The world's population will likely grow to 10 billion people by the end to the century, and their energy requirements will grow much, much faster. Today two-thirds of all people are still poor and consume little energy. As they approach a Western standard of living, they're going to want more than they have now of the things you and I take for granted.
Improvements in the efficiency of renewable or sustainable energy, mainly solar and wind, will likely become economical. But in the foreseeable future, there is no remotely practical substitute for the high-density energy of fossil fuels.
The Second Law of Thermodynamics states, in essence, that without continual energy, all systems wind down. The Second Law is always there, grinding away. And over the coming generation, the companies and countries that control fossil fuels are going to have more influence on the rest of the world than they ever had before.
Energy is what makes the world go round.
For most of the past 60 years, the United States has prospered, largely because it has dominated the energy market but also because it issues the currency in which energy and other resources are traded. However, U.S. strength has been ebbing in the "Colder War" as Vladimir Vladimirovich Putin positions himself for the final push. While the United States dithers over green energy, Russia has a Putin in its tank.
Today, Russia and China are encouraging the abandonment of the dollar by developing international trade facilities that operate without touching U.S. currency.
Other countries are following the lead given by Russia and China. Also the BRICS countries (Brazil, Russia, India, China, and South Africa) took a huge step toward autonomy at an economic summit in Fortaleza, Brazil in July 2014. What currencies will be involved are not yet known, but these five countries are clearly moving to disengage from the Bank for International Settlements (BIS) and the International Monetary Fund (IMF)--both of which are subject to the dollar's current dominion.
Those unhappy with U.S. over involvement in world affairs are inspired to discover ways to escape dependence on the dollar. The United States intended to demonstrate to the world that it still carried the biggest stick. Instead, it has shown that getting whacked with the stick needn't hurt that much. U.S. sanctions against Russia for its involvement in Ukraine are having the same perverse effect on the dollar as sanctions against Iran.
Putin and his allies are embarked on a mission to sabotage the petrodollar. You now know this, and you know its importance.
Three factors argue persuasively that the undoing of the dollar will be comparatively abrupt and disturbing.
First, in its heyday, Britain ruled a vastly different world. Today, there are multiple centers of financial power--including Russia, China and Brazil--with the technical ability to build dollar-less systems.
Second, ubiquitous computing capacity will make it easier to leave the dollar.
Third, the volume of the assets that will be shunned will be unprecedented. The United States slipped away from the gold discipline in 1971. Since then, exporting dollars and dollar-denominated IOUs has been a major industry. The volume of dollar assets that foreigners will be shifting away from will be much bigger and will move like a landslide.
For the United States, self-restraint hasn't been part of the program, and now, reasonably or not, the world is full of resentment. As the need for U.S. currency declines, the resentful will find dumping the dollar entirely agreeable, a satisfying exercise in passive aggression.
None of this is yet inevitable.
In fact, the recipe for the United States to avoid it is not all complex. The solution is still available. And it is simple, but brutally so.
Expect more conflict between Russia and the West. And expect the conflict to make access to energy and other resources even more valuable than it is today. Understanding that fact is the key to profiting from Putin's vision.
Source: Marin Katusa: The Colder War: How the Global Energy Trade Slipped from America's Grasp
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