'De-Americanised' World Needed After US Shutdown

"As US politicians of both political parties (fail to find a) viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanised world."

"A new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests respected and protected on an equal footing." 

"The cyclical stagnation in Washington for a viable bipartisan solution over a federal budget and an approval for raising debt ceiling has again left many nations' tremendous dollar assets in jeopardy and the international community highly agonised."

"Instead of honouring its duties as a responsible leading power, a self-serving Washington has abused its superpower status and introduced even more chaos into the world by shifting financial risks overseas," but equally stoked "regional tensions amid territorial disputes, and fighting unwarranted wars under the cover of outright lies."

"a new international reserve currency should be created to replace the dominant US dollar". 

[China's official news agency: Xinhua]

US Dollar Will Be DeThroned As World's Defacto Currency

Canadian billionaire businessman Ned Goodman predicts the end of the U.S. Dollar as the world's reserve currency. He predicts the transition out of the U.S. Dollar will become, "...quite ugly."

Lecture at Cambridge House's Toronto Resource Investment Conference 2013 on Thursday, September 12, 2013.

"In my view, the dollar is about to become dethroned as the world's de facto currency. I'll tell you how I came to that conclusion so quickly... the new President of China, Xi Jinping, his first visit on the day of his becoming President, was at his request to meet with Mr. Putin. And he immediately made a deal with Mr. Putin to get all the oil that he needs, which he can buy in Renminbi."

"We're headed to a period of stagflation, maybe serious inflation, but stagflation for sure, and the United States will be losing the privilege to print at its will, the world's reserve currency. A period that's going to be very inflationary, and I can tell you that before that happens, it is likely that it is going to get quite ugly." - Ned Goodman

BRICs Bank To Rival World Bank / IMF and Challenge Dollar Dominance

Bloomberg News reports that:

The biggest emerging markets are uniting to tackle under-development and currency volatility with plans to set up institutions that encroach on the roles of the World Bank and International Monetary Fund.

The leaders of the so-called BRICS nations -- Brazil, Russia,India, China and South Africa -- are set to approve the establishment of a new development bank during an annual summit that began today in the eastern South African city of Durban, officials from all five nations say. They will also discuss pooling foreign-currency reserves to ward off balance of payments or currency crises.

“The deepest rationale for the BRICS is almost certainly the creation of new Bretton Woods-type institutions that are inclined toward the developing world,” Martyn Davies, chief executive officer of Johannesburg-based Frontier Advisory, which provides research on emerging markets, said in a phone interview. “There’s a shift in power from the traditional to the emerging world. There is a lot of geo-political concern about this shift in the western world.”

The BRICS nations, which have combined foreign-currency reserves of $4.4 trillion and account for 43 percent of the world’s population, are seeking greater sway in global finance to match their rising economic power. They have called for an overhaul of management of the World Bank and IMF, which were created in Bretton Woods, New Hampshire, in 1944, and oppose the practice of their respective presidents being drawn from the U.S. and Europe.

“We need to change the way business is conducted in the international financial institutions,” South African International Relations Minister Maite Nkoana-Mashabane said in a March 15 speech in Johannesburg. “They need to be reformed.”

The U.S. has failed to ratify a 2010 agreement to give more sway to emerging markets at the IMF, while it secured Jim Yong Kim, an American, as head of the World Bank last year over candidates from Nigeria and Colombia.

Finance ministers and central bank governors from the BRICS nations, who met in Durban today, agreed to set up currency crisis fund of about $100 billion, Brazilian Finance Minister Guido Mantega told reporters today. He didn’t give details of proposed funding for the new bank, which Brazil wants established by 2014. The nation’s leaders are due to sign a final accord tomorrow.

US Invaded Iraq Because It Wouldn't Have Survived Otherwise

While the US invasion of Iraq about a decade ago was based on public-facing lies about nonexistent weapons arsenals, the underlying reasons for the invasion were much more dire. Iraq had found the US’ Achilles Heel, and would bankrupt the US if not stopped.

When the United States President “Not-a-Crook” Nixon unilaterally declared that the United States would not pay back its loans on August 15, 1971, it sent shockwaves through the financial world. Normally, this would have been a declaration of bankruptcy. Instead, the world seemed to accept Nixon’s statement that the rest of the world could trade their unfulfilled financial claims on the US between them as they pleased, and maybe hope to recover some of it.

This set off the greatest experiment in global economics ever conducted. Some claim that our economy is based on centuries-old principles dating back to the 1600s; that’s factually wrong. The principles under which the global economy operates are merely 40 years old – half of a human lifetime – and there are increasing signs of ponzification, which, if bursting, would be a bubble-burst the likes of which has never been seen.

Before this so-called Nixon Shock, the US Dollar was based on gold. Every U.S. Dollar was an IOU issued by the United States, redeemable for one-thirty-fifth of an ounce of gold at any time.

Regrettably, the war devastated the US Economy. The Vietnam war, that is. As a result, the US did the predictable and stupid thing and just started printing more money to finance the war. Before the war, coverage for the gold-for-dollar debt had been reasonable, but some countries – France, in particular – saw where things were heading. Charles de Gaulle insisted on having the French USD reserves redeemed for gold, as had been promised. This exchange also took place, causing the back-end gold coverage for the dollar to drop from about 50% to about 20%, past the economic breaking point.

Seeing that the US couldn’t possibly pay back its issued IOUs as promised, Nixon decided to… not do that, and just cancelled their validity unilaterally, as has already been stated. This had a number of effects: first, it caused currencies to start floating against each other, rather than all being tied to the dollar which was in turn tied to gold. Second, it allowed the US to start printing dollars like there was no tomorrow, and encouraging other countries to buy as much as they could, to just stockpile US Dollars.

This also happened, and is known as currency reserves. The USD, being the world’s dominant currency, holds two immense advantages of being held in currency reserves: first, each dollar bought and stockpiled in a non-US country is one dollar that gave the US citizens (or government) that purchasing power against other nations for free. (If I print money for fun that you buy with your money, I can use your money to buy your shiny things.) The second is the status of being the world’s international trade currency, meaning that if I want to buy something from you in China, I need to first buy US Dollars with my money, and then exchange those US Dollars for your goods that I want.

These two mechanisms create an external demand for the US Dollar that props up the United States’ grotesque overconsumption and feeds its ridiculously oversized military. (How grotesque is the overconsumption, you ask? The US federal deficit is 50%. For every two dollars the US Government spends, one of them needs to be borrowed from somewhere.) This deficit is absorbed by countries that stockpile an increasing number of US Dollars in their currency reserves, predominantly in east Asia. This group of countries has been derogatorily called ODIC, Organization of Dollar-Importing Countries.

We observe here, that if another currency should begin to threaten the dominance of the USD in key international trade, the currency reserves would be rebalanced to reflect that fact. It would not merely cause less US overconsumption to be absorbed – rebalancing currency reserves would mean that countries started selling USD instead of just not buying, replacing a portion of their USD holdings with something else. Seeing how precarious the US financial situation is, this could well set off a selloff avalanche that would re-balance the USD down to a fraction of today’s value. In economic terms, this is called a “correction”. (I’ve written a previous piece on this that’s easy to read.) Such an avalanche would be the definite end of the United States as a superpower and largely mirror the collapse of the Soviet Union, which was similarly overextended. It would also bring a lot of suffering to the already-overexploited middle and lower economic classes in the US.

So, back to Iraq and the United States invasion. What could Iraq possibly have done from the other side of the planet that warranted a global campaign of lies to build political support for a military invasion that still kills people, one decade later? Why was it rational for the US Administration to spend one trillion or so dollars – more accurately described as “a shitload of money” – on going to war with a small country on the other side of the planet, one that had nothing at all to do with the September 11 attacks? On observing the facts on the table, it was perfectly rational to do so, all the deaths and suffering notwithstanding. It was likely a matter of life and death for the US as a nation:

Iraq had suddenly started selling its oil for Euros instead of for US Dollars.

The United States invaded three years later, which was about the necessary time to build public global opinion (based on false pretexts, also technically known as “lies”, about weapons stockpiles) for a full-scale ground invasion. It also had considerable help from the lack of nuance following the September 11 attacks in 2001 in pushing aggression against a country that was unrelated to those attacks.

Predictably, after the invasion was over, one of the very first actions taken by the interim US-led administration was to revert to selling oil in US Dollars instead, closing the circle and ending the imminent threat to the United States’ existence as a superpower.

Obviously, it could be asked why I’m bringing this up now. I’ll be following up with articles related to this topic – but it has to do with bitcoin, the yuan, Iran and its similar position, and the overall global financial crisis bubble. Hint: Iran is already selling oil in yuan and is moving ahead with a Euro-based stock exchange in Tehran.

Via: "Falkvinge"

Is The World Abandoning The U.S. Economy?

By Brandon Smith,
Courtesy Of "Alt-Market"

... there is no such thing as an invincible economy, especially if it is predicated on overt debt creation, fiat printing, and reckless foreign policy.  When it comes down to the raw data, the American system is just as fragile as any corrupt third world shanty-town nation.  

The possibility of a U.S. without financial hegemony is very real.  To understand that this possibility exists is one thing; to understand that the process of destabilization has already begun is another.  Many analysts with their heads stuck in the mainstream clouds attempt to argue against the “theory” of foreign markets decoupling from the U.S., not realizing that their entire debate platform is pointless because the decoupling is happening right under their noses…  

The recent press covering the ongoing plan by BRIC nations (or “BRICS” if you count the latest bilateral agreements with South Africa) to establish their own supranational banking hub merely highlights the fact that developing countries are not simply “talking” about decoupling from the United States, they are taking actions to make it happen:

http://www.bloomberg.com/news/2012-10-16/goldman-sachs-s-o-neill-sees-brics-bank-gathering-momentum-1-.html

The response from mainstream financial analysts is, of course, that the project for a BRIC bank will fail.  Their argument, however, usually revolves around the assumption that this new central bank is designed to “compete” with the IMF, and is a merely an overreaction to the IMF and World Bank’s failure to give developing nations more inclusion in decision making processes.  I see no evidence that the BRICS are trying to create a counter-system which would conflict with IMF control.  Instead, it would seem that the BRICS are much more interested in forcing the issue of greater inclusion, and garnering greater favor within the already existing IMF structure:

http://www.reuters.com/article/2012/04/19/imf-idUSL2E8FJ90K20120419 
Last year the G20 discussed heightened participation by China and the BRICS in the IMF’s global basket currency, the SDR.  French Finance Minister and later “elected” IMF chief Christine Lagarde agreed with the idea while stating that certain conditions, including appreciation of the Yuan’s value, would have to take place:

http://www.bbc.co.uk/news/business-12905205

Contrary to the belief that the BRICS are building opposition to the IMF, China has on several occasions called for the EXPANSION of the IMF’s power, as well as widespread circulation of the SDR:

http://www.businessweek.com/news/2011-11-03/chinese-president-hu-calls-for-reform-of-imf-sdr-currency-basket.html 

How have the MSM talking heads missed this trend?  Simply put:  Bias, controlled and pre-written talking points from their editors, as well as many half-baked presumptions.  The popular belief amongst financial academia is that the IMF is a product of American economic might, and that the organization will do whatever is in the best interests of the U.S. at all times.  The reality is that the IMF is fast becoming the central authority of economic operations around the globe, and America just happens to be paying the largest “tithe” to the respective coffers of the banking syndicate.  Do you get more control in the operations of the IRS when you pay more taxes?  

The IMF’s goal is world centralization of economic control.  For them, any sovereign nation is expendable in pursuit of the end game, including the United States.  The IMF would not be pushing the issuance of a new world reserve currency to unseat the dollar if they did not intend to follow through, and they certainly would not hobble the greenback if they cared in the slightest about American economic concerns.     

Rather than running counter to the IMF, BRIC partners and the newly realized ASEAN bloc are making themselves indispensible to the globalists, ensuring wider partnership in the near future.  A BRIC central bank is, I believe, a bargaining chip to be used to open the door to more leadership in the IMF while reducing American influence.  To summarize, the BRICS are not in conflict with the IMF, rather, they are in conflict with the U.S., and this conflict is coming to a climax…

Trade amongst BRIC nations continues to climb while exports to the U.S. have diminished.  Between 2001 and 2009, exports and imports between BRICS skyrocketed, even amidst the derivatives collapse:

http://www.bbc.co.uk/news/business-13046521

Last year, ASEAN overtook Japan as China’s third largest trading partner.  With the announcement of increased participation by Japan in the ASEAN bloc this year, the economic body looks poised to eclipse the U.S. and perhaps even the EU as China’s primary source of export and import business:

http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/1197997/1/.html

Meanwhile, overall exports around the world have dropped for five consecutive months in 2012 on slowing demand in the West.   The expectation of a massive resurgence in consumer demand from the U.S. has been proven unfounded, while the recession in the EU is exacerbating the downturn.  U.S. exporters, who not long ago held dreams of foreign buyers clamoring for goods in the midst of Federal Reserve inflation and dollar devaluation, have discovered that they are instead floundering:

http://www.nytimes.com/2012/10/23/business/global/chinas-slowing-economy-puts-pressure-on-american-exporters.html?pagewanted=all&_r=1&

The mainstream claim is that this is due to a breakdown in general Chinese demand, but with exponential bilateral trade deals (many of which cut out the U.S. dollar completely as a reserve currency) being made between China and major producing and consuming countries, it is clear that this is not just a demand issue in China; it is an ongoing process of removal of the U.S. from the trading picture.  That is to say, China is deliberately reducing purchases of U.S. goods and turning towards BRIC and ASEAN partner countries to fill the void.  This may be the reason why China recently surpassed the U.S. as the top sanctuary for foreign investment:

http://online.wsj.com/article/SB10001424052970203406404578074683825139320.html?mod=asia_home 

A Treasury report on China’s status as a “currency manipulator” already due but now delayed until after the elections may become the catalyst for the final phase of the global shunning of American markets.  With China being presented as a primary issue during the presidential debates, it would seem that regardless of who “wins” the election there will be strain applied to Chinese trade relations.    

China’s incredible gold buying extravaganzas over the past few years (including an estimated 500 tons in 2011 and another 500 tons so far in 2012) indicate that they are indeed hedging against what they obviously expect will be devaluation in the dollar or multiple currencies around the world including the dollar.  India continues its long tradition of gold buying, while Russia is now increasing its reserves by half-a-billion dollars a month.  These are the actions of countries getting ready for a break in the financial system, not a recovery, and certainly not a return to the old days of American consumer bliss.

The argument over whether or not the BRICS and the rest of the world can drop the U.S. economy and move onward has, ultimately, been rendered obsolete.  Many will claim that a decoupling is impossible, but the fact remains that a decoupling is taking place.  The consequences of this fiscal divorce remain to be seen, and the mainstream could very easily predict disaster for the BRICS.  The real question they should be asking themselves, though, is which countries are better placed to survive such an event?  Is the U.S. economy really built to withstand a loss of the dollar as the world reserve currency?  Is the U.S. prepared for plummeting foreign investment and a reduction in its already dismal production capacity (production taking place by Americans on American soil, that is)?  Is the U.S. really ready for extreme inflation in imported goods (most of the goods we consume)?  Who really needs who more?  It is time for the pundits and average Americans alike to set aside their commercialized and subsidized fake patriotism and question how strong our economy truly is.  To ignore vast weakness today, is to feel vast pain tomorrow…

So Long, US Dollar

The Media Won't Touch This Story About The End Of The US Dollar

By Marin Katusa
Source: "Casey Research"
May 01, 2012
Courtesy Of "Information Clearing House"

There's a major shift under way, one the US mainstream media has left largely untouched even though it will send the United States into an economic maelstrom and dramatically reduce the country's importance in the world: the demise of the US dollar as the world's reserve currency.

For decades the US dollar has been absolutely dominant in international trade, especially in the oil markets. This role has created immense demand for US dollars, and that international demand constitutes a huge part of the dollar's valuation. Not only did the global-currency role add massive value to the dollar, it also created an almost endless pool of demand for US Treasuries as countries around the world sought to maintain stores of petrodollars. The availability of all this credit, denominated in a dollar supported by nothing less than the entirety of global trade, enabled the American federal government to borrow without limit and spend with abandon.

The dominance of the dollar gave the United States incredible power and influence around the world… but the times they are a-changing. As the world's emerging economies gain ever more prominence, the US is losing hold of its position as the world's superpower. Many on the long list of nations that dislike America are pondering ways to reduce American influence in their affairs. Ditching the dollar is a very good start.

In fact, they are doing more than pondering. Over the past few years China and other emerging powers such as Russia have been quietly making agreements to move away from the US dollar in international trade. 

Several major oil-producing nations have begun selling oil in currencies other than the dollar, and both the United Nations and the International Monetary Fund (IMF) have issued reports arguing for the need to create a new global reserve currency independent of the dollar.

The supremacy of the dollar is not nearly as solid as most Americans believe it to be. More generally, the United States is not the global superpower it once was. These trends are very much connected, as demonstrated by the world's response to US sanctions against Iran.

US allies, including much of Europe and parts of Asia, fell into line quickly, reducing imports of Iranian oil. 

But a good number of Iran's clients do not feel the need to toe America's party line, and Iran certainly doesn't feel any need to take orders from the US. Some countries have objected to America's sanctions on Iran vocally, adamantly refusing to be ordered around. Others are being more discreet, choosing instead to simply trade with Iran through avenues that get around the sanctions.

It's ironic. The United States fashioned its Iranian sanctions assuming that oil trades occur in US dollars. That assumption – an echo of the more general assumption that the US dollar will continue to dominate international trade – has given countries unfriendly to the US a great reason to continue their moves away from the dollar: if they don't trade in dollars, America's dollar-centric policies carry no weight! It's a classic backfire: sanctions intended in part to illustrate the US's continued world supremacy are in fact encouraging countries disillusioned with that very notion to continue their moves away from the US currency, a slow but steady trend that will eat away at its economic power until there is little left.

Let's delve into both situations – the demise of the dollar's dominance and the Iranian sanction shortcuts – in more detail.

Signs the Dollar Is Going the Way of the Dodo

The biggest oil-trading partners in the world, China and Saudi Arabia, are still using the petrodollar in their transactions. How long this will persist is a very important question. China imported 1.4 million barrels of oil a day from Saudi Arabia in February, a 39% increase from a year earlier, and the two countries have teamed up to build a massive oil refinery in Saudi Arabia. As the nations continue to pursue increased bilateral trade, at some point they will decide that involving US dollars in every transaction is unnecessary and expensive, and they will ditch the dollar.

When that happens, the tide will have truly turned against the dollar, as it was an agreement between President Nixon and King Faisal of Saudi Arabia in 1973 that originally created the petrodollar system. 

Nixon asked Faisal to accept only US dollars as payment for oil and to invest any excess profits in US Treasury bonds, notes, and bills. In exchange, Nixon pledged to protect Saudi oilfields from the Soviet Union and other potential aggressors, such as Iran and Iraq.

That agreement created the foundation for an incredibly strong US dollar. All of the world's oil money started to flow through the US Federal Reserve, creating ever-growing demand for both US dollars and US debt. Every oil-importing nation in the world started converting its surplus funds into US dollars to be able to buy oil. Oil-exporting countries started spending their cash on Treasury securities. And slowly but surely the petrodollar system spread beyond oil to encompass almost every facet of global trade.

The value of the US dollar is based on this role as the conduit for global trade. If that role vanishes, much of the value in the dollar will evaporate. Massive inflation, high interest rates, and substantial increases in the cost of food, clothing, and gasoline will make the 2008 recession look like nothing more than a bump in the road. This will be a crater. The government will be unable to finance its debts. The house of cards, built on the assumption that the world would rely on US dollars forever, will come tumbling down.

It is a scary proposition, but don't bury your head in the sand because countries around the world are already starting to ditch the dollar.

Russia and China are leading the charge. More than a year ago, the two nations made good on talks to move away from the dollar and have been using rubles and renminbi to trade with each other since. A few months ago the second-largest economy on earth – China – and the third-largest economy on the planet – Japan – followed suit, striking a deal to promote the use of their own currencies when trading with each other. The deal will allow firms to convert Chinese and Japanese currencies into each other directly, instead of using US dollars as the intermediary as has been the requirement for years. China is now discussing a similar plan with South Korea.

Similarly, a new agreement among the BRICS nations (Brazil, Russia, India, China, and South Africa) promotes the use of their national currencies when trading, instead of using the US dollar. China is also pursuing bilateral trades with Malaysia using the renminbi and ringgit. And Russia and Iran have agreed to use rubles as a means of currency in their trades.

Then there's the entire continent of Africa. In 2009 China became Africa's largest trading partner, eclipsing the United States, and now China is working to expand the use of Chinese currency in Africa instead of US dollars. Standard Bank, Africa's largest financial institution, predicts that $100 billion worth of trade between China and Africa will be settled in renminbi by 2015. That's more than the total bilateral trade between China and Africa in 2010.

The idea of moving away from the dollar is also finding support from major international agencies. The United Nations Conference on Trade and Development has stated that "the current system of currencies and capital rules that binds the world economy is not working properly and was largely responsible for the financial and economic crises." The statement continued, saying "the dollar should be replaced with a global currency." The International Monetary Fund agrees, recently arguing that the dollar should cede its role as global reserve currency to an international currency, which is in effect a basket of national currencies.

There is also a host of countries that have started using their own currencies to complete oil trades, a move that strikes right at the heart of US-dollar dominance. China and the United Arab Emirates have agreed to ditch the dollar and use their own currencies in oil transactions. The Chinese National Bank says this agreement is worth roughly $5.5 billion annually. India is buying oil from Iran with gold and rupees. China and Iran are working on a barter system to exchange Iranian oil for Chinese imported products.

Speaking of Bartering for Oil… How about Those Iranian Sanctions?

The United States and the European Union based their Iran sanctions on the financial system behind Iran's oil trade. The country uses its central bank to run its oil business – the bank settles trades through the Belgium company Swift (Society for Worldwide Interbank Financial Telecommunication) and the trades are always in US dollars. Once they take full effect in July, US and EU sanctions against Iran will make transactions with the Iranian central bank illegal. When that occurs, this official avenue of trade will shut down. In fact, Iran was shut out of Swift a few weeks ago, so that road is already blockaded.

But the arrogance in the sanctions is the assumption that Iran can only use this one, dollar-based avenue. In reality, the Islamic Republic is considerably more agile than that; removing its ability to trade in the official manner is only encouraging the country to find imaginative new methods to sell its oil.

Since the sanctions were announced, Tehran's official oil sales have certainly declined. Iran actually preemptively halted oil shipments to Germany, Spain, Greece, Britain, and France, which together had bought some 18% of Iran's oil. But covert sales have curbed or perhaps even reversed the reduction in shipments. It is impossible to know the details, as buyers and sellers involved in skirting the sanctions are being very discreet, but the transactions are undoubtedly happening.

As mentioned above, Iran is selling oil to India for gold and rupees. China and Iran are working on a barter system to exchange Iranian oil for Chinese imported products. China and South Korea are also quietly buying Iranian oil with their own currencies.

The evidence? Millions of barrels of Iranian oil that were in storage in Iranian tankers a few weeks ago now seem to have disappeared. Officially, no one knows where the oil went. Was it rerouted? Has production been shut in? Is the oil being stored elsewhere?

Oil is fungible, which means one barrel of crude is interchangeable with another. Once it leaves its home country, it can be nearly impossible to know where a barrel of oil originated, if its handlers so desire. And it's not just barrels that are hard to track – even though oil is carried on ships so large they are dubbed "supertankers" it is surprisingly difficult to keep tabs on every tanker full of Iranian oil.

And the Iranians are using every trick in the book to move their oil undetected. In the last week it became apparent that Tehran has ordered the captains of its oil tankers to switch off the black-box transponders used in the shipping industry to monitor vessel movements and oil transactions. As such, most of Iran's 39-strong fleet of tankers is "off radar." According to Reuters, only seven of Iran's Very Large Crude Carriers (VLCCs) are still operating their onboard transponders, while only two of the country's nine smaller Suezmax tankers are trackable.

Under international law ships are required to have a satellite tracking device on board when traveling at sea, but a ship's master has the discretion to turn the device off on safety grounds, if he has permission from the ship's home state. Some tankers turned off their trackers to avoid detection last year during the Libyan civil war in order to trade with the Gaddafi government.

And Iran is about to gain even greater flexibility in disguising the locations of oil sales, as the National Iranian Tanker Company (NITC) is about to take delivery of the first of 12 new supertankers on order from China.

The new tankers will add much-needed capacity to NITC's fleet at a time when the number of maritime firms willing to transport Iranian crude has dwindled significantly, forcing Iran's remaining buyers to rely on NITC tankers. Thankfully for NITC, the 12 new VLCCs – each capable of transporting two million barrels of crude – will significantly expand the company's current fleet of 39 ships.

Sanctions or no sanctions, Iran is moving its oil. But even having your own, off-radar ships to transport oil bought in renminbi or rupees or won doesn't mean all these tricks and maneuvers don't have a cost.

Freight costs for each voyage add up to nearly $5 million, a sizable hit for Tehran. Iran is often also shelling out millions of dollars in insurance for each oil shipment, because the majority of international shipments are insured through a European insurance consortium that is backing away from Iranian vessels because the EU sanctions will make such transactions illegal.

And since business is business, buyers are also demanding much better credit terms from the National Iranian Oil Company (NIOC) than normal. Traders are reporting agreements giving the buyer as much as six months to pay for each two-million-barrel cargo, a grace period that would cost Tehran as much as $10 million per shipment.

For Tehran to cover freight costs, insurance, and the cost of generous credit terms wipes out as much as 10 percent of the value of each supertanker load. Beyond that, customers are also negotiating better prices. For example, the flow of Iranian oil to China did slow in the first quarter of the year, but not because China endorsed the sanctions. Rather, Chinese refiner Sinopec reduced purchases to negotiate better prices with the National Iranian Oil Company. The country's imports from Iran are expected to climb back to the 560,000 barrel-per-day level in April.

That trade, along with non-dollar-denominated deals with India, Turkey, Syria, and a long list of other friendly nations, will keep Iran's finances afloat for a long time. The sanctions may be preventing Tehran from banking full value for each tanker of oil, but there is still a lot of Iranian oil money flowing.

The mainstream media is avoiding all discussion of the demise of the US dollar as the world's reserve currency. Even fewer people are talking about how sanctions based on Iran's supposed need to use the US dollar to sell its oil leave loopholes wide enough for VLCCs to sail right through.

Without acknowledging the elephant in the room, articles about Iranian tankers turning off their transponders or India using gold to buy Iranian oil invariably sound like plot developments in a spy thriller. Much more useful would be to convey the real message: The world doesn't need to revolve around US dollars anymore and the longer the US tries to pretend that the dollar is still and will remain dominant, the more often its international actions will backfire.

[The end of dollar dominance is a very ominous sign for the US economy… especially since the federal government seems to be ignoring this enormous elephant. Ignore it at your peril – or get advice from over 30 financial experts that will help you thrive during the tumultuous times ahead.]

Marin Katusa, an accomplished investment analyst, is the senior editor of Casey Energy Opportunities, Casey Energy Confidential, and Casey Energy Report.