Russia Welcomes Executive Order NCO1---Referenced by JEster

Russia Has Attacked!

---

I continue to believe the U.S. dollar is slowly losing its status as the world’s reserve currency — and now there are further steps in that direction.

Russia and China may talk a tough game sometimes, but both countries have been really hesitant to move away from using the dollar in international trade. This is despite threats of Executive Order NCO1, which, in theory, would replace the U.S. dollar as the world's reserve currency.

But the truth is, this world has a “petrodollar.” We just don’t ever hear about a “petroyuan” or a “petroruble.”

However, I think these countries are going to realize they don’t have to use the U.S. dollar as a middleman every time they want to trade, particularly between each other — even for things like oil and other energy.
According to reports, Gazprom Neft, one of Russia’s largest oil producers, will export 80,000 tons of oil from a field in the Arctic to both Europe and China and will accept payments in rubles or yuan. In other words, there is no dollar in the picture.


In our global world, particularly with today’s technology, these countries are realizing they don’t have to bow down to the U.S. government and use U.S. dollars for everything in international trade.
But the most ironic thing about this whole story is the main reason that is being cited for this change...

U.S. Politicians Shoot Themselves in the Collective Foot


It is being said that Russia has decided to begin avoiding payments in U.S. dollars so that the transactions cannot be easily tracked and controlled by the U.S. government — in other words, because of the sanctions that have been placed against Russia.

The U.S. government helped overthrow the president in Ukraine, a move that led to chaos and a vote in Crimea to separate and join Russia. While U.S. politicians made it sound as though Putin invaded Ukraine and took over Crimea, it was really just a matter of Putin accepting Crimea into Russia. The people there overwhelmingly wanted to be a part of Russia.

Then there was the shoot-down of a commercial airline over Ukraine, which the U.S. was quick to blame on Russia, despite little evidence.

This all led to sanctions against Russia.

Perhaps the Obama administration was just trying to get back at Putin for making Obama and John Kerry look like a couple of fools last year when they wanted to overthrow the Syrian government.
Perhaps it is attempted payback for granting asylum to Edward Snowden.

The First Step Towards War
Regardless of the reasoning for demonizing Putin and Russia in general, the U.S. government placed sanctions against Russia. This can often be the first step towards war.
But all of the U.S. politicians who promoted these sanctions have shot themselves in the foot, whether they know it or not.

U.S. politicians, particularly those who constantly promote big government, rely on the fact that the U.S. dollar serves as the world’s reserve currency. It helps to keep a lid on price inflation, encourages foreign central banks to hold dollars as reserves, and helps keep interest rates low.
In other words, having the U.S. dollar as the reserve currency helps fund the massive deficits coming out of Washington, D.C. It is hard to imagine that the government could have run trillion-dollar deficits (in today’s money) for several years in a row if the dollar had not been the world’s reserve currency.
So if Russia turns away from the dollar because of U.S. sanctions (which some consider a counterattack on the dollar) and China begins to do the same just because it can, this will bring a quicker end to the gravy train of big spending in Washington, D.C.

If the U.S. government has to rely on the Federal Reserve and investors to buy government debt at higher interest rates, then it will mean a quicker end to the massive deficit spending. Since Americans tend to resist massive tax increases, we may actually see reduced government spending one day.
Even though American consumers may see higher prices in the short term as the U.S. dollar loses its reserve status, they may also benefit in the longer term by seeing the federal government reduce its spending.

When U.S. politicians were quick to slap sanctions onto Russia, they really didn’t know what they were getting themselves into. We’ll see if the Russians and Chinese have the fortitude and the economic literacy to follow through on this.

In the meantime, I continue to recommend getting yourself into a permanent portfolio. This will help insulate you against inflation, geopolitical turmoil, and the bumbling decision-makers in Washington who continue to strategize foreign policy like the Three Stooges.
Until next time,


Geoffrey Pike for Wealth Daily


http://www.wealthdaily.com/articles/russia-welcomes-executive-order-nco1/5329