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Connecting Some Ugly Dots
Someone said of the 9-11 attacks that the failure to see them coming was a failure of imagination on the part of Americans. Essentially, a lack of being able to connect the dots, so to speak, of various events, threats, and motivations of those who don't like us and who would very much like to see the US made irrelevant in the world...
As you may have noticed, there are just a few ugly dots in the world today...shall we let our imaginations play?
For example, the mild winter we had this year led to an early planting of what was to be a bumper corn crop here in the US.
That is, until an unscheduled heat wave this summer seared much of this year’s crop into dried up husks. This has sent corn prices into the stratosphere and left us with potential food shortages.
Meanwhile, global demand for corn and other grains continues to grow, especially from places like China and India.
Rising food prices–and food shortages--are the kind of thing that lead to nasty things like food riots. Sure, those things happen in South America, or maybe at the edges of Europe, but not in the good ol’ USA…
Not yet, anyway. But the economic and geopolitical picture is changing rapidly and in most cases, not for the better. The corn shortage is just one of many…
Burning food and causing shortages
Not to make too big of a deal about it, but don’t you think that now would be a good time to scale back the ethanol content in our gasoline? You know, as a way of giving the American family a break on food prices?
Does it make that big of a difference in our air quality? Is it worth burning a basic food source for both man and beast, especially in times of shortage?
The corn crop is a key part in the food chain and energy equation, and shortages only put more strain on an already strained US economy.
And speaking of shortages, if—and it’s becoming more likely as the days go by—the Straits of Hormuz become too dangerous for oil shipping to pass through, you can count on an immediate spike in oil prices as well as an oil shortage. The Strait doesn’t have to be closed per se to drastically affect oil prices, it just has to be dangerous enough to make it unlikely that oil barges and crews will pass through.
Ask yourself how many tankers will have to be attacked—not sunk—but attacked before they decided that it’s too risky?
Once an oil carrier is attacked in the Strait, whether it spills oil or not, the price of oil will rise dramatically. How many oil carriers would then balk at making the passage? Many or most. At the very least, the trek would become very costly in terms of insurance. The direct result would be not only a steep rise in world oil prices, but also corn prices. That’s in addition to the shortages already anticipated.
What is also anticipated is that no cuts in ethanol—corn alcohol—added to our fuel would be made. The environmentalist and the corn farmers’ lobby would certainly resist any such adjustment, as certainly would this administration.
Now, what would happen if, as is happening now, China becomes successful in expanding their dollar exclusion zones around the world? Those are the zones where China has successfully made agreements with governments such as Japan, Russia, India, Brazil, and Chile to bypass the US dollar as an intermediary currency, and trade directly with their own respective currencies.
The unthinkable happens
Given the prospect of both rising food prices and oil prices, if the dollar becomes less needed or desired as a store of value to our trading partners around the world, which is happening, then prices in dollars of both food and oil would rise to who-knows-how-high. This is where we would see the beginning of hyperinflation here in the US as the dollar becomes worthless to the rest of the world. The rise of China in the world would come as a result of replacing America’s financial clout with its own.
Ah, but what about those $1.3 trillion in T-bills that China holds? Won’t they miss that money if the dollar becomes worthless? One answer might be that China may use the debt to buy America from the US government.
What do I mean by that?
Simply that China may demand some heavy concessions from us as our creditors. They may, for example, decide that they want to own various tracts of federal lands from coast to coast; say those parcels with shale oil or timber in or on them. Why not? China is buying the same resource rich lands from countries around the world.
Anybody doubt that an American administration is above or beyond selling the country to China? Besides, as the US economy slows down, there is really no reason for the Chinese to believe that the US will ever be able to pay the debt that it owes. Why not get something tangible and needed from the US, rather than a trillion of useless dollars?
Think that such things can’t happen. Think again; the unthinkable is becoming an everyday occurrence these days as the American-led international system unravels at an accelerating rate. Don’t be too surprised at neither what happens nor at what is allowed to happen, because when it comes to looking out for America’s economic and strategic interests, well, we’ve got the best politicians that money can buy.
And those are…The Gorrie Details.å