In order to continue to inflate the supply of US dollars globally, the USG must spend these dollars into existence. Their preferred method is to whip out the plastic and borrow these dollars into existence through the creation of good ol’ American Sovereign Debt. The American people are more or less tired of that shit and will not tolerate a massive increase in government spending, especially in an election year. However, a war is different thing altogether! Americans love war! There isn’t a war we haven’t gleefully supported in the beginning. The upcoming war with Iran will be no different.
War is very expensive. Arguably it is the most expensive endeavor known to mankind. Perfect for inflating the supply of dollars globally and perfect for inflating the credibility of the US and the need for us and our printing press.
Nobody will care that credit default swaps are now worthless due to the fact that the ISDA will never allow any “credit event” to be characterized as a default. Current holders of CDS contracts are holding specific performance contracts that will never be allowed to function. Attempting to allow these contracts to function will result in the immediate default of the largest 5 banks in the world, which will bring the entire global financial structure down. Nobody will care that future buyers of sovereign debt will not be able to hedge their purchase with CDS contracts and therefore will avoid sovereign debt in the first place. Nobody will care that the only buyer willing to pony up will be the central banks, who have access to a magical printing press that will print as many dollars as they will ever need without the fear of losing their capital. The Fed believes it does not need a hedge, the ECB has the perfect hedge, physical gold marked to market.
No, Americans and the most of the world will not care about these things as the bombs fly and as people are obliterated, all in the name of saving the world from the evil scourge of Iran. Soon enough the thrill of war will wear off and reality will start to rear its ugly head again. The world will realize that it was fooled again by the can-kicking exercise and now the problem has been greatly increased rather than solved. Then what?
The day is coming when all the credibility inflation engineered to give the dollar value is going to come crashing down. Nothing will stop it. When this occurs the dollar will go to the trash bin of history as the greatest failed store of value in history. Simultaneously physical gold will replace it as the world’s designated reserve asset of choice and the will once again serve the purpose that mankind has always found to be best for it.
Gold, get some.
While a few days ago we reported that the US was set to place a third aircraft carrier, ostensibly the USS Enterprise, in the Arabian Gulf in the indefinite future, it appears that the US is wasting little time in making preparations for this latest military escalation against Iran. As RT reports, “two ships of the US Navy, the nuclear submarine USS Annapolis and the destroyer USS Momsen have passed through the Suez Canal into the Red Sea. Although their destination is confidential, they are now getting dangerously close to the Persian Gulf. The ships’ passage was a major operation for the Suez administration as due to safety reasons they had to close off the canal to all other traffic and even shut down the bridge, disrupting the link between the banks for some four hours. The traffic on the roadways alongside the canal was also restricted, Interfax news agency reports.” What’s next: reports that Russian destroyers in Syria are also moving in the general direction of the Arabian Gulf?
More from RT:
There are no reports regarding the destination of the vessels, but the news come amid the ongoing crisis in the relationship between the US and Iran. There is mounting speculation that the Annapolis and the Momsen are heading to the Persian Gulf to reinforce the US naval forces already present in the region.
Currently the US has two aircraft carrier groups in the region headed by USS Abraham Lincoln and USS Carl Vinson. It is expected that another aircraft carrier, USS Enterprise, will join the strike force in March.
Since the EU placed a new round of sanctions on Iran by putting an embargo on Iranian oil, Iran is once again threatening to use military force to close the Strait of Hormuz.
Meanwhile, a Kuwaiti maritime official said on Monday that the Gulf Cooperation Council group of Arab countries have contingency plans for coastguards and naval forces should there be an attempt by Iran to shut down the Strait of Hormuz.
When one reads of such developments, what can one think but: Nobel peace prize.