default. That would be embarrassing. The main device for maintaining order at the COMEX continues to be naked shorting of futures contracts, a blatantly corrupt practice. The naked short ambushes occur with greater frequency in recent months.”

“The new wrinkle to render damage to the COMEX is the arrival of the Shanghai Gold Exchange.”

“The upcoming Petro-Dollar sunset has very uncertain timing indications. … Back in April 2010, the Saudis and other main Persian Gulf nations struck a deal with Russia and China for protection in the gulf region. … the event signaled the sunset of the Petro-Dollar defacto standard.”

“The day is nigh where the Saudis accept non-US$ payments for crude oil. They might first accept Chinese Yuan, then Japanese Yen, then Korean won, then Gold itself through big Turkish bazaars.”

“with imposed rules on account reporting abroad, with tax information requirements, and with capital controls. It is harder each month to move large amounts of funds. The forms to complete have become onerous and imposing, acting like implicit restrictions. It is harder each month to use simple bank cards at ATM machines. With a simple rule change, the banks cannot complete these transactions. The organized and patterned restrictions work to trap USDollars within the local US borders. Consider it an internal mechanism to assist the global isolation of the USDollar.”

“The world wants a more just, more functional, more efficient, more equitable global trade system. The United States has abused its global reserve custodian position too long. The world is fighting vigorously to remove it.”

“The usage of the USDollar as a credit card to finance its consumption binge without ability to pay will come to an end. The usage of the USDollar as a device to enable powerful aggression in war to advance syndicate interests like vertically integrated narcotics will come to an end. The usage of the USDollar as a banking monopoly device will come to an end. The usage of the USDollar as an instrument for bond fraud will come to an end. The usage of the USDollar as a free lunch device to finance the USGovt deficit will come to an end.”

“When the USDollar is no longer the global reserve currency, the Gold Standard will be right around the corner, if not already in the implementation stage.”

Jim’s very um, …exuberant, piece can be read in its entirety here.