Biden promised serious problems to the whole world if the US defaults on public debt pic.twitter.com/DRYLEg989i
— Spriter (@Spriter99880) May 10, 2023
Dedollarization
The major global economies are shifting and the clues are there for those who know where to look
https://www.rt.com/business/575849-dedollarization-us-oil-trade/
April 6, 2023
By Dr. Radhika Desai, a professor at the Department of Political Studies at the University of Manitoba in Winnipeg, Canada and director of the Geopolitical Economy Research Group. She also writes on current affairs for Valdai Club, CGTN, Counterpunch and other outlets and is the author of Geopolitical Economy: After US Hegemony, Globalization and Empire and Capitalism, Coronavirus and War: A Geopolitical Economy
© Aaron McCoy / Getty Images
De-dollarization is increasingly making headlines and you don’t have to look too hard to find examples.
New sources of non-dollar finance are emerging. There are new bilateral agreements to trade and lend in currencies other than the US dollar. Even more importantly, major oil trade buyers and sellers – Moscow and Riyadh as much as Beijing and New Delhi – are agreeing to trade it in non-dollar currencies. These deals are destroying one of the main pillars of dollar dominance since OPEC quadrupled and then doubled oil prices in the 1970s, giving countries around the world a major reason to demand and hold dollars.
However, many analysts continue to write as if the dollar’s dominance remains intact. Of course, these arguments are based on all sorts of false assumptions. For instance, they claim the dollar will continue dominating until another country’s currency replaces it or that this will only happen if other countries pursue forms of internationalization that mimic that of the US dollar today.
In a sense, the discussion is a little like that depicted in The Big Short, a film about a small band of bankers who bet against the housing market and the securities resting on it in the 2000s. Having made their bets, they waited for the market to collapse. It did. However, for a time, while mortgage defaults increased, the securities they are based on continued to rise in value. Prices were buoyed by investors primed by Alan Greenspan’s famous claim that there could not possibly be a housing market bubble. Nor were the securities downgraded. The rating agencies had not only given high scores to investment rubbish, they had come to believe their own lies. Only when the losses piled up and actually began to filter through the system in the form of payment shortfalls was the truth acknowledged.
Dollar being ‘gradually abandoned’ – IMF boss
De-dollarization also has its equivalent of the losses and payment shortfalls. Consider the recent Financial Times story, ‘China’s ‘men in black’ step up scrutiny of foreign corporate sleuths’. It describes the Chinese Ministry of State Security using “methods familiar to spies and private detectives” to crack down on “foreign corporate sleuths” performing “due diligence” on investments. They cite the process of checking whether a supply chain involved “forced labor from Xinjiang” as an example, stating that such due diligence is critical for attracting US investment.
The piece adds that earlier, “the due diligence groups felt they had ample space to operate and that authorities understood their importance,” but now Beijing has stepped up scrutiny of these scrutineers on grounds of national security. They lament that “spy companies were the gatekeepers for money,” but now, “[t]hat sense of a mutually beneficial relationship is gone.”
Now, the Chinese government has no shortage of reasons for stepping up its scrutiny of the information being gathered by foreign, particularly US entities. After all, it is the target of a US hybrid war whose fronts multiply daily. However, this is not the only significance of the story. It goes deeper than that and testifies to de-dollarization.
Since 1971 the US currency’s global role has rested on the claim that the dollar-denominated financial system was the world’s most sophisticated, with the broadest and deepest pools of capital from which the rest of the world’s investors could drink their fill. Certainly, the expansion of financial activity, also known as financialization, has been critical. By increasing financial demand for the dollar, it counteracted the Triffin Dilemma caused by the US deficits that provided the world with liquidity, meaning that the larger the US deficits, the greater the downward pressure on the dollar.
Yuan overtakes dollar in China’s cross-border payments
Needless to say, claims about the attractions of US finance were exaggerated. As far as most of the world was concerned, rather than providing beneficial productive investment, the US dollar-denominated financial system only unleashed torrents of short-term ‘hot’ money that has only profited mostly Western speculative investors, while regularly wreaking havoc on the rest of the world’s economies. Only China and a handful of other much smaller, favored, investment destinations benefited from a certain (easily overstated) amount of productive investment. Ironically, it was part of the hollowing out of US manufacturing through a little foreign direct investment and a lot of outsourcing.
Now, however, the US dollar-denominated system’s internal contradictions are mounting. While it is ceasing to provide its US and Western short-term investors with opportunities for speculative profit and to furnish the modest productive investment it once did.
The most fundamental of these mounting contradictions is the bind into which the rise of inflation puts the wizards at the Federal Reserve. On the one hand, the only way they can deal with inflation without eroding the power of capital is by raising interest rates, but that promises to crash the very financial structures of unproductive debt and speculation on which the wealth of the financial elite it serves relies. On the other hand, if the Fed does not raise interest rates, and permits inflation to run rampant, it will destroy the same system even more directly by undermining the value of the monetary unit, the US dollar, on which the entire system rests. What’s the point of accumulating your wealth in dollars if they are losing value at a rate close to or even higher than the rate at which you are accumulating it?
If the US financial system is losing its charm even for speculators, the very financialization over which it presides and on which the US dollar system rests has, over the last several decades, strangulated the alternative source of gain, the US productive economy. For decades, it was deprived of the long-term, patient investment that alone can make it dynamic. Today, therefore, neither the financial system nor the US productive economy will keep dollars flowing into the US dollar system. The former, which once yielded profits – via interest or speculation – by skimming off production incomes kept capital flowing into the US dollar system based on a reasonable expectation of gain. That situation has been eroded.
Gold leading ‘revolt against dollar’ – economist
It is no wonder that a recent Financial Times story comparing the US and European financial systems explained that, today the EU, with its proportionally larger base of productive corporations able to generate dividend income rather than merely uncertain and increasingly risky speculative gains, is likely to attract more money. And if Europe looks good compared to the US, China looks even better.
Money from around the world is flocking into Chinese IPOs (initial public offerings). By contrast, IPOs in the US and the UK, with the most financialized and productively weakened economies, have performed abysmally. The simple reason is that China still has a productive economy and far more of the sort of steady dividend-paying productive companies investors will now increasingly seek.
So, China cracking down on Western ‘due diligence’ sleuths is just another sign that the US financial system, and with it the dollar, is fast losing what few charms it once had. China may have tolerated a certain amount of espionage from Western financial investors when they constituted a major source of investment in China’s productive economy and US-China relations were miles better. Today, not only must it be more vigilant on national security grounds, with the US waging an ever-expanding hybrid war against China, its productive economy is winning the favor of the very capital that is fast falling out of love with the US financial system. China has no incentive to tolerate US “sleuthing.”
https://www.zerohedge.com/news/2023-05-06/us-dollar-sovereign-debt-endgame
BY QUOTH THE RAVEN
SATURDAY, MAY 06, 2023 – 5:25
Submitted by QTR’s Fringe Finance
The regional bank crisis is continuing on, or ahead, of schedule. Not wanting to live in an echo chamber – but also mindful of the fact that I’m in the minority with how I think about the economy – I wanted to have a long-form discussion with two of my friends, Andy Schectman and Larry Lepard, to discuss the state of the U.S.
We talked about the blowoff valve for the economy – something I wrote about days ago – as gold and precious metals.
“When we take out 2100 with authority, it’s game on,” Larry says. “That’ll be a clear historical breakout. When that occurs, we’re going to squirt up to 2500 or 3000 very quickly.”
“Where else do you go beside gold and silver? Yes I own a precious metals company, but I try to be objective. Where do you go in the system where rising rates inversely affect stocks and bonds?” Schectman asks.
“The blowoff valve is the value of the currency and the easiest measure of that is gold,” Lepard adds.
We also discussed the regional banking crisis. “How is it that anyone isn’t freaking out that the Fed is basically bailing out the FDIC? The FDIC is, in essence, insolvent,” Andy Schectman asked me. “They’re going to blow up the regional banks.”
“Everyone is leaving the regional banks because Janet told us they won’t be safe”
We also discussed the state of the Fed and the global economy.
“The Fed is really playing with fire with this tight monetary policy. They are solving the problem in the short term but compounding the problem in the long term. They’re going to be forced into yield curve control,” Larry adds. “The next QE will take the Fed’s balance sheet from $9 trillion to $25 trillion.”
“Hyperinflation occurs when everybody becomes convinced that there is no way out other than printing the currency,” he adds. “I think it’s kind of inevitable. Everyone can read the signals and the signals are going to be there.”
We talked about how the BRICS nations are trying to move away from the U.S. dollar. “When you look at countries that have expressed interest in joining BRICS, they all have substantial gold holdings,” Andy told me about the global economy. “The numbers are increasing among those who want to join, there’s over 60 countries they have lined up in a queue [to join BRICS].”
“I do believe it’ll be a Sunday night. OPEC, the BRICS nations, Saudi Arabia – they come out and say on a Sunday night, we’re taking other currency for oil – and everything blows up Monday morning. It’s a tsunami of dollars,” Andy concluded. “The pieces are being put into place right now. Nobody is going to have time to react.”
“Why the hell would Central Banks be buying more gold now than ever? They’re frontrunning. They don’t care about the technicals, they’re using the Western suppression of gold prices to de-dollarize. What does that look like when the world completely sheds dollars because they no longer need them to buy oil?”
We also discussed:
- the end of the U.S. dollar’s dominance
- the geopolitical divide taking place
- gold & silver markets and manipulation
- politics into 2024
- banking collapses & equity markets
- the future of Bitcoin & crypto
You can listen to my full interview with Larry and Andy on Spotify here, Apple Podcasts here, and streaming on YouTube here:
Larry manages the EMA GARP Fund, a Boston based investment management firm. Their strategy is focused on providing “Monetary Debasement Insurance”. He has 38 years experience and an MBA from Harvard Business School. And he likes to curse. On Twitter he is @LawrenceLepard
Andy is the President & Owner of Miles Franklin Precious Metal Investments. Prior to starting Miles Franklin, Ltd. in 1989, Andrew became a Licensed Financial Planner, specializing in Swiss Franc Investments and alternative investments. At Miles Franklin Ltd., a company that has eclipsed $5 billion in sales, Andrew has developed an operation that maintains trust, collaboration, and ethical behavior, superior customer service and satisfaction to better serve their clients. He is responsible for overseeing the firm’s operations and business functions; including strategy and planning, account management, finance, and new business. He is andy@milesfranklin.com on email.
QTR’s Disclaimer: I am not a guru or an expert. I am an idiot writing a blog and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning and generally trade like a degenerate psychopath. This is not a recommendation to buy or sell any stocks or securities or any asset class – just my opinions of me and my guests. I often lose money on positions I trade/invest in and I’m sure have lost more than I’ve made in my time in markets. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. Positions can change immediately as soon as I publish this, with or without notice. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. Also, I just straight up get shit wrong a lot. I mention it three times because it’s that important.
Contributor posts published on Zero Hedge do not necessarily represent the views and opinions of Zero Hedge, and are not selected, edited or screened by Zero Hedge editors.
De-dollarization is heading for a breakthrough due to rising global discontent with US ‘casino capitalism’…
“If you want to analyze the patterns these past two decades, you need to understand the fact that, if you are rich in commodities and if you are a productive capitalist nation and you decide to issue a currency, it will be internationally respected because people will know it’s based on facts, actual provenance, actual wealth,” he said. “That’s contrary to the system that we have now, which I have been calling it ‘casino capitalism’ for years. It’s futures, it’s bets, it’s suppositions. It may go right or wrong. If you lose, you lose it all. The house mostly always wins because the house is the one who prints the currency. It’s backed by nothing, literally, by a country that owes $30 trillion [in national debt] now and it will never be able to repay it.”
https://www.zerohedge.com/geopolitical/escobar-global-de-dollarization-nearing-crossroads-moment
BY TYLER DURDEN
SUNDAY, MAY 07, 2023
Authored by Ekaterina Blinova,
“It’s a gigantic snowball all over the world. We cannot even keep up with it,” Pepe Escobar said in an interview with the New Rules podcast.
“It’s very important what is going to be discussed at the BRICS summit in South Africa. This will probably be the crossroads moment where things are going to then go.”
Escobar explained that a growing number of countries in the Global South were doing the math and concluding that the US dollar was not a safe bet. The combination of aggressive US sanctions policy and reckless government spending have dramatically reduced the greenback’s international appeal.
“If you want to analyze the patterns these past two decades, you need to understand the fact that, if you are rich in commodities and if you are a productive capitalist nation and you decide to issue a currency, it will be internationally respected because people will know it’s based on facts, actual provenance, actual wealth,” he said. “That’s contrary to the system that we have now, which I have been calling it ‘casino capitalism’ for years. It’s futures, it’s bets, it’s suppositions. It may go right or wrong. If you lose, you lose it all. The house mostly always wins because the house is the one who prints the currency. It’s backed by nothing, literally, by a country that owes $30 trillion [in national debt] now and it will never be able to repay it.”
To make matters even worse, the US Federal Reserve’s aggressive interest rate hikes has made borrowing in dollars expensive for almost everyone in the world. Prior to the Fed’s move, Kristalina Georgieva, managing director of the International Monetary Fund, warned in January 2022 that the US raising interest rates could backfire on the global economy and especially on countries with higher levels of dollar-denominated debt.
https://sputnikglobe.com/services/video/embed/1110058768-1110062907.html
The ongoing US banking crisis threatens to further destabilize international financial markets. No country in the world wants to “catch a cold” when the US economy “sneezes,” as memories of the 2008 financial crisis linger.
“They say, ‘look, why do we have to be subjected to this kind of arrangement?’ And of course, before, as we all know, it was ‘the Empire of bases’, over 800 military bases all over the world, ‘the power of the financial markets’, ‘the power of soft culture’, ‘the power of cancel culture’, but the Global South is not intimidated anymore. I think this is the first [time] in this new millennium. We never had this before in the past two and a half centuries, at least,” Escobar said.
BRICS Seeking to Establish New Currency
In January 2023, BRICS – an acronym for Brazil, Russia, India, China, and South Africa – made a splash by announcing that it may soon explore the possibility of creating its own currency to by-pass the US dollar. The idea was articulated on both sides of the Atlantic: Russian Foreign Minister Sergey Lavrov touched upon the plan during a presser after his meeting with Angolan President Joao Lourenco on January 25.
On the other side of the pond, President of Brazil Luiz Inacio Lula da Silva discussed the issue of the creation of a common currency for BRICS and the countries of Mercosur, a South American trade bloc, during his meeting with his Argentine counterpart Alberto Fernandez.
“Why can’t an institution like the BRICS bank have a currency to finance trade relations between Brazil and China, between Brazil and all the other BRICS countries? Who decided that the dollar was the (trade) currency after the end of gold parity?” Lula said during an April visit to the Shanghai-based New Development Bank.
According to Escobar, the formation and development of three organizations, namely BRICS, the Shanghai Cooperation Organization (SCO) and the Eurasian Economic Union predetermined the end of the greenback-centered world order. BRICS members are now discussing designing an alternative currency; similar discussions are being held in the Eurasian Economic Union; they should start coordinating and then this will spill over to the SCO, the writer projected.
The trend has already been engulfing other blocs, Escobar continued, referring to the Association of Southeast Asian Nations (ASEAN). On March 28, ASEAN finance ministers and central bank governors held a meeting in Indonesia to discuss how to move to settlements in local currencies by further enhancing an ASEAN cross-border digital payment system.
Initially, the agreement on such transactions was reached between Indonesia, Malaysia, Singapore, the Philippines, and Thailand in November 2022. The association is seeking to reduce dependence not only on the US dollar, but also on euros, yens, and British pounds in financial transactions.
“We have something that was absolutely unbelievable two months ago,” Escobar emphasized.
Why is De-Dollarization Gaining Steam?
De-dollarization has been discussed for decades. For instance, Mikhail Khazin, a Russian economist and publicist, who served in the Working Center for Economic Reforms under the Boris Yeltsin government in the 1990s, and his co-author Andrey Kobyakov predicted the demise of the US dollar dominance roughly 20 years ago in their book titled “The Decline of the Dollar Empire and the End of Pax Americana.” While the idea has been in the air for quite a while, why is it that this phenomenon has only now started to gain critical mass?
“We can even establish a date for it,” responded Escobar. “February last year, with that freezing, confiscation, stealing of Russian foreign reserves. And the Global South as practically as a whole started asking themselves from Latin America to Africa to South East Asia, ‘if they can do this with a nuclear superpower, they can do it with any one of us snapping their fingers’. So that’s why the coordination inside these multilateral organizations and in other forums picked up astronomic speed.”
To illustrate his point, the journalist referred to the swift development of BRICS with a staggering 19 countries currently on the list to join the organization. Among them, the strongest candidates are Iran, Argentina, Algeria, as well as the United Arab Emirates, Turkiye, Egypt, Kazakhstan, and Indonesia, as per the geopolitical analyst.
“So these are all strong middle rank powers from anywhere,” Escobar said. “And they’re going to start discussing the now notorious BRICS alternative currency. So they have to speed up this conversation and let’s hope that they are going to start discussing it in conjunction with the Eurasian Economic Union, which is much more advanced, and the Shanghai Cooperation Organization.”
Escobar believes that nothing short of a breakthrough in this respect could occur as early as next year.
“It’s possible, it’s a feasible scenario,” he insisted. “Until a few months ago, this would be the ultra-far-fetched scenario. Not anymore, because now the speed is unbelievable. Literally every day – Bangladesh, Argentina, Algeria, countries in Southeast Asia.”
Last month, Russian Foreign Minister Sergey Lavrov met with his Bolivian counterpart Rogelio Mayta in the Venezuelan capital Caracas and introduced a new trade transaction system to drop the US dollar and the euro and switch to rubles and Bolivianos instead.
Together with Argentina and Chile, Bolivia forms the so-called “Lithium Triangle” which accounts for more than half of the world’s deposits of the silvery-white alkali metal. Bolivia’s Salar de Uyuni salt flat alone contains 21 million metric tons of lithium, widely used in rechargeable batteries for mobile phones, laptops, digital cameras and electric vehicles.
Petroyuan May Dethrone Petrodollar
The most important element is the coming of the petroyuan, as per Escobar. For decades, crude oil has been traded in US dollars. However, the petrodollar could be soon dethroned: last year, Beijing called on Gulf leaders to settle their gas and oil deals with China in yuan. The US and China remain the world’s top two consumers of crude, using 18.7 million and 15.4 million barrels per day, respectively. Energy settlements in yuan could deal a heavy blow to the greenback.
“We are on our way, which is something that even very good American financial analysts who have been following this story could never imagine that this would be literally around the corner,” the journalist said. “Now, the only thing that is missing, in fact, is the Chinese delegation going to Riyadh and saying, ‘okay, from now on everything is going to be in yuan, no more Western currencies anymore.’ And we already have a mechanism for it. I did a column about that, basically explaining that it’s a very simple mechanism.”
“You buy oil futures at the Shanghai Exchange priced in yuan. So from now on you have a new benchmark, an oil benchmark in yuan that you transact in Shanghai. The Chinese say, ‘look, it’s linked to gold as well. You want to change yuan into gold? Simple. We have a gold exchange here in Shanghai and we have another one here in Hong Kong. You can trade all you want for gold.’ This is the way. It’s extremely simple. But not many people are aware of it. Only a few economists, in fact. And I have not seen this discussion in American media, for that matter,” Escobar continued.
That doesn’t mean, however, that the dollar will be replaced by the yuan: instead, a whole set of currencies will be used wiping out the greenback’s hegemony, according to the geopolitical analyst.
“I think we’re going to start with having multiple replacements, and then maybe in the second stage, these multilateral organizations start thinking, okay, why don’t we think about a fusion? Because we have different priorities,” he said.
De-dollarization is heading for a breakthrough due to rising global discontent with US ‘casino capitalism’, Pepe Escobar, geopolitical analyst and veteran journalist, told Sputnik News.
“It’s a gigantic snowball all over the world. We cannot even keep up with it,” Pepe Escobar said in an interview with the New Rules podcast. “It’s very important what is going to be discussed at the BRICS summit in South Africa. This will probably be the crossroads moment where things are going to then go.”
May 4, 2023
© AFP 2023 / FRED DUFOUR
Ekaterina Blinova
All materialsWrite to the author
De-dollarization is heading for a breakthrough due to rising global discontent with US ‘casino capitalism’, Pepe Escobar, geopolitical analyst and veteran journalist, told Sputnik News.
“It’s a gigantic snowball all over the world. We cannot even keep up with it,” Pepe Escobar said in an interview with the New Rules podcast. “It’s very important what is going to be discussed at the BRICS summit in South Africa. This will probably be the crossroads moment where things are going to then go.”
Escobar explained that a growing number of countries in the Global South were doing the math and concluding that the US dollar was not a safe bet. The combination of aggressive US sanctions policy and reckless government spending have dramatically reduced the greenback’s international appeal.
“If you want to analyze the patterns these past two decades, you need to understand the fact that, if you are rich in commodities and if you are a productive capitalist nation and you decide to issue a currency, it will be internationally respected because people will know it’s based on facts, actual provenance, actual wealth,” he said. “That’s contrary to the system that we have now, which I have been calling it ‘casino capitalism’ for years. It’s futures, it’s bets, it’s suppositions. It may go right or wrong. If you lose, you lose it all. The house mostly always wins because the house is the one who prints the currency. It’s backed by nothing, literally, by a country that owes $30 trillion [in national debt] now and it will never be able to repay it.”
To make matters even worse, the US Federal Reserve’s aggressive interest rate hikes has made borrowing in dollars expensive for almost everyone in the world. Prior to the Fed’s move, Kristalina Georgieva, managing director of the International Monetary Fund, warned in January 2022 that the US raising interest rates could backfire on the global economy and especially on countries with higher levels of dollar-denominated debt.
The ongoing US banking crisis threatens to further destabilize international financial markets. No country in the world wants to “catch a cold” when the US economy “sneezes,” as memories of the 2008 financial crisis linger.
“They say, ‘look, why do we have to be subjected to this kind of arrangement?’ And of course, before, as we all know, it was ‘the Empire of bases’, over 800 military bases all over the world, ‘the power of the financial markets’, ‘the power of soft culture’, ‘the power of cancel culture’, but the Global South is not intimidated anymore. I think this is the first [time] in this new millennium. We never had this before in the past two and a half centuries, at least,” Escobar said.
Paul Craig Roberts: Washington Shot Itself in Head by Facilitating De-Dollarization
BRICS Seeking to Establish New Currency
In January 2023, BRICS – an acronym for Brazil, Russia, India, China, and South Africa – made a splash by announcing that it may soon explore the possibility of creating its own currency to by-pass the US dollar. The idea was articulated on both sides of the Atlantic: Russian Foreign Minister Sergey Lavrov touched upon the plan during a presser after his meeting with Angolan President Joao Lourenco on January 25.
On the other side of the pond, President of Brazil Luiz Inacio Lula da Silva discussed the issue of the creation of a common currency for BRICS and the countries of Mercosur, a South American trade bloc, during his meeting with his Argentine counterpart Alberto Fernandez.
“Why can’t an institution like the BRICS bank have a currency to finance trade relations between Brazil and China, between Brazil and all the other BRICS countries? Who decided that the dollar was the (trade) currency after the end of gold parity?” Lula said during an April visit to the Shanghai-based New Development Bank.
Celso Amorim: Lula is Gigantic Force in Brazil, Can Boost BRICS, Facilitate S America’s Integration
According to Escobar, the formation and development of three organizations, namely BRICS, the Shanghai Cooperation Organization (SCO) and the Eurasian Economic Union predetermined the end of the greenback-centered world order. BRICS members are now discussing designing an alternative currency; similar discussions are being held in the Eurasian Economic Union; they should start coordinating and then this will spill over to the SCO, the writer projected.
The trend has already been engulfing other blocs, Escobar continued, referring to the Association of Southeast Asian Nations (ASEAN). On March 28, ASEAN finance ministers and central bank governors held a meeting in Indonesia to discuss how to move to settlements in local currencies by further enhancing an ASEAN cross-border digital payment system.
Initially, the agreement on such transactions was reached between Indonesia, Malaysia, Singapore, the Philippines, and Thailand in November 2022. The association is seeking to reduce dependence not only on the US dollar, but also on euros, yens, and British pounds in financial transactions.
“We have something that was absolutely unbelievable two months ago,” Escobar emphasized.
Not By Yuan Alone: Whole Set of National Currencies To Deep-Six US Dollar Dominance
31 March, 18:09 GMT
Why is De-Dollarization Gaining Steam?
De-dollarization has been discussed for decades. For instance, Mikhail Khazin, a Russian economist and publicist, who served in the Working Center for Economic Reforms under the Boris Yeltsin government in the 1990s, and his co-author Andrey Kobyakov predicted the demise of the US dollar dominance roughly 20 years ago in their book titled “The Decline of the Dollar Empire and the End of Pax Americana.” While the idea has been in the air for quite a while, why is it that this phenomenon has only now started to gain critical mass?
“We can even establish a date for it,” responded Escobar. “February last year, with that freezing, confiscation, stealing of Russian foreign reserves. And the Global South as practically as a whole started asking themselves from Latin America to Africa to South East Asia, ‘if they can do this with a nuclear superpower, they can do it with any one of us snapping their fingers’. So that’s why the coordination inside these multilateral organizations and in other forums picked up astronomic speed.
To illustrate his point, the journalist referred to the swift development of BRICS with a staggering 19 countries currently on the list to join the organization. Among them the strongest candidates are Iran, Argentina, Algeria, as well as the United Arab Emirates, Turkiye, Egypt, Kazakhstan, and Indonesia, as per the geopolitical analyst.
“So these are all strong middle rank powers from anywhere,” Escobar said. “And they’re going to start discussing the now notorious BRICS alternative currency. So they have to speed up this conversation and let’s hope that they are going to start discussing it in conjunction with the Eurasian Economic Union, which is much more advanced, and the Shanghai Cooperation Organization.”
New Currency Zones Taking Shape Within BRICS as Global Dollar System Crumbling, Economist Says
28 January, 13:38 GMT
Escobar believes that nothing short of a breakthrough in this respect could occur as early as next year.
“It’s possible, it’s a feasible scenario,” he insisted. “Until a few months ago, this would be the ultra-far-fetched scenario. Not anymore, because now the speed is unbelievable. Literally every day – Bangladesh, Argentina, Algeria, countries in Southeast Asia.”
Last month, Russian Foreign Minister Sergey Lavrov met with his Bolivian counterpart Rogelio Mayta in the Venezuelan capital Caracas and introduced a new trade transaction system to drop the US dollar and the euro and switch to rubles and Bolivianos instead.
Together with Argentina and Chile, Bolivia forms the so-called “Lithium Triangle” which accounts for more than half of the world’s deposits of the silvery-white alkali metal. Bolivia’s Salar de Uyuni salt flat alone contains 21 million metric tons of lithium, widely used in rechargeable batteries for mobile phones, laptops, digital cameras and electric vehicles.
As Dollar Demand Shrinks, US Deficit Headache Swells
14 April, 13:32 GMT
Petroyuan May Dethrone Petrodollar
The most important element is the coming of the petroyuan, as per Escobar. For decades, crude oil has been traded in US dollars. However, the petrodollar could be soon dethroned: last year, Beijing called on Gulf leaders to settle their gas and oil deals with China in yuan. The US and China remain the world’s top two consumers of crude, using 18.7 million and 15.4 million barrels per day, respectively. Energy settlements in yuan could deal a heavy blow to the greenback.
“We are on our way, which is something that even very good American financial analysts who have been following this story could never imagine that this would be literally around the corner,” the journalist said. “Now, the only thing that is missing, in fact, is the Chinese delegation going to Riyadh and saying, ‘okay, from now on everything is going to be in yuan, no more Western currencies anymore.’ And we already have a mechanism for it. I did a column about that, basically explaining that it’s a very simple mechanism.”
“You buy oil futures at the Shanghai Exchange priced in yuan. So from now on you have a new benchmark, an oil benchmark in yuan that you transact in Shanghai. The Chinese say, ‘look, it’s linked to gold as well. You want to change yuan into gold? Simple. We have a gold exchange here in Shanghai and we have another one here in Hong Kong. You can trade all you want for gold.’ This is the way. It’s extremely simple. But not many people are aware of it. Only a few economists, in fact. And I have not seen this discussion in American media, for that matter,” Escobar continued.
That doesn’t mean, however, that the dollar will be replaced by the yuan: instead, a whole set of currencies will be used wiping out the greenback’s hegemony, according to the geopolitical analyst.
“I think we’re going to start with having multiple replacements, and then maybe in the second stage, these multilateral organizations start thinking, okay, why don’t we think about a fusion? Because we have different priorities,” he said.
For more of Pepe Escobar’s exclusive analysis on de-dollarization, check out the full episode of the podcast on our Telegram and Odysee.
https://www.rt.com/business/575634-imf-georgieva-us-dollar-shift/
2 May, 2023
Kristalina Georgieva says there are no viable alternatives for a global reserve currency
Kristalina Georgieva, IMF Managing Director at the Milken Institute Global Conference in Beverly Hills, California, on May 1, 2023. © AFP / Patrick T. Fallon
The managing director of the International Monetary Fund (IMF) has said the US dollar is gradually losing its status as the world’s main reserve currency.
Speaking on Monday, Kristalina Georgieva noted that there is no viable alternative among global currencies to replace the greenback in the near future.
“There has been gradual shift away from the dollar, it was 70% of reserves, now it is slightly under 60%,” Georgieva stated at the 2023 Milken Institute Global Conference in Beverly Hills, California.
According to the IMF chief, the euro can be viewed as the biggest competitor to the dollar, while the British pound, the Japanese yen and the Chinese yuan “play a very modest role.”
She stressed that the leading factor for trust in the currency of this or that country is the strength of its economy and the depth of its capital markets.
READ MORE: India and China to drive half of world’s economic growth – IMF
“And if you are thinking of an alternative in a world in which we may migrate to central bank digital currencies massively… and there I don’t see an alternative, I don’t see it coming anytime soon,” Georgieva said.
Georgieva highlighted the major shocks of the past few years – the Covid pandemic, the Russia-Ukraine conflict and the spike in interest rates after years of loose monetary policy – calling them “a series of unthinkable events.”
She explained that the rapid transition from low to high interest rates has exposed vulnerabilities in the financial sector, and that the high exposure of the US banking sector to the crisis has come as a surprise to IMF analysts.
https://tass.com/economy/1608729
April 24, 2023
It is reported that Russia understands full well how to prioritize the allocation of financial resources and is doing everything necessary in this respect
MOSCOW, April 24. /TASS/. The world is at the beginning of a changing of the guard in the global economic order, Russian Finance Minister Anton Siluanov said on Monday.
“We are currently at the first acute phase of changing the global economic order,” Siluanov said. “Countries with developing economies are pushing countries with so-called developed economies aside. Therefore, understanding these drivers and the essence of current global changes provides us with an opportunity to think not only about the present moment, but to look forward – how the global and political system will evolve, what should be done today about particular cases, and what to focus on in terms of allocating the government’s resources,” the minister noted.
Russia understands full well how to prioritize the allocation of financial resources and is doing everything necessary in this respect, Siluanov said. Despite all the restrictions, critical areas and branches of the economy are running smoothly, he added.
MONDAY, APR 24, 2023
Authored by Michael Snyder via The Economic Collapse blog,
Our leaders were able to successfully kick the can down the road for a long time, but now many of our long-term problems are becoming short-term problems, and the economic outlook for the remainder of 2023 is extremely bleak. But none of the economic hardships that we are experiencing at this moment should shock any of us. The truth is that we were warned about all of these things well ahead of time.
Many independent voices have been warning us that there would be severe consequences for the exceedingly foolish economic decisions that our leaders were making, and now those severe consequences are starting to play out right in front of our eyes.
The following are 5 economic disasters we were warned about in advance that are happening right now…
#1 We were warned that a great commercial real estate crisis would be coming, and now it is here. In fact, we just witnessed another massive default…
With recent stress in the regional banking sector, sentiment in US commercial real estate (CRE) – and especially the office sector – has turned negative as investors prepare for potential spillover effects (with JPM, Morgan Stanley, and Goldman Sachs all joining the gloom parade), especially as high-profile defaults continue to make headlines as borrowers face higher debt service costs and refinancing becomes much harder ahead of a $400 billion CRE debt maturities this year alone.
The latest headline fueling concerns about a potential CRE crisis involves a fund belonging to CRE giant Brookfield defaulting on a $161.4 million mortgage for twelve office buildings in Washington, DC.
According to Bloomberg, the loan was transferred to a special servicer working with “the borrower to execute a pre-negotiation agreement and to determine the path forward.”
#2 We were warned that there would be widespread layoffs as economic conditions in the United States deteriorated. Sadly, that is now happening all around us. For example, on Monday accounting firm Ernst & Young announced that they will be laying off thousands of highly paid workers…
Ernst & Young said Monday that it would eliminate roughly 3,000 jobs from its US workforce as it pivots to address shifts in demand and “overcapacity” in sections of its business.
The cuts represent less than 5% of the US firm’s total workforce. EY described the workforce reduction as “part of the ongoing management of our business” and said it didn’t stem from the firm’s recent failure to implement a global breakup.
#3 We were warned that the largest corporate debt bubble in the history of the world would eventually burst, and now corporations are beginning to default on their debts at a rate that should deeply alarm all of us…
More companies around the world defaulted on their debts in the first three months of this year than in any quarter since late 2020, when businesses were still hamstrung by restrictions to stop the spread of Covid.
In a report Tuesday, credit rating agency Moody’s said 33 of the corporations it rates defaulted on their debts in the first quarter, the highest level since the last quarter of 2020 when 47 companies defaulted. Almost half, or 15 companies, defaulted last month — the highest monthly count since December 2020.
Defaulting firms included Silicon Valley Bank, which collapsed in March, its holding company SVB Financial Group and Signature Bank.
#4 We were warned that we would witness a dramatic surge in bankruptcies in 2023, and that is precisely what is happening…
Bankruptcy filings across the United States rose for the third straight month in March in all major industries. A total of 42,368 new bankruptcies were filed last month, according to data from Epiq Bankruptcy, a provider of U.S. bankruptcy court data, technology, and services.
This is 17 percent up from the 36,068 filings in March 2022 and is the highest number of monthly bankruptcy filings since April 2021.
Data from S&P Global Market Intelligence showed 71 corporate bankruptcy petitions in March, a jump from 58 in the previous month. This is the highest monthly total since July 2020 and the fourth straight month of increases.
#5 We were warned that the rest of the world would eventually start rejecting the U.S. dollar, and now “de-dollarization” is happening at a “stunning” pace…
The dollar is losing its reserve status at a faster pace than generally accepted as many analysts have failed to account for last year’s wild exchange rate moves, according to Stephen Jen.
The greenback’s share in global reserves slid last year at 10 times the average speed of the past two decades as a number of countries looked for alternatives after Russia’s invasion of Ukraine triggered sanctions, Jen and his Eurizon SLJ Capital Ltd. colleague Joana Freire wrote in a note. Adjusting for exchange rate movements, the dollar has lost about 11% of its market share since 2016 and double that amount since 2008, they said.
“The dollar suffered a stunning collapse in 2022 in its market share as a reserve currency, presumably due to its muscular use of sanctions,” Jen and Freire wrote. “Exceptional actions taken by the US and its allies against Russia have startled large reserve-holding countries,” most of which are emerging economies from the so-called Global South, they said.
Unfortunately, we are still only in the very early stages of this economic meltdown.
The general population is starting to understand that things have gone horribly wrong, and a CNBC survey that was just released discovered that Americans “have never been more negative about the economy” than they are at this moment…
Amid persistent inflation, higher interest rates and recession worries, Americans have never been more negative about the economy, according to the latest CNBC All-America Economic Survey.
A record 69% of the public holds negative views about the economy both now and in the future, the highest percentage in the survey’s 17-year history.
Even during the darkest days of 2008 and 2009 Americans were more optimistic about the future of the economy than they are right now.
Just think about that.
We are in really deep trouble.
Of course, this new economic crisis will take some time to fully play out.
But it has officially arrived.
The months ahead are going to be filled with economic pain, and that is going to cause a tremendous amount of turmoil throughout our entire society.
The New Development Bank (NDB) established by the five-member BRICS group is offering loans in local currencies, part of its efforts to ditch the use of the U.S. dollar for world trade.
https://www.naturalnews.com/2023-04-19-brics-ndb-offering-loans-in-local-currencies.html
by: Ramon Tomey
Wednesday, April 19, 2023
The New Development Bank (NDB) established by the five-member BRICS group is offering loans in local currencies, part of its efforts to ditch the use of the U.S. dollar for world trade.
NDB President Dilma Rousseff confirmed the move, adding that the financial institution plans to give 30 percent of loans in the local currencies of member nations. The NDB was established in 2014 by the BRICS group – Brazil, Russia, India, China and South Africa – to challenge the U.S.-dominated World Bank. Rousseff, who served as Brazil’s president from 2011 until her impeachment in 2016, took over the NDB’s leadership in March 2023.
“It is necessary to find ways to avoid foreign exchange risk and other issues such as being dependent on a single currency, such as the U.S. dollar,” she said during an April 14 interview with the Chinese media outlet CGTN.
“The good news is that we are seeing many countries choosing to trade using their own currencies. China and Brazil, for instance, are agreeing to exchange with [the Chinese yuan] and the Brazilian real.”
Rousseff emphasized that the NDB has committed to this pivot toward local currencies in its strategy. In line with this, the bank has to lend 30 percent in local currencies. Thus, she told CGTN that 30 percent of the NDB’s loan book will be financed in the currencies of BRICS member countries.
“That will be extremely important to help our countries avoid exchange rate risks and shortages in finance that hinder long-term investments,” Rousseff said.
Incumbent Brazilian President Luiz Inacio Lula da Silva visited the NDB’s headquarters in the eastern Chinese city of Shanghai to attend Rousseff’s swearing-in ceremony. Lula was the first head of state to visit the institution’s headquarters. Rousseff succeeded Lula after the latter served two presidential terms from 2003 until 2010.
The Brazilian leader challenged the dollar’s dominance during his trip to China. He emphasized that the NDB’s goal is to create “a world with less poverty, less inequality and more sustainability,” and challenged the bank to play a “leading role in achieving a better world, without poverty or hunger.”
Rousseff: World needs an “anti-crisis mechanism”
“The world now is under the threat of high inflation and restrictive monetary policy, particularly in developed countries,” Rousseff said in response to a question about the challenges faced by BRICS and the NDB.
“Such monetary policy means a higher interest rate and, therefore, a higher probability of reduction in growth and … recession,” she noted. “This presents an important question for the BRICS [group]. We need a mechanism – a so-called anti-crisis mechanism – which must be counter-cyclical and support stabilization.”
Last January, South African International Relations Minister Naledi Pandor said the BRICS group plans to “develop a fairer system of monetary exchange” in order to weaken the “dominance of the dollar.”
“The systems currently in place tend to privilege very wealthy countries. [They also] tend to be really a challenge for countries such as ourselves, which have to make payments in dollars [that cost] much more in terms of our various currencies,” she explained. “So I do think a fairer system has to be developed. It’s something we’re discussing with the BRICS ministers in the economic sector discussions.”
Aside from the five core BRICS countries, the NDB also lists Bangladesh, Egypt and the United Arab Emirates (UAE) as members. Uruguay is also in the process of joining the bank, and many other countries have also expressed interest.
Argentina, Iran and Algeria have formally applied to join the extended BRICS+ group. Russian Foreign Minister Sergey Lavrov also confirmed other nations that expressed interest to join. These included Egypt, Turkey, Saudi Arabia, the UAE, Indonesia, Argentina, Mexico and “a number of African nations.” (Related: Argentina, Iran apply to join BRICS group of emerging economies.)
DollarDemise.com has more stories about countries dropping the dollar for trade.
Watch South African International Relations Minister Naledi Pandor discloses the nations that wish to join the BRICS+ group below.
https://www.brighteon.com/embed/4db12704-c41e-4e33-ab4c-86527360f72d
This video is from the Thrivetime Show channel on Brighteon.com.
More related stories:
Putin says BRICS countries are establishing new global reserve currency to replace U.S. dollar.
BRICS nations moving rapidly to circumvent the US dollar as the World Reserve Currency.
Potential BRICS expansion could mark end of dollar as world’s pre-eminent currency.
IMF trying to bribe Egypt away from BRICS with new loans.
Sources include:
The bloc of developing countries will be a larger driver of development than the Western Group of Seven major economies
Earlier this year, Russian Foreign Minister Sergey Lavrov said that “more than a dozen” nations have expressed interest in joining BRICS, including Algeria, Argentina, Bahrain, Bangladesh, Indonesia, Iran, Egypt, Mexico, Nigeria, Pakistan, Sudan, Syria, Türkiye, the United Arab Emirates, and Venezuela. Saudi Arabia, Egypt, and Bangladesh have acquired equity in the New Development Bank, the funding organization of BRICS.
https://www.rt.com/business/574957-brics-to-pass-west-economy/
April 19, 2023
© Getty Images / lvcandy
Members of the BRICS group – Brazil, Russia, India, China, and South Africa – are expected to outpace the US-led G7 in terms of their contribution to the world’s economic growth, from this year, Bloomberg reported on Monday.
According to the outlet’s calculations – based on the latest IMF data –the BRICS countries will contribute 32.1% of the world’s growth, compared to the G7’s 29.9%.
The Group of Seven nations (G7) – consisting of the US, UK, Canada, France, Germany, Italy, and Japan – has long been considered the most advanced economic bloc of countries on the planet. Russia was a member, until 2014, when it was expelled due to the fallout from the Western-backed Maidan coup in Ukraine.
The report indicated that in 2020, the contributions from BRICS countries and the G7 to global economic growth were equal. Since then the performance of the Western-led bloc has been declining. By 2028, the G7’s contribution to the world economy is predicted to decrease to 27.8%, while the BRICS will account for 35%.
Bloomberg calculations show that China will be the top contributor to global growth over the next five years, with its share set to be double that of the US. China’s share of global GDP expansion is expected to represent 22.6% of total world growth by 2028, the outlet wrote. India is projected to contribute 12.9% of global GDP.
“In total, 75% of global growth is expected to be concentrated in 20 countries and over half in the top four: China, India, the US and Indonesia. While Group of Seven countries will comprise a smaller share, Germany, Japan, the United Kingdom and France are seen among the top 10 contributors,” the outlet wrote.
READ MORE: African state eyes turn to BRICS – media
A recent study by a UK-based macroeconomics research firm has also found that the gap between the two groups in terms of global economic weight is expected to continue to grow. The analysts noted that China and India have been experiencing robust economic growth, and more countries are interested in joining BRICS.
Earlier this year, Russian Foreign Minister Sergey Lavrov said that “more than a dozen” nations have expressed interest in joining BRICS, including Algeria, Argentina, Bahrain, Bangladesh, Indonesia, Iran, Egypt, Mexico, Nigeria, Pakistan, Sudan, Syria, Türkiye, the United Arab Emirates, and Venezuela. Saudi Arabia, Egypt, and Bangladesh have acquired equity in the New Development Bank, the funding organization of BRICS.
Last year, BRICS countries proposed the creation of their own currency in order to move away from the US dollar and the euro in mutual transactions.
Failing banks, inflation, soaring interest rates and the flight from the petrodollar could become a disaster for ordinary Americans
The ultimate irony is that Russia, and also the US/Israeli arch-enemy Iran, are by comparison doing quite well economically as they sell their oil and gas to anyone in any currency. One has to conclude that when US Treasury Secretary Janet Yellen recently made her secret trip to Kiev to promise the despicable Volodymyr Zelensky billions of taxpayer dollars the United States might just have been better served if she had stayed in Washington and made some minimal effort to address the mounting economic problems confronting us here at home.
https://www.globalresearch.ca/end-american-exceptionalism/5816290
Global Research, April 18, 2023
***
Watching a once great nation commit suicide is not pretty. President Joe Biden does not seem to understand that his role as elected leader of the United States is to take actions that directly or indirectly benefit the folks who voted for him as well as the other Americans who did not do so. That is how a constitutional democracy is supposed to work.
Instead, Biden and the gang of introverts and neocon war criminals that the has surrounded himself with have done everything that can to inflict fatal damage on the economy through rash initiatives both overseas and at home. A spending spree to buy support from the bizarre constituencies that make up the Democrat Party base while also fighting an undeclared war in Europe have meant that nearly two trillion dollars has been added to the national debt under Biden’s rule, a debt that was already unsustainable at nearly $30 trillion, larger than the United States’ gross national product. Plans to cancel student loan debts will add hundreds of billions of dollars more to the red ink.
And those actions undertaken overseas, to include continuing to expand the war in Ukraine against Russia, will do immeasurable more damage. Consider how the Democratic Party has long had it in for Russian Federal President Vladimir Putin, dating back to when Putin took power in 2000 and started kicking out the Western scallywags who were looting his country.
Subsequently, false intelligence and other innuendoes were contrived by Hillary Clinton and her team in 2016 to implicate Donald Trump as a Russian stooge who was secretly working for Putin. When that didn’t work and Trump was elected, the Russians were accused by the media and Democrats of willy-nilly interfering in US elections more generally speaking, a much-exaggerated claim in contrast to the overwhelming silence surrounding the real electoral and policy interference, which has been coming from Israel and its fifth column inside the United States, who, not coincidentally, are the chief proponents of the war against Russia.
Placing a target on Vladimir Putin’s back appears to have an unfortunate consequence which Biden has yet to wake up to, namely the fact that the United States now has what might be described as a Ponzi scheme faux economy which is very vulnerable, particularly as much of the world has become disenchanted with the US style of global leadership. Note for example the recent state visit by French President Emmanuel Macron to Beijing, where he embraced a “global strategic partnership with China” to bring about a “multipolar” world, freed of “blocs” that is not sheltering behind “Cold War mentality.” Macron also criticized the “extraterritoriality of the US dollar.”
And threats made by the Bidens against both China and Russia have accomplished little beyond drawing the two major political and military powers closer together. Beijing and Moscow entered into a trade agreement in their own currencies in 2014 and have openly taken steps to challenge US dominance of international currency exchanges, creating instead a global multipolar trading environment. Europe aside, many nations are now eager to cut the tie that binds, which is the decades long American dominance of international financial mechanisms and also the general use of dollars to pay for oil and other energy supplies. The widespread use of petrodollars enables the buffoonish Janet Yellen at the US Treasury and the Federal Reserve banks to print unlimited unbacked fiat currency, knowing that there will always be a market for it.
If You Say “Democracy” Often Enough the Voters Will Reward You
Which brings us back to the Ukraine war, pursued “until we win” by Biden and his somnolent Secretary of State Antony Blinken. One of the first moves when Russia intervened in Ukraine was to block and eventually confiscate Russia’s 300 billion dollars-worth of foreign reserves in banks in the US and Europe. That sent a shock wave across currency markets all around the world. Biden and Yellen had weaponized the US’s own national currency, which hitherto had been an untouchable step in international relations for nations that were not actually at war. Countries like China and India with large economies then realized that the US Treasury Department and the dominance of the dollar as an exchange currency had now become a weapon of war and a serious threat to the economies of all other nations.
As a consequence, the US Dollar is right now being rejected by many nations as the world’s reserve currency. Some nations all over the world have agreed to use the Chinese Yuan and Indian Rupee for any-and-all international currency transactions. Saudi Arabia continues to use the petrodollar but does not demand it. Recently, Saudi Crown Prince Mohammed bin Salman and Chinese President Xi Jinping agreed to permit the Saudis to sell oil to China in Yuan. Saudi Arabia, the world’s largest oil exporter, is now allowing multiple currencies to be used to purchase its oil, a major attack on the primacy of the US dollar and it also has accepted Chinese mediation to mend fences with the US and Israel’s arch enemy Iran. And the Saudis have even more recently refused a Biden Administration request that it start pumping more oil to reduce energy costs, signalling that the shift is both political and economic in nature. Japan, a major economy, has also started purchasing oil and gas directly from Russia against the US-imposed energy embargo while Brazil, another major economy, has agreed to use the Yuan in its increasing trade with China. As fewer nations utilize the US dollar, America’s ability to export and ignore its burgeoning domestic debt and inflation to other countries is being diminished.
This might have a decisive impact on the US currency as the drive to break with the petrodollar continues to grow and could produce something like a “perfect storm” impacting on the US economy. It threatens to drastically lower the standards of living of nearly all Americans within the next several years as the dollar loses value and purchasing power. As the US economy is heavily interconnected with many European economies, Europe is also likely to be a victim of the coming disaster.
The good news, of course, is that the United States will no longer be able to afford its endless wars and international interventions. Lacking its economic power, it will no longer be able to declare itself “exceptional” and the enforcer of a “rules-based international order.” It would mean an ending of the funding of developments like the Ukraine proxy war and the troops will have to come home from places like Syria and Somalia. And it might even mark the ending of sending billions of dollars annually to a wealthy Israel.
Ending dollar supremacy would inevitably have an immediate impact on what passes for US foreign policy, making it more difficult for Washington to initiate and sustain Treasury Department sanctions on countries like Iran and North Korea. It could also create economic turmoil for many countries until the situation resolves itself by producing greater volatility in currency markets worldwide. The Federal Reserve Bank will no doubt respond to the unfolding crisis by acting as it always does by raising interest rates to astronomical levels, thereby hurting most Americans who can least afford the shock therapy.
And it did not have to turn out this way. It could have been avoided. If the US, which had no horse in the race, had left Ukraine alone Vladimir Putin would not have become a symbol of defiance against the “Rules-Based International Order” and he would not have worked with China to establish multipolarity in the way the financial world operates. Instead, we have a situation where Europe is being de-industrialized due to soaring energy prices and Washington’s destruction of the Nord Stream pipelines while the US is potentially confronting economic disaster as the dollar’s relevance to international trade sinks. The ultimate irony is that Russia, and also the US/Israeli arch-enemy Iran, are by comparison doing quite well economically as they sell their oil and gas to anyone in any currency. One has to conclude that when US Treasury Secretary Janet Yellen recently made her secret trip to Kiev to promise the despicable Volodymyr Zelensky billions of taxpayer dollars the United States might just have been better served if she had stayed in Washington and made some minimal effort to address the mounting economic problems confronting us here at home.
This de-dollarization movement is driven in part by resentment of America’s foreign policy, including, in particular, the US government’s increasing use of economic sanctions. Dethroning the dollar from its world reserve currency status makes it easier for countries to ignore these sanctions.
https://www.shtfplan.com/headline-news/will-the-end-of-the-petrodollar-end-the-us-empire
by Ron Paul
Apr 18, 2023
This article was originally published by Ron Paul at The Ron Paul Institute for Peace and Prosperity.
Future historians may say that the most significant event of 2023 had nothing to do with Donald Trump, other 2024 presidential candidates, or even the war in Ukraine. Instead, the event with the most long-term significance may be one that received little attention in the mainstream media — Saudi Arabia’s movement toward accepting currencies other than the US dollar for oil payments.
After President Nixon severed the last link between the dollar and gold, his administration negotiated a deal with the Saudi government. The US would support the Saudi regime, including by providing weapons. In exchange, the Saudis would conduct all oil transactions in dollars. The Saudis also agreed to use surplus dollars they accumulated to purchase US Treasury bonds. The resulting “petrodollar” is a major reason why the dollar has maintained its world reserve currency status.
Also this year, China and Brazil made an agreement to conduct future trade between the countries using the countries’ own currencies rather than dollars. Brazilian President Lula da Silva has called on more nations to abandon the dollar.
This de-dollarization movement is driven in part by resentment of America’s foreign policy, including, in particular, the US government’s increasing use of economic sanctions. Dethroning the dollar from its world reserve currency status makes it easier for countries to ignore these sanctions.
De-dollarization will negatively impact the US government’s ability to manage its over 30 trillion dollars debt. With a few exceptions, there is still no real support in Congress for spending cuts. Republican leadership members may say they will not support a debt ceiling increase unless it is tied to spending cuts. However, after the Biden administration accused the Republicans of wanting to cut Social Security and Medicare, House Speaker Kevin McCarthy declared a reduction in spending on Social Security and Medicare — big drivers of the federal deficit — “off the table.” Similarly, despite the growing skepticism of foreign interventionism among Republicans, the military-industrial complex maintains a viselike grip on congressional leadership and the White House. Therefore, do not expect any reduction in military spending. Instead, the Pentagon’s budget will likely increase.
The Federal Reserve will face continuing pressure to monetize ever-increasing federal debt and keep interest rates (and thus the federal government’s borrowing costs) low. The resulting inflation will lead to more support for ending the dollar’s world reserve currency status. As more countries abandon the dollar, the Fed will become less able to monetize the federal government’s debt without creating hyperinflation. This will result in a dollar crisis and an economic meltdown worse than the Great Depression.
This crisis will lead to the end of the welfare-warfare-fiat currency system. While history suggests this will lead to the rise of even more authoritarian political movements, the growing popularity of libertarian ideas suggests the collapse will also fuel the further growth of the liberty movement. This could mean that the crisis leads to a restoration of limited government and an advancement of liberty. The key to taking full advantage of the opportunity presented by the crisis is to keep spreading our ideas. Fortunately, we do not need a majority; we just need a tireless, irate minority committed to the cause to regain our liberty.
The Brazilian president has asserted his country’s role as a player in its own right in the new multipolar world
https://www.rt.com/news/574882-lula-china-trip-us/
April 18, 2023
By Oliver Vargas, a Latin America-based journalist, co-founder of Kawsachun News and host of the ‘Latin America Review’ podcast
Chinese President Xi Jinping (L) and Brazil’s President Luiz Inacio Lula da Silva, accompanied by their wives, attending a welcome ceremony at the Great Hall of the People in Beijing on April 14, 2023. © Ricardo STUCKERT / Brazilian Presidency / AFP
Brazilian President Luiz Inacio Lula da Silva has just returned from his highly anticipated and successful trip to China, generating optimism and enthusiasm for an enhanced role for Latin America as it emerges from the shadow of the US.
Chinese President Xi Jinping’s welcoming ceremony was the first sign the trip would be a success for everyone involved. As he and Lula walked down the red carpet, China’s military band played a rendition of ‘Novo Tempo’, an ‘80s Brazilian song associated with the protests against the US-backed dictatorships of that time.
Behind closed doors, 15 bilateral agreements and memoranda of understanding were signed, including investment deals, research and development plans, food standards, state news agencies, technology transfers, and cooperation on building the seventh China-Brazil Earth Resources Satellite (CBERS). The meeting built upon years of strategic partnership. China displaced the US as Brazil’s largest trade partner in 2009, and the event was about deepening that process.
However, the most interesting facet of the visit was the tone of the public statements by both leaders, as it went beyond diplomatic niceties and showed a clear commitment from both countries in taking on a leadership role that will challenge the years of Washington’s unipolar dominance.
US must stop ‘encouraging war’ in Ukraine – Lula
“I wonder every night why all countries are forced to do their trade backed by the dollar. Why can’t we do trade backed by our currency?” said Lula at an event in Shanghai. The conflict in Ukraine was also on the agenda, and Lula made it clear that the US funneling billions of dollars worth of weapons to the Kiev regime was escalating, rather than calming, the conflict. He commented, “It is necessary that the United States stop incentivizing the war and begin to speak about peace. The European Union needs to start talking about peace.”
Reasserting Latin America’s own interests
This visit marks the beginning of a much closer relationship between Latin America and those challenging US dominance on the international stage. Once Lula returns, the next big item on the agenda will be a visit from Russian Foreign Minister Sergey Lavrov, who will be embarking on a Latin America tour in which he’ll also visit Venezuela, Cuba, and Nicaragua.
Lavrov’s visits will be an opportunity to discuss areas of common interest for Russia and Latin America, such as trade, investment, energy, and defense. He will also attempt to strengthen cultural ties at a time when Washington is promoting xenophobia against Russians and Russian culture globally.
The success of Lula’s China trip will clearly put an extra spring in the step of the Latin American governments that will be receiving Russia’s official delegation this week. The win-win cooperation possible with China and Russia stands in clear contrast to the arrogant finger-wagging and interventionism on offer from the US.
Brazil calls for ‘move away’ from dollar
However, Latin America is not a passive participant in the process of building a multipolar world. The region is taking on leading roles in the process. Former Brazilian president and Lula ally, Dilma Rousseff – who is also the victim of a US-backed coup – is starting her new role as chief of the BRICS development bank in Shanghai, a crucial coordinating role for Brazil, China, Russia, India, and South Africa, as well as for a possible ‘BRICS plus’ expansion to include more emerging economies in the Global South.
Backlash from the US
Washington has tried to court Lula ever since he was elected president. Brazil is the largest economy in Latin America, so it would be unwise not to do so. The State Department has issued official condemnations of the right-wing rioters that attacked the Brazilian congress with the aim of preventing Lula from assuming office, its statements in support of ‘Brazilian democracy’ was perhaps an attempt to communicate that the US would not work to undermine Lula’s presidency, as they had done against other leftist presidents from Bolivia to Venezuela.
For that reason, Washington has not formally responded to Lula’s China trip and upcoming official meeting with Lavrov. Nevertheless, the cottage industry of pro-US ‘analysts’ and ‘commentators’ have been weighing in and setting a narrative that Lula was scoring an “own goal” by reaching out to China and Russia.
Top economist frets that US is getting ‘lonely’
The Argentina-based website Infobae, one of the largest right-wing digital media outlets in the region, ran a piece entitled ‘Lula’s trip to China risks becoming a goal against Brazil’. The author questions China’s intentions by saying, “Brazil, one of the richest countries in the world in terms of raw materials and natural resources, has everything to be a power on its own, without the help of any other foreign power. But to do so, it must overcome the corruption of its politicians and submit its management to strict scrutiny.”
The same outlets that decry the nationalization of industry and celebrate free trade deals with the US have suddenly taken a hardline “third-worldist” and isolationist turn.
Others are warning Brazil of drawing the ire of Washington. Oliver Stuenkel, who writes for Americas Quarterly – an outlet funded by Western oil corporations – recently said, “The more Lula talks about Ukraine during this visit in China, which in Western perception is not a neutral actor, the greater the risk that Brazil will be seen in Europe and the United States as an actor closer to Russia than to them.”
Perhaps being “an actor closer to Russia” and closer to China will prove to be a more fruitful path for Latin America. Being an actor closer to Washington has resulted in unequal trade deals, coups, invasions, and much more. Lula’s China trip shows that another, more equal relationship is possible. Lavrov’s Latin America tour will be a fantastic opportunity for Latin America to build on this and elevate itself onto the global stage.
Bloomberg
Fri, 14 Apr 2023
© Dennis Brack / DanitaDelimont.com / Legion-Media
Former Treasury Secretary Lawrence Summers
Former Treasury Secretary Lawrence Summers warned of “troubling” signs that the US is losing global influence as other powers align together and win favor among nations not yet aligned.
“There’s a growing acceptance of fragmentation, and — maybe even more troubling — I think there’s a growing sense that ours may not be the best fragment to be associated with,” Summers said on Bloomberg Television’s “Wall Street Week” with David Westin.
Summers was speaking on the sidelines of the spring meeting of global finance chiefs in Washington, where the key theme has been a warning about “fragmentation” of the world economy as the US and rich-world allies aim to reshape supply chains away from China and other strategic competitors.
“Somebody from a developing country said to me, ‘what we get from China is an airport. What we get from the United States is a lecture,'” said Summers, a Harvard University professor and paid contributor to Bloomberg TV.
Comment: If by ‘lecture’ he means: regime change, destabilisation, civil war, and vassal status, then, yes, he’s partly right; because a business relationship with China actually provides many times more than just an airport.
Simultaneous to the spring meeting in Washington, hosted by the International Monetary Fund and World Bank, the president of Brazil — the world’s No. 12 economy — was visiting China, showcasing those two nations’ tightening relations.
The semiannual Washington confab also follows a shock move by Saudi Arabia, Russia and other members of the OPEC+ group to cut crude-oil output — complicating the task for the US, euro zone and other developed nations battling to rein in inflation.
Comment: They could just drop the sanctions.
Deepening links between the Middle East and Russia and China — which recently brokered a rapprochement between Saudi Arabia and Iran — are “a symbol of something that I think is a huge challenge for the United States,” Summers said. “We are on the right side of history — with our commitment to democracy, with our resistance to aggression in Russia,” he said. “But it’s looking a bit lonely on the right side of history, as those who seem much less on the right side of history are increasingly banding together in a whole range of structures.
“Washington will need to consider how to address this new challenge, he added. The structures of the IMF and World Bank will also be a key longer-term issue, he said. “If the Bretton Woods system is not delivering strongly around the world, there are going to be serious challenges and proposed alternatives.”
Comment: See also: The IMF’s punitive loan system makes struggling countries poorer, it must end
The Chinese yuan may be the perfect foil for the rupee to usher in a new multipolar order for global trade.
India’s new foreign trade policy, which took effect on April 1, seeks to pivot away from the US dollar’s hegemony and promote the country’s own national currency, the rupee, in a bid to boost exports and conserve its foreign exchange reserves.
In 2022, India’s exports were $453.3 billion, a 14.6% uptick year-on-year, despite a slowdown in global trade. India became the fifth-largest economy in the world last September at $3.18 trillion, even though the Covid-19 pandemic slowed its march towards $5 trillion by another two years.
Amid a robust economic growth outlook, India is poised to trade in rupees with countries that are facing an acute shortage of dollars, according to the country’s commerce secretary, Sunil Barthwal. Santosh Kumar Sarangi, head of the directorate-general of foreign trade (DGFT), has spelled out a national goal of $2 trillion in exports of merchandise and services by 2030. Additionally, India will launch a new amnesty scheme for one-time settlement of defaults on export obligations, Sarangi said. The scheme, which will remain operational till September, aims for quicker resolution of trade disputes.
Indian rupee goes global
The rupee’s global push got a shot in the arm after 18 countries including Russia, Germany, Singapore, Israel, and the UK agreed to trade in the Indian national currency. The Reserve Bank of India (RBI), the country’s central bank, recently gave its approval to these countries to pay for imported goods in rupees. The move will reduce India’s ballooning trade deficit of $233 billion between April 2022 and January 2023.
India’s trade with its south Asian neighbors such as Nepal, Bhutan, Bangladesh, and Sri Lanka will also grow as BRICS members push to de-dollarize the global market.
Last month, the Indian government announced that the RBI had cleared 60 requests from various banks in these 18 nations to open Special Vostro Rupee Accounts (SVRAs) that allow foreign banks to settle payments in rupees.
Indian importers will make payments in rupees that will be credited to the SVRAs of the foreign correspondent bank, and exporters will receive payment from the SVRAs of their foreign partners. India’s central bank has also given the nod for the surplus rupee balance in these SVRAs to be used for payments on projects and investments, import advance flow management, and investments in government securities.
The RBI’s new norms augur well for India, which holds the rotating presidency of the G20 this year. New Delhi would like to use this elite world economic club to push for international trade settlement in rupees, Barthwal said. He believes the rupee trade will help several developing and less developed economies that are facing currency issues.’ A broad consensus on these lines emerged during the first Trade and Investment Working Group (TIWG) meeting of the G20 that was held in Mumbai, India in late March.
Time to end the dollar’s ‘bullying’
As economies around the world – especially emerging ones – feel the spillover effect of US monetary tightening, the debate is being reignited on ending the dollar’s dominance in global trade. Another key factor is Washington’s ability to use its currency as a potent tool for political blackmail and coercion against nations it sees as adversaries. From Cuba to Iran to Syria to Russia, the US has been accused of arbitrarily imposing sanctions on nations to further its own economic interests while pursuing irresponsible monetary policies. Several experts have cited the weaponization of the dollar as a likely trigger that could bring an end to its dominance as the world’s most powerful currency.
The call to ditch the US dollar has intensified following US sanctions on Russia due to the Ukraine conflict that started in February 2022. The punitive measures led to overseas assets of Russia’s financial institutions being frozen and multiple major Russian banks being cut off from the SWIFT system. This was an indication for the rest of the world, including India and China, of the growing risks of the US using the dollar for its geopolitical and expansionist gains. A new arrangement is needed, and currencies such as the Chinese yuan have an opportunity to play an important role in providing such an alternative.
Plans are afoot by many nations to ensure the SWIFT system becomes less relevant through innovative financial mechanisms that are gathering momentum. These measures would limit the system as a tool for the US and its coercive tactics. For instance, during the meeting of all ASEAN finance ministers and central bank governors in Bali, Indonesia on March 30, topping the agenda were discussions about reducing financial transaction dependence on the US dollar, euro, yen, and pound sterling and alternatively making payments in regional currencies.
In January, South African Foreign Minister Naledi Pandor was quoted as saying in an interview with Sputnik that the emerging economies of BRICS would like to find a way of bypassing the US dollar and creating a mechanism that would not be skewed towards wealthier Western nations. Saudi Arabian Finance Minister Mohammed Al-Jadaan echoed Pandor in January, saying the oil-rich sheikhdom would be open to talks about settling petroleum trade in currencies other than the US dollar.
Not so rosy for rupee-ruble trade
Though India has been working overtime to push the rupee for its global trade, the realities are far from ideal, as the currency has considerably weakened in the past year.
In the case of India-Russia bilateral trade, which has been rapidly growing since the Ukraine conflict started, New Delhi has found a viable alternative.
India and Russia have decided to route goods through third countries such as the UAE, which enjoys healthy ties with both the nations, and also because the emirates’ currency – the dirham – is pegged to the dollar, and as a result, the dirham enjoys global stability. Both nations have come to the understanding that this is the best way to engage in bilateral trade and also avoid trading in rupees, rubles and dollars.
However, the new approach contradicts the Indian government’s bid to settle international trade in rupees in line with an announcement made last July.
The rupee-ruble payment mechanism is proving to be tough going so far because of the growing trade imbalance between India and Russia and several other teething issues. Russian banks such as Sberbank and Gazprombank, which have operations in India, are also not in favor of Indian rupees piling up.
Besides, the rupee lost 7.8% in the last financial year, the most since 2019-20, and it was one of the worst-performing Asian currencies – falling more than 10% – in 2022. It ended this past fiscal year in March at 82.18 to a dollar. Given such volatility, using the UAE dirham appears to be a reasonable solution to help facilitate a further ramping up of bilateral trade.
Foreigners less enthusiastic about US debt
Another important area where de-dollarization trends are being observed is American debt. While statistics on foreign holdings of US Treasuries for any given month or even year may simply reflect the vicissitudes of markets and the relative strength of the dollar, the long-term secular trend is of foreign central banks scooping up less American debt than they once did.
For decades, foreign countries sterilized a significant share of US deficits – meaning the US ran deficits that it financed with dollar-denominated debt, which other countries bought in large quantities. However, this arrangement – a key component of the special status the dollar has enjoyed – has begun being chipped away at in recent years. In fact, since 2014, foreigners have been consistent net sellers of Treasuries.
Prominent American fund manager Luke Gromen has noted that between 2002 and 2014, foreign central banks bought 53% of all US Treasuries issued; from 2014-2022 that figure is just 3%. China, in fact, announced in 2013 that henceforth it would not grow its balances of US Treasuries and has been a net seller of Treasuries for over a decade.
This trend is likely set to continue. And with less trade being settled in dollars, there will be fewer dollars to be recycled into traditional reserve assets such as US Treasuries.
De-dollarized global trade
India and China have initiated the move to de-dollarize global trade with Russia, while Brazil is joining the party and South Africa is waiting in the wings. The initiative connects the BRICS trade dots. India has paid Russia in UAE dirhams for its crude oil purchases and saved an estimated $3.6 billion in the process.
The yuan has in recent years established itself as a major global currency that is poised to contribute to the dislodging of the dollar from its position of supremacy. The yuan is now the fifth most used currency in payments, third largest in trade settlements and fifth largest reserve currency.
To make matters worse for several developing countries, there has been an exponential rise in dollar borrowing costs, holding back the growth of their foreign trade. This is where comparatively low-cost yuan financing could further boost the Chinese currency’s global visibility.
The yuan joined the IMF’s Special Drawing Right (SDR) basket in October 2016, and since then the currency’s strength has grown significantly. IMF data showed that yuan accounted for 12.28% of the SDR last year.
With Beijing working overtime to make a currency play as the world’s second-largest economy, the prevailing dollar-dependent scenario could change in the next couple of years. China’s Cross-Border Interbank Payment System (CIPS), which is a viable alternative to SWIFT, and its digital currency (e-CNY) promise to become a dominant payment system to further trade between Beijing and its partners such as the Global South. The e-CNY could emerge as the significant reserve currency, which would break the dollar hegemony.
The Indian rupee could double down as a foil to the Chinese currency in a multipolar world. De-dollarization is likely to become a reality in a new global order, where the US won’t have the last word based on its economic might.
Historically, it’s the decline of the currency that portends the decline of hegemony. And the dollar could be the epitaph for US imperialism.
Bill Burns says Washington’s position as the “big kid on the geopolitical block” isn’t guaranteed
https://www.rt.com/news/574673-cia-burns-us-power/
The dominant global role of the US can no longer be guaranteed as the country is witnessing a time of change “that comes along a couple of times a century,” CIA Director Bill Burns has claimed.
April 13, 2023
Central Intelligence Agency (CIA) Director William Burns © Getty Images / Kevin Dietsch
The dominant global role of the US can no longer be guaranteed as the country is witnessing a time of change “that comes along a couple of times a century,” CIA Director Bill Burns has claimed.
Speaking at the Baker Institute earlier this week, Burns said that although Washington “still has a better hand to play than any of our rivals,” it is “no longer the only big kid on the geopolitical block and our position at the head of the table isn’t guaranteed.”
The CIA chief pointed to growing ties between China and Russia, which he argued will present a “formidable challenge” for his agency for years to come. According to Burns, Beijing is “not content to only have a seat at the table; it wants to run the table,” while Russia is seeking to “upend the table altogether.”
Burns, who served as the US ambassador to Moscow under George W. Bush, condemned Russia’s military operation in Ukraine, calling it an act of “brutish aggression.”
He claimed the CIA has provided “good intelligence” that has “helped the Ukrainians defend themselves” and cemented “a strong coalition in support of Ukraine.”
Burns added that Kiev’s long-anticipated spring offensive would feature “strong material and intelligence support from the US and our allies.”
The spy chief claimed that Russian President Vladimir Putin is “not serious about negotiations” on a peaceful resolution to the conflict, and suggested that only Ukrainian progress on the battlefield was “likely to shape prospects for diplomacy.”
US dollar forecast to lose global dominance
Russia has repeatedly stated that it is open to peace talks and has blamed Kiev and its Western allies for blocking negotiations. Ukraine has placed a legal ban on any talks with Russia as it seeks to defeat its opponent on the battlefield.
Regarding China, Burns insisted that Beijing remains the CIA’s “biggest long-term priority.” He noted that in the last few years, the intelligence agency has doubled the resources it focuses on China, including hiring and training Mandarin speakers and stepping up efforts to compete with Beijing on the world stage.
“Managing a crucial and increasingly adversarial relationship with China will be the most significant test for American policy makers for decades to come,” the US official said, arguing that the risk of a conflict over Taiwan will continue to grow.
Tales from the Conspiratum 
