GUEST BLOG: Ross Meurant – It’s all to do with oil, mate

IT’S ALL TO DO WITH OIL, MATE.

Maori lament the legacy of British colonial tyranny.  Their focus has been theft of land rather than being defeated by the musket.

Australia’s Indigenous lament of British colonialism is not confined to loss of land but horrendous genocide.

Fast forward from 19th Century to 20th Century and America emerged as the next Ozymandias and the inevitable, “Date with Destiny: Demise”.

But! How can this Colossus collapse?

Succinctly?  Shit happens, if you’ll excuse reversion to the vernacular for a moment.

As the trend in the above link foretells; the 21st Century looms as “Day of Reckoning”.

 

It’s all to do with OIL, mate.

Religion is definitely the major cause of war over the centuries and today remains a massive contributor to murder in the name of Righteousness.  But Oil has taken stage as “King of Kings”.

 

Oil is to today’s, religion.

The petro dollar was negotiated by Henry Kissinger with the Saudis shortly after Nixon took the US off the gold standard.

The agreement stipulated that all Saudi oil would be sold in US dollars, commonly called petro dollar. This creates a demand for US currency and hence keeps its value elevated as a result.

As the price of oil increases so does the demand for the US dollar. The Saudis in turn invested their petro dollars in US Treasury Notes.  In other words, they purchased US debt.

This increased the money supply in the US and helped finance the consumption society that developed in the US and the demand for more imported goods especially from China in recent years.

Collateral damage emerges in the form of US corporations using cheap labour in China which leads to rising unemployment in the US and a trade deficit (US v China) which precipitates the current war America can’t win i.e. tariff war.

Most international borrowing takes place in US dollars. In third world countries whose currencies are inevitably weak, their economies are very susceptible to any rise in the US dollar as their borrowing costs (interest on loans) increases with any increase in the US dollar.

The US dollar is also the world’s reserve currency in which most trade between nations is settled. This too creates the demand for the dollar. And here we get to the nub of Why so many wars where America is involved?

The value of the dollar is backed up by the US military might who have a history of challenging any nation that dares to challenge their reserve currency status.

 

OIL trade underpins the above.

One can appreciate therefore, that the US is keen to retain their current status as the world’s reserve currency and go after anyone who challenges their position like Gaddafi in Libya. 

And Iran. 

With the BRIC nations organising against the reserve status of the US dollar, if they succeed in replacing it as the sole reserve currency, the value of the US dollar will decline as there will be less demand. This will import inflation into the US as the cost of goods to feed their consumption will increase in US dollar terms.

The problem that arises with the BRIC countries is that they include both China and Russia, who individually (and indisputably together), have the military might to challenge the US if they try to enforce the dollar’s status.

 

As Percy Shelley once penned, of Ozymandias:

My name is Ozymandias, King of Kings;

Look on my Works, ye Mighty, and despair!

Nothing beside remains. Round the decay

Of that colossal Wreck, boundless and bare

The lone and level sands stretch far away.”