The Biggest Monetary Shockwave in 47 Years
What’s your idea of paradise?
Sunny skies? Sandy beaches? Crystal blue waters?
Were we to describe our ideal paradise, it would look very much like everyday life…only more affordable.
Electricity, healthcare and education wouldn’t cost a dime.
There’d be no interest on loans.
Petrol would be 15 cents a litre at the pump.
Food and water would be clean, plentiful, and cheap.
Best of all, owning a home would be considered a human right.
Are we naïve enough to think our idyllic paradise awaits Australia in the future?
Far from it.
But it may surprise you to learn that our utopian paradise is more fact than fiction.
This was life in Libya before the war.
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How to destroy a nation
Libya’s downfall began in 2011 following the brutal murder of long-time ruler Muammar Gaddafi. His death signalled a dramatic turn for the worse for the country’s six million inhabitants.
Quite why things have turned out as they have in the North African enclave is a matter of great debate. But everything points to a mindless pillaging of a once thriving nation.
In the aftermath of the US-NATO intervention seven years ago, then US Secretary of State Hillary Clinton famously boasted ‘We came, we saw, he died!’
Her victory speech is light on why they had to come, or why he had to die. But it underlines how reckless and rife with impunity the West deals with regimes that don’t bow to its wishes.
When ‘rogue’ states overstep boundaries set by Western powers, the outcome is always the same, with untold misery following.
The US-NATO coalition claims its intervention in Libya was carried out on humanitarian grounds. Gaddafi was committing atrocities against his people, they claimed, so he had to be taken out.
But if the aim was to stop unsubstantiated killings, the interventionists failed miserably. Seven years of civil strife will attest to that.
What’s more, NATO destroyed Libya’s vast $33 billion irrigation system, which provided water for 70% of the population. If this is what progress looks like, it has much to answer for.
Of course, such interventions are rarely about humanitarianism.
Gaddafi’s gruesome execution was brought about because he’d overstepped the international order’s boundaries. That order assumes that what’s in the best interests of the West is also in the interests of the rest.
Gaddafi’s crime wasn’t that he mistreated his people. It was that he wanted to make Africa a more independent continent. One not governed by the Western powers.
He sought to create an autonomous pan-African currency backed by gold.
He planned to bypass the petrodollar for oil payments.
And he fought to free his people from the imperialist corporate interests that held sway over the country’s oil and wealth.
Gaddafi’s biggest mistake was in failing to learn from history. As Iraq’s Saddam Hussein learned the hard way a decade prior, the US-led Western powers will tolerate any regime that keeps its interests at heart. What they won’t stand for is a challenge to corporate interests and the petrodollar.
But like a leaky boat, the West won’t be able to contain the ship from sinking indefinitely. Despite the fates of Libya and Iraq, the world continues to spiral headfirst towards de-dollarisation.
Dethroning the greenback
Calls for a multipolar approach to global trade and finance grow louder by the day. China and Russia are the loudest voices, but there is no shortage of nations seeking to overthrow the greenback.
Turkey threw its hat into the ring this week in the latest sign of a shift towards the Russia-China axis. It announced a decision to repatriate its gold stored at the New York Federal Reserve.
Turkish president Recep Tayyip Erdogan questioned the international use of the US dollar, suggesting that loans should be based on gold instead. He also said that states needed to be ‘saved’ from the ‘exchange rate pressure’ brought about by the US dollar.
Turkey’s move, as you may be aware, is in part a preparation for the dethroning of the US dollar as the global reserve currency. This monetary reset has been a long time coming, but we’re now entering the final stretch.
Importantly, countries that hold the most gold will have proportionately bigger say in reshaping the monetary order that arises from the ashes of the post-dollar world.
As Gaddafi and Hussein learned, this type of talk gets you hanged, drawn and quartered. But the entire schoolyard is turning on the bully, and there are now too many powerful actors undermining the petrodollar. The West might be able to deal with one or two weak rebels at a time, but it can’t muzzle the whole world at once.
In any case, Erdogan’s pleas are unlikely to see him suffer the same fate as Gaddafi or Hussein. Turkey is not Libya or Iraq. It’s not a major oil exporter. And it’s too strategically important as a gateway for Middle Eastern oil and gas into Europe.
Regardless, Turkey’s actions highlight how perilously close the world is to end of the petrodollar’s 47-year reign.
Like the civil war that engulfed Libya, the real victims from this monetary upheaval will be the unsuspecting public.
Monetary resets don’t destroy wealth; they merely redistribute it. Which means Australia’s middle class, estimated at 70% of the population, will be one of the biggest losers.
But it doesn’t have to be that way for you. Forewarned is forearmed. Taking the necessary steps to safeguard your family’s wealth and legacy has never been more important.
For The Daily Reckoning Australia