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Dr. Jim Willie: First Watch the US Dollar Rise, Then Watch Its Total Demise
In the video below, Elijah Johnson asks Dr. Jim Willie if the dismantling of the Petrodollar machinery that Dr. Willie talks about so often will have any effect on the economic reset talked about in the post titled, Jim Willie: U.S. Dollar is Now a Matter of National Security Due to Poor Decisions, and if so, what will it be?
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Dr. Willie responds by explaining that what he is referring to when he talks about the “Petrodollar machinery,” is the oil derivatives contracts.
Derivative contracts for oil are more or less a mechanism to link the U.S. Dollar, British Pound, crude oil, and all kinds of other financial assets together, and the result is the contractual equivalent of the gold standard as applied to the crude oil asset.
In essence, what derivative contracts did, was make the de facto oil involved in the contracts what was REALLY backing the U.S. Dollar.
It could be argued that the U.S. Dollar is a fiat currency, and therefore has no backing, and while that would “technically” be true, for all “practical” intents and purposes oil was indeed what was backing the U.S. Dollar.
Because of their extreme complexity, oil contract derivatives don’t dismantle easily, and it doesn’t help when there are trillions of dollars tied up in oil contracts amounting to a total of roughly 25% more than there was in 2008 when world financial markets crashed.
Since the U.S. went off the gold standard in 1971, and for all “practical” purposes adopted the Petrodollar de facto standard in 1973, the arrangement the U.S. has had with Saudi Arabia and all the Arab Emirates, is that our middle eastern partners agreed to take all crude oil sales, all crude oil payments, and all Petro surpluses in U.S. Dollars, and then they agreed to hold them in U.S.Treasuries for their savings. Until about two years ago, there was never discussion of, nor a problem involving the subsequent sale of the Treasuries after crude oil sales.
One thing we’ve come to expect here in the U.S., is a dishonest media, and true to form, they conveniently never reported on the massive gold heists the U.S. carried out in recent years on countries in the Middle East.
Just because our media didn’t report it, doesn’t mean that other countries didn’t report it either.
Our allies were well aware of what we did. In the post titled, Jim Willie: What Will It Mean If the Yuan Gets Reserve-Currency Status, it discusses how last March, U.S. mercenaries, with hoods on their heads and at 2am, stole 44 tons of Gold from the Borispol Airport in Kiev along with $70 BILLION DOLLARS of the prime minister’s money (allegedly for “his own good” and safekeeping) and deposited the money in a Swiss Account for ourselves. .
Furthermore, as Dr. Willie reports in The Mid East Carnage Left by the American Wrecking Ball, he says:
The U.S. has managed to dislodge virtually all the monarchies in the Middle East, created MASSIVE instability, STOLEN everyone’s gold, and right now all our “allies” are scurrying to get as much of their gold from central banks as possible thanks to U.S. THEFT! Relations have deteriorated so badly in the Middle East, that when Obama went to Saudi Arabia this past spring, they ignored him. They literally would not speak to him. Along with the rest of the world, the Mid East has HAD it with the U.S.
Apparently somewhere during our raids, we cleaned out the Saudi’s and the Arab Emirates gold too, and as you might imagine, that didn’t sit well with them, so they decided to strike back and began dismantling their oil contracts.
Once that process began, Petro-Contracts HAVE to be settled in U.S. Dollars when they are dissolved. So, Dr. Willie says, THAT is what caused the Dollar to go up in value so much over the same time period. It wasn’t that our economy was so strong, but quite the opposite in fact.
After all, what better evidence that the Petrodollar its dying, than to watch crude oil prices dropping.
Why? Because as crude oil drops, that causes the U.S. Dollar to go up (for now anyway), which in turn forces the price of gold to go down.
If you’ve followed Dr. Willie for a while, you know he’s been saying that he expects the Dollar to keep rising, and eventually vanish overnight causing mass hysteria.
To better explain that concept, he uses an analogy of several hundred balloons all tied together and allowed to rise into the atmosphere…
“Eventually the air pressure outside is going to be absent, and the pressure inside the balloons becomes too great, so the balloons all pop!”
Notice the verbiage he uses. He didn’t say the balloons all come crashing down to earth, because they don’t.
They explode. Poof. Gone… just like the Dollar! In the article below by Michael Snyder, he covers just how low the markets may go as these huge financial bubbles begin to explode.
When you combine Michel Snyder’s estimates with what Dr. Willie and Former Federal Reserve President, Richard Fisher, said last week, a market drop of 50% could be very likely…
Watch the Rise of the Dollar; Then DEMISE of the Dollar
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The stock market is in far worse shape than we are being told. As you will see in this article, the average U.S. stock is already down more than 20 percent from the peak of the market. But of course the major indexes are not down nearly that much. As the week begins, the S&P 500 is down 9.8 percent from its 2015 peak, the Dow Jones Industrial Average is down 10.7 percent from its 2015 peak, and the Nasdaq is down 11.0 percent from its 2015 peak. So if you only look at those indexes, you would think that we are only about halfway to bear market territory. Unfortunately, a few high flying stocks such as Facebook, Amazon, Netflix and Google have been masking a much deeper decline for the rest of the market. When the market closed on Friday, 229 of the stocks on the S&P 500 were down at least 20 percent from their 52 week highs, and when you look at indexes that are even broader things are even worse.
For example, let’s take a look at the Standard & Poor’s 1500 index. According to the Bespoke Investment Group, the average stock on that index is down a staggering 26.9 percent from the peak of the market…
Indeed, the Standard & Poor’s 1500 index – a broad basket of large, mid and small company stocks – shows that the average stock’s distance from its 52-week high is 26.9%, according to stats compiled by Bespoke Investment Group through Friday’s close.
“That’s bear market territory!” says Paul Hickey, co-founder of Bespoke Investment Group, the firm that provided USA TODAY with the gloomy price data.
So if the average stock has fallen 26.9 percent, what kind of market are we in?
To me, that is definitely bear market territory.
The rapid decline of the markets last week got the attention of the entire world, but of course this current financial crisis did not begin last week. These stocks have been falling since the middle part of last year. And what Bespoke Investment Group discovered is that small cap stocks have been hurt the most by this current downturn…
Here’s a statistical damage assessment, provided by Bespoke Investment Group, of the pain being felt by the average U.S. stock in the S&P 1500 index:
* Large-company stocks in the S&P 500 index are down 22.6%, on average, from peaks hit in the past 12 months.
* Mid-sized stocks in the S&P 400 index are sporting an average decline of 26.5% since hitting 52-week highs.
* Small stocks in the S&P 600 index are the farthest distance away from their recent peaks. The average small-cap name is 30.7% below its high in the past year.
After looking at those numbers, is there anyone out there that still wants to try to claim that “nothing is happening”?
Over the past six months or so, the sector that has been hit the hardest has been energy. According to CNN, the average energy stock has now fallen 52 percent…
And then there’s energy. The dramatic decline in crude oil prices rocked the energy space. The average energy stock is now down a whopping 52% from its 52-week high, according to Bespoke. The only thing worse than that is small-cap energy, which is down 61%.
If you go up to an energy executive and try to tell him that “nothing is happening”, you might just get punched in the face.
And it is very important to keep in mind that stocks still have a tremendous distance to fall. They are still massively overvalued by historical standards, and this is something that I have covered repeatedly on my website in recent months.
So how far could they ultimately fall?
Well, Dr. John Hussman is convinced that we could eventually see total losses in the 40 to 55 percent range…
I remain convinced that the U.S. financial markets, particularly equities and low-grade debt, are in a late-stage top formation of the third speculative bubble in 15 years.
On the basis of the valuation measures most strongly correlated with subsequent market returns (and that have fully retained that correlation even across recent market cycles), current extremes imply 40-55% market losses over the completion of the current market cycle, with zero nominal and negative real total returns for the S&P 500 on a 10-to-12-year horizon.
These are not worst-case scenarios, but run-of-the-mill expectations.
If the market does fall about 40 percent, that will just bring us into the range of what is considered to be historically “normal”. If some sort of major disaster or emergency were to strike, that could potentially push the market down much, much farther.
And with each passing day, we get even more numbers which seem to indicate that we are entering a very, very deep global recession.
For instance, global trade numbers are absolutely collapsing. This is a point that Raoul Pal hammered home during an interview with CNBC just the other day…
Looking at International Monetary Fund data, “the year-over-year change in global exports is at the second lowest level since 1958,” Raoul Pal, Publisher of the Global Macro Investor told CNBC’s”Fast Money”this week.
Basically, it means economies around the world are shipping their goods at near historically low levels. “Something massive is going on in the global economy and people are missing it,” Pal added.
The steep decline in 2015 exports is second only to 2009, when the global recession led to a 37 percent drop in export growth.
We have never seen global exports collapse this much outside of a recession.
Clearly we are witnessing a tremendous shift, and it boggles my mind that more people cannot see it.
As for this current wave of financial turmoil, it is hard to say how long it will last. As I write this article, markets all over the Middle East are imploding, stocks in Asia are going crazy, currencies are crashing, and carry trades are being unwound at a staggering pace. But at some point we should expect the level of panic to subside a bit.
If things do temporarily calm down, don’t let that fool you. Global financial markets have not been this fragile since 2008. Any sort of a trigger event is going to cause stocks all over the world to slide even more.
And let us not minimize the damage that has already been done one bit. As you just read, the average stock on the Standard & Poor’s 1500 index is already down 26.9 percent. The financial crisis that erupted during the second half of 2015 has already resulted in trillions of dollars of wealth being wiped out.
When people ask me when the “next financial crisis” is coming, I have a very simple answer for them.
The next financial crisis is not coming.
The next financial crisis is already here.
An angry bear has been released after nearly seven years in hibernation, and the entire world is going to be absolutely shocked by what happens next.
FOR MORE GREAT MATERIAL FROM JIM WILLIE:
Jim Willie: U.S. Dollar is Now a Matter of National Security Due to Poor Decisions
Jim Willie: Armageddon Coming to U.S. With Trillions Exposed In Derivatives
Jim Willie, The Fed’s Week of Reckoning, and an Isolated United States
Jim Willie: After Banks Fail, Government Seizes IRA’s, 401k’s, and Pensions
Jim Willie, the Crumbling Global Economy, and the Dollar Crisis
Jim Willie: What Do the Oil Black Market, NATO, and ISIS Have in Common?
Jim Willie; One on One -Taking Questions On the Most Pressing Matters of the Day
Jim Willie: The Fed, Yellen, US Dollar, and Negative Interest Are a Joke!
Jim Willie Explains U.S. Nuclear Threats to China & Russia Over Challenging the Dollar
Jim Willie: What Will It Mean If the Yuan Gets Reserve-Currency Status?
Jim Willie and 20 Reasons Why Quitting Prepping After September Was Wrong
Jim Willie: The Mid East Carnage Left by the American Wrecking Ball
Jim Willie: The Fractured Bond Market and the Economic Collapse
FOR MORE GREAT MATERIAL FROM PETER SCHIFF:
Peter Schiff: Due to the Feds Antics, the Market is Very Dangerous Now
Peter Schiff: 2015 Was The Worst Year Since 2008 and Stocks Still Dropping
Peter Schiff: Janet Yellen Strayed From Her Own Plan and Went Nuts!
Peter Schiff: Higher Spending During Holidays Does Not Fix Screwed Economy
Peter Schiff and “If The Economy Is Fine, Why Are So Many Large Retailers Imploding?”
Peter Schiff: Take a Good Look at the “New” American Dream!
Peter Schiff: Did the Fed’s Luck Run Out On Friday the 13th?
Peter Schiff and “The 4 Harbingers Of Stock Market Doom”
Peter Schiff and Reagan Advisor: Complete Economic Collapse Immediately Ahead
Peter Schiff: Warning! Economic Storm Clouds Ready to Rain
Peter Schiff: Death of the US Dollar Is Imminent; Fed Out of Options
Peter Schiff: 11 Trillion In Global Stock Losses and Awful Jobs Report
Peter Schiff: “The Fed Admits Rates Could Stay at Zero Forever”
Peter Schiff with Mr. “I Have No Fear Of an Economic or Stock Market Collapse”
Peter Schiff Explains Why Financial Bubbles Are Ready to Pop
Peter Schiff: Everybody Is Preparing for Wrong Outcome in US Economy
2 Day Crash That Was Larger Than Any 1 Day Market Crash In U.S. History
Peter Schiff On China’s Currency Devaluation and the Federal Reserve Board
Peter Schiff: Greece Was a Sideshow. Americans Need to Worry About Starving
Peter Schiff: China and Switzerland is Killing U.S. Dollar
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Been hearing this since before 2003, 13 years later the dollar still stands. Keep saying it though, you’re bound to be right one day. #killurself
You got that right Jimmie, watch the fiat dollar rise and then vanish into thin air.
Yo Jimbo,
Did You Know It Would Take 398, 879, 561 Years To Be Off The Federal Governments Debt.
Total unfunded liabilities that Federal Government has accrued comes to $111.7 Trillion Dollars.
Guess what comes next?!
Let’s Get Ready To Party Like It’s 1776!
Our forefathers warned us that the enemy is within, know your enemy.
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” ― Sun Tzu, The Art of War
Jim again I would really like to believe this, but going by your previous posts?
In other news……
/global-unrest/2016/01/the-lion-is-it-time-to-fight-back-against-the-islamic-invasion-video-2469888.html