In the last few articles, an attempt has been made on this site to explore some real world scenarios that may be taking place behind the scenes in regards to cold fusion and how government and otherwise influential entities, like corporations and the military, may be responding to the increasing body of evidence that cold fusion/LENR has not been debunked and in fact its existence is supported by an ever growing amount of evidence, and being confirmed by a wider and wider group of scientists and researchers. If you have not read Tom Baccei’s previous articles that explore such scenarios, they can be found here and here. These have been attempts to explain why in spite of the growing evidence (actually undeniable if one takes the time to review the evidence contained on this site and elsewhere, especially lenr-canr.org), the defining moment where the reality of this technology becomes apparent to the masses continues to be elusive. NASA’s January 12 LENR video was very nearly the push that was needed to take this subject out of the shadows. It actually succeeded but only for a very brief time. Below are two charts related to LENR searches on Google. The first chart plots Google searches for the term LENR from 2004 to the present. The second chart plots Google searches for the term NASA LENR from 2004 to the present.
As one can see, searches for both terms spiked around the time of the NASA video, then subsequently plummeted after a statement released by NASA’s Joseph Zawodny the following day in which he feverishly backpedaled in attempt to distance both himself and NASA from years of research and public statements, the bulk of which can be found here. Yet, as disappointing as this backpedaling from NASA was, it is not the first time that this has happened. It is not the first time some great announcement or event surrounding cold fusion has been made or expected, only to ultimately disappear in a cloud of WTF. The first of course was the now infamous announcement of Pons and Fleischmann in 1989, but in the past year alone there have been several such events. These included Andrea Rossi’s anti-climatic October 28 e-Cat “test”, which was made private at the proverbial “last minute,” the actual last minute cancellation of Dr. Brian Ahern’s public LENR presentation in December, and the public proclamations of Dr. George Miley in October that his LENR device was approaching commercialization, followed by the disbanding of his research group just two months later. There was also the revelation that the LENR research of the US Navy’s Space and Naval Warfare Systems Command (SPAWAR) was being discontinued right around this same time.
Mr. Baccei has outlined possible reasons and scenarios for these apparent cold fusion mirages. He has explored the idea that advent of cold fusion may well produce a level of instability that the ultra-rich and powerful find uncomfortable, to say the least. He has also touched on the possible role the military may reasonably play in keeping this technology “quiet,” at least in the short term.
I would now like to touch on another possible reason for the cold fusion disappearing act. This reason involves the relationship of the US dollar to oil. It has often be speculated that cold fusion, or any technology that competes to supply the world’s energy needs, would be opposed by Big Oil. I really don’t think that is speculation; on the contrary, I think that is fairly obvious that Big Oil would not welcome cold fusion with open arms. I think one would have to be extraordinarily naïve to think otherwise. However, that is not particular issue I have in mind. The relationship of the US dollar and oil goes way beyond what is obvious.
To explain, let me provide an historical background. Up until the early 1970s the currency of the United States was backed by gold, accordingly to the Bretton Woods agreement of the 1940s. The system created by this agreement was an attempt to standardize and stabilize currencies around the world for the sake of international trade, rebuilding of nations following World War II and to prevent some of the circumstances that had resulted in the Great Depression. Under this international agreement, the value of the US dollar was linked to the value of gold. In turn, the value of other international currencies were linked to the dollar accordingly to agreed upon exchange rates. While this system had its critics even at its inception, it did prove to be of great utility to help stabilize the world economy after the calamity of The Great Depression and the Second War War.
In the early 1970s, this arrangement began to become problematic for the United States. It was mired in a long and costly war in Vietnam, the national debt was increasing at an alarming rate, and unemployment and inflation were on the rise. Other nations that were part of the Bretton Woods agreement began to become concerned about the health of the US economy and many began to ask that loaned monies be repaid in the form gold, which the US was obligated to accommodate according to the agreement. As a result, US gold reserves were rapidly diminishing. In response to this, in August of 1971 President Richard Nixon and his advisors decided to implement a variety of economic policies that would subsequently become known as the Nixon Shock. It was so named because the plan was devised and implemented by a small number of men in the executive branch of the US government without the knowledge of the US Congress, business leaders, the American people or any of its allies, and included a decree that the US would no longer honor its obligation to repay its debts in gold accordingly to terms of the Bretton Woods. Obviously, this radical plan came as a shock to the rest of the world when it was actually announced. Some familiar with the proceedings of the inner circle of the Nixon White House reported that it actually took longer to decide when to announce this new plan to the world than it did to devise the plan itself, as it architects knew that it would be unsettling to the world at large. While other nations had already broken the Bretton Woods agreement out of concern for the US’s ability to repay its debts, the sudden withdrawal of the US from this agreement as the principal party basically made the agreement null and void.
As a result of the abandonment of Bretton Woods, all currencies became fiat currencies, based in essence on nothing more than the written promises of the issuing government. The value of many international currencies remained intertwined through a complex system of exchange rates, as before, but now the base of these exchange rates was based on something much less definite then the price of gold. It needs to be pointed out that the price of gold at that time was not as volatile as it is today and had remained relatively stable over a long period of time. A rise in the price of gold from $35/ounce to $40/ounce (roughly 15%) had caused some in the Nixon Administration to panic but this rise had come after a long period of stability in the price of gold and a rise of 15% is small in comparison the volatility of today’s gold market.
It was shortly after the Nixon Shock that the value of the US dollar became intimately linked with oil. With the US currency no longer fixed to something tangible, like the price of gold, and the Bretton Woods agreement now in shambles, the dollar needed something of value to make it competitive with the currencies of other nations who had much better economic fundamentals in terms of inflation, employment, debt, etc., and with which the dollar now had to compete with on the open market. As a result, in 1973 President Nixon reached an agreement with Saudi Arabia whereby that nation would only accept US dollars as payment for oil. The Saudis also agreed to invest any excess profits in US Treasury bonds, notes, and bills, the instruments by which the US Government finances its debt. In exchange, the US agreed to protect the Saudi oil fields from hostile entities including the then Soviet Union. By 1975 all of the members of OPEC had agreed to sell their oil only in US dollars. So in essence, by the mid-1970s the US had gone from backing the dollar with gold to backing it with “black gold“ or oil. This agreement with the Saudis and subsequently with all of OPEC made the dollar the reserve currency for oil. As a result every oil-importing nation now had to have US dollars in order to buy oil. This made the dollar a valuable commodity in and of itself.
This arrangement remains in effect to this day, despite the fact that US not only continues to carry a large debt load but now that debt is the highest it has been in history. How big is the US debt load? I really cannot explain it adequately in detail in the confines of this blog but the illustration below explains it in the simplest terms possible.
In other words, if the US Government were a person or family, it would seriously be looking at claiming bankruptcy about now. In fact, it would have no choice…save for the role of its currency in the trade of the world’s most valuable commodity, oil. By the same token, if oil were to suddenly lose its importance in the scheme of world trade, then its value would drop precipitously and the value of the US dollar would follow. Almost all value the US dollar holds would be lost and, like Cinderella at midnight, it would turn into a pumpkin.
So, in light of the above, one can see that if cold fusion were ever proven to be true beyond all doubt to the masses, it may have serious consequences for the financial system of the United States, and perhaps much of the industrialized world. The US by virtue of its monetary policy may have well painted itself into a corner. Given the dollars intimate relationship with oil, they may not be able to widely implement cold fusion technology, or any revolutionary energy technology, even if were desirous to do so on a variety of other levels.
Yet, there are some important factors to point here. Oil is not the only commodity in the world for which the US dollar is held as the reserve currency. The US serves this purpose for a wide range of products and commodities; however, oil is still the most important commodity for which the dollar holds this status and it holds this status largely because it remains the exclusive currency for oil trade. So, if oil were to become less important in view of the advent of a new energy technology like cold fusion, a drop in the value of US dollar may not be immediate, although it may ultimately be inevitable.
There has been increasing dissatisfaction from many corners of the globe over recent years over the dollars status as a reserve currency, especially amongst the so-called BRIC nations (Brazil, Russia, India and China), with these emerging economic powers feeling increasingly uneasy about the dollars lofty status, especially in view of its enormous public debt. This means that the undercurrent to move away from the US dollar has already begun and the United States already had to start considering the prospect that the dollar may eventually lose its value as a reserve currency. There have been low-level meetings amongst the BRIC powers to discuss alternatives to the dollar in regards to world trade generally and the trade in oil specifically. However, so far the United States has been able to keep this attempt to move away from the dollar largely at bay through a combination of diplomacy and its more unpleasant cousin, i.e. threats of retaliation in the form of economic trade, etc. How long the US will be able to keep the dollar’s detractors at bay remains to be seen and, as a US citizen, HOPEFULLY US leaders have begun to devise a strategy to meet this challenge…preferably a plan that does not involve a unilateral economic “shock.”
So far only two oil exporting nations have openly defied the “dollars only for oil system,” those being Iraq and Iran. The US invaded Iraq in 2003 and is rattling the sword against Iran as this article is being written. It has long been argued that the Iraq War and the impending war with Iran are about oil and the “weapons of mass destruction pretense” is an overblown one. This may well be true and, if it is, the real issue regarding oil is more about its value in propping up the US dollar and the real “weapon of mass destruction” is attempting to lead the world away from the dollar as the oil reserve currency. Iraq certainly had no trouble exchanging its oil directly for food, medical supplies and other commodities with a variety of nations, including those of the EU, in the years prior to the US invasion. Right now Iran is negotiating similar arrangements with two of the BRIC nations, India and China, the two most populous nations on the planet and two nations whose economies and energy demands are expanding rapidly.
I think that it is also important to point here that both India and China have an interest in cold fusion research. India has long been actively researching cold fusion since its first announcement in 1989. Dr. George Miley, who I mentioned at the beginning of this article, is associated with a prominent Chinese university and holds a similar position at that institution as he does at the University of Illinois. One has to wonder that if he cannot finding funding and support for his cold fusion cell in the United States, if the Chinese might be willing to step in. Perhaps that already has occurred. Professor Xing Zhong Li of China’s Tsinghua University is a member of the Cold Fusion Energy, Inc. consortium with Dr. Miley and is reportedly building a prototype cold fusion reaction at that institution. I wonder if he and Dr. Miley have at least had the opportunity to compare notes?
The bottom line here is that in view of the US dollar’s relationship with oil, it may be matter of practical economic policy to not let the e-Cat (or any other LENR device) out of the bag, at least just yet. If this allowed to happen, it may just wipe away the value of the sole source of stability that remains for US currency, oil. The Obama Administration’s recently announced push for clean and renewable energy technologies may be a signal that at least some in the US are seriously considering moving away from oil both as an energy source and a commodity on which it bases its currency, although the latter may prove more problematic than the former considering the debt load the US carries. Without oil the US has very little to pin the value of its currency to.
It will be interesting in the coming days to see how the US, and the world, responds to the continuing and developing cold fusion saga. I wonder if the results of Defkalion independent testing will indeed make it to public view, or if indeed such independent testing will even ever take place. I am also curious to see how the story plays out in regards to the NANOR cold fusion device recently demonstrated at MIT by Dr. Mitchell Swartz, and the reaction to the cold fusion paper just published by MIT professor Dr. Peter Hagelstein (click here to view). And, as always, it will be interesting to see what twists and turns lie ahead for commercialization of the e-Cat.
Although I have attempted to sound a cautionary tone with this article, it is still hard to imagine how the opposition to this technology can ultimately prevail, short of a natural disaster of Biblical proportions or the advent of World War III, in view of the number of people who are working to bring cold fusion to the world. However, I am beginning to come to the sobering realization that if and when this technology is finally able to break through, it very well not be in the United States. The US is at the epicenter of the old paradigm and rarely in human history has a new one emerged in the midst of the old. There are simply too many established powers and entrenched interests, too may obstacles to overcome. Of course I hope I am wrong but hundreds of centuries of recorded human history tell me that I likely will not be. This technology will probably take hold first in one of the BRIC nations or somewhere in the Third World.
Update 02/09/2012: Below are links to a couple of videos that explain the Petrodollar system in more detail. Please remember, rarely is a singular source 100% accurate, so do your own independent research to verify pertinent information.
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