Transcript for 6/20/24: FIAT FIRE W/ ALAN JOHNSON

Last week the alternator on my car just wore out and so I had to pay out more money to fix it. I felt my budget just slip through my fingers. 

I took Liam to the dentist and even though my insurance will cover most of his fillings and cleanings -- I still have to pay for the rest -- again I could see the number in my account diminishing -- I am at a loss to keep up with not only the inflation with just buying groceries let alone these surprises that happen -- and so it becomes a major worry -- on top of many others that we as an Americans have to whether through-- we have been taking it on the chin financially -- a whole lot more than normal. 

It appears that people are allowing their politics to get in the way of their survival.

Apologists are everywhere, and they are beginning to annoy everyone.

There is no excuse for this --the American way of life is slowly diminishing and we are becoming just like any other country.

Nothing special and no dreams to dream.

We have not learned from history evidently and it takes a 30 to 50-year cycle to actually destroy everything with the intent to restore it with something new.

It is the Great Reset. The new normal, the new order.

And you will pay dearly for it. 

Have you checked your budgets lately? Whatever you do it is becoming difficult to keep up with runaway inflation and the promise that there will be some major adjustments that will free up cash and allow us all to live better lives.

So far all we get are platitudes and no one wants to rise up and take charge of the schemes that are happening where it appears that money laundering is the staple of our economy and the taxes you pay are going towards an unwinnable war in Europe.

Food prices and just living are increasing exponentially because of the money print and inflation.

I am sure that the unelected bureaucrats and bankers have a solution to this -- and it has always been the goal-- starve people until they accept the New World Order.

A few years before this all began, i did a show about Big Mac economics indicating that if the price of a Big Mac meal turns out to be overpriced -- then the economy is toast.

And now McDonald's is in a price war-- it is similar to the price wars that happened with gas stations in the last 1970's.

Mcdonald's is pulling out one of the most potent weapons in its arsenal: The value meal. It’s all part of a bid to lure back penny-pinching customers who have cut back on fast food after flocking to the Golden Arches in recent years.

On June 25, McDonald’s will kick off a marketing campaign and a new $5 meal deal, raising the stakes as US restaurants vie to lure back inflation-weary diners.

Wow, would have ever thought that in the future you would have to practically take out a second mortgage for your Big Mac attack? 

Burger King’s US president pledged to roll out its $5 value meal “before they do,” alluding to McDonald’s in a memo to franchisees. Wendy’s Co. pushed out a $3 breakfast offer and took to social media to mock its competitors for copying its ideas. Even Starbucks, known for its pricey Frappuccinos and lattes, said it would offer a $6 breakfast sandwich and coffee combo.

But let's be honest -- this won't last long. It is a gimmick and you can bet that franchises will complain that it is not feasible as a dollar is only capable of buying a pickle and the burger hiding behind it.

What is going wrong with the economy --and how long are Americans going to tolerate this 3rd world country inflation debacle?

The system fleeced us all post-COVID and the sheep are unaware that an even bigger fleecing is coming --which will force us further into a war-footing economy --where we will have to make more sacrifices for the power elite that make deals behind closed doors -- deals that affect your lively hood and barely created a bruise on theirs.

One of the core staples of the past 50 years, and an anchor propping up the dollar’s reserve status, was a global financial system based on the petrodollar – this was a world in which oil producers would sell their product to the U.S. (and the rest of the world) for dollars, which they would then recycle the proceeds in dollar-denominated assets and while investing in dollar-denominated markets, explicitly prop up the USD as the world reserve currency, and in the process backstop the standing of the US as the world’s undisputed financial superpower.”

Sorry to say but the petrodollar quietly died recently.

While it didn't get big headlines, the demise of the petrodollar could mean big trouble for a U.S. government that depends on dollar dominance to support its borrowing and spending.

"Petrodollar" refers to the dollar's role in crude oil transactions. 

In the wake of the 1973 oil crisis, Saudi Arabia agreed to conduct all oil transactions in dollars and invest its oil surplus funds in U.S. Treasuries in exchange for U.S. military support.

The agreement was a boon for the dollar and was key in cementing the greenback as the world reserve currency. Due to Saudi Arabia's prominent role in the global oil trade, the agreement had a far-reaching effect. As a result, virtually all of the world's global oil transactions were priced in dollars. 

This ensured a constant demand for dollars. Every country needed them to buy oil. This demand for dollars supported the U.S. government's “borrow and spend” policies, along with its massive deficits. 

As long as the world needed dollars for oil, it guaranteed demand for the greenback. That meant the Federal Reserve could print more dollars and issue more Treasuries than it could have otherwise.

Saudi Arabia’s agreement to sell oil exclusively in dollars ended on June 9, 2024 – ending the backing for the petrodollar as the world’s reserve currency. The Crown Prince of Saudi Arabia has decided to open up its lucrative oil trade to other countries and currencies. Saudi Arabia has now joined a China-led digital currency project.

This was a deal that was put in place to bring Arab nations and the U.S. closer together. It was designed to circulate dollars between the two regions in exchange for oil sales. As a result, oil has been a commodity that has been priced and traded in dollars. Now, as this deal has not been renewed, Saudi Arabia can trade or deal in currencies outside of the U.S. dollar; they can now trade in yen, euros, Chinese yuan, and even the highly contentious Russian ruble. 

Truth be told, this has been happening in the background since the invasion of Ukraine by Russia and the Western world subsequently placing sanctions on Russia to limit its exports. The sanctions never worked, as all they did was form new trading alliances and change the partnership agreements for good. As a result, the world has forever changed.

The petrodollar was getting ragged before the expiration of the Saudi-U.S. agreement. Late last summer, the UAE settled an oil trade without converting local currencies to dollars for the first time when India's top refiner paid for crude in rupees. India has also bought oil from Russia without using dollars. India ranks as the world's third-largest oil importer. 

As India Today reported, "This move by Saudi Arabia marks the beginning of a major shift in global economic dynamics, though its full implications on international trade and finance remain to be seen."

But we can only speculate for the moment.

US global power rests on a few key pillars, some of the most important of which are:

Dollar dominance in trade, dollar dominance in investment and finance, physical (military) control on the supply of oil, and

base agreements to further expand US military control in strategic (and oil-producing) regions.

A key foundation for this global exercise of US power is the Saudi-US petro-dollar agreement from 1974.

Saudi Arabia has reportedly decided not to renew its 80-year petro-dollar deal with the U.S.

This move has all but been censored in the Mainstream media -- and if you run searches on the failure, it will be met with hostile accusations of fake news.

As a consequence, not only the dollar as the World’s dominating currency will be severely hit. US capital markets will also be hit, as the now expired US-Saudi deal required Saudi dollar incomes to be recycled and reinvested in the USA, mainly as low-yield US bonds.

But even more, the US role as military “protector” of Saudi Arabia against Iran has now been revoked by Saudi Arabia.

Since the U.S. began focusing on shale in 2012, the dynamics have changed for the petrodollar as the country moved from being a net energy importer to an exporter. The U.S. has come a long way since the days of relying on Saudi Arabia and other nations for its oil needs, and this is why the petrodollar is no longer needed nor holds as much relevance and meaning as it did back then. 

This move away from the U.S. dollar has been a cause of many wars in the past, so this change is of great significance. Today, as several very powerful countries are moving away from the dollar, there is little the U.S. can do. As of now, the dollar is still the reserve currency, as there is no comparable second one behind. But the wheels of change are already set in motion.

The BRICS nations have announced a new BRICS payment system as the World Bank challenged the status of the US dollar in international transactions. 

The BRICS nations consist of Brazil, Russia, India, China, and South Africa.

Saudi Arabia is considering a full BRICS membership this year.

BRICS is an economic cooperation bloc originally made up of Brazil, Russia, India, China, and South Africa. As of Jan. 1, 2024, the bloc expanded to include Saudi Arabia, Egypt, the UAE, Iran, and Ethiopia. More than 40 other nations have expressed interest in BRICS membership.

The expanded BRICS has a combined population of about 3.5 billion people. The economies of the BRICS nations are worth over $28.5 trillion and makeup roughly 28 percent of the global economy. BRICS nations also account for about 42 percent of global crude oil output.

This also has a huge impact on the bond markets. As the global alliances change, there are fewer buyers of the U.S. treasury. We know that China and Russia have been selling down UST, leaving only Japan and some others as the buyers. Given the way that the U.S. is spending, they will end up being the biggest buyers of their own debt. Sound familiar? 

This comes at a time when the U.S. national debt is on course to reach $37 trillion, about $8 trillion to be refinanced this year at even higher rates. Seeing the U.S. 10-year yield trading at 4.4% is astonishing when there is just so much debt to come still as the Biden administration knows no other way to keep the U.S. economy and consumers afloat than to boost and print even more.

Saudi Arabia just changed the entire future of the US dollar when it decided to end its decades-long agreement with the US and the Petrodollar. Saudi Arabia is now looking to BRICS and China for their future in this new multipolar world. 

This could signal the end of America’s global financial dominance and raise the question of what the US is famous for exporting that the world is buying. 

The US economy benefits greatly from being able to export dollars and issuing debt in the form of treasury bonds, which creates a stable economy, lower interest rates, and financial market liquidity.

The established financial world order of the past 50 years is now transitioning to a new and unknown paradigm as the petrodollar agreement between the U.S. and Saudi Arabia was allowed to expire.

While many point to escalating global tensions and shifting geopolitical allegiances as the impetus for allowing the agreement to expire, changes in the power dynamics of the global oil market have also played a crucial role in this development as the world moves towards alternative energy sources. 

The rise of renewables and natural gas has been steadily reducing the world’s reliance on oil for the past decade, and even oil-rich countries like Saudi Arabia have evolved. 

The Kingdom is on track to generate half its electricity with renewables and natural gas by 2030 and plans to plant 10 billion trees as part of a larger goal to reach net-zero emissions by 2060. To achieve this, they have implemented more than 80 public and private sector initiatives representing an investment of over $188 billion. 

Their decision to go in that direction has also been influenced by the emergence of new oil-producing nations, such as Brazil and Canada, which have challenged the traditional dominance of the Middle East.

According to digital news service Sputnik, “Nearly 80 percent of global oil sales are priced in dollars. However, Russia, Iran, Saudi Arabia, China, and others are increasingly shifting to local currencies in energy trade. In 2023, 20 percent of global oil was bought in other currencies, as per the Wall Street Journal.”

The Kingdom’s acceptance into the BRICS bloc has the potential to influence this decision. If Saudi Arabia moves to expand beyond the USD, it would materially weaken the currency’s dominance in the oil market – and as a result, its place on the world stage. A decline in global demand for the greenback could result in higher inflation, higher interest rates, and a weaker bond market in the United States.

While many analysts have said that the threat to the USD’s status as the reserve currency is overblown, most acknowledge that the expiration of the petrodollar agreement has the long-term potential to weaken the USD and, by extension, U.S. financial markets. 

ironically Saudi Arabia has decided to convert the non-USD currency proceeds into other assets, such as gold. Again we are beginning to see a trend as financial security seems to be dwindling as the world prepares for war --and the guaranteed move towards a world reset -- which of course includes a cashless or token economy.

The symbolism of the end of the US-Saudi petrodollar agreement marks a shift toward a future that is further economically and geopolitically fragmented-- no wonder governments have indicated that they are now moving towards gold as a secure currency in the event of total economic collapse around the world.

While the details on the future of a BRICS currency are scant, Russian President Vladimir Putin stated , “Within BRICS, we’re working on shaping an independent payment system, free from political pressure, abuse, and external sanctions interference.”

Some have suggested that a BRICS currency could be backed by a basket of commodities, of which gold would be a part – which would likely benefit gold prices. 

The US-Saudi petrodollar agreement ends and won’t be extended. This will force the US to print tons of new USD!

The end of the petrodollar could accelerate global de-dollarization and that would be a disaster for the U.S. economy.

While the current de-dollarization trend doesn’t directly threaten the dollar’s role as the world reserve currency — yet — it could foreshadow bigger problems down the road, especially if it accelerates.

The dollar is already on shaky ground. Many countries are looking for ways to minimize dependence on the greenback due to growing concerns over America's use of the dollar as a foreign policy weapon.

Even those who minimize any threat to the dollar's status as the global reserve currency concede the expiration of the petrodollar agreement could weaken the dollar over the long term. That would spill over into U.S. financial markets, particularly the bond market. It would also lead to more price inflation for American consumers. 

Sputnik explained it this way:

“If world players significantly reduce the use of U.S. dollars, the U.S.'s ability to issue dollar debt and earn dollars for exports will diminish and the nation's economy will shrink, according to international economists.” 

If other nations no longer need dollars to conduct trade, the demand for dollars could plunge significantly. That would create a dollar glut and a rapid devaluation of the greenback. Interest rates on US Treasury bonds would soar. This would be untenable for a government servicing more than $34.5 trillion in debt.

Modest interest rate hikes by the Federal Reserve have already driven interest payments sky-high. The U.S. government now spends more on servicing the debt than it does on national defense or Medicare. 

You should be wary of counting on global petrodollar dominance to prop up the U.S. House of Cards economy.

From now on , the dollar will come under heavy pressure, USD will be printed, and inflation will start rising. Nations will be bullish for gold.

I often wondered if it could get worse and wouldn't you know it is getting much worse as we witness the fiat fire sale and the alchemy of turning pure dung into precious metals?