A new world economy

-- Here we can see the new world economy forming. It's clear that the dollar is collapsing, so people and governments throughout the world are moving to a new system involving barter and other currencies. As we saw from this article yesterday, Iran is creatively finding many ways to circumvent the sanctions, and the fact that so many entities cooperate speaks volumes. -- Rice Farmer

-- What is happening is that the United States, believing itself to be flexing muscle, is actually hastening the demise of the dollar by pushing the entire world into "System D" faster. It either has become, or will become, less expensive -- all things considered -- to function outside of dollar hegemony, which no longer really exists. There are major new economic trends revealing themselves on the World News Desk. -- MCR

And if I take a step back I can see TPTB orchestrating this in the same way that QEII brought on massive inflation. If I had my bets I'd guess that the Clintons and the Bushes moved their assets out of dollars a long time ago, and are profiting from this shift of power. The tension over Iran is masking a great shift in economic power. The U.S. empire looks pretty-well defeated to me. -- MCR

Barter system and the new bi-lateral trade currency

By Deepak Rangan

Commodity Online, 

9 Febraury, 2012

Before governments and currencies, trade was done through the barter system- the exchange of goods. Introduction of currencies enabled a common denominator by which goods could be more easily valued, thus currencies became the medium of exchange.

The US Dollar is currently the world reserve currency. But as countries across the world find it difficult to accommodate certain US demands and are barred from using its financial system, they have to find out a medium of exchange- be it their respective national currencies or commodities.

The recent US-Iran dispute over the Middle East nation's alleged nuclear development programme had led to the US implementing financial sanction on Iran- which ultimately meant that countries who used to import oil from Iran suddenly found out that they could not pay for its oil.

India and Iran faced a similar problem and a recent arrangement between the two nations gives us an indication of a possible future where governments can engage in a system of barter exchange without succumbing to international pressures.

The new deal between India and Iran

As per the new arrangement, India will pay 45% of Crude Oil imports in Indian Rupees and Iran can use the Rupee payments for buying Indian products like machinery,metals, food etc.

Essentially what this does is that it takes the US Dollar away from being the sole medium of international exchange and instead, two countries can trade on one national currency and the nation receiving the currency can use the same for purchasing goods from the other country.

To simplify, just look at India-Iran deal. India buys oil from Iran. India pays Iran in Indian Rupees. Iran uses the Rupee to buy goods from India. Thus throwing the US Dollar out of the picture. In effect, the two countries are engaging in a barter system with the sole difference being that two countries use one of their currency as a medium of exchange.

With dissent in the international community growing, the US dollar faces the threat of extinction in the future. Especially if the US demands other countries to act according to its desires. And even though the India-Iran deal may just be a small step, it also gives us a peek into the future- a future where countries can engage in free trade without its interests being held hostage by the demands of any country.