The Plot to Destroy America’s Greatest Weapon

Could a handshake destroy the world we know? 

We may be on the verge of finding out. 

In early December, Chinese President Xi Jinping ventured out of China—a rarity—and landed in the desert…in Saudi Arabia, to be exact. He was there to plot America’s comeuppance.  

Now, it’s not necessarily presented that way in the traditional media. But there is no mistaking China’s game. Or Saudi Arabia’s game, for that matter. 

At issue was an agreement in which China will buy more and more oil from Saudi Arabia, and—this is the bombshell—China wants to pay for that oil in Chinese yuan. 

Seems like nothing untoward on the surface. Brits spend pounds, Yanks spend bucks, the Chinese spend yuan, or renminbi as it’s also called.  

But here’s where our problem arises: The world has, since the mid-1940s, used the dollar as the medium of exchange for pretty much all global trade. Persians wanna buy rice from Uruguay, they pay in dollars. Japan wants to buy wine from New Zealand, it pays in dollars. Mexico wants to buy cars from South Korea, it pays in dollars. 

This dollarized global economy is a byproduct of the Bretton Woods agreement. Signed in the dying days of World War II, it established the greenback as the world’s reserve currency.  

Bretton Woods is the reason America has a vast financial advantage over the rest of the planet. All that global trade in greenbacks means that the entire world has to buy dollars to facilitate all the daily transactions that happen across borders. That means there is a constant and continual demand for governments and companies the world over to buy and maintain a stash of dollars. 

Absent that demand for dollars, our currency would not be nearly as strong as it is.  

Uncle Sam would not be able to borrow nearly as many trillions as he has been able to. U.S. consumers would not be able to afford nearly the same level of aspirational living that they afford now. Mortgage rates in America would be much higher since the global demand for U.S. debt keeps them artificially suppressed today. Energy prices would be sharply higher because oil and gas on the international markets would be priced in other currencies rather than the dollar (and U.S. buyers would need to pay exchange fees for those currencies). 

In short, Bretton Woods is a very big reason for the wealth and prosperity of America’s middle class. 

Now, China is looking to blow apart that advantage by ditching the dollar and grabbing barrels of Saudi oil with renminbi instead of greenbacks.  

Saudi Arabia has yet to agree…but to me, it seems like a matter of time. The Saudis, never much of a real friend to America, probably wouldn’t mind seeing the U.S. falling a peg or seven. 

Alas, this is just the camel’s nose under the tent. 

China is also part of a plan hatched with Russia and other emerging BRICS nations to create a fiat currency based on hard assets that would compete against the dollar. (The BRICS group includes Brazil, Russia, Indonesia, China, and South Africa…and is looking to add Argentina, Iran, Turkey, Saudi Arabia, and Egypt.) 

Maybe no Western government ever owns a single BRICS buck, or whatever it’s ultimately called, but there are plenty of governments in emerging economies that have little love for Washington, D.C. They’d be more than happy to hold a hard currency at a moment when the U.S. and Western governments are drowning in debt and racing toward a currency/monetary crisis. 

Just because they’re emerging doesn’t mean they’re impotent. 

Ever seen a colony of ants kill a wasp and work in tandem to dispatch the corpse?  

Never underestimate the power of cooperation to take down a giant. 

So it is, then, that a big—big!—theme as 2023 and beyond plays out will be the dollar’s hegemony under assault. 

No reserve currency in the history of money has ever survived much past a century in power, and there’s no reason to think, “Well, this time is different.”  

Our greenback has ruled atop the heap for right at a century now. It served its purpose in the post-war decades. Now, the Young Turks are stepping up to say, “Right—enough of that.” 

Of course, the bad news here is that America is not about to let the dollar’s reserve currency status fade into history. Doing so would unleash financial devastation on the U.S. economy, the American consumer, and Uncle Sam. 

This is the stuff over which wars are fought. 

Don’t fade this story. This is yet another reason gold and silver (bitcoin too) are going to be such important components in an investment portfolio. They’re financial/lifestyle insurance. 

I’m not saying the crisis is tomorrow. But I am saying all these separate efforts at undermining the dollar do mean something. And the fact that they are finding an audience among non-Western nations that are coming into power also says something. 

And that something is not good. 

Be prepared, just in case that handshake to sell Saudi oil to China priced in Chinese currency is just around the corner.