Saudi Arabia and Warfare Economics

Frank Gaffney spoke to Kevin Freeman yesterday about overseas developments which could significantly affect the U.S. dollar. Freeman is the Founder and CEO of Freeman Global Investment Council and can speak to these issues quite well.

Saudi Arabia recently made a not-so-thinly veiled threat against the dollar recently. Freeman explained:

“The Saudis have given a very overt threat, They’ve stated that if we continue to delve into the idea that there are 28 pages in the 9/11 Commission report that they likely implicate the Saudis, that could open up the possibility for Americans to sue Saudi Arabia for their role in the 9/11 catastrophe. And they’ve said if you do that then we will dump our $750 billion in treasury holdings on the open market.”

Freeman went on to suggest that if the Saudis pulled this off it would collapse the petro-dollar which has kept the U.S. dollar the reserve currency for decades.

At the same time, China is suddenly talking about creating a gold-backed Yuan. One usual suspect, namely Vladimir Putin, may have had a hand in that. Freeman said:

“This is something Vladimir Putin’s had in mind for a long time, he’s pushed the Chinese. In 2013, the Chinese said we should de-Americanize the world and dump the dollar as reserve currency and if the Saudis are joining, that is a very significant thing.”

The dumping of the petro-dollar would have far reaching implications. Freeman put the situation in stark terms:

“No nation in the history of the world has had a $20 trillion dollar debt and that’s where America finds itself very soon. We have $19 trillion and it’s adding up every minute. At $20 trillion dollars of debt, we need external buyers of that debt in order for us to continue to fund our government… If Saudi and China both turned against the dollar, the demand for dollars would diminish, which means demand for treasuries diminish, which means it’s harder to fund our debt and eventually that spirals down and the only way to pay our debt is to print more money and that’s hyper-inflation.”

Gaffney asked Freeman what we as a nation should be doing about this global economic war from the Saudis and others.  Freeman said our energy independence is key:

“That is what scares them the most, the fact that we can frack and produce oil and become the world’s largest oil producer just shocks them. We can remove their economic leverage at any point and we can do that as a matter of law because we can open up federal lands that could be exploited for energy opportunities.”

Energy independence would be a great thing for America.