As Goes Saudi Arabia, So Goes The Dollar

By Chris W
The Libertarian Patriot

H/T LRC

Think about this for a minute, what happens if the revolutions in the Middle East spill over into Saudi Arabia and their monarchy is overthrown? Putting aside the debate over which side we will support; a despotic government that brutally suppresses opposition or rebels in search of "democracy", the outcome of such a revolution has far reaching implications for the financial well being of our nation and our way of life as we know it.

As I wrote about here, the motivation for the US to maintain the status quo in the ME is to keep oil priced in dollars. Simply put, a de-pegging of the dollar to oil would be catastrophic to the dollar's status as the world's reserve currency and would cause immediate inflation, most likely hyper-inflation, as the cost of everything from fuel to food to basic necessities would skyrocket. With oil no longer pegged to the dollar, dollar demand would plummet and bring the Treasury's printing presses to a screeching halt.

The reason all the printing at the Treasury hasn't had a greater effect on devaluing the dollar or raising interest rates is because when other nations buy and hold our debt, that money is essentially out of circulation and inflation is held in check. It's when that money comes rushing back into the system that that you have to worry. Too much too soon and you are paying $20 for a loaf of bread.

Now back to Saudi Arabia. That nation produces nearly half of all the region's oil and if the monarchy is toppled former Saudi oil minister Sheikh Zaki Yamani predicts that oil could go to $200, even $300 a barrel. That happens and we'll all look back nostalgically at the "good old days" of $4 a gallon gas.

Even worse, yes it gets worse, what if a new government came in and said that they would accept payment in gold, Euros, Yuan, a basket of currencies or gummy bears? The current Fed Ponzi scheme, along with life as we know it, would be toast. If oil is no longer priced in dollars there is no reason to for nations to accumulate or even hold dollars and they will dump them faster than you can say Great Depression of 2011.

My advise is to be prepared. Stock up on necessities, plant a vegetable garden, learn how to be self-sufficient and trade in some fiat dollars for gold and silver. You should always plan for the worst and hope for the best. Think of it as a cheap insurance policy; it may cost you a lot now but if the SHTF and you don't have anything to fall back on, what is it going to cost you in the future to survive? And if I'm wrong you've learned some new skills, still have tangible assets and have a bunch of canned good to donate to a local food pantry.

Our nation's years of foreign intervention, along with all the unintended consequences that go with it, have us boxed in worse than Curly Howard in the classic Three Stooges short "A Plumbing We Will Go" except we won't be laughing. Every action that has been taken by Leviathan is to fix the problems that arose from the previous foray and like the mythical Hydra where two heads would grow back when you chopped one off, two or more problems were created for every one that was solved. Unfortunately those that espouse foreign intervention always fail to see the errors of their ways and repeatedly make the same mistakes in correcting the ones they have made in the past.

It's going to get really interesting really soon and for as bad as things have seemed to have been for the past few years, it may just a warm-up for what we are about to go through.

Stay tuned, it's going to be a bumpy ride.

1 comment:

  1. We are thinking alike. I'm working a post on planting a garden right now.

    ReplyDelete

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