As of this weekend, the Iran War has done more to diminish US power in the Middle East than I have seen in my lifetime. I’m going to start with the smallest of events that I’ve said was coming in order to share some valuable information with everyone. Then I’ll move on to the massive turn of events in the Middle East that happened over the past two days due to US ineptitude in this war. (The most blockbuster events that have not even been reported in the mainstream media yet will be restricted to those who actually support my work, who might want to skip to the end and then come back to this section that is available to all; but there is significant content here for everyone about the death of the petrodollar. I’m going to rush this out because of the breaking news at the end, so please pardon a few typos.)
Starting with the smallest point first, which is still of historic significance, diesel in the US just soared past its highest price in history! So, those rising fuel prices I promised would hit this summer are resoundingly and solidly here just as summer nears its close:
Diesel hits all-time high of $6 per gallon, and just about everything will cost more
The nationwide average price of diesel hit $6 per gallon Friday for the first time, an ominous record for the fuel that powers much of the U.S. economy.
The price was $6.05 as of Friday morning, according to data from motor club AAA. The national average price of regular gas was $4.29, up 15 cents since last week.
Since the war with Iran began in late February, the nationwide average diesel price has soared by 60%.
“The cost of diesel gets into just about everything,” KPMG chief economist Diane Swonk said in a recent interview.
“From running a farm ... [to the] cost of food, but also everything across the economy that’s shipped,” she said. When diesel prices rise, everything “gets that extra fee tacked onto it.”
Swonk predicted that the high cost of diesel will be an “inflationary problem” for months to come.
And we made it here even ahead of seeing those “spotty” out-of-fuel signs at gas stations that I said would be coming. I did report on a few, but there was no deeper explanation in those X posts as to whether the gas station owners just didn’t realize their tanks were nearing empty, as sometimes happens, or actually could not get fuel. So, I won’t claim that as an accurate prediction yet, but what that means is that fuel prices are still going higher once actual shortages do start to show up. (At least, one of those did sound like more than the station owner/manager forgot to order fuel in time as the person wondered out loud, “What’s going on?” as in “Why hasn’t my fuel arrived yet?”)
This week, Trump made the surprising (only in that it came from his lips) announcement of the obvious, which is that the war and the high prices on fuel will continue until the day after the election because Iran will do all it can to reduce his power while in office. He’s pathetically blind or just lying, though, to be claiming their pressure will end right after the election due to their desperation for a deal. Not everyone has the short attention span of Donald Trump. The Iranians have been in the long game for decades.
Today, Middle East nations are negotiating with Iran to see if they can get Iran to open the strait. Iran will use the negotiations as a process to keep buying time, as they always do, so that the war of attrition bites deeper into America’s back side. They will say something along the lines of, “Yes, we will open the strait if every nation in this room promises to kick all American military bases out of their country.” That would be a huge win for Iran, and such a negotiation point puts the onus back on the nations that are begging for strait mercy to change the situation in the Middle East. It would achieve one of Iran’s major objectives in this war, talked about in my last Deeper Dive.
At this point, as laid out in that Deeper Dive, it is actually within the realm of feasibility that Iran could get that kind of agreement and actually kick the US permanently out of the Gulf, and today’s blockbuster event really underscores why nations like Saudi Arabia will be seriously considering such a move. Moreover, the US has a huge financial burden to add to its toppling mountain of debt if it is going to rebuild all those bases, which means it might not press so hard to remain there. A US military official has just admitted the US received major damage:
Navy Secretary Casually Admits Iran “Blew the Hell” out of U.S. Base
Fox News’s Jennifer Griffin wrote. “Haven’t heard a senior U.S. official admit this on the record until now.” Others noted the Iranian military capacity does not seem to be as depleted as Trump claims. Naturally, the always-lying Trump administration has been underplaying the damage done by Iran; but it eventually gets out as ships limp home in worse states than the US originally admitted.
With Trump now promising a $5,000 economic stimulus check to every single adult American if Republicans sweep both houses of congress at an estimated cost of $1.25-trillion, adding the cost of rebuilding all those military bases and replenishing their military hardware is going to be a tough addition to the price of this war. So, if nations that have experienced heavy damage because of those bases now demand the US go away, the US might not push back as hard as it would when it was a more prosperous nation. That is the cost of having a towering national debt that now looks like the Leaning Tower of Piza.
Yet, the costs of this war are hardly done mounting because Iran plans to do a lot more destruction to US military bases in the region in order to drive the US out and a lot more destruction to US oil infrastructure. And events that happened overnight show how rapidly that can come about!
Most of those costs where that kind of damage was already rendered are not imputed yet into the cost of this war because it is not known if the US will rebuild. Most of the oil rebuilding costs will have to born by US oil companies that are making bank off the war unless the billionaires manage to get bailout money from congress—always a possibility in our brave new world; but that may be a tough sell in congress with the debt tower now leaning so hard that the Treasury secretary was unable with his first-round effort to prop it up at all. The props snapped immediately, showing he’ll need to place far stronger timber under the structure of US debt if he wants to prop it up.
We’re back to massive financial rescue measures -OR- just facing the impossible cost of soaring interest. That is a no-win scenario because, as the war continues to drive inflation up (sure to rise rapidly with diesel not over $6/gallon), interest rates will continue to rise, and with central banks lately casting off Treasuries like sand bags of ballast thrown off a falling financial balloon, financing that interest is a real problem.
So, with that, I said I would explain in the next Deeper Dive what I meant by death of the dollar and what that means to all of us, and then I will go through some of the exploding details of the war that I shared in headlines with paying subscribers on Thursday (again beyond the paywall because a person deserves to be paid for his many hours of work each day, and thank you to those who realize that and do something about it!) And finally on to the atom-bomb sized transformation in the ME that happened overnight.
The dollar’s demise
Many of the people who write about the dollar’s collapse envision a scenario something like Zimbabwe where the dollar spirals hopelessly into a vortex of lost value. If you haven’t hedged for inflation with bricks of gold, toilet paper is going to cost you your entire 401(k).
That’s not what I’m talking about. I won’t say that cannot happen, but it is not what I meant in my Deeper Dive last week. I’m talking about death of the “petrodollar,” which is the same thing as death of the world’s primary trade currency. The world has many trade currencies (currencies used for trade with many nations outside of trade with the nation that issues the currency). The euro, the yen, the yuan, the Swiss franc, all are used to store wealth in sovereign funds, to make foreign exchanges between banks; but none as widely as the dollar, and there are two reasons for that:
The dollar was anchored in global trade by Henry Kissinger when he negotiated the establishment of the petrodollar for all oil trade with Saudi Arabia back in 1974. Other smaller oil-producing nations joined in with the Saudis, and the US at the time was not the major exporter of oil that it has become. So, all oil trade came to be done in dollars, which forced other nations wanting to buy oil of the Middle East to exchange their currency for dollars before buying oil. That was typically done by using their currencies to buy US Treasuries, denominated in dollars, which could be moved like large sacks of money between banks. The US currency, thus, became THE dominant trade currency of the world.
That has now been blown to bits—hence my “death of the dollar.” With oil trade in the Middle East being throttled, the need for petrodollars has been throttled. Worse still, with so much animosity created toward the US and its dollar by decades of sanctions and now by the US starting wars all over the world at a level of new beginnings and major intensity not seen since the big wars of history, and with the US threatening to seize the lands of its friends and congress doing nothing to step in the way of that because it cowers before Trump, there is a LOT of hatred toward the US and toward using the dollar.
On top of all that, with this war going even further outside of US control as I’ll get to below the paywall, the damage being done to the petrodollar nations because of their close connections to the US makes it no longer worth participating in the petrodollar. You see, the original bargain was that, if ME nations signed on to selling their oil only in dollars, they would receive protection from other hostile entities in the region, such as Iran.
Well, we see where that promise has now gone. Instead of bringing protection as was the case (or, at least, appeared to be the case for decades), being affiliated with the US is bringing absolutely massive destruction to their oil economies and their newly minted tourist economies and never more so than over the past twenty-four hours. Having US bases in their countries, instead of offering security, is the same thing as painting a glowing red target on their backs that says, “BOMB HERE!”
The US, diminished in defensive weaponry from too many years of overextending itself, has been unable to provide a solid defense. That became abundantly clear in the past two days. The nations of the Middle East are, as a result, badly wounded; and, as the reports to be covered below show, the likelihood of even greater damage is EXTREME.
So, I cannot think of any reason those nations would want to participate in the US petrodollar scheme anymore. Iran will keep fighting this war, as laid out in the last Deeper Dive until it drives the US out of the Persian Gulf region. It won’t likely be driven entirely out of the Middle East, but Iran will be content to get the US back away from Iran and certainly out of the Strait of Hormuz.
The more the US fights back, the more Iran will destroy the petrodollar nations that house US military bases—not just the bases but their oil infrastructure … and even more if that is what it takes. That raises the amplitude of the cost of staying in the petrodollar. As the last Deeper Dive explained, Iran is on a graduated path of widening and enlarging the damage (called the “escalation trap”) until it succeeds in all of its three main goals laid out in that Deeper Dive, which it has held rock-hard to throughout all negotiations, so we know they mean business. They are not backing down on those demands.
With all of that said, death of the petrodollar does not mean the dollar has to go all Zimbabwe. As noted, many other nations have global currencies that are not petrodollars, and they have been advancing slowly in popularity on the dollar. Not having the unique trade status of the dollar has not thrown them into massive inflation, anymore than what the dollar has seen since the financial and economic profligacy of the Covidcrisis. So, there are other factors more related to inflation; so, there are other factors essential or inflation, such as Fed “money printing,” but that is, of course, where the death of the petrodollar could create an inflationary crisis, depending on the Fed and feds response. I’m just saying hyperinflation is not inevitable, but neither is it unlikely.
The alternative is uglier
The US, of course, could do as Trump has said he WILL do and utterly destroy Iran’s civilization, and that is why Trump is now campaigning with European nations to dissolve the International Criminal Court because that kind of genocide of civilians, which the US is certainly capable of, would bring the possibility of death sentences to Trump and any members of his administration that participate in the mass genocide.
The US could unleash all kinds of weapons of mass destruction or just conventionally bomb into non-existence every energy facility in Iran, making survival in high-rise buildings in the middle of a desert impossible, cutting off refrigeration, making feeding the masses in a desert impossible, cutting off water, making life in a desert impossible. The US has the power to do that, and anyone implementing such a plan will be taken to The Hague if ever apprehended and sentenced to life in prison or death. Hence …
US pressures NATO allies to destroy International Criminal Court
The U.S. attempted to enlist its NATO allies in a campaign to “systematically dismantle” the International Criminal Court, straining already fraught transatlantic relations.
During a closed-door meeting of NATO’s 32 ambassadors in Brussels in mid-July, U.S. envoy Matthew Whitaker asked NATO countries for help in disassembling the international body, and urged them to leave the ICC’s founding document, the Rome Statute, according to three NATO diplomats who were granted anonymity to speak freely.
Whitaker ended his intervention by saying: “We will be watching closely who stands with America,” the three diplomats said.
The pressure on allies to quit the court — driven by U.S. concern that its own officials could face war crimes prosecutions — is part of a broader Trump administration campaign against international institutions and rules seen as limiting U.S. freedom of action.
It’s pretty clear: Effort to end the war-crimes court is being pressed in order to prepare the way for genocide if all else fails in the Trump-Israel-Iran War, and all else is already failing (see the latest war stories below). I am sure the president will get little support on that because everyone his people are speaking to are well aware of where he is going with this. Therefore, Trump will continue to make more enemies out of our NATO allies by strong-arming them with his endless new tariffs or sanctions, such as banning them from SWIFT dollar transactions, thereby clubbing the trade currency even harder—the kinds of things that he imposes on friends anytime they don’t do what he demands, tiny tot wearing a crown in a crib that he is.
The U.S. mission sent out a paper to NATO delegations telling them: “The United States will systematically dismantle the capabilities of the ICC … we firmly request that you immediately take steps to withdraw,” according to details of the document shared with POLITICO.
It also pressed allies to “examine the threat” of the ICC to their own countries, “publicly condemn” its “overreach” and “cease … immediately” any material support to the court. “Let us end the charade of the ICC once and for all,” it reads. Although NATO is not a signatory to the court, all alliance members except Turkey and the U.S. belong.
The push against the ICC was launched this summer by U.S. Secretary of State Marco Rubio, who has accused the court of infringing on U.S. sovereignty.
That is because we like to bomb the heck out of anybody we want to bomb the heck out of whenever we want to bomb the heck out of them and to whatever extent we want. The ICC stands in the way of that, and it stands in the way of our seizing Canada and Greenland. It bars the door to our destroying Iranian civilian civilization. Notice the correlation in those two words. Destruction of the civilization, which is literally what Trump promised, is destruction of its civilians who depend on that civilization as the organizing principle that makes such highly populous life possible in a desert!
So, the ICC is an unhandy thing that Tyrant Trump wants out of his way. Those who support him are walking the path of global tyranny because, clear the path, and he will get worse. He has to get the court out of the way to protect himself as a tyrant, so he is making a full-court press to get rid of it. (No apology for the pun. I like puns.)
“The ICC and its friends are waging a war against our country not with bullets or missiles but with statutes, compacts and the force of so-called international law,” Rubio said on July 13. “If they believe they can deprive us of our sovereignty, we will teach them the full meaning of American resolve.”
Some extremely harsh words, so you can see how real the press of tyranny is. DO NOT ATTEMPT TO STAND IN THE WAY OF OUR IMPERIAL GOALS. Trump is serious about getting Greenland. He’s serious about getting Canada, and he’s holding back on his repeated pledge to wipe Iran’s civilization off the map because he and his officials fear The Hague will kill them if they go that far.
These are truly dark days because a good part of the US populace is going along with all of that by denying the reality that the Trump administration really does intend to do all of those things that Trump has claimed he is determined to do. Why? Because most people think he cannot really be THAT insane. They dismiss it by saying, “You know how he exaggerates just to wind up the press.”
Trump’s actions and the damage he has already brought to this nation’s integrity and global respect, to its military power and its broad acceptance in the world, and to our everyday prices, which we will be saddled with for a long time (such as that diesel I led off with) and, finally, the dismantling of the trade dollar, which brings serious destruction to the very foundations of the United States’ Toppling Tower of Piza, all say he is as serious as death, itself.
To conclude the Death of the Dollar explanation, the dollar has two ways that it is valued: One is on foreign exchanges where its function as a global trade currency is in play. That value, which is relative to other currencies, could blow to bits as dollars become less sought after. A devalued dollar on foreign exchanges will make our exports more successful, except for retaliatory tariffs barring the door; but it will also make our imports, which we US citizens highly rely upon, more expensive, which is where US tariffs are already beating us on the knee caps.
The other way the dollar is valued is its purchasing power as measured by CPI, PCE and PPI—all measures of inflation or the comparative buying power of the dollar one year or one month against the previous year or previous month. Those measures don’t track all that much with foreign exchanges of the dollar. They are an internal valuation. Those measures may be impacted by death of the petrodollar, but it does not mean a Zimbabwe style crash.
A Zimbabwe style crash requires massive money printing, and the US could respond that way in order to diminishing its debt burden when that debt burden becomes unmanageable because death of the petrodollar has left us without enough parties wanting to buy US Treasuries. Many alternative press sites have long suggested the US will try to inflate its way out of its debt problem. So, the Zimbabwe path is certainly possible as we try to print enough money with the Fed covering the bill, so to speak, to keep paying the piling debt.
The other path is we make massive cuts in our national budget and eliminate the deficit. That is something that should have been done decades ago, which makes it very hard to do now. In fact, it was done for a very small window of time. That is now a nearly impossible path because the cuts would have to be enormous, making them a huge shock. Another alternative (or likely something that would have to happen in conjunction with expenditure cuts) is that the Trump Tax Cuts are terminated.
Doing both of those things would take us back to where we were under Clinton and Gingrich for a blend of tax increases and spending cuts, and military fortress dismantlement across the Middle East in order to start living within our means, but that is VASTLY more difficult now than it was before George Bush blew those years of minor surpluses completely out of the water with his tax cuts and his candy of $4,000 to taxpayers. That was an absolutely stupid plan that completely terminated a brief period where America was actually realistic and fiscally responsible about what it would take to end deficit spending.
Is there any hope in this much more divided nation with a much more divided government in getting there? Not likely. So, death of the petrodollar may still turn into Zimbabwe, here we come! But there are alternative paths to, at least try.
A good start that many could get behind would be to COMPLETELY end the quest for American empire! Good luck with that because the MIC that runs the government will fight it in every way. However, Clinton did some of that when the Cold War ended, claiming what I think he called “the Cold War dividend” when the US was suddenly able to scale back from fighting the “Soviet Threat.”
We need to go a lot further with that and size our military down to just what it takes to actually defend our own land from real attacks and not to defend and CONTROL the entire world for the sake of oil and empire. I’m not saying we should not defend allies when they are actually attacked, but we need to get totally out of the imperial expansion business where we use the US military to achieve more control even where allies are not being attacked at all.
Our president is a runaway train in the other direction. One person in the publication RawStory wrote, and I think it is likely accurate:
My current theory of Donald Trump is that he is utterly gripped by the terror of death, and is desperately attempting to leave some mark on the world that history cannot erase — this is the point of the wars, the annexation threats, the D.C. vandalism. I think right now he is genuinely fixated on adding new American territory as the brass ring, the thing they’ll never be able to take away from his memory.
You are witnessing the death throes of a narcissistic emperor, grasping for the reins of absolute power to create some vain and lifeless form of immortality because he doesn’t like where he may be going after death. America’s long imperial quest has reached its ugly zenith in Donald Trump.
An empire is very expensive to hold together, much less to assemble in the final years of your rapidly waning life.
Said another in that article,
Rather than making America great again, Trump is inflicting grievous harm on it with tariffs, now upgraded to import bans against select Canadian goods; an illegal war; and a total ransacking of our public and private sectors for the enrichment of his courtiers and his family. And he is going to bury us all with him in a tomb of his own design — a ballroom.
With that, let’s go on to reincent outbreaks current oil war, starting with the first significant escalation of the week, reported on in The Daily Doom headlines on Thursday:
