Today, Iran fired the first shot in a battle that will ultimately change the global economic system. Mehr News Agency announced that the long-anticipated Iran Oil Bourse (OIB) will open sometime next week on Kish Island competing head-on with the US dollar. Currently, all oil transactions are denominated exclusively in greenbacks (via the London and New York oil exchanges) giving the US a virtual monopoly on the oil trade and maintaining the dollar 's position as the world 's reserve currency. This privilege has allowed the US to generate massive deficits as well as a national debt of $8.4 trillion without fear of economic collapse but, the "time 's they are a-changin '". If Iran proceeds with its plan, the central banks around the world will convert some of their reserves into euros sending billions of dollars back to the America. This will result in either recession or depression.
The notion that the bourse poses a serious threat to the US economy has been widely dismissed as a left-wing, internet-conspiracy theory. In fact, there is nothing conspiratorial about it, unless the fundamental law of "supply and demand" no longer applies.
If fewer people want the greenback it becomes worth less. Is that conspiratorial?
No matter. If the bourse opens next week then gold will shoot into the stratosphere while jittery currency traders continue to edge away from the shaky greenback.
The Bush administration has done irreparable damage to our currency. Under the guidance of the Federal Reserve, Bush has increased government spending by 35% while raising the national debt a whopping $3 trillion. The only thing keeping the dollar on its lofty perch is the oil trade and that may soon change.
Now, it appears that the game is over. Oil thirsty nations will be free to purchase petroleum in a stable currency leaving Uncle Sam to flail away in ocean of red ink.
Nearly 70% of the reserves in the world 's central banks are currently denominated in US dollars. This monopoly allows the US to purchase valuable resources with fiat currency and maintain enormous deficits without hyper-inflation. It is the perfect rip-off. The administration has shown its willingness to go to war and kill hundreds of thousands of innocent people to defend this global extortion-racket. However, forces are in play now that will make it impossible to maintain the present system. If the Fed increases interest rates much more the $9 trillion housing bubble will burst, and if it doesn 't raise rates, the $2 billion of cash inflows the government needs each day to cover its trade deficit will evaporate.
It is a "lose-lose" situation.
The opening of Iran 's bourse will only hasten the inevitable decline of the dollar and a death-spiral for the American economy; that is why Congress passed the Iran Freedom Support Act last week (even before the Security Council had made its recommendations!) Hidden in the small print of the legislation is a clue that reveals Congress ' real intentions:
"The Congress declares that it is the policy of the United States to deny Iran the ability to support acts of international terrorism ....by limiting the development of Iran 's ability to explore for, extract, refine, or transport by pipeline petroleum resources."
The fate of the greenback is entirely the result of Bush 's enormous tax cuts, profligate spending, and a deeply-flawed foreign policy agenda. By now, Bush and co. had expected to topple regimes in Iraq, Iran, Syria, Libya, Sudan and Somalia. If his "5 year campaign" had been successful then Washington would control enough of the world 's oil to force the other nations to continue using the dollar even while the gargantuan debt kept piling up. This explains why the oil giants linked arms with the 12 central banks to dupe the American people into the apocryphal war on terror. Terrorism is simply a public relations scam that conceals the ongoing global resource war.
America is now facing a slow-motion meltdown that could escalate into a widespread run on the dollar. Attacking Iran will only aggravate the situation and push tenuous states towards new alliances. (China, India, Venezuela and Russia have already expressed support for the new bourse)