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Driving Pox Americana Off the Cliff

GRAPHIC: ZeroHedge

America is the abusive psychopathic ex-boyfriend that never stops stalking you after the relationship ends. Every day, another round of sanctions and tariffs makes the case against continuing to do business with the U.S. stronger. A central theme of The New Nationalist (TNN) is that the lowest common denominator kakistocracy that runs America into the ground has been put in place by design.

Last week, Merkel’s German Foreign Minister Heiko Maas dropped a big bombshell involving the need for a new financial payment system that bypasses the U.S.-dominated SWIFT system. Maas openly accused the U.S. of weaponizing the dollar.

Merkel herself said, “We can no longer rely on the superpower of the U.S.”

France, Germany and the United Kingdom plan to protect the interests of companies doing business with Iran, a significant European market of around 80 million people.

With the U.S. unveiling a new set of sanctions against Russia on Friday, Moscow said it is accelerating efforts to abandon the American currency in trade transactions, Russian Deputy Foreign Minister Sergei Ryabkov said.

The time has come when we need to go from words to actions and get rid of the dollar as a means of mutual settlements and look for other alternatives,” he said in an interview with International Affairs magazine, quoted by RT“Thank God, this is happening, and we will speed up this work,” Ryabkov said

The Russian Federation has reduced its public debt in relation to GDP from 92% at the beginning of 2000 to 13% today. They have only 13 billion in dollar-denominated debt and have jettisoned most of their U.S. Treasury reserves in favor of gold.

The U.S. has a debt-to-GDP level of 107% and faces fiscal deficits of well over a trillion dollars in the year ahead. [See “Trumpenstein Has More Largesse for the Kleptocrats, and is There a Fat-Finger ‘Sell’ Button?“] Relying totally on its previously annotated reserve-currency status, the United States had foreign currency reserves of only $42.8 billion as of March 2018. In comparison, the euro area has combined foreign currency reserves of $272.7 billion as of March  2018.

In contrast, Turkey — with almost 100 billion dollars in foreign debt — suffers from the excessive dollarization of its economy. Countries in this position are vulnerable to a U.S.-dollar attack by wild man Trump. The smart ones know it, and they’re doing something about it.

So far, the total value of goods covered as a result of President Donald Trump’s trade war with China is $100 billion. But with trade talks breaking off, the Red Queen administration is now set to enact a far larger tranche of tariffs covering some 6,000 products from China with an annual import value of $200 billion. The U.S. could impose the duties after a comment period ends Sept. 6. China is expected to retaliate soon, and my bet is a more serious devaluation. The last two times, China tried to devalue its currency, in August 2015 and December 2015, and the U.S. stock markets cracked by over 11% in a matter of a few weeks.

China and Iran have already agreed to stop using the dollar in global trade as China ramped up purchases of Iranian oil in defiance of U.S. sanctions. China, Russia and India have cut deals to accept each others’ currencies for bi-lateral trade.

Even Switzerland’s solidly conservative state pension fund has joined in the de-dollarization trend this year and has strongly increased its investments in bullion, switching away from paper-backed securities in U.S. dollars.

After a decade of experimental monetary policies in the U.S., Europe, Japan and elsewhere, the emerging market economies have become addicted to debt borrowed in so-called hard currency U.S. dollars that they cannot inflate away.

US Inflation Would Go Ballistic

The primary causa proxima for runaway inflation in America would be the return to the domestic economy of U.S. dollars from abroad as foreigners switch to alternatives. In particular, this would involve the discontinuance of petrodollars as a reserve currency. This would also involve direct goods trade as well. Russia, China and other dollar-bond holders in truth financed the U.S. wars that were aimed at them by buying U.S. debt. When the foreign reserve status of the U.S. dollar erodes, those dollars flow back into the domestic United States and incinerate price stability, causing substantial bursts of inflation.

This may already be underway. The Fed heads are still all over the map about inflation, which is creeping higher. Clearly, there is no discussion about excess dollar repatriation at all. If this came on their radar screen soon enough, they would have to act decisively to drain dollars from the U.S. domestic economy.

What appears to be unfolding is an attempt to sound credible and tough without doing much. To that end, hawk Dudley stated, “Inflation’s coming soon.”

Janet “Cry Wolf” Yellen on her watch openly admitted that the Fed does not “fully understand” inflation. She admitted that the Fed was “wrong” about employment and inflation, stating, “The FOMC’s understanding of the forces driving inflation is imperfect.” Trying to sound credible, she then suggested “The Fed “should also be wary of moving too gradually (on monetary policy).

The Producer Price Index (PPI), for example, which generally leads the Consumer Price Index (CPI) by a few months, rose at a 3.4% year over year (YoY) rate in June, up from a 3.1% rate in May. Of interest, the transportation sub-index, a key component of costs, rose a whopping 1.3 percentage points in May (a 15.6% annualized rate) and 7.7% YoY.

Procter & Gamble Co., Nestle SA, Coca-Cola Co. and others announced price increases this summer on a wide swath of consumer staples.

The Employment Cost Index, for years the darling of the Fed when it came to justifying loose monetary policy, now stands at a cycle high. Yet it, too, is being largely ignored by Powell and company.

The secondary cause of resurgent inflation will be tariffs on Chinese imports. This removes a deflationary effect on U.S. prices and functions as a tax mostly on lower- and middle-class people on the plantation. Import prices were starting to run hot even before the tariffs fully kick in.

7 Comments on Driving Pox Americana Off the Cliff

  1. Also in the Pox Americana dept … Another Syria false flag chemical attack in preparation … whilst Russian and UK-US-Israeli forces assemble in and around Syria, as if both in major-war mode:

    Russians have delivered a demarche to the State Department, warning the Americans to desist from their plans to attack Syria. Russian intelligence learned that eight tanks containing chlorine have been delivered to Halluz village of Idlib province where the group of specially trained militants has already been deployed in order to simulate the rescue of the victims of chemical attack. The militants were trained by the British private military company Olive (which had merged with the American Constellis Group).

    The operation, the Russians say, had been planned by the British intelligence services to justify an impending airstrike directed against Syrian military and civil infrastructure. For this strike, USS The Sullivans guided missile destroyer with 56 cruise missiles onboard arrived to the Persian Gulf, and the US Air Force bomber B-1B with 24 cruise Air-to-Surface Missiles had been flown to the Al-Udeid air base in Qatar.

    The idea is Israeli, the operational plans are British, weapons and vessels are American, and a possibility for confrontation grows stronger each day.

    The above summary from Israel Shamir, who adds:

    The British establishment together with Organised Jewry were able to push unwilling America into the world wars twice, and perhaps they will be able to repeat this feat a third time.

    Also, with more details on the false-flag preparations:

    • But here’s what doesn’t work for me; if the UK is part of consortium protecting Iran, why would they want to attack Syria which is simply inflammatory? The UK has become everymore diabolical and, I believe, now constitutes nearly as much of a problem as Israel in world instability. I know we never really won the Rev war and have been lackeys for the UK power structure (Masonic, City of London, Rothschild) for centuries now, but it’s time people here realized who the bad guys really are!!

    • Tulsi Gabbard is still the canary in the coalmine in all of this. The
      fact she is still in office and allowed within the Trump Administration
      says something to you/us ‘Trumptards’. I believe the die are already cast against him, given his involvement with Epstein and his ilk. But maybe, just maybe he has a heart and a brain. She speaks out against Trump’s actions on Syria and other ‘interventionist’ things, but we never see tweets about her, telling. If the media speaks out against Trump he unloads. Jacobin magazine disapproves of her as well, also telling.

    • Beto’s highest single donor by group origin is from individuals from the JStreet group.

      Cruz, who needs no introduction, has his donations coming mostly from individuals from Banks and Industry, including many defense contractors.

      Both are extremely pro-israel with minor ‘engineering disputes’ in between to make the November elections seems like they count.

    • British secret service has sure been implicated in a lot of false flags…from the Steele document to bringing Chlorene once again to the Syrian party. M and Q better recall Roger Moore because they’re forever getting caught meddling.
      They can’t even Brexit properly, yet they are all over the board leaving big greasy fish n chips fingerprints in everybody else’s affairs. Que Bono? Soros(?) …again?

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