Whoa, so this is a headline of huge significance to the subject matter of this blog. How about that, among all the global economic uneasiness coupled with invented Iran conflict tensions: Indian government dropped a bombshell!!
India to pay for Iran's oil in gold
Not only will they not participate in some bogus embargo/sanctions towards Iran, they WILL continue importing oil from Iran. Furthermore, they will trade with Iran using one of the oldest "hard" currency in the world, gold! Not in a fiat-currency of Euro, which has been on life support; not in the Indian Rupee which is also a fiat currency; and definitely not in the so-called "world's reserve FIAT currency" American Dollar.
As mentioned in earlier post, very big economies such as India, China, Japan and Germany are dependent on importing oil from Iran. Among them, Germany and Japan are two countries whose national defence still continues to be subsidized by the US. Yes, quite literally American taxpayers subsidize their defence even after 60+ years of end to WWII AND 20 years of end to Cold War. India and China are under no such obligations. With a national debt approaching (or maybe has already exceeded by now??) $16 trillion, growing uneasiness in society due to unemeployment and plethora of other issues; last thing in the world US currency can afford is taking on a needless military conflict.
Now, don't get me wrong. Like most major economies in the world, India also happens to be a country whose currency (Indian Rupee) is governed by a central banking system - The Reserve Bank of India. And like most major economies, this currency is fiat too - that is, it's not backed by any physical/natural resource. There is no telling, if sometime in the future even the Indian government/society engages in risky behavior of too much spending, out-of-control debt, too much needless warfare - even Indian currency could face grave prospects. This is nothing new, there are countless historical case-studies for this. I mean, I'm not talking rocket science here. It's something backed by basic common-sense arithmetic. Any empire that stretches way beyond its means and takes on unsustainable debt faces bankruptcy. Prosperity and welfare (howsoever well-intnetioned) cannot be magically created out of thin air by printing more and more paper currency backed by nothing. Napolean's French empire went bankrupt by over-ambitious warfare. Romans, Ottomans, British, Soviet and more empires stretched way beyond their means in warfare and crumbled. There doesn't seem to be a monopoly on greed and stupidity in any specific society. Who is to say the Indian banking system will never take on a self-destructive approach sometime in the future?
But in the most recent past and the present, this event is very significant. Due to the prolonged Japanese recession and serious economic turmoil in both Europe and USA, Reserve Bank of India had the foresight to load up on their gold reserves. Even though Indian Rupee itself may not be backed by any gold reserves, taking the wise move of loading up on gold has given India potential of surviving serious global economic turbulence. At the same time, it is extremely concerning for American Dollar's prospect of debasement. If other major economies like China start doing the same, it would be catastrophic for American Dollar. The status of being a global reserve-currency is what is keeping it propped up. If and when the dubiousness of this status gets exposed, all bets are off. The mischievous behavior Federal Reserve is engaged in - notwithstanding taking on prospects of even more warfare - would DOOM whatever American Dollar savings American society accumulated in their bank accounts, retirement accounts etc.
I feel, it's high time more American voters and taxpayers start paying attention to the seriousness of economic uncertainty their government and central banking system is leading them into.
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