So it turns out that Russia started dumping the dollar from all institutions and private holdings out of US banks. You may think that's no big deal, but its $12 billion in a month. Their largest company, Gazprom, which sells natural gas to Europe has shifted out of dollars and will take Euros and Renmimbi (Chinese) instead. Not dollars.
So what? Well, the dollar is only worth what it is because not accepting is would cause a crash in the value and cause hyperinflation. Remember that Ben Bernanke was literally putting zeros onto the end of the money supply at The Federal Reserve, deflating all Dollars every time he did that, in order to print more Treasury Bills, where the Fed bought to buoy the Dollar despite NOT paying off the Derivatives debt. Which still sits there, growing. We are so screwed. The Dollar is gonna die, painfully. If we don't ramp up fracking and export the oil, the dollar will crash and all the rich guys will go broke. They are used to having things their own way. They have a lot of resources, so their panic could result in rather spectacular crime or suicides.
We knew Russia wasn't going to suddenly go sane and back off attacking Ukraine. We still made a stink about it because they're committing Ethnic Cleansing and eventually actual genocide there. We don't have a leg to stand on, morally. We did this to our Indians. And now we're the Indians, when the fracking companies come. Rich guys with lawyers will steal it, steal our water, all to provide the Europeans a reason to side with us, despite having destroyed their economy with the Housing-Derivatives Bubble.
And the phrase Pivot To Asia? Have you ever wondered why that came following the revelation that Spain, Italy, and Greece were bankrupt and likely to permanently crash the Euro? Because that's NOT ironic, merely cynical. And I KNOW Cynical. It's my thing. Europe is bankrupt and collapsing. Find a new market to exploit. Give the Europeans some competition for oil sales.
China has a big pile of money, but it is run by old Chinese fossils with no concept of macroeconomics other than dictate 5-year plans or send in the army to kill everyone. They create currency every time they want to, like Bernanke did, and their money supply being smaller, the consequences are felt immediately through inflation. So it is hard to accept it as currency when the fossils can steal it by just making a billion more today. Again, Bernanke doing this has been a disaster in the USA. Smart money went into stocks because the Dollar was crap and the T-bills kept devaluating so yields were crap. This is why the US stock market is 17,000 and there are still no jobs. Stocks are measured in dollars. If the dollar is devaluating, then it takes more of them to buy a stock, doesn't it? Ergo, the market is up, but the rise is inflation. Nobody says this, but what does milk cost these days? How about cheese? What about the price of meat? No kidding, also higher? Yes, that is inflation. Inflation is not quite as bad as under Jimmy Carter, but it is close. And getting worse.
Pivot to Asia means ignoring Europe's security and economies, because they have tanked and contagion will require dumping Southern Europe from the European Union to save the rest, and if they don't, Scandinavia will dump the EU, and probably Britain will too. If you suffered to save for a rainy day, you aren't giving what you scraped by with to the party bum that lived it up and now is broke. Screw that.
Pivot to Asia means selling what we've got, oil and food, to Japan, Korea, Taiwan, and the Pacific (all those islands are broke though). Put some resources into them to buy back some of our debt and make ourselves less attached and a little richer, or less poor, to protect our rich people a bit longer. All we have to do is poison our wells for the next 1000 years. And give up driving with gasoline. Oh well. CNG means lots more stops, but its not impossible, just annoying.
We don't HAVE TO pivot to Asia. We could allow new currencies to replace the Dollar and then default on the T-bills. We'd lose trade except we still have the biggest oil supply/reserve and we still have all that natural gas and food exports. They'd have to suck it up and pay us hard currencies we want. Maybe return our gold? We could be selling closer to natural allies, like Central and South America. Shorter trip for shipping vessels, already trading in fish and farm goods, and our power and water purification is more reliable than the Chinese and cheaper than the Europeans. And they want these things. Basic sanitation is a great way to reduce misery and bootstrap into a first world nation. They can pave their dirt roads and get hospitals in every town so no more tragic childbirth deaths. Central and South America would love that. It also offers all those Mexican immigrants somewhere to take their language skills and US connections and get richer than stoop labor here as we keep automating farming and reducing labor requirements.
But for some reason, the USA is content to let Spain export its talented expats into Central and South America where they start businesses. Brazil remains largely poor with a few ultrarich very gradually improving things. We have more to gain by developing there, and it solves the invasion problem. Right now, there are 100K Mexicans and Guatemalans surging across our borders like invaders, hoping to be given citizenship under amnesty rules that aren't actually legal, merely rumored by some idiot.
The American people voted twice for this. They are masochists and I despise their willful ignorance. We're going to pay and pay until we get up the nerve to dump the morons, end the Federation, and start over within our own borders. We need realistic expectations, and realistic limits, and to work with what we've got to solve the problems.
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