The signs of regime change are everywhere. From embarrassment by Russia's success in Syria to China's creation of its own 'World Bank' and SWIFT alternative, the trend of de-empirization are growing, but tonight's news that Washington will sell oil from its strategic reserve in order to meet budget constraints and avoid default (as China takes advantage of low prices to build its own reserves) is simply stunning in its analogy of the shifting world order.
As CNN reports, [11]
Bipartisan congressional leaders and the White House struck a major fiscal deal in principle Monday that would raise the debt ceiling and lift budget caps on both defense and domestic programs, according to congressional sources familiar with the deal.
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This deal would avoid a potential debt default on November 3, and it would reduce the chances of a government shutdown on December 11.
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The deal includes $80 billion in increased defense and domestic spending over two years, a senior House source told CNN.
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That new spending would be offset by sales from the strategic petroleum oil reserve, use of public airwaves for telecommunications companies and changes to the crop insurance program — among other measures. Moreover, the deal would spread out increases in Medicare premiums over time so beneficiaries don't feel them acutely. It would also aim to preserve the Social Security disability trust fund, sources said.
Conservatives sharply panned the deal.
"It's emblematic of five years of failed leadership," said Rep. Justin Amash, R-Michigan.
So, to summarize, 'Murica - the world's reserve currency superpower and "cleanest dirty sheet in a brothel" economy is about to sell its "strategic" petroleum reserves at multi-year low prices in order to meet an ever-expanding welfare state's needs...
[12]
As China "buys low" adding to its reserves amid the multi-year low prices...
[13]
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Of course this move by The US is echoing what many Petrodollar States are being forced to do to (sell 'reserves' to meet social welfare needs); however, in this case, it is not some massively indebted banana republic, but The Unites States of America (oh wait!).
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As we recently pointed out, [14] there are two general schools of thought amongst noted contrarians and libertarians regarding China’s overriding objectives.
One school has it that China is very much a part of the One World Government philosophy and their primary goal is to acquire a more powerful seat at the IMF. Having done so, they will settle in and be content to be one of the leading jurisdictions that run the world collectively.
The other school suggests that China means to become the most powerful nation in the world - to replace the US in every way as the world’s dominant nation.
My own appraisal is a combination of the two. China’s behaviour - not only their public stance, but their massive economic infrastructural development efforts indicate to me that they intend to go full-bore with their new economic infrastructure, giving them powers that rival and even overtake the EU and US. At that point, they will be unconcerned as to whether they will be welcomed into the “club” that is presently dominated by the EU and US. They will be an unstoppable freight train passing through town. The western world can either get on board, or fall by the wayside. The Chinese will prefer the former, as it would be more profitable and would avoid conflicts (both military and economic), but they will not be deterred.
At this moment in time, we’re observing a part of that effort. The old structure is being slowly bulldozed and a new structure is underway. It’s very likely that, in order to assure its success, it will be a better one - one which offers its users greater freedom. We can be certain that, like all governmental constructs, it will eventually become corrupted and be just as oppressive as the one it hopes to replace. However, in its early years (and hopefully beyond that) the people of the world will enjoy a period of increased economic freedom.
Some time ago, when we first predicted that China would create such a system, it seemed almost a fairy tale - a highly unlikely development. Yet, China has gotten there even faster than I’d expected. Let’s hope that the day when its benefits trickle down to the street level, worldwide, will also arrive more quickly than we had expected.
Charts: Bloomberg
