How Trump's Iran Gamble is Killing the Dollar
Trump's Iran gamble is not only making himself miserable, but also sets a lot things moving in unknown direction. But one thing's movement is clear. That is, the dollar is moving towards death. Trump's chicken-out in front of Iran's shooting down the US MQ-4 drone is the biggest accelerator to speed up the death of the dollar.
First, Trump destroyed America's credibility.
America's credibility in the world is gone, and gone for ever. Everyone not only knows, but also has to accept the so-called "the world's only unrivaled superpower" is indeed a paper-tiger. This is a huge psychological blow to many people in Taiwan and beyond, and starts a chain reactions around the globe. Those people in Taiwan who believed, as later as last month, that the US would fight for Taiwan Independence, now have to admit the US doesn't have such an ability to do so. Japan and S.Korea will have to re-examine the value of their loyalty to the US. As Trump is retreating from the world under the banner of "America First",
a China-centered new Asia is in the making. And very likely a new world order.
Second,
Trump thrust America into the War-debt noose further. America now is one step closer to its graveyard. Every declining empire is struggling with two issues when it approaches its graveyard:
(1) Wars, unwinnable wars that the dying empire has to fight, even though it knows they are unwinnable;
(2) Debts, unpayable debts that the dying empire has to borrow, or rollover even though it knows these debts are time-bombs. Trump's America is now struck in an unwinnable war with Iran, and in unpayable war bills that come with its Iranian war. America's Iranian war has officially started regardless how the US responds to Iran's shooting down US's MQ-4 UAV. When this could end? There is no end is in sight. Trump still boasts that his "maximum pressure" is working. Oh, boy, you can't continue your economic warfare against Iran without big military deployment in the gulf, and big military deployment there costs a lot of money, and debts. Worse ever, in the end, you still have to choose fight or flight because your economic warfare will never work without credible military enforcement. Fight or flight, none is good for the US. Fight against Iran will be another Vietnam war. Flight will completely destroy the dollar. Do-nothing to Iran will only make Iran stronger. The ME wars are America version of British Boer wars that you can't win and can't escape.
Third, Trump's chicken-out in Iran's shooting down the US drone is shaking the corner stones of Petro-dollar,
speeding up the death of the dollar. Without Saudis' and Gulf countries' commitment to Petro-dollar, the dollar is just as ordinary as India's Rupee, or Brazil's Real, or China's RMB. At the time the Petro-dollar was conceived right after Nixon's abandonment of dollar's gold standard in 1971, the US offered the Saudis two incentives, the security of Saudi Arabia and other gulf countries, and the freedom of using American financial instruments to store the wealth that they have made from their crude oil trade. These two incentives are the corner stones to buy the Saudis' loyalty to the dollar.
Now, the security that the US has promised the Saudis is gone. Anther incentive is losing its attraction. China has been working to open up its capital market to the world.
Once China's capital market is opened up big enough to allow the Saudis to move their huge wealth accumulated in the past fifty years' oil and gas business from the dollar to the RMB,
the dollar is ead. The Saudis haven't abandon the dollar yet, not because they are unwavering believers of the dollar, but because there is no safe place to store the money they have made in the past fifty years. They are waiting. Once they think the time is right, they will ditch the dollar just as quickly, as determined as the Russians did.
