As I’m certain you already know by now, Henry Kissinger died final week on the age of 100. He leaves a fancy legacy, which is definitely comprehensible as a result of he operated in a fancy geopolitical surroundings.
However Henry Kissinger was a grasp strategist and political scientist. Together with his current passing, I believed I’d retell the story of certainly one of his most sensible plans, and clarify the way it pertains to the demise of the greenback.
In February 1974, I used to be requested by Professor Robert W. Tucker of the Johns Hopkins College of Superior Worldwide Research to affix him and 4 different overseas coverage specialists for a gathering on the White Home.
On the time, confidence within the greenback was on shaky floor as a result of President Nixon had ended gold convertibility of {dollars} in 1971.
The worth of oil was skyrocketing, partly as a result of inflationary insurance policies pursued by the Federal Reserve, and partly as a result of an Arab oil embargo in response to U.S. assist to Israel within the Arab-Israeli Yom Kippur Battle of 1973.
Saudi Arabia was receiving {dollars} for his or her oil shipments, however they might now not convert the {dollars} to gold at a assured value straight with the U.S. Treasury. The Saudis have been secretly dumping {dollars} and shopping for gold on the London market. This was placing strain on the bullion banks receiving the greenback.
Confidence within the greenback started to crack. Anyway, again to my assembly on the White Home…
Ought to We Invade Saudi Arabia?
We have been ushered by way of the safety gate on Pennsylvania Avenue close to West Government Avenue, closest to the West Wing. We have been then escorted to the workplace of Dr. Helmut Sonnenfeldt, Secretary of State Henry Kissinger’s deputy on the Nationwide Safety Council.
There, we engaged in a technique dialogue. Our focus that evening was debating a full-scale navy invasion of Saudi Arabia.
The thought was we’d then safe their oil fields, pump sufficient oil to produce Western and Japanese wants and value it nevertheless we wished. We debated the professionals and cons of this plan, together with potential provide disruptions and worldwide reactions till properly into the night.
Now, it will not be lined within the historical past books, however a navy takeover of Saudi Arabia was very a lot on the desk. The truth is, the planning was properly underway. However the Nixon administration below Henry Kissinger determined to attempt one different method first. And what they got here up with was absolute genius.
Just a few months after my assembly, in June 1974, President Nixon met with King Faisal in Saudi Arabia. A month later, he despatched his representatives to supply a brand new deal. The deal was as simple because it was sensible.
Start of the Doomsday Deal
The Saudis would conform to promote their oil just for U.S. {dollars}. These {dollars} for oil have been known as “petrodollars.” And the Saudis would then reinvest these petrodollars in U.S. Treasury securities and deposits in U.S. banks.
In return, the U.S. would promote superior weapons and navy {hardware} to the Saudis and we’d promise U.S. navy assist to guard Saudi oil fields and the royal household.
This could successfully assure the Home of Saud long-term rule over the nation.
The ultimate twist was that U.S. banks would then “recycle” the petrodollars deposited by Saudi Arabia as loans to rising markets in Latin America, South Asia and Africa.
In flip, these growing nations would buy U.S., European and Japanese exports. That will ignite international progress. And, in fact, to try this they’d want numerous oil. That meant oil demand would develop endlessly as would demand for {dollars}. It was the last word win-win.
And the 1974 “Petrodollar Accord” was born. Or as I name it, the Doomsday Deal. Behind this “deal” was a not so delicate risk to invade Saudi Arabia and take the oil by power, which I used to be invited to the White Home to think about.
BRICS and the Finish of the Doomsday Deal
Now, nearly 50 years later, the wheels are coming off. The world is shedding confidence within the greenback once more, and the cracks within the greenback are already getting bigger.
It’s vital to grasp all of this regarding BRICS.
For those who’re unfamiliar with BRICS, I’m speaking in regards to the financial alliance between Brazil, Russia, India, China and South Africa. I wrote lots about it this previous summer season and fall. I defined the modifications within the international financial system that may ship shock waves all through markets.
The BRICS nations characterize nearly one-third of the complete international GDP. Their economies are larger than the US, Germany, Japan, the U.Okay., France, Canada and Italy mixed.
And due to Biden’s weak point and overseas coverage failures our enemies — and even our allies — are emboldened and the Doomsday Deal is cracked vast open.
The BRICS nations have been operating circles round blundering Biden recently.
Blunders
Right here’s a fast rundown of a few of Biden’s current failures. On Jan. 17 of this yr, photographs have been fired when Saudi Arabia humiliated Biden and thumbed its nostril at America by asserting it’s contemplating accepting different currencies for its oil.
And that announcement opened the floodgates.
On March 8, 2023, Reuters reported one other large blow as India and Russia at the moment are ditching the greenback and buying and selling oil in non-dollar currencies. On March 28, Brazil and China introduced an settlement to conduct all future commerce transactions utilizing their very own currencies.
And it will get even worse. Even our so-called allies noticed the writing on the wall.
That very same day, French oil large Whole Energies introduced that they had purchased liquefied pure fuel from a Chinese language oil firm utilizing the Chinese language forex, the yuan.
Now, different U.S. allies like India, Pakistan and the United Arab Emirates have made offers with Russia or China to purchase oil or different commodities in their very own currencies.
With Biden within the White Home, they’re laughing at us now.
The Starting of a Seismic Shift
Iraq introduced earlier this yr they’re now buying and selling their oil for Chinese language yuan. Not too long ago it’s solely gotten worse…
In August of this yr, it was introduced Saudi Arabia — our previous associate within the Doomsday Deal — can be becoming a member of the BRICS group of countries beginning in 2024.
And extra just lately, China and Saudi Arabia agreed to a forex swap deal.
Our enemies have been already salivating, and now with this most up-to-date information they’re able to pounce.
In a world political financial system lengthy dominated by the petrodollar, this may very well be the start of a seismic shift.
Ultimately a tipping level can be reached the place the greenback collapse abruptly accelerates as occurred to the British pound sterling final century.
My background contained in the U.S. intelligence group, funding banks and international forex markets has proven me how good buyers may revenue from the failure of the Doomsday Deal.
Probably the greatest methods buyers can anticipate this financial earthquake is by shopping for gold.
