But at the underside, Tech de-coupling from China is one implicit aspect to such a strategy (camouflaged beneath the catch-phrase of recovering ‘stolen’ U.S. jobs and intellectual property): The prize that America truly seeks is to seize for itself over the coming decades, all global standards in leading-edge technology, and to deny them to China.

Such standards might seem obscure, but they are a crucial element of modern technology. If the cold war was dominated by a race to build the most nuclear weapons, today’s contest between the U.S. and China — as well as vis à vis the EU — will at least partly be played out through a struggle to control the bureaucratic rule-setting that lies behind the most important industries of the age. And those standards are up for grabs.

China has long been strategically positioning itself to fight this ‘war’ of tech standards (i.e. China Standards 2035, a blueprint for cyber and data governance).

The same argument is true for supply-chains which are now at the centre of a tug-of-war that has major implications for geopolitics. Dis-entangling the rhizome of supply chains built-up through decades of globalism is difficult and onerous: The multinational companies which sell into the Chinese market may have little choice but to try to stay put. However, if de-coupling as a key U.S. foreign policy persists, then products ranging from computer servers, to Apple iPhones, could end up having two separate supply chains — one for the Chinese market, and one for much of the rest of the world. It will be more costly and less efficient, but this is the way that politics is pushing (at least for now).

So where are we in this de-coupling struggle? Until now, it is a mixed bag. The U.S. has focussed on de-coupling in certain leading-edge technologies (that also have dual civil-defence potential). But Washington and Beijing have stayed clear of financial de-coupling (so far) – as Wall Street does not want to lose a $5 trillion two-way financial trade.

Some years back, when travelling across Europe, passengers commonly had to exit one train on reaching the frontier, and cross to a different train and carriages, beyond the border. This still exists. The railways were operating on entirely different gauge rail tracks. We have not reached that point in Tech. But the future is likely to become more complex – and costly – should Europe, the U.S. and China adopt different protocols for 5G. The latter, with its low latency, enables diverse strands of data to be mined, and modelled, in near real time (a game-changing factor for missile targeting and aerial defence systems, where every millisecond counts).

It is possible then, that 5G may be divided into two competing stacks to reflect different U.S. and Chinese standards? For outsiders to compete, they may find it necessary to manufacture separate equipment for these different protocols. Some measure of division is also possible in semiconductors, artificial intelligence and other areas where U.S.-China rivalry is intense. For now, Russia and Iranian infrastructure is fully compatible with China. The West is not yet a ‘separate gauge’; it can still work with Iran and Russia, but dual-functionality in the tech sphere nevertheless will cost — and probably require careful legal workabouts, to avoid legal or regulatory sanction.

And just to be clear, the battle for influence over Tech standards is separate to the ‘Regulatory War’ in which the Data, AI and the Regulatory eco-spheres are being ‘Balkanised’. Europe is almost non-existent in the Cloud analytics sphere, but is trying to catch-up quick. It must. China is so far ahead that Europe has little choice but to bulldoze (strong arm) its way into this space i.e. by ‘regulating’ U.S. Cloud business (already under U.S. anti-trust threat), toward Europe.

Cloud companies provide their clients with data storage, but also with sophisticated tools for analysing, modelling, and understanding the vast data sets found in the cloud. The sheer size of modern data sets has sparked an explosion of new techniques for extracting information from them. These new techniques are made possible by ongoing advances in computer processing power and speed, as well as by aggregating computer power to improve performance (known as High-Performance Computing, or HPC).

Many of these techniques (‘data mining’, ‘machine learning’, or AI) refer to the process of extracting information from raw data. Machine learning refers to the use of specific algorithms to identify patterns in raw data and represent the data as a model. Such models can then be used to make inferences about new data sets or guide decision-making. The term ‘Internet of Things’ (IoT) usually refers to a network of connected computing and physical devices that can automatically generate and transmit data about physical systems. The ‘nervous system’ serving such ‘body messaging’ will be 5G.

The EU is already regulating Big Data; it intends to regulate the U.S. Cloud platforms; and is looking at setting EU protocols for algorithms (to reflect EU social objectives and ‘liberal values’).

All those companies that are dependent on Cloud analytics and machine training, therefore, will be affected by this Regulatory fragmentation into distinct spheres. Companies, of course, need these capabilities to run robotics and complex mechanical systems effectively – and to reduce costs. Analytics has been responsible for huge productivity gains. Accenture estimate that analytics alone could generate as much as $425 billion in added-value, by 2025, for the oil and gas industry.

It was the U.S. that triggered this round of de-coupling, but the consequence to that initial decision is that it has prompted China to respond with its own de-coupling from the U.S. at the leading-edge of Tech. China’s intent now is not simply to refine and improve on existing technology, but to leapfrog existing knowledge into a new tech realm (such as by discovering and using new materials that overcome present limits to microprocessor evolution).

They may just succeed – over next the three years or so – given the huge resources China is diverting to this task (i.e. with microprocessors). This could alter the whole tech calculus – awarding China primacy over most key areas of cutting-edge technology. States will not easily be able ignore this fact – whether or not they profess to ‘like’ China, or not.

Which brings us to the second ‘underside’ to this geopolitical struggle. So far, both the U.S. and China have kept finance largely separate to the main de-coupling. But a substantive change may be underway: The U.S. and several other states are toying with Central Bank digital currencies, and FinTech internet platforms are beginning to displace traditional banking institutions. Pepe Escobar notes:

Donald Trump is mulling restrictions on Ant’s Alipay and other Chinese digital payment platforms like Tencent Holdings…and, as with Huawei, Trump’s team is alleging Ant’s digital payment platforms threaten U.S. national security. More likely is that Trump is concerned Ant threatens the global banking advantage the U.S. has long taken for granted.

Team Trump is not alone. U.S. hedge fund manager Kyle Bass of Hayman Capital argues Ant and Tencent are “clear and present dangers to U.S. national security that now threaten us more than any other issue.”

Bass estimates that the Chinese Communist Party is pushing its yuan digital payment system on an estimated 62% of the world’s population in ways that threaten Washington’s influence. What started as a mere online payment service has since veered sharply into a financial services juggernaut. It’s becoming a powerhouse in loans, insurance policies, mutual funds, travel booking and all the cross-platform synergies for sales and economies of scale.

At the moment, well over 90% of Alipay users are using the app for more than just payments. This is “effectively creating a closed-loop ecosystem where there is no need for money to leave the wallet ecosystem,” says analyst Harshita Rawat of Bernstein Research.

Rawat notes that Ant has “used its payment service as a user acquisition engine for building broader financial services features.” That includes finding ways to cross-pollinate Ant’s ambitions to be China’s financial services mall with Alibaba’s dominant online bazaar…

Given that many Chinese already downloaded the Alipay app, CEO Eric Jing is angling to export its model overseas. It’s collaborating with nine start-ups around the region, including GCash in the Philippines and Paytm in India. Ant plans to use the proceeds from its share listing to accelerate the pivot overseas.

The point here is two-fold: China is setting the scene to challenge a fiat dollar, at a sensitive moment of dollar weakness. And secondly, China is placing ‘facts on the ground’ — shaping standards from the bottom up, through widespread overseas adoption of its technology.

Just as Alipay has made huge inroads across Asia, China’s ‘Smart Cities’ project diffuses Chinese standards, precisely because they incorporate so many technologies: Facial recognition systems, big data analysis, 5G telecoms and AI cameras. All represent technologies for which standards remain up for grabs. Thus ‘smart cities’, which automate multiple municipal functions, additionally helps China’s standards drive.

According to research by RWR Advisory, a Washington-based consultancy, Chinese companies have done 116 deals to install ‘smart city’ and ‘safe city’ packages around the world since 2013, with 70 of these taking place in countries that also participate in the Belt and Road Initiative. The main difference between ‘smart’ and ‘safe’ city equipment is that the latter is intended primarily to survey and monitor the population, while the former is primarily aimed at automating municipal functions while also incorporating surveillance functions. Cities in western and southern Europe together have signed up to a total of 25 such ‘smart’ and ‘safe’ projects.

Mark Warner, Democratic Vice-Chair of the U.S. Senate intelligence committee, sees the threat from China in stark terms: Beijing intends to control the next generation of digital infrastructure, he says, and, as it does so, to impose principles ‘that are antithetical to U.S. values’. “Over the last 10 to 15 years, [the U.S.] leadership role has eroded and our leverage to establish standards and protocols reflecting our values has diminished,” Warner laments: “As a result others, but mostly China, have stepped into the void to advance standards and values that advantage the Chinese Communist party”.

All signs point to China wielding more influence over global technological standards. Yet equally certain is that the backlash from Washington is building. Should the U.S. become more confrontational, it could lead China to accelerate a move towards parallel alternatives. This could ultimately result in a bifurcated arena on industrial standards.

And it’s been no secret that the elite of the world want us to stop transacting in cash because it is something they can’t track. Sweden has flirted with the cashless society while the European Union did away with large denomination bills the same way the U.S. has been phasing them out.

A few years ago, India created a huge stir removing the 500 and 1000 rupee note from circulation. All of these moves have been, nominally, in service of stamping out corruption. They are sold to the public as a way to punish criminals and money launderers.

But the reality is that the push for removing cash from society is to put all of our financial dealings in databases which gives authorities a record of everything you do. As governments around the world become increasingly bankrupt they naturally look for ways to improve tax compliance as well as create profiles of anyone they deem a threat to their continued existence.

That’s the real reason for why ‘cash is trash’ to authorities. And the moves towards digital only versions of national currencies is an extension of the power grab currently underway as a response to the crisis of COVID-19.

But, more than that, the reason for this demonization of cash has as much to do with the understanding that the current global financial system is broken and will need a global coordinated bailout.

The easiest way to effect that is to be able to create digital money at the stroke of a keyboard.

The crisis of 2008 was bigger than the Federal Reserve. To survive it required the coordinated effort of all the major central banks along with support from the International Monetary Fund (IMF).

So, color me not shocked when I see this report from Sputnik that the head of the Shanghai Gold Exchange publicly make the case in favor of a transnational digital currency to replace the U.S. dollar as the world’s trade settlement currency.

According to Wang Zhenying, quoted by Reuters, the dollar, as a weapon of US pressure and a source of vulnerability for other countries, can no longer be the standard global currency. He admits that gold is also not an ideal means of exchange, as its quantity is limited and it cannot meet the needs of growing international trade. Therefore, a supranational currency for settlements independent of any country is needed.

This idea is not something new and was already promoted by China during the last financial crisis of 2008-2009. Then Chinese central bank chief Zhou Xiaochuan proposed to reform the system of international settlements through special drawing rights (SDR).

Author and commentator Jim Rickards has been making this point for more than a decade. He’s talked openly in his previous books The Death of Money and Currency Wars about the plans for the IMF to assume the role as the world’s central bank because the crisis in process will be greater than all the central banks.

I agree with Jim on this and have for years. The world’s elite have discussed these things openly. They’ve written white papers on this.

But what is interesting now is that Mr. Wang is modifying this idea slightly, talking in terms of a hard currency of some form to replace the U.S. dollar. But, look at his argument closely and you’ll see the bait and switch for while he doesn’t believe we’ll get consensus on using IMF Special Drawing Rights (SDR) as a way to settle accounts he doesn’t believe gold is viable either.

So what will it be, then?

Countries, like China, are already working on digital versions of their national currencies. The U.S. Congress tried to slip this language into the recently-passed first CARES Act authorizing trillions in bailouts and stimulus money.

Russia has been working on a digital as well as a cryptocurrency version of the ruble. The EU desperately wants member states to agree to debt mutualization and fiscal integration under the auspice of the European Central Bank to create digital only euros and end physical euros once and for all.

Gold ownership in Germany is now highly suspect with the German government openly tracking all gold sales greater than 1000 euros, less than one ounce.

Financial privacy is, effectively, already a thing of the past. Even the cryptocurrency markets in the so-called first world have to be AML (Anti-Money Laundering) and KYC (Know Your Customer) compliant to get the ability to operate with the existing financial infrastructure.

The push for the end of cash is a real thing. It’s a dangerous and worrying trend because it assumes all taxes and fees demanded by governments are legitimate. It assumes that if you want to remain private you are a money launderer and a cheat.

And what’s most worrying is that opposition to U.S. hegemonic behavior, weaponizing the dollar the way the Trump administration has, will be used as the rallying cry for an even worse system of social and financial control.

I’m all for the multi-polar world but we don’t need a global trade settlement currency as administered by governments. Do you really think that any other country wouldn’t eventually come to look like the U.S. after nearly a century of dominating the world’s financial landscape?

If you do then I assert you are either terminally naïve or a shill.

That’s what this story is really all about. The Davos Crowd never sets up a dynamic like this which leaves people with anything other than a Hobson’s Choice. You can either suffer under the tyranny of the U.S.’s rapacious banking oligarchy or you can choose an equally bad one administered as a global one.

But that isn’t the only choice. Mr. Wang isn’t wrong that something new is needed but it needs to be a real hard currency based on antecedent value, not birthed out of thin air or backed by future labor (debt).

The dollar reserve standard is in the process of dying. The great financialization of the world and the multiple levels of credit bubbles its engendered are bursting. People are open to alternatives. And in the great game of global capital a country only has to be slightly better than the current dominant player to attract the lion’s share once the outflows begin.

China is positioning itself to be a bigger player here but the IMF, governed and controlled by the U.S., is not the solution. That’s a ‘meet the new boss, same as the old boss’ scenario.

Right now gold is seeing a strong bid the world over and Bitcoin is rising into the halving of its reward pool which occurs every four years. There has never been a better opportunity for people to reject the pronouncements and solutions of the very people who have so thoroughly destroyed our ability to assess risk and value.

And it will be the discipline of cash tied to real assets, birthed from human toil but free from human manipulation that will return sanity to our markets and local economies. That’s what a hard currency is. That’s what Mr. Wang administers at the SGE and that’s what needs to come back.

In the case of Mark Carney’s Bank of England, the former Bank of Canada governor/Goldman Sachs man has recently led the hectic campaign for a green digital crypto-currency to replace the bankrupt US dollar. Since his announcement of this crypto plan on August 22, the Bank of Canada quickly fell into line declaring its support of the agenda on October 15.

Carney’s colleagues in the United Nations Conference on Trade and Development (UNCTD) amplified this message on October 15 saying: “What is needed is a Global Green New Deal that combines environmental recovery, financial stability and economic justice through massive public investment in decarbonizing our energy, transportation and food systems while guaranteeing jobs for displaced workers and supporting low carbon growth paths in developing countries… through the transfer of appropriate technologies”.

Carney was joined by former Bank of England Governor Mervyn King who recently warned that a “financial Armageddon” is looming unless central banks are permitted to unleash unbounded quantitative easing once more.

The Storm now Emerging

The fact that this highly coordinated push is happening now is not unconnected to the elephant in the room: not only is it a myth that the financial system recovered after the near-meltdown of 2008, but the truth is that the crisis has only become magnitudes worse today, with many signs now pointing to an even bigger blowout that no amount of quantitative easing can solve.

Since September 17, a radical new wave of bailouts have been unleashed with the NY Federal Reserve pumping $50-$100 billion of short term loans/day into the big banks in order to fight an immanent “liquidity crunch”. Meanwhile the IMF Global Financial Stability Report of 2019 has sounded the alarm that the corporate debt of eight leading nations has grown to a record $19 trillion upon which sits innumerable trillions of derivatives bets. The IMF Report authors stated that “a sharp, sudden tightening in financial conditions could unmasks the vulnerabilities” of the system.

Derivatives and the Unreality of Modern Banking

When the 2008 crisis hit, many people woke up to the ugly fact that they had been living a lie.

Illusions had blown up so dramatically that many were able to examine their own axioms and began to think more clearly about the real principles of political economy which globalization had denied to exist. This was hard not to do when Congressmen like Brad Sherman publicized that he and others were threatened with Marshall Law in America if he did not support a bailout of “too-big-to-fails”. Sadly, as the post-2008 “bailout system” emerged, speculation only continued to grow and the west was told that “the fundamentals were sound”, Globalization and the neoliberal paradigm had proven themselves and people went back to sleep.

What was the lesson we SHOULD have learned in 2008?

Economics is not digital. It is not even monetary. Hell it is not even resource-based. Of course, resources, money and even digital currencies may play important roles in an economic system, but the system’s viability- what we may call the “cause of value”, is not premised upon any of those things. This fact was understood more widely in the thirty post WWII years among trans-Atlantic nations. But with the 1971 floating of the US dollar off of the gold standard and onto speculative markets, the new paradigm of “money-first, reality second (or never)” was unleashed and nations stripped of their qualified leaders soon also became stripped of their real assets as well as their ability to generate credit for long term infrastructure or impose protective tariffs in defense of their own interests- both practices officially banned by NAFTA, the WTO and the EURO-cage.

Throughout the 1990s derivatives increased from $2 trillion in 1992 to $70 trillion in 1999 at the height of the Y2K bubble. Once that bubble blew, many thought the “end was nigh”, and started waking up again but due to the 1999 repeal of Glass Steagall followed by the 2000 deregulation of over-the-counter derivatives now being supported with supercomputers and “high-frequency trading”, the illusion was given new life and the $70 trillion bubble became $500 trillion by 2007 when the subprime bubble blew. To put things in proportion, global GDP amounts to $85 trillion.

Where was the Resistance?

Why didn’t more people fight throughout the 1970s, 1980s, 1990s, and 2000s against this collapse of manufacturing, decay of vital infrastructure and the loss of those very practices which created the foundations first world living standards which generations unborn required to survive?

Admittedly, a few did.

Deutschebank President Alfred Herrhausen tried to revive the pro-industrial growth model as the Berlin Wall fell, but a November 1989 assassination put an end to that. American presidential candidate Lyndon LaRouche admittedly led a powerful resistance within America, but an FBI crackdown in 1988 put the man and his leading allies in maximum security prison for years. There were a few others, but for the most part the lesson learned by the political class, and citizens who should have known better was “don’t make waves”, keep your head down, and you might get material comfort while the outskirts of the empire go to hell.

New Silk Road or New Green Deal

It is no secret that Carney as well as French Finance Minister Bruno LaMaire have recently stated that if a Global Green New Deal is not imposed quickly then China’s New Silk Road will become the basis of a new post-Bretton Woods system. In the minds of an oligarchical governing class obsessed with control, this multipolar future premised on long term growth and international development projects WITH NO DEFINED ENDPOINT POSSIBLE is a horror not to be permitted- even at the cost of launching WWIII.

This is where the economic meltdown and the green digital currency “solution” are revealed in their full ugliness.

The reason why those countries led by Russia and China are jumping on board a New Silk Road is because the paradigm governing it is premised upon REAL VALUE! By lifting people out of poverty (800 million in China alone), and valuing the creative powers of mind which multiply their opportunities of action when given a pro-industrial growth-oriented paradigm, these Eurasian powers have tapped into the source of value which guided the west in the post WWII years. The problem with this paradigm which zero-sum thinking geopoliticians HATE is that once any genuine program of serious development starts, you can’t really stop. It’s an open system and since it is premised on human creative thought and free will, it is also non-linear. This fact of open-non linearity is really humanity’s saving grace.

When nations elevate their citizens to higher standards of living, rates of consumption increase, as do rates of attrition of existing resource baskets, but cognitive powers also increase which must offset that entropy with greater rates of anti-entropy through new discoveries and inventions! These must be applied in the form of industrial and technological progress. Imagine what the world would already look like if JFK’s program for a space based economy powered by nuclear fusion wasn’t de-railed over his dead body!

This entire science of physical economy is both at the heart of the Belt and Road Initiative today and its principles were discussed already many decades ago in the 1984 textbook So You Wish to Learn All About Economics and associated video the Power of Labor. It is well worth taking the time to work through this material seriously if one considers themselves a truth-seeker in today’s world.

The only reason why the Bank of England’s green digital currency is taken seriously at all today is because westerners have become so psycho-spiritually detached from reality during the years since the “consumer society cult” led people to believe that a nation could magically exist as a services economy without producing.

Just like those technocrats in 1919 who imposed impossible Versailles reparations onto a defeated Germany while simultaneously gouging the physical economic basis of the Weimar Republic’s existence, today’s technocrats are hungry for a new fascist solution to the problem of sovereign nation states. We know what almost happened in Germany when the last project funded by the Bank of England failed in 1945… but what about today?

The author can be contacted at canadianpatriot1776@tutamail.com

Facebook has announced a plan to launch a new cryptocurrency named the Libra, adding another layer to its efforts to dominate global communications and business. Backed by huge finance and technology companies including Visa, Spotify, eBay, PayPal and Uber – plus a ready-made user base of 2 billion people around the world – Facebook is positioned to pressure countries and central banks to cooperate with its reinvention of the global financial system.

In my view as a social media researcher and educator, Facebook CEO Mark Zuckerberg is clearly seeking to give his company even more political power on a global scale, despite the potential dangers to society at large. In a sense, he is declaring that he wants Facebook to become a virtual nation, populated by users, powered by a self-contained economy, and headed by a CEO – Zuckerberg himself – who is not even accountable to his shareholders.

Facebook hasn’t behaved responsibly in the past, and is still wrestling with significant public concerns – and investigations – about its privacy practices, information accuracy and targeted advertising. Therefore, it’s important to see through the hype. People must consider who is reshaping the world, and whether they are doing it in the best interests of humankind – or whether they are just seeking to benefit the new class of elite technology executives.

Humanity needs ethical leadership, and time to think through the potential repercussions of rapid technological change. That’s why, in my view, Facebook’s cryptocurrency should be blocked by financial regulators until its design has been proved to be safe for all of global society.

Understanding Libra

Technology companies are interested in a global currency that is native to the internet. That could allow companies like Facebook and Twitter to bring in more users to their platforms, and collect money from businesses who want to join the new system. They also want to siphon off business from the existing financial services industry. That sector is worth trillions of dollars, is enormously profitable, and yet has struggled to implement its own digital currency.

It will start as a private, permissioned, not-trustless, centralized oligopolistic members-only club. So much for calling it “blockchain”. Like all “enterprise DLT” it is blockchain in name only and an monopoly to extract massive seignorage from billions of users. A monopoly scam https://t.co/NritKaQODS

— Nouriel Roubini (@Nouriel) 17 июня 2019 г.

The technical details of Facebook’s plans are still emerging, but it seems that the company is not seeking to compete with Bitcoin or other cryptocurrencies. Rather, Facebook is looking to replace the existing global financial system with an all-new setup, with Libra at its center.

The company may be counting on increased public interest in cryptocurrencies and financial technologies, and its market strength, to overcome objections. However, I don’t believe Facebook should be allowed to wreck the global financial system like it has, as many see it, wrecked global communications.

Speeding global exchange

There is definitely a need for smoother, faster and cheaper ways to send money around the world, and to provide access to financial services to the many people who do not have formal bank accounts. There is real potential to Libra, but there are likely to be ways to improve even more, developing a payment system that better serves the world as a whole.

At least at the moment, the Libra is being designed as a form of electronic money linked to many national currencies. That has raised fears that Libra might someday be recognized as a sovereign currency, with Facebook acting as a “shadow bank” that could compete with the central banks of countries around the world.

It doesn’t help that Facebook is already positioning itself to evade regulatory scrutiny by creating a corporate subsidiary that will join an ostensibly independent governing body for the Libra.

To protect consumers, regulators should look carefully at whether the new system supporting the Libra is sound. It may be that an entirely new set of financial rules and regulations is needed to shield the existing financial system from harm if the Libra becomes more popular than national currencies. At the very least, governments need to proceed slowly and carefully when new products may introduce systemic risks into our environment. Even the CEO of Google has acknowledged that. In my opinion, Libra’s planned launch in 2020 does not allow enough time to fully vet this technology and its risks.

Protecting the global financial system

Financial regulations have developed over time to encourage trust between unknown parties, and to protect regular customers from fraudsters and corporate greed. There are also rules that help governments prevent and detect transactions that support crime and terrorism.

This is not to say that all payments and purchases should be tied to a known entity online or in real life. Cash and anonymity is also a civil right and is key to privacy and personal freedoms.

As new digital financial services, methods of electronic payment and currencies develop and become popular, they should not be allowed to undermine longstanding financial safety systems, even in the name of smoother, cheaper transactions.

My concern is not just about large-volume transactions. Facebook has shown how even small amounts of money can buy microtargeted ads with the power to influence public opinion and election outcomes in the U.S. and around the world.

Product design and risk assessment

Facebook has a long history of questionable business models and privacy practices. The public, and their representatives in government – including elected officials, financial regulators and central bank authorities – should carefully scrutinize all aspects of Facebook’s cryptocurrency plans.

This concern is especially urgent because Facebook also has a long history of launching products and services, like political ads and live-streaming video, without fully considering their potential to damage democracy and the global society at large.

Mark Zuckerberg didn’t think enough about how people could use Facebook for ill.

The company has demonstrated its inability to serve society beneficially – and it may not even be interested in trying. All the signals suggest that customers and regulators alike should carefully examine whether Facebook’s Libra is truly innovative or just a way to avoid restrictions on a potentially hazardous financial product.

Defending democracy

Facebook’s entrance into the financial industry is a threat to democracies and their citizens around the world, on the same scale as disinformation and information warfare, which also depend on social media for their effectiveness.

It may be hard for world leaders to understand that this is an emergency, as they cannot see the virtual powers aligning against them. But they must huddle quickly to ensure they have – and keep – the power to protect their people from technology companies’ greed.

Yes, but the goal is bigger than this…Zuckerberg is building Rome. This is nation-building. This is bigger than the global financial system. Sovereigns are being invaded from the cloud. https://t.co/cbagUDHoHh

— J. Grygiel (@jmgrygiel) 18 июня 2019 г.

It will be key to understand if Facebook’s future cryptocurrency will ultimately function more like anonymous cash, or more like a traceable credit card transaction. Facebook has the blockchain and encryption technology to create an anonymous digital cash-like system, or a private digital currency, which has not been created yet. Anonymity would heighten the risks of abuse such as money laundering, so it’s worth watching out for a cash-like Facebook cryptocurrency that mirrors the central banks’ cash system.

In addition, I cannot help but reflect on the name that Facebook chose for this, the Libra, which is a reference to the Roman measurement for a pound, once used to mint coins. In many ways the company that Mark Zuckerberg is building is beginning to look more like a Roman Empire, now with its own central bank and currency, than a corporation. The only problem is that this new nation-like platform is a controlled company and is run more like a dictatorship than a sovereign country with democratically elected leaders. Even now, the company may have as much power as some countries – and more than others.

In the wake of the not too distant global financial crisis, and the “fake news” and disinformation culture that is developing, people must slow down and fully evaluate disruptive technology of this magnitude. Society cannot withstand a launch of a cryptocurrency in Facebook’s infamous “move fast and break things” style.

theconversation.com

The Iranian rial: crash. The Turkish lira: crash. The Argentine peso: crash. The Brazilian real: crash. There are multiple, complex, parallel vectors at play in this wilderness of crashing currencies. Turkey’s case is heavily influenced by the bubble of easy credit created by European banks.

Argentina’s problem is mostly to do with the neoliberal austerity of President Mauricio Macri’s government admitting it won’t be able to fulfill payment targets agreed with the IMF less than three months ago.

Iran’s has to do with harsh United States sanctions imposed after the Trump administration’s unilateral pullout from the Iran nuclear deal.

This is a serious currency crisis affecting key emerging markets. Three of these – Brazil, Argentina and Turkey – are G20 members, and Iran, absent external pressure, would have everything to qualify as a member. Two – Iran and Turkey – are under US sanctions while the other two, at least for the moment, are firmly within Washington’s orbit.

Now, compare it with currencies that are gaining against the US dollar: the Ukrainian hryvnia, the Georgian lari and the Colombian peso. Not exactly G20 heavyweights – and all of them also inside Washington’s influence.

Behold the axis of gold

Independent analysts from Russia and Turkey to Brazil and Iran largely agree that the overwhelming factor in the current currency crisis is a reversing of the US Federal Reserve quantitative easing (QE) policy.

As investment banker and risk manager Jim Rickards noted, QE for all practical purposes represented the Fed declaring a currency war against the whole planet – printing US dollars at will on a trillion-dollar scale. That meant mounting US debt was devalued so foreign creditors were paid back with cheaper US dollars.

Now, the Fed has dramatically reversed course and is all-out invested in quantitative tightening (QT).

No more liquid dollars flooding emerging markets such as Turkey, Brazil, Argentina, Indonesia or India. US interest rates are up. The Fed stopped buying new bonds. The US Treasury is issuing new bond debt. Thus QT, combined with a global, targeted trade war against major emerging markets, spells out the new normal: the weaponization of the US dollar.

It’s no wonder that Russia, China, Turkey, Iran – nearly every major regional player invested in Eurasia integration – is buying gold with the aim of progressively getting out of US dollar hegemony. As JP Morgan himself coined it over a century ago, “Gold is money. All else is credit.”

Every currency war though is not about gold; it’s about the US dollar. Yet the US dollar now is like an inscrutable visitor from outer space, dependent on massive leverage; a galaxy of dodgy derivatives; the QE printing scheme; and gold not being awarded its true importance.

That is about to change. Russia and China are heavily invested in buying gold. Russia has dumped US Treasuries en masse. And what the BRICS had been discussing since the mid-2000s is now in motion; the drive to build alternative payment systems to the US dollar-subordinated SWIFT.

Germany appears to be coming around to the idea. If that does happen, it could possibly lead the way towards Europe redefining itself geopolitically in terms of its military and strategic independence.

When and if that happens, arguably at some point in the next decade, US foreign policy configured as an avalanche of sanctions may be effectively neutralized.

It will be a long, protracted affair – but some elements are already visible, as in China using US trading markets to help the emergence of a wider platform transference. After all key emerging markets cannot wiggle out of the US dollar system without full yuan convertibility.

And then there are nations contemplating the creation of their own cryptocurrencies. Digital finance is the way to go.

Some nations, for instance, could use a cryptocurrency denominated in SDRs (special drawing rights) – which is, in practice, the world money as designated by the IMF. They could back their new digital coins with gold.

Mired-in-crisis Venezuela is at least showing the way. The “sovereign bolivar” started circulating last week – pegged to a new cryptocurrency, the petro, which is worth 3,600 sovereign bolivars.

The new cryptocurrency is already posing a fascinating question: “Is the petro a forward sale of oil or an external debt backed by oil?” After all, BRICS members are buying a large chunk of the 100 million petros – confident that they are backed by a surefire reserve, the Ayacucho block of the Orinoco Oil Belt.

Venezuelan economist Tony Boza nailed it when he stressed the peg between the petro and international oil prices: “We are not going to be subject to the value of our currency being determined by a website, the oil market will determine it.”

A Persian cryptocurrency?

And that brings us to the key question of the US economic war on Iran. Persian Gulf traders are virtually unanimous: the global oil market is tightening, fast, and it will run short in the next two months.

Iran oil exports will likely drop to just over 2 million barrels a day in August. Compare it to a peak of 3.1 million barrels a day in April.

It looks like a lot of players are folding even before Trump’s oil sanctions kick in.

It also looks like the mood in Tehran is “we will survive,” but it’s not exactly clear the Iranian leadership is really aware of the nature of the incoming tempest.

The latest Oxford Economics report seems pretty realistic: “We expect the sanctions to tip the economy back into recession, with GDP now seen contracting by 3.7% in 2019, the worst economic performance in six years. For 2020, we see growth of 0.5%, driven by a modest recovery in private consumption and net exports.”

 The authors of the report, Mohamed Bardastani and Maya Senussi, say “the other signatories to the original deal [the JCPOA, especially the EU-3] have yet to spell out a clear strategy that would allow them to circumvent US sanctions and continue importing Iranian oil.”

The report also admits the obvious: there will be no internal push in Iran for regime change (that’s a thing only happening in warped US neocon minds) while “both reformers and conservatives are united in defying the sanctions.”

But defying how? Tehran has not come up with a win-win roadmap capable of being sold to anyone – from JCPOA members to energy importers such as Japan, South Korea and Turkey. That would represent true Eurasia integration. Just having Ayatollah Khamenei saying Iran is ready to pull out of the JCPOA is not good enough.

What about a Persian cryptocurrency?

atimes.com

Where to go from here?

If trust and sustainability were the two conditions that allowed for the transition from physical gold to paper currency, it is from this basis that we must start to analyze where we are going and what effects the next economic crisis could have.

In 2008, confidence in central banks saved the global economy. But as Mario Draghi said, the bazooka of quantitative easing was fired and a second hit during a crisis would have proved ineffective. The reason is complex and must be clearly explained. Most people are paid in a currency deposited in the bank, because that is where one keeps one’s currency, able to withdraw it at any time. But in the event of an economic crisis, priority is given to the banks, whatever remaining liquidity being for the customers. The reason why there was no bank run in 2008, which would have led to the collapse of the global banking system, lies in the trust that ordinary people continued to place in the financial system, courtesy of what the corporate-controlled media told them.

The problem concerns the next financial crisis and how the world population will react. The path already seems to be traced, especially in geopolitical terms. Countries like China and Russia have created their own alternative banking and financial system to escape dollar sanctions; but they have also begun to de-dollarize by accumulating gold and using different payment methods to the US currency. In the same way, the desire to escape from a centrally controlled financial system, and the attendant need to remain anonymous, has produced a technological evolution known as cryptocurrency, much as the need to quickly communicate and globally exchange data in real time produced the Internet. Both evolutions find common roots in the American security services. The Internet stems from a DARPA project, and blockchain was outlined in NSA documents back in 1996.

It is easy to imagine that governments and central banks have been caught flat footed by the birth of the cryptocurrencies, but it would be better not to underestimate nations that have been ruling the world for decades and have their finger on the pulse. Although Washington's aggressive foreign policy has accelerated de-dollarization, one must consider the reason why cryptocurrencies have not been declared illegal.

Let us go back for a moment to the devastating effects of the loss of the gold standard. Looking at a chart, it is easy to see how the start of world debt coincided with the end of the dollar being linked to gold. This has led to an increase in inflation, calmed only by false economic data and a powerful financial manipulation by central banks in collusion with each other. Purchasing power has plummeted and the average person has as a result become impoverished.

When the ordinary person is overwhelmed by debts and sees his purchasing power steadily declining over the years, while continuously being told by the media that the exact opposite is happening, dissatisfaction and frustration increases to a point of passing a tipping point. In the US in 2008, the burden of the bailout fell on the shoulders of ordinary citizens. Once bitten, twice shy. People are placing less and less trust in the media and the banks.

From Gold to Money to Crypto.

In this sense, we can perhaps understand why bitcoin and blockchain technology have been able to prosper in complete freedom. It is conceivable that the project reflects an evolving world in which paper money disappears in favor of the digital one. How this transition could take place, and why some nations devoted to de-dollarization will find themselves in a privileged position compared to economies entirely tied to the dollar is a matter open to debate. The possible economic-shift must be considered real and probable for the sustainability of many nations, accompanied by the inevitable technological change and the need to anchor the global economy back to real values. The natural passage is a return to physical gold or to virtual gold, precisely the block chain and the value we bring with it.

We should not underestimate the power of central banks and their plans to invent their own cryptocurrency as a mean to perpetuate their Ponzi scheme. What will make the main difference in the future is what backs up these virtual currencies. For example, Russia and China have accumulated many tons of gold and diversified their assets, dumping USD in exchange for tangible goods. A Crypto-Yuan or Ruble will eventually be valued more than an empty crypto-dollar without any counter-value. In a not to long distant future, Yuan and Ruble will be backed with gold or other financial assets like bitcoin while new virtual currencies will continue to perpetuate their empty value as with fiat currency. No surprise that with the next financial crisis, fiat money will pour into gold and crypto market looking for a safe haven from the devaluing dollar.

In the next couple of years we can expect central banks such as those of the US, Europe and Japan develop their own crypto-currency and start pushing conversion from fiat money into their crypto, advancing their project of keeping the system centralized. We should not exclude drastic measures, such as banning non-state-actor cryptos, from governments when central banks start realizing having lost their competitive edge on currency manipulation.

The last straw will be related to US military power trying to enforce the use of USD. In a scenario of steady economic and military decline of power, the US will find itself unable to force certain countries to use their currency, therefore losing its main weapon to create chaos in the world to advance its geopolitical goals. Without the dollar as the main world reserve currency, Washington will be forced to reconcile with the rest of the world, understanding that the unipolar moment is over and the neoliberal hegemonic planes to rule the world are forever gone.

Many national economies seem to have begun the process of protecting themselves from what seems like an inevitable economic trend. De-dollarization – dumping dollars for other goods of value — has become popular not only with countries but also with ordinary individuals as a result of global technological growth and increasing access to the Internet. The financial markets are generally reflecting this same trend.

The US dollar is the world’s most dominant reserve currency. The planning and financial rules that accompany this situation are decided in the United States for the benefit of Washington and a few of her allies. This has been reflected in the creation of the petrodollar, the abolition of the gold standard, and the most recent financial crisis of 2008, with the senseless process of quantitative easing. All these economic decisions have been made with the precise aim of prolonging American domination of the global economy, artificially propping up an unsustainable financial system.

The practical consequences of this unsustainability have led over time to thoughts of a practical alternative, both to escape from the domination of the dollar and to re-anchor the economy to real value. The need to circumvent this situation has become especially urgent for countries with a large amount of dollar-denominated debt, or where they face the prospect of being excluded from the SWIFT international payment system.

It is therefore not accidental that countries like Iran and Venezuela, but also Russia and North Korea, have resorted to alternative methods to operate in the global economic space. Washington’s political decision in 2012 to remove Iranian banks from SWIFT immediately set off alarm bells for several countries. The need to escape from the possibility of being excluded from SWIFT became urgent for countries under the threat of Washington. An alternative payment system was thus born in 2015, christened the Cross-Border Interbank Payments System (CIPS), unsurprising founded by China. Basically a copy of the SWIFT system, it serves the role of being a backup system should the Americans seek to exclude from SWIFT recalcitrant countries. A more radical solution has been sought by Venezuela, with the country creating its own virtual currency. President Maduro has announced the creation of a crypto state currency based on the value of oil and supported by barrels of oil worth over five billion dollars. Venezuela has been forced to take this step because of a scarcity of US dollars in the country brought on by the economic warfare visited on the it by Washington, which has succeeded in driving the country into a deep crisis.

This search for fresh liquidity is a gamble for Maduro, who even hopes to be able to trade with allied countries in the new currency, thus circumventing international bans. Even North Korea is said to operate in bitcoin, thereby circumventing the international system of prohibitions and blockades.

The sanctions on Russia, and the influence that Washington exerts with the dollar on the global economic system, has led Moscow and Beijing to a de-dollarization agreement, establishing the yuan gold standard. Russia sells hydrocarbons to China, which pays for them in yuan, then Russia immediately converts the yuan into gold at the Shanghai Gold Exchange, in the process bypassing Washington's sanctions.

This situation is being replicated in country after country. The United States increases financial and economic pressure on countries through such international bodies as the IMF and the World Bank, then these countries organize amongst themselves to push back against the interference. Technology has facilitated this strategy of decentralization against the center that is London and Washington, the financial heart and primary cause of manifold global problems. Firstly, the possibility of the unlimited printing of dollars has distorted global economies, inflating stock markets and causing national debts to grow out of control. Even the gold markets are manipulated by virtue of the abundance of easy money and such ponzi-scheme tools as derivatives and other forms of financial leverage. All too predictably, as seen in 2008, if it all comes crashing down, the central banks are going to bail out their partners through the mechanism of quantitative easing, guaranteeing unlimited cashflow and leaving taxpayers, along with the small players in the financial markets, to carry the burden.

It is probably too early for the common man to understand what is happening, but in fact the dollar is depreciating in relation to some more tangible assets. But gold continues to be corralled by parallel financial mechanisms and other financial instruments created for the sole purpose of manipulating the financial markets on which the common man depends in search of modest gains. As with others, the gold market suffers from the combine power of the US dollar, centralized financial institutions and market manipulation. Entities such as the FED (and their owners), criminally colluding and working with private banks, hedge funds, rating agencies and audit companies, have made immense wealth by driving the world into a debt scam that has stripped normal citizens of their future.

What is happening in the cryptocurrency markets in not only occurring in parallel with the spread of the Internet, smartphones and the increasing ability to operate in the digital world, but is also seen as a safe haven from centralized financial regulators and central banks; in other words, from the dollar and fiat currencies in general. Whether bitcoin will prove to be a wise long-term investment is yet to be seen, but the concept of cryptocurrencies is here to stay. The technology behind the idea, the blockchain, is a definitive model for decentralized economic transactions without any intermediary that can manipulate and distort the market at will. It is the antidote to the debt virus that is killing our society and spreading chaos around the world.

Washington is now left to deal with the consequences of its demented actions against its geopolitical adversaries. The decision to remove Iran from the SWIFT system, and the ongoing economic war against Russia and Venezuela, have pushed the People's Republic of China to obviate any direct attacks on its financial system by creating an alternative economic system. The goal is to warn the United States and her allies that an economic alternative exists and is already operational, ready to be opposed to the Euro-American system if necessary. Washington does not seem to want to renounce the role of manipulator and ruler of world speculative finance, and the obvious result of this is the creation of a financial system that is slowly working against the current one. Lack of anonymity and the centrality of systems seem to be the two fundamental elements of the current financial system that orbits around London and Washington. An anonymous, decentralized and technologically reliable system could be exactly what Washington's geopolitical adversaries have been looking for to end the US-Dollar hegemony.

If we were to identify what uniquely fuels American imperialism and its aspirations for global hegemony, the role of the US dollar would figure prominently. An exploration of the depth of the dollar’s effects on the world economy is therefore necessary in order to understand the consequential geopolitical developments that have occurred over the last few decades.

The reason the dollar plays such an important role in the world economy is due to the following three major factors: the petrodollar; the dollar as world reserve currency; and Nixon's decision in 1971 to no longer make the dollar convertible into gold. As is easy to guess, the petrodollar strongly influenced the composition of the SDR basket, making the dollar the world reserve currency, spelling grave implications for the global economy due to Nixon's decision to eliminate the dollar’s convertibility into gold. Most of the problems for the rest of the world began from a combination of these three factors.

Dollar-Petrodollar-Gold

The largest geo-economic change in the last fifty years was arguably implemented in 1973 with the agreement between OPEC, Saudi Arabia and the United States to sell oil exclusively in dollars.

Specifically, Nixon arranged with Saudi King Faisal for Saudis to only accept dollars as a payment for oil and related investments, recycling billions of excess dollars into US treasury bills and other dollar-based financial resources. In exchange, Saudi Arabia and other OPEC countries came under American military protection. It reminds one of a mafia-style arrangement: the Saudis are obliged to conduct business in US dollars according to terms and conditions set by the US with little argument, and in exchange they receive generous protection.

The second factor, perhaps even more consequential for the global economy, is the dollar becoming the world reserve currency and maintaining a predominant role in the basket of international foreign-exchange reserves of the IMF ever since 1981. The role of the dollar, linked obviously to the petrodollar trade, has almost always maintained a share of more than 40% of the Special Drawing Right (SDR) basket, while the euro has maintained a stable share of 29-37% since 2001. In order to understand the economic change in progress, it is sufficient to observe that the yuan is now finally included in the SDR, with an initial 10% share that is immediately higher than the yen (8.3%) and sterling (8.09%) but significantly less than the dollar (41%) and euro (31%). Slowly but significantly Yuan currency is becoming more and more used in global trade.

The reason why the United States has been able to fuel this global demand for dollars is linked to the need for other countries to own dollars in order to be able to buy oil and other goods. For example, if a Bolivian company exports bananas to Norway, the payment method requires the use of dollars. Norway must therefore own US currency to pay and receive the goods purchased. Similarly, the dollars Bolivia receives will be used to buy other necessities like oil from Venezuela. It may seem unbelievable, but practically all countries until a few years ago used US dollars to trade amongst each other, even countries that were anti-American and against US imperialist policies.

This continued use of the dollar has had some devastating effects on the globe. First of all, the intense use of the American currency, coupled with Nixon’s decisions, created an economic standard based on the dollar that soon replaced precious metals like gold, which had been the standard for the global economy for years. This has led to major instability and to economic systems that have in the proceeding years created disastrous financial policies, as seen in 2000 and 2008, for example. The main source of economic reliability transferred from gold to dollars, specifically to US treasury bills. This major shift allowed the Federal Reserve to print dollars practically without limit (as seen in recent years with interests rates for borrowing money from the FED at around 0%), well aware that the demand for dollars would never cease, this also keeping alive huge sectors of private and public enterprises (such as the fracking industry). This set a course for a global economic system based on financial instruments like derivatives and other securities instead of real, tangible goods like gold. In doing this for its own benefit, the US has created the conditions for a new financial bubble that could even bring down the entire world economy when it bursts.

The United States found itself in the enviable position of being able to print pieces of paper (simply IOU’s) without any gold backing and then exchange them for real goods. This economic arrangement has allowed Washington to achieve an unparalleled strategic advantage over its geopolitical opponents (initially the USSR, now Russia and China), namely, a practically unlimited dollar-spending capacity even as it accumulates an astronomical public debt (about 21 trillion dollars). The destabilizing factor for the global economy has been Washington's ability to accumulate enormous amounts of public debt without having to worry about the consequences or even of any possible mistrust international markets may have for the dollar. Countries simply needed dollars for trade and bought US treasures to diversify their financial assets.

The continued use of the dollar as a means of payment for almost everything, coupled with the nearly infinite capacity of the of FED to print money and the Treasury to issue bonds, has led the dollar to become the primary safe refuge for organizations, countries and individuals, legitimizing this perverse financial system that has affected global peace for decades.

Dollars and War: The End?

The problems for the United States began in the late 1990s, at a time of expansion for the US empire following the demise of the Soviet Union. The stated geopolitical goal was the achievement of global hegemony. With unlimited spending capacity and an ideology based on American exceptionalism, this attempt seemed to be within reach for the policymakers at the Pentagon and Wall Street. A key element for achieving global hegemony consisted of stopping China, Russia and Iran from creating a Eurasian area of integration. For many years, and for various reasons, these three countries continued to conduct large-scale trade in US dollars, bowing to the economic dictates of a fraudulent financial system created for the benefit of the United States. China needed to continue in its role of becoming the world's factory, always having accepted dollar payments and buying hundreds of billions of US treasury bills. With Putin, Russia began almost immediately to de-dollarize, repaying foreign debts in dollars, trying to offload this economic pressure. Russia is today one of the countries in the world with the least amount of public and private debt denominated in dollars, and the recent prohibition on the use of US dollars in Russian seaports is the latest example. For Iran, the problem has always been represented by sanctions, creating great incentives to bypass the dollar and find alternative means of payment.

The decisive factor that changed the perception of countries like China and Russia was the 2008 financial crisis, as well as growing US aggression ever since the events in Yugoslavia in 1999. The Iraq war, along with other factors, prevented Saddam from starting an oil trade in euro, which threatened the dollar's financial hegemony in the Middle East. War and the America’s continued presence in Afghanistan stressed Washington’s intentions to continue encircling China, Russia and Iran in order to prevent any Eurasian integration. Naturally, the more the dollar was used in the world, the more Washington had the power to spend on the military. For the US, paying a bill of 6 trillion dollars (this is the cost of the wars in Iraq and Afghanistan) has been effortless, and this constitutes an unparalleled advantage over countries like China and Russia whose military spending in comparison is a fifth and a tenth respectively.

The repeated failed attempts to conquer, subvert and control countries like Afghanistan, Georgia, Iraq, Libya, Syria, Donbass, North Korea, Egypt, Tunisia, Yemen and Venezuela, have had significant effects on the perception of US military power. In military terms, Washington faced numerous tactical and strategic defeats, with the Crimean peninsula returning to Russia without a shot fired and with the West unable to react. In Donbass, the resistance inflicted huge losses on the NATO-supported Ukrainian army. In North Africa, Egypt is now under the control of the army, following an attempt to turn the country into a state under the control of the Muslim Brotherhood. Libya, after being destroyed, is now divided into three entities, and like Egypt seems to be looking with favorable regard towards Moscow and Beijing. In the Middle East, Syria, Turkey, Iran and Iraq are increasingly cooperating in stabilizing regional conflicts, where needed they are backed by Russian military power and Chinese economic strength. And of course the DPRK continues to ignore US military threats and has fully developed its conventional and nuclear deterrent, effectively making those US threats null and void.

Color revolutions, hybrid warfare, economic terrorism, and proxy attempts to destabilize these countries have had devastating effects on Washington's military credibility and effectiveness. The United States finds itself being considered by many countries to be a massive war apparatus that struggles to get what it wants, struggles to achieve coherent common goals, and even lacks the capability to control countries like Iraq and Afghanistan in spite of its overwhelming military superiority.

No One Fears You!

Until a few decades ago, any idea of straying away from the petrodollar was seen as a direct threat to American global hegemony, requiring of a military response. In 2017, given the decline in US credibility as a result of triggering wars against smaller countries (leaving aside countries like Russia, China, and Iran that have military capabilities the likes of which the US has not faced for more than seventy years), a general recession from the dollar-based system is taking place in many countries.

In recent years, it has become clear to many nations opposing Washington that the only way to adequately contain the fallout from the collapsing US empire is to progressively abandon the dollar. This serves to limit Washington’s capacity for military spending by creating the necessary alternative tools in the financial and economic realms that will eliminate Washington's dominance. This is essential in the Russo-Sino-Iranian strategy to unite Eurasia and thereby render the US irrelevant.

De-dollarization for Beijing, Moscow and Tehran has become a strategic priority. Eliminating the unlimited spending capacity of the FED and the American economy means limiting US imperialist expansion and diminishing global destabilization. Without the usual US military power to strengthen and impose the use of US dollars, China, Russia and Iran have paved the way for important shifts in the global order.

The US shot itself in the foot by accelerating this process through their removal of Iran from the SWIFT system (paving the way for the Chinese alternative, known as CIPS) and imposing sanctions on countries like Russia, Iran and Venezuela. This also accelerated China and Russia’s mining and acquisition of physical gold, which is in direct contrast to the situation in the US, with rumors of the FED no longer possessing any more gold. It is no secret that Beijing and Moscow are aiming for a gold-backed currency if and when the dollar should collapse. This has pushed unyielding countries to start operating in a non-dollar environment and through alternative financial systems.

A perfect example of how this is being achieved can be seen with Saudi Arabia, which has represented the crux of the petrodollar.

De-dollarize

Beijing has started putting strong pressure on Riyadh to start accepting yuan payments for oil instead of dollars, as are other countries such as the Russian Federation. For Riyadh, this is an almost existential issue. Riyadh is in a delicate situation, dedicated as it is to keeping the US dollar tied to oil, even though its main ally, the US, has pursued in the Middle East a contradictory strategy, as seen with the JCPOA agreement. Iran, the main regional enemy of Saudi Arabia, was able to have sanctions lifted (especially from Europeans countries) thanks to the JCPOA. In addition, Iran was able to pursue a historic victory with its allies in Syria, gaining a preeminent role in the region and aspiring to become a regional powerhouse. Riyadh is obliged to obey the US, an ally that does not care about its fate in the region (Iran is increasingly influential in Iraq, Syria and Lebanon) and is even competing in the oil market. To make matters worse for Washington, China is Riyadh’s largest customer; and considering the agreements with Nigeria and Russia, Beijing can safely stop buying oil from Saudi Arabia should Riyadh continue to insist on receiving payment only in dollars. This would badly hurt the petrodollar, a perverse system that damages China and Russia most of all.

For China, Iran and Russia, as well as other countries, de-dollarization has become a pressing issue. The number of countries that are beginning to see the benefits of a decentralized system, as opposed to the US dollar system, is increasing. Iran and India, but also Iran and Russia, have often traded hydrocarbons in exchange for primary goods, thereby bypassing American sanctions. Likewise, China's economic power has allowed it to open a 10-billion-euro line of credit to Iran to circumvent recent sanctions. Even the DPRK seems to use cryptocurrencies like bitcoin to buy oil from China and bypass US sanctions. Venezuela (with the largest oil reserves in the world) has just started a historic move to completely renounce selling oil in dollars, and has announced that it will start receiving money in a basket of currencies without US dollars. (This is not to mention the biggest change to have occurred in the last 40 years). Beijing will buy gas and oil from Russia by paying in yuan, with Moscow being able to convert yuan into gold immediately thanks to the Shanghai International Energy Exchange. This gas-yuan-gold mechanism signals a revolutionary economic change through the progressive abandonment of the dollar in trade.

In the next and last article, we will concentrate on how successful Russia, Iran and China have been in forging a multipolar world order with the goal of peacefully containing the fallout from the collapsing American empire, and how this alternative world order is opening up a new geopolitical landscape for America’s allies and other countries.

In a series of articles posted on www.paulcraigroberts.org, we have proven to our satisfaction that the prices of gold and silver are manipulated by the bullion banks acting as agents for the Federal Reserve.

The bullion prices are manipulated down in order to protect the value of the US dollar from the extraordinary increase in supply resulting from the Federal Reserve’s quantitative easing (QE) and low interest rate policies.

The Federal Reserve is able to protect the dollar’s exchange value vis-a-via the other reserve currencies—yen, euro, and UK pound—by having those central banks also create money in profusion with QE policies of their own.

The impact of fiat money creation on bullion, however, must be controlled by price suppression. It is possible to suppress the prices of gold and silver, because bullion prices are established not in physical markets but in futures markets in which short-selling does not have to be covered and in which contracts are settled in cash, not in bullion.

Since gold and silver shorts can be naked, future contracts in gold and silver can be printed in profusion, just as the Federal Reserve prints fiat currency in profusion, and dumped into the futures market. In other words, as the bullion futures market is a paper market, it is possible to create enormous quantities of paper gold that can suddenly be dumped in order to drive down prices. Everytime gold starts to move up, enormous quantities of future contracts are suddenly dumped, and the gold price is driven down. The same for silver.

Rigging the bullion price prevents gold and silver from transmitting to the currency market the devaluation of the dollar that the Federal Reserve’s money creation is causing. It is the ability to rig the bullion price that protects the dollar’s value from being destroyed by the Federal Reserve’s printing press.

Recently, the price of a Bitcoin has skyrocketed, rising in a few weeks from $1,000 to $2,200. Two explanations suggest themselves. One is that the Federal Reserve has decided to rid itself of a competing currency and is driving up the price with purchases while accumulating a large position, which then will be suddenly dumped in order to crash the market and scare away potential users from Bitcoins. Remember, the Fed can create all the money it wishes and, thereby, doesn’t have to worry about losses.

Another explanation is that people concerned about the fiat currencies but frustrated in their attempts to take refuge in bullion have recognized that the supply of Bitcoin is fixed and Bitcoin futures must be covered. It is strictly impossible for any central bank to increase the supply of Bitcoins. Thus Bitcoin is standing in for the suppressed function of gold and silver.

The problem with cryptocurrencies is that whereas Bitcoin cannot increase in supply, other cryptocurrencies can be created. In order to be trusted, each cryptocurrency would have to have a limited supply. However, an endless number of cryptocurrencies could be created that would greatly increase the supply of cryptocurrencies. If entrepreneurs don’t bring about this result, the Federal Reserve itself could organize it.

Therefore, cryptocurrency might be only a temporary refuge from fiat money creation. This would leave gold and silver, whose supply can only gradually be increased via mining, as the only refuge from wealth-destroying fiat money creation.

For as long as the Federal Reserve can protect the dollar by bullion price suppression and money creation by other reserve currency central banks, and as long as the Federal Reserve can keep the influx of new dollars out of the general economy, the Federal Reserve’s policy adds to the wealth of those who are already rich. This is because instead of driving up consumer prices, thus threatening the US dollar’s exchange value with a rising rate of inflation, the Fed’s largess has flowed into the prices of financial assets, such as stocks and bonds. Bond prices are high, because the Fed forced up the price by purchasing bonds. Stock prices are high, because the abundance of money bid prices higher than profits justify. As the US government measures inflation in ways designed to understate it, the consumer price index and producer price index do not send alarm systems into the markets.

Thus, we have a situation in which the Fed’s policy has done nothing for the American population, but has driven up the values of the financial portofilios of the rich. This is the explanation why the rich are becoming more rich while the rest of America becomes poorer.

The Fed has rigged the system for the rich, and the whores in the financial media and among the neoliberal economists have covered it up.

Reading the revelations contained in the documents released by WikiLeaks and adding them to those already presented in recent years by Snowden, it now seems evident that the technological aspect regarding espionage is a specialty in which the CIA, as far as we know, excels. Hardware and software vendors that are complicit — most of which are American, British or Israeli — give the CIA the opportunity to achieve informational full-spectrum dominance, relegating privacy to extinction. Such a convergence of power, money and technology entails major conflicts of interest, as can be seen in the case of Amazon AWS (Amazon's Cloud Service), cloud provider for the CIA, whose owner, Jeff Bezos, is also the owner of The Washington Post. It is a clear overlap of private interests that conflicts with the theoretical need to declare uncomfortable truths without the need to consider orders numbering in the millions of dollars from clients like the CIA.

While it is just one example, there are thousands more out there. The perverse interplay between media, spy agencies and politicians has compromised the very meaning of the much vaunted democracy of the land of the Stars and Stripes. The constant scandals that are beamed onto our screens now serve the sole purpose of advancing the deep interest of the Washington establishment. In geopolitical terms, it is now more than obvious that the deep state has committed all available means toward sabotaging any dialogue and détente between the United States and Russia. In terms of news, the Wikileaks revelations shed light on the methods used by US intelligence agencies like the CIA to place blame on the Kremlin, or networks associated with it, for the hacking that occurred during the American elections.

Perhaps this is too generous a depiction of matters, given that the general public has yet to see any evidence of the hacking of the DNC servers. In addition to this, we know that the origin of Podesta’s email revelations stem from the loss of a smartphone and the low data-security measures employed by the chairman of Hillary Clinton’s presidential campaign. In general, when the 16 US spy agencies blamed Russia for the hacking of the elections, they were never specific in terms of forensic evidence. Simply put, the media, spies and politicians created false accusations based on the fact that Moscow, together with RT and other media (not directly linked to the Kremlin), finally enjoy a major presence in the mainstream media. The biggest problem for the Washington establishment lies in the revelation of news that is counterproductive to the interests of the deep state. RT, Sputnik, this site and many others have diligently covered and reported to the general public every development concerning the Podesta revelations or the hacking of the DNC.

Now what is revealed through Wikileaks’ publications in Vault 7 is the ability of a subsection of the CIA, known as Umbrage, to use malware, viruses, trojans and other cyber tools for their own geopolitical purposes. The CIA’s Umbrage collects, analyzes and then employs software created variously from foreign security agencies, cyber mafia, private companies, and hackers in general. These revelations become particularly relevant when we consider the consequences of these actions. The main example can be seen in the hacking of the DNC. For now, what we know is that the hacking – if it ever occurred – is of Russian origin. This does not mean at all that the Kremlin directed it. It could actually be very much the opposite, its responsibility falling into the category of a cyber false-flag. One thing is for sure: all 16 US intelligence agencies are of the view that “the Russians did it”. That said, the methods used to hack vulnerabilities cannot be revealed, so as to limit the spread of easily reusable exploits on systems, such as the one that hosted the DNC server. It is a great excuse for avoiding the revelation of any evidence at all.

So, with little information available, independent citizens are left with very little information on which to reliably form an opinion on what happened. There is no evidence, and no evidence will be provided to the media. For politicians and so-called mainstream journalists, this is an acceptable state of affairs. What we are left with instead is blind faith in the 16 spy agencies. The problem for them is that what WikiLeaks revealed with Vault 7 exposes a scenario that looks more likely than not: a cyber false-flag carried out by the Central Intelligence Agency using engineered malware and viruses made in Russia and hypothetically linking them back to hacking networks in Russia. In all likelihood, it looks like the Democrats’ server was hacked by the CIA with the clear objective of leaving Russian fingerprints and obvious traces to be picked up by other US agencies.

In this way, it becomes easier to explain the unique views of all 16 spy agencies. Thus, it is far more likely that the CIA intentionally left fake Russian fingerprints all over the DNC server, thereby misleading other intelligence agencies in promoting the narrative that Russia hacked the DNC server. Of course the objective was to create a false narrative that could immediately be picked up by the media, creating even more hysteria surrounding any rapprochement with Russia.

Diversification of computer systems.

The revelations contained in the Wikileaks vault 7 (less than 1 % of the total data in Wikileaks’ possession has been released to date) have caused a stir, especially by exposing the astonishing complicity between hardware and software manufacturers, often intentionally creating backdoors in their products to allow access by the CIA and NSA. In today’s digital environment, all essential services rely on computer technology and connectivity. These revelations are yet more reason why countries targeted by Washington, like China, Russia, Iran and North Korea, should get rid of European and American products and invest in reducing technological dependence on American products in particular.

The People's Republic has already started down this track, with the replacement of many network devices with local vendors like Huawei in order to avoid the type of interference revealed by Snowden. Russia has been doing the same in terms of software, even laying the groundwork to launch of its own operating system, abandoning American and European systems. In North Korea, this idea was already put into practice years ago and is an excellent tool for deterrence for external interference. In more than one computer security conference, US experts have praised the capabilities of the DPRK to isolate its Internet network from the rest of the world, allowing them to have strong safety mechanisms. Often, the only access route to the DPRK systems are through the People's Republic of China, not the easiest way for the CIA or NSA to infiltrate a protected computer network.

An important aspect of the world in which we live today involves information security, something all nations have to deal with. At the moment, we still live in a world in which the realization of the danger and effect of hacking attacks are not apparent to many. On the other hand, militarily speaking, the diversification and rationalization of critical equipment in terms of networks and operability (smartphones, laptops, etc) has already produced strong growth in non-American and European manufacturers, with the aim of making their systems more secure.

This strengthening of technology also produces deleterious consequences, such as the need for intelligence agencies to be able to prevent the spread of data encryption so as to always enjoy access to any desired information. The birth of the Tor protocol, the deployment of Bitcoin, and apps that are more and more encrypted (although the WikiLeaks documents have shown that the collection of information takes place on the device before the information is encrypted) are all responses to an exponential increase in the invasion of privacy by federal or American government entities.

We live in a world that has an enormous dependence on the Internet and computer technology. The CIA over the years has focused on the ability to make sure vulnerable systems are exploited as well as seeking out major security flaws in consumer products without disclosing this to vendors, thereby taking advantage of these security gaps and leaving all consumers with a potential lack of security. Slowly, thanks to the work and courage of people like Snowden and Assange, the world is beginning to understand how important it is to keep personal data under control and prevent access to it by third parties, especially if they are state actors. In the case of national security, the issue is expanded exponentially by the need to protect key and vital infrastructure, considering how many critical services operate via the Internet and rely on computing devices.

The wars of the future will have a strong technological basis, and it is no coincidence that many armed forces, primarily the Russian and Chinese, have opted in recent years to training troops, and conducting operations, not completely relying on connectivity. No one can deny that in the event of a large-scale conflict, connectivity is far from guaranteed. One of the major goals of competing nations is to penetrate the military security systems of rival nations and be able to disarm the internal networks that operates major systems of defense and attack.

The Wikileaks revelations are yet another confirmation of how important it is to break the technological unipolar moment, if it may be dubbed this way, especially for nations targeted by the United States. Currently Washington dictates the technological capacities of the private and government sectors of Europe and America, steering their development, timing and methods to suit its own interests. It represents a clear disadvantage that the PRC and its allies will inevitably have to redress in the near future in order to achieve full security for its vital infrastructure.