Michael Krieger On The Rebirth Of Barter

Tyler Durden's picture

Via Michael Krieger of 'A Lightning War For Liberty' blog,

Justice in the hands of the powerful is merely a governing system like any other. Why call it justice? Let us rather call it injustice, but of a sly effective order, based entirely on cruel knowledge of the resistance of the weak, their capacity for pain, humiliation and misery.
- Georges Bernanos
(1888-1948)

 

Outwardly we have a Constitutional government. We have operating within our government and political system, another body representing another form of government, a bureaucratic elite which believes our Constitution is outmoded.
- Senator William Jenner
(1908-1985) U.S. Senator (IN-R)

 

The Final Act of the Uruguay Round, marking the conclusion of the most ambitious trade negotiation of our century, will give birth – in Morocco – to the World Trade Organization, the third pillar of the New World Order, along with the United Nations and the International Monetary Fund.
- Government of Morocco
April, 1994   Source: New York Times, full page ad by the government of Morocco

 

The Rebirth of Barter
One of the most important articles I have read this week comes from Forbes contributor Gordon Chang.  In it he states that China is preparing to avoid U.S. sanctions on Iran by paying for oil with gold.  Not only that but he also mentions that China has already been bartering with Iran to get a hold of petroleum.  He states:

So how can Beijing keep both Iran’s ayatollahs and President Obama happy at the same time?  Simple, the Chinese can avoid the U.S. sanctions through barter.  China has already been trading its produce for Iran’s petroleum, but there is only so much gai lan and bok choy the Iranians can eat.  That’s why Iran is also accepting, among other goods, Chinese washing machines, refrigerators, toys, clothes, cosmetics, and toiletries.

 

The barter trade works, but Iran needs cash too.  As it is being cut off from the global financial system, the next best thing is gold.  So we should not be surprised that in late February the Iranian central bank said it would accept that metal as payment for oil.   Last year, China imported $21.7 billion in Iranian oil and exported $14.8 billion in goods and services.  As the NDAA goes into effect, look for Beijing to ship gold to Iran to make up the difference.

Thus, the leadership in America in its infinite stupidity has actually accelerated the demise of the U.S. dollar as the world’s reserve currency.  After its “kinetic action” in Libya succeeded in toppling the regime there, Washington’s geopolitical hubris grew and it has attempted to muscle Iran into a corner.  Instead, all it has done is alienated our “allies” that need Iranian oil to survive and in the process quickened a move away from the dollar to settle certain transactions.  Read Gordon’s article here.

In a similar move on a more micro level, the government of Spain in a similar desperation has banned the use of cash transactions above 2,500 euros (read this great article here on it).  How do you think citizens are going to respond to this?  People are already in the streets.  They are not pleased with what is going on.  Then the government is going to tell them they can’t use cash amongst themselves so that the authorities can track every single thing they do and bleed them with taxes until they are slaves on a banker plantation.  Everything is going to go black market and to a barter system.  It will happen country by country as governments get increasingly desperate and the authoritarian clamp down continues.  It will happen on an increasing level until all of these house of cards bureaucratic states fail and something new is reborn.  In case you haven’t seen it yet, this one town in Greece is already leading the way. This story outlines what will be a mega trend globally over the next decade.

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Whalley World's picture

At least the good ol usa has some supposed gold coated tungsten.  Jean Cretien sold all of our gold and when Rob Kirby asked him why he sold us out at a business luncheon, the ex PM said "I do not recall that transaction"

oddjob's picture

'Dino' was a slimeball of the first order.

MeelionDollerBogus's picture

When you realize just how much gold is in Canada or under control around the world by Canadian mining companies I think you should re-read you comment.

Angus McHugepenis's picture

Pretty sure that was Rob Ford, the Mayor of Toronto posting above.

Paul Atreides's picture

Torontonians cringe at the word Ford so much so I think it's hurting the local Ford dealerships in the GTA...

Freddie's picture

There was video on the net of Montreal cops and student riots over tuition.  The Quebecious cops are pretty tame.  I saw some Toronto cops during a G8 metting or some other riot not that long ago - they are like f****** storm troopers. 

Sucks.  I like Canada and Canadians but I guess the politicians there are just as evil as everywhere else. 

Kaiser Sousa's picture

Soles I like ur style...adopted the same battle strategy 4 years ago.....
Fuck all bankers and their bitch owned politicians....

blindman's picture

listen here.
Snooks Eaglin with George Porter Jr.- Baby Please [2/6]
http://www.youtube.com/watch?v=bqZz4tW4GSU

Sudden Debt's picture

America cut off Iran's bank accounts and now Iran can't insure it's oilships anymore.
China is willing to buy the oil as is india and pay for it in gold but they don't want to insure it either.
And Iran won't send oiltankers through Somali pirat sea land because that would give the americans to much of a excuse to sink them.
So Iran can sell but can't insure so it can't sell.
And gold or not, they're left with their oil.

Clint Liquor's picture

China's Navy is already 'escorting' merchant ships in the Indian Ocean.

http://zeenews.india.com/news/world/china-to-open-military-base-in-indian-ocean_746551.html

China and India need Iranian Oil and they will get it regardless of the sanctions.

 

TheFourthStooge-ing's picture

.

Axis 2.0?

Yes, they'll be going up against Axis 2.0: the US, Israel, and the NATOadies.

 

Normalcy Bias's picture

The US Govt has almost reached 'Peak Arrogance.'

Normalcy Bias's picture

It's very close. Soon, there'll be real resistance from the Chinese or Russians. Who knows when the American people will decide they've had enough...

icanhasbailout's picture

LOL you ain't seen NOTHING yet. We're only up to coke & hookers, the latter of which may be tossed out of moving US embassy vehicles. Nothing short of of droit de seigneur, and perhaps not even then, will wake the sheep.

sethstorm's picture

Then the logical action is to cause a few accidents on a large scale.  Nothing too large, just enough to tell those countries that the US is in charge.

Worked in the 1990's, and it's likely to work today.

TheFourthStooge-ing's picture

We need more Kool-Aid®, sethstorm just kicked the keg.

http://www.youtube.com/watch?v=d0weBTA-TCI

 

lakecity55's picture

The Fed and The City won't stand for it. They'll use their very own NATO army to attack, knowing China will never do anything in retaliat-----------------------------static

Shock Force Ignoble Fiat, come in, over.

Shock Force Ignoble Fiat come in, over.........

BidnessMan's picture

What is with the insurance fixation? They will use their own tankers. And India and China are the other way from Somalia once you leave the Straights of Hormuz. Look at a map....

delacroix's picture

Iran takes delivery of 12 new tankers soon. built in china

sethstorm's picture

So you get a few leaky & rusty ships built to substandard specifications (compared to the developed world) and they're probably older than time itself.

 

TheFourthStooge-ing's picture

Ummmm, he did say that they're new tankers.

As far as substandard specifications, I think you'll find that any cheap junk made in China was manufactured to the exact substandard specifications given to them by the outsourcers in the "developed" world. The Chinese are certainly capable of building high quality merchandise, if that's what the customer wants. We don't see it very often in America, though, because American retailers have conditioned us to accept cheap, low quality, throwaway crap.

 

fnordfnordfnord's picture

Oh we are definitely going to war with Iran. How dare they.

Paul Atreides's picture

The US government is also threatening to close India’s access to SWIFT for purchasing Iranian oil. Alternative threats are also being made against long-time ally Japan. This is further evidence of the growing desperation  and the increasing fragility of the fiat dollar.

I think China is a given, they will do what they want to do and purchase oil for gold. They have been trading for thousands of years and nobody is going to tell them who their customers should be. The kicker will be India and Japan if they fold to US pressure the dollars role as a reserve currency will be extended a few short years. BUT if India and/or Japan refused to bow to US pressure and instead continue to purchase oil from Iran without fiat dollars, the days of the US dollar will be severly numbered.

 

bahaar's picture

Not enough oil in Iran for both China and India.  Plus no pipeline (proposed pipelines have to run through Afghanistan and we know what's going on in that country)

Paul Atreides's picture

There will be plenty once the EU stops buying it and they WILL figure out a way to insure and police those ships you can be sure of it!

Kaiser Sousa's picture

Dollars days r done...India like the rest of the REAL economic powerhouses r already telling broke ass Uncle Scam to fuck off n very plain terms....its game over....better get ur metals while can......

smb12321's picture

Dollar days are not "done" although it's been predicted for 20 years.  On ZH, countless posts have promised the end of the dollar by _______  (fill in blank).   The decoupling of dollars from the world's economy will not be instantaneous and - not surprisingly to any well-seasoned traveler - is not popular.  Africa, Latin America or south Asia (even in Europe) still want the dollar (as opposed to any other currency). It's the default currency. 

Now, whether it should be is another matter.  But like the many prophecies of immediate catastrophe (by next month at the latest - LOL) the death of the dollar, while inevitable, is not predictable.   And though I love silver or gold, they will not replace the dollar.  That will be another currency the world gradually agrees upon.

 

Paul Atreides's picture

Dollar days are not "done" although it's been predicted for 20 years. 

The dollars days are numbered and that number is no more then 1000.

On ZH, countless posts have promised the end of the dollar by _______  (fill in blank).  

That's because we on ZH are trying our best to figure out what day that is so we can be prepared.

The decoupling of dollars from the world's economy will not be instantaneous and - not surprisingly to any well-seasoned traveler - is not popular. 

On the contrary the Federal Reserve is exporting inflation globally monetizing their debt and the globe is sick of it.

Africa, Latin America or south Asia (even in Europe) still want the dollar (as opposed to any other currency). It's the default currency. 

Well South Africa is part of the BRICS and they want nothing to do with the dollar, as for south asia they are sick of having to convery every trade into dollars and loose money so they are all forming bi-lateral currency agreements. Latin America is in close proximity to the US but is sick of their interference and regime jacking BS so you can count them out. Just look at the recent Americas Summit, read about it here.

Now, whether it should be is another matter.  But like the many prophecies of immediate catastrophe (by next month at the latest - LOL) the death of the dollar, while inevitable, is not predictable.   And though I love silver or gold, they will not replace the dollar. 

Gold WILL become the new global reserve currency, why do you think all the CB's around the world are loading up on it?

That will be another currency the world gradually agrees upon.

It will be a basket of currencies with gold at the top of the list.

WallowaMountainMan's picture

That will be another currency the world gradually agrees upon.

 

Alternatively the world governments/central banks will agree soto voce to maintain world paper$ in a range that effectively creates one world currency. they want to take back to the throne of power from the 'bond vigilantes', those folks being the ones who decided that over time, they could destroy countries at will by setting the 'win/lose' scenario around the % of debt/gdp. Since that game would eventually end government/central bank power alliance, the govs/central banks will stop it. Non floating 'floating' currencies should do the trick.

Of course, this is just a guess from a newbie to this fascinating world of zh, but at least it is a guess whose accuracy even i can follow with my simple math. :)

 

p.s. if they ever agree to maintain a set amount of world paper$ in circulation, ... well, that's just another theory of mine.

Zero Debt's picture

to maintain world paper$ in a range in relationship to each other, but not to commodities, that effectively creates one world currency

WallowaMountainMan's picture

that was the what i was trying to say but did not related that to commodities (or more generally 'needs/desires')....i thought paul a. was suggesting that a currency named 'something' would be adopted and replace all dollar, yen franc, etc.  the politics of that are impossible, but it seems the govs/central banks could just decide to did it amongst themselves, without the 'real' world agreeing to it.

thoughts about the effect on the 'bond vigilantes'?

 

thanks for the comment.

Kaiser Sousa's picture

Dollars days r done...India like the rest of the REAL economic powerhouses r already telling broke ass Uncle Scam to fuck off n very plain terms....its game over....better get ur metals while can......

cranky-old-geezer's picture

 

 

if India and/or Japan refused to bow to US pressure and instead continue to purchase oil from Iran without fiat dollars, the days of the US dollar will be severly numbered.

Yes, that's exactly how it'll play out. 

America cutting nations off from the dollar because they trade with Iran is the dumbest thing.   They're simply pushing nations into the arms of China and Russia.

China is now able to supply pretty much any sort of product another nation needs, and Russia can supply all the military stuff another nation needs.

As America gets more arrogant (read: desperate) and pushes more nations away from the dollar, those nations will simply start dealing with China and Russia, and the asian alliance will grow larger and larger.

 

sethstorm's picture

Kind of hard for China to do that if the US is able to cause countries to have  a voluntary or forcible rejection of China by their own people. 

The only things that Third World (and Second World) nations provide are cannon fodder for the US and First World nations that oppose them.  It has been proven time and again with various forms of military hardware.

Once the US is willing to play hardball with the Third World, things will settle down real quick.

Non Passaran's picture

Watch out for China becoming a source of oil for Japan (wink, wink).
It's true the decision is stupid, but the Obama administration specializes in those and besides they have less and less choice

cougar_w's picture

I find it somehow reassuring to find that the Law of Unintended Consequences is still in effect.

Add that one to the usual Laws of Thermodynamics and you get an idea how completely, totally, and irrevocably fucked things are about to become.

Reality. Always. Wins.

bahaar's picture

And this is the first time that part of the world bartered?   Before the fall of Soviet Union, they used to barter with all their allies and non-aligned countries like India.  US $ didn't disappear.  Also don't be so sure of value of gold.  James Cameron, Larry Page and co. are going to mine asteroids for minerals.  And one of the asteroid is loaded with Pt.  Now Au sits right next to Pt on periodic table.  Chances are, another asteroid is loaded with gold.  Thats QEinfinity for gold backed currency. 

Pladizow's picture

Yes and then we'll all paint ourselves blue and go to Avatar world!

donsluck's picture

Timing is everything. Too early to worry about asteroids.

Kayman's picture

It is going to take a lot of gold to get space gold.  And anyway, what will you do when you double up on the supply ?

smb12321's picture

The only reason the world needs the US is for our patents (still a majority), world currency, leadership (yes, it's still there), catastrophe response (China compares to Biden) and technology. Besides, that, we're not needed.  LOL

There is a reason barter was replaced by currency - ease, permanence, ability to adjust, , but most important, as a substitute when the party had nothing to offer. Barter is VERY popular with those chomping at the bit for total destruction (the survivalists) but as a model for modern prosperity it's pretty lame.

MeelionDollerBogus's picture

There's a reason a FEW particular barter-goods were chosen as money - not currency but money - like silver, gold, copper - and there's a SECOND reason why paper took over (and then electrons).

Electrons are merely a proxy for paper, accepted as both have nearly equal value close to zero far divorced from the claimed time/resource value one can have with a "unit" aka dollar.

Metal money, however, is actually money and not just currency, reflecting real value because you really use them for non-monetary means.

Markets over time chose metals.

People under the force of a GUN used paper. Many didn't want to do so but had little choice. First the lie was put that equal conversion was possible at any time, then some realized it was a lie, then all promises of conversion were revoked AND ownership of gold was even made illegal in the USA.

That's the reason. It's called money-laundering.

MeelionDollerBogus's picture

gold, silver, platinum and palladium move together in currency terms in ways that reflect their true need by supply with a little modulation for preferred currency inverse-manipulation.

And yet you are arguing not to expect gold to "go to the moon" by arguing platinum will LITERALLY be harvesed from asteroids far BEYOND the actual literal physical moon?

Really?

Just think about that for a second, think about the total inversion of not only logic but spatial reasoning and poetic implication of the very notion.

Bicycle Repairman's picture

"James Cameron, Larry Page and co. are going to mine asteroids for minerals."

Put the science fiction comic book down.