By COGwriter
Will the US dollar be dethroned as the world's primary reserve currency?
Will the US dollar once fall and be essentially worthless?
Are there major international moves that threaten the US dollar's status?
Has the USA itself taken steps that threaten its status?
The answer to these questions is yes, and you can see this from world events that are confirming properly understood biblical prophecies.
(A related video is also available: US Dollar being challenged by Gold-Petro-Yuan.)
Here is some information about the US dollar and being the world's primary reserve currency:
For nearly a century, the United States dollar has served as the world's premier reserve currency, taking the crown once worn by the pound sterling. The future of the dollar as the most popular reserve currency is less certain. Reserve currencies are foreign currencies held by central banks. When a country acquires reserves, it doesn't place the currency in general circulation. Instead, it parks the reserves in the central bank. The reserves are acquired through trade, with the acquiring country selling goods in exchange for currency. Reserve currencies thus grease the wheels of international commerce by helping countries and businesses conduct transactions using the same currency, a much simpler task than settling transactions involving different currencies. Their popularity is easy to see: between 1995 and 2011, the amount of currency held in reserve increased by over 730%, from around $1.4 trillion to $10.2 trillion.
Issuers of Reserve Currencies
Reserve currencies are typically issued by developed, stable countries. The currency most commonly held as a foreign exchange reserve is the U.S. dollar, which, according to the International Monetary Fund (IMF), comprised nearly 62% of allocated reserves as of late 2012. Other currencies held in reserve include the euro, Japanese yen, Swiss franc and pound sterling. The dollar, while still the most widely held reserve currency, has seen increased competition from the euro. (Radcliffe B. A Primer On Reserve Currencies http://www.investopedia.com/articles/economics/13/reserve-currencies.asp#ixzz4ssejn6Ga accessed 09/16/17) Facebook
Here is more about the benefits of being the world's reserve currency:
Michel Sapin, the French finance minister, called for a “rebalancing” of currencies used in international transactions, implicitly criticizing the status of the U.S. dollar as the principal international reserve currency. Sapin joins a long tradition of French finance ministers criticizing the dollar’s privileged status, which goes back to Valery Giscard d’Estaing. In the 1960s, d’Estaing, who served as President of France from 1974 to 1981, said that the United States received an “exorbitant privilege” due to the greenback serving as the basis for much of international financial transactions.
The dollar’s global reserve status does confer some real benefits, ...
The purpose of a reserve currency is to help smooth international transactions. Imagine a company that wants to sells goods to a company in a country with a different currency. When it comes to currency, the companies have two potential problems. First, the exchange rate between the two currencies could shift dramatically and change the price of the good. Secondly, the importing company might use a currency that isn’t used much outside of its borders and trading that currency might be difficult. By using a widely circulated currency, such as the U.S. dollar, the two companies eliminate the two risks.
But the two companies whose transactions are smoothed aren’t the only ones who benefit. The issuer of the reserve currency, the United States in this case, also benefits. More companies and individuals using the dollar means more transactions denominated in dollars, which provides more liquidity for this currency. Liquidity means that financial assets can be priced more easily and loans are more easily provided. In short, U.S. firms get easier access to capital because of the dollar’s reserve status.
These benefits are certainly real and substantial, but there are also costs. ... foreign goods are less expensive to U.S. firms and households, which spurs them to consume cheaper foreign goods and therefore imports increase. (Bunker N. Being the reserve currency has its privileges and costs. July 2014 http://equitablegrowth.org/equitablog/reserve-currency-privileges-costs/ accesed 09/16/17)
The essentially benefits to the USA have included making money on international trades that the USA otherwise would not be involved in, less inflation, a subsized economy, lower borrowing cost, a more attractive investment market, and getting many goods from foreign lands at less cost than otherwise.
This status for the USA will not contine.
Former US Congressman Ron Paul wrote:
January 12, 2018
The Great Recession began in 2007. It didn’t take long for the money managers to recognize its severity, and that a little tinkering with interest rates would not suffice in dealing with the economic downturn. In Dec. 2008, the first of four Quantitative Easing programs began which did not end until Dec. 18, 2013. Some very serious consequences of this policy of unprecedented credit creation have set the stage for a major monetary reform of the fiat dollar system. The dollar’s status as the reserve currency of the world will continue to be undermined. This is not a minor matter. As our financial system unravels, the seriousness of it will become evident to all, as the need to pay for our extravagance becomes obvious. This will make the country much poorer, https://mises.org/wire/what-has-qe-wrought
Notice also the following:
What happens to the US economy if the Dollar is no longer the reserve currency of the world?
If US T-bills lose their attraction as reserve investments … it would get harder for the Treasury to sell more of them, requiring higher interest rates to be paid and potentially forcing austerity measures on the US government or triggering classic deficit spending inflation (“printing money” to pay for government, this doesn’t happen now because the deficit is financed through sales of those bonds at extremely low interest rates).
If foreign central banks and governments start exchanging their US dollars for some other currency or currencies, then the value of the dollar in international trade drops, it becomes more expensive to buy imported goods in the US and more profitable to sell exported goods from the US. This could have all kinds of political and social effects, especially if the shift was rapid, severe, and unexpected. https://www.quora.com/What-happens-to-the-US-economy-if-the-Dollar-is-no-longer-the-reserve-currency-of-the-world
The above is warning about inflation, higher interest rates, and troubles borrowing. The USA is the most highly indebted nation of all time. The USA has been essentially on a borrowing binge the last four decades and its economy is now dependent upon borrowing. The Bible paints an even worse scenario that in the time of the end (Habakkuk 2:2-3) the highly indebted will be taken over (Habakkuk 2:2:6-8) and destroyed (Daniel 11:39; USA in Prophecy: The Strongest Fortresses).
Notice what Donald Trump stated in October 2024:
In October, speaking at the Economic Club of Chicago with Bloomberg, Trump warned that the United States could slip into “Third World status” if it loses reserve dominance.
“We have to have that. We cannot lose it,” Trump said. “You’ll go to Third World status in this country because you take a look at the way things are running.” He also pledged to implement a 100 percent levy on any country considering moving away from the dollar. (Durden T. De-Dollarization Effort In Spotlight After Trump's Tariff Threat On BRICS. ZeroHedge, December 3, 2024 https://www.zerohedge.com/geopolitical/de-dollarization-effort-spotlight-after-trumps-tariff-threat-brics
Yes, the impact on the US would be horrible--and even worse than Donald Trump asserted.
The time will come when the US dollar is dethroned and this will inflict great pain, though not the “greatest pain” that the North Koreans want, on the USA. But shortly after the US dollar becomes close to worthless, the great tribulation (Matthew 24:21) will come and the USA will be no more (watch Do these 7 prophesies point to the end of the USA?). North Korea cannot, of itself, cause that. But actions and reactions to sanctions are partially setting the stage for that.
Dethroning the US dollar will cause massive economic problems for the USA. Much more than almost anyone believes. The standard of living in the USA has been raised/subsidized for years because of the status of the US dollar. That status is weakening. This will ultimately severely hurt the USA.
Notice something published back in 1968:
You have seen that the U.S. Dollar — long thought of as the stablest currency in the world — is in immediate jeopardy of being DEVALUED!
That means that it will take you MORE DOLLARS to buy the SAME amount of imported goods. IF the dollar is devalued, INFLATION will almost surely result — and eventual economic COLLAPSE for the United States.
IF the dollar is devalued, INFLATION will almost surely result — and eventual economic COLLAPSE for the United States.
Those of you who truly BELIEVE the prophecies of your Bible KNOW such economic collapse is prophesied to happen!
President Johnson has signed a bill removing the "gold cover" for the United States.
What does this all mean?
It means that AT ANY TIME now, you could suddenly awake to find you have only about HALF the "money" you thought you possessed — or that your purchasing power has been DRASTICALLY reduced, overnight!
SHOULD the dollar collapse, it could well mean a repetition of the disastrous DEPRESSION that strangled the economic world ln 1929!
... YOUR MONEY is in danger! ...
And, temporarily, the businesses of this world are still continuing along with a shaky confidence in the DOLLAR!
So now, THINK about your dollars for a moment. Do you still have some "confidence" in THIS WORLD, and in its financial systems? Are you "laying up treasure where thief doth enter and rust doth corrupt" or are you laying up treasure toward the KINGDOM OF GOD? Is your money stagnating — is it lying DORMANT — where it may be literally SNATCHED AWAY from you in a moment? Or is it PRODUCING, WORKING, DOING something constructive? ...
Think about your "money." Is it something REALLY tangible? Or is it only a piece of PAPER in which man temporarily retains a certain confidence? ... MONEY will be worth NOTHING to you. (Armstrong HW. Co-worker Letter, March 26, 1968)
While the collapse of the US dollar has not yet happened, since the above came out, the dollar went off the gold standard and the USA did enter a period of high inflation. The time will come when the US dollar is not accepted by other nations and will be worth no more than the scrap value of the cotton-paper it is printed on.
Back in 2009, my 2012 and the Rise of the Secret Sect book warned that the U.S. dollar will ultimately be worthless with another currency (with European involvement and/or control) taking its place in the world (see Chapters 7-8 and Appendix B).
One thing in my book 2012 and the Rise of the Secret Sect was the following:
It would seem that once the U.S. dollar totally collapses people all around the world will consider that even if the Euro is strong, having a more gold-backed currency would be safer. Having the European power acquiring a lot more gold to back the Euro (even if the backing is only implied) or possibly other future European currency (that might potentially replace the Euro) may greatly increase European credibility, prosperity, and influence around the globe.
Why is any of this relevant?
Because we are seeing steps to make this happen.
After that book came out, the Wall Street Journal reported that on September 7, 2009 a committee of the United Nations advised dropping the U.S. dollar as the world's reserve currency (Goldstein S. U.N. Panel Calls For Dollar Reserve Role To Be Eliminated. Wall Street Journal Online, September 8, 2009. http://online.wsj.com/article/BT-CO-20090908-704507.html). While there had been scattered discussions of this before, this was the first time such an important multi-national panel specifically called for the elimination of the role of the U.S. dollar as the world’s reserve currency.
“Gulf Arabs are planning—along with China, Russia, Japan and France—to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency… The current deadline for the currency transition is 2018” (Fisk R. The demise of the dollar. The Independent, 6 October 2009 http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html; see also (Evans-Pritchard A. Gulf petro-powers to launch currency in latest threat to dollar hegemony. Telegraph, December 16, 2009. http://www.telegraph.co.uk/finance/economics/6819136/Gulf-petro-powers-to-launch-currency-in-latest-threat-to-dollar-hegemony.html).
The United Nations made a stronger recommendation to drop the dollar as the primary basis of the world trade in June 2010 (Charbonneau L. Scrap dollar as sole reserve currency: U.N. report. Reuters, June 29, 2010. http://www.reuters
.com/article/idUSTRE65S40620100629?feedType=RSS&feedName=topNews).
In October 2010, Simon Derrick at Bank of New York Mellon said, “The euro is the only real alternative to the dollar as a reserve currency” (Graham P, Oliver C. Currency race that everyone is trying to lose. Financial Times, October 12, 2010. http://www.ft.com/cms/s/0/9cd196e8-d62d-11df-81f0-00144feabdc0.html). The French President declared that the world powers need to implement a new international monetary system (Mitchell A. UPDATE: Sarkozy Urges New Monetary System After China Talks. Wall Street Journal, November 5, 2010. http://online.wsj.com/article/BT-CO-20101105-715584.html).
In November 2010, Russia and China announced that they were dropping the use of the US dollar for bilateral trade (Qiang S and Xiaokun L. China, Russia quit dollar. China News, November 24, 2010. http://www.chinadaily.
com.cn/china/2010-11/24/content_11599087.htm). Even the Washington Post realized, “The days of the U.S. dollar as the world's reserve currency are numbered” (Kaplan R. A world with no one in charge. Washington Post, December 5, 2010. http://www.washingtonpost.com/wp-dyn/content/article/2010/12/03/AR2010120306537.html). Forbes reported that “central banks around the world” are “dumping the greenback” as “The US dollar’s role as the world’s reserve currency has been called into question” (Central Banks Dump Treasuries As Dollar’s Reserve Currency Status Fades. Forbes, March 16, 2011. http://blogs.forbes.com/afontevecchia/2011/03/16/central-banks-dump-treasuries-as-dollars-reserve-currency-status-fades/).
In May 2011, “Chuck Butler, president of EverBank World Markets and a 35-year currency analyst” stated: “The U.S. dollar will lose its reserve currency status sometime between 2014 and 2020. There will be no trumpet; it will just happen” (Clark J. If the Dollar Goes, What Happens to Your Portfolio? Casey Research, June 21, 2011. http://www.caseyresearch.com/editorial.php?page=articles/if-dollar-goes-what-happens-your-portfolio&ppref
=CRX409ED0611D). US policies seem to be leading to the end of the dollar (Powell SS. How US debt risks dollar doomsday. New York Post, April 30, 2012. http://www.nypost.com/p/news/opinion/opedcolumnists/how_us_debt_risks
_dollar_doomsday_j8dxHSYWUa22QpSN7ttOIL).
In September 2018, EU Commission President Jean-Claude Juncker said he wanted the EU to be "Promoting the euro currency abroad, to compete with the US dollar" (Jean-Claude Juncker calls for EU to be a global player. Deutsche Welle, September 12, 2018. https://www.dw.com/en/jean-claude-juncker-calls-for-eu-to-be-a-global-player/a-45453011).
Back in March 2015, I reported:
Notice another article about China, gold, and its AIIB:
Gold And Silver – China’s AIIB Spells U.s. Dollar Demise, Not Clear For Precious Metals
The Asian Infrastructure Investment Bank [AIIB]. What is it? Yet another political disaster for the Obama administration as it leaves a wide swath of blunder after blunder in massively failed efforts to keep US allies from aligning with China’s newest anti-US, anti- fiat Federal Reserve “dollar, AIIB. It will not just compete with the World Bank, a US- dominated financial entity, the AIIB will logically replace the World Bank in its own Asian sphere of influence. …
If WWIII breaks out, as an increasing number of voices are expressing, it will be due to the singular effort of the US and no other reason.
Back to the AIIB. It is a clear announcement by the rest of the world that the fiat “dollar,” as a world reserve currency is fading faster and faster away as the leading international currency for settling trade between nations. The AIIB is China’s announcement to the rest of the world that it has had it with the bully tactics of the US, and China wants, is actually closer to demanding that she be given her due respect as a world leading power overtaking the US in increasing measures for what constitutes a new world economic leader.
The AIIB will become a leading lender for new development, particularly in Asia where a lot of new growth and development is underway. This is in sharp contrast to the US that uses warfare as its badge of “economic development,” more like destruction. Just look at Libya, Afghanistan, Iraq, now Ukraine, ongoing attempts to destabilize Syria. Anywhere the US is involved, it is destroying nations. By contrast, China and Russia are making deal after deal for true economic development in and with other countries without immersing those countries in unrepayble debt situations.
China’s AIIB will put an end to that, and the US is very unhappy. The UK agreed to join with the AIIB, much to the consternation of Obama, accusing the UK of “constantly accommodating” China. http://www.marketoracle.co.uk/Article49933.html
The time will come when the US dollar is totally worthless and will stop being a world reserve currency. …
China is trying to take steps. Not all of them will work. However, WWIII will come, and actions by the Europeans, the USA, and others are leading to it. (Thiel B. China, Gold, and the AIIB. COGwriter, March 31, 2015)
In 2016, I reported:
the Chinese see what happened as a step to dethrone the USA dollar as the world’s predominant reserve currency.
Notice something from several days ago:
World Bank backs China’s push to challenge US dollar dominance by selling SDR bonds ahead of G20 summit
World Bank vice-president says more Special Drawing Rights-denominated bonds may be issued after debut sale this week …
The yuan will officially become a component currency in the basket calculating the value of the SDR, offering the yuan nominal international reserve currency status along with the US dollar, the euro, the pound and yen. http://www.scmp.com/news/china/economy/article/2012119/world-bank-backs-chinas-push-challenge-us-dollar-dominance
The idea that putting the Chinese currency in the SDR basket to reduce/challenge the dominance of the USA dollar is obviously not limited to Jim Rickards.
Once the USA does lose its status as the world’s reserve currency, the USA will experience problems 99% of Americans probably do not think is possible. …
the USA has actual, past, and potential enemies as creditors.
Furthermore, consider that while the USA has been accumulating pledges in the form of US Treasury bonds and notes, the Chinese have been accumulating gold (see China, Gold, and the AIIB). Various ones in Europe have been repatriating gold from the USA, like the Germans (see Germany is repatriating and accumulating gold–why?). Germany is getting more gold. The Bible teaches that the final King of the North will accumulate gold and take it from Egypt in Daniel 11:40-43; cf. Revelation 18). (Thiel, B. G20, SDR, China, & JR’s ‘Timetable for the Dollar’s Demise’. COGwriter, September 6, 2016)
For a multitude of decades following the end of World War II, the U.S. dollar has reigned supreme as the universal currency with which most international trade was conducted…
Even as China awakened, and became the world’s runnerup world’s economic superpower, its “yuan” barely increased as a sovereign currency for global trade in general. If anything, the dollar has maintained its strength, and then some, as the foreign investment magnet has gravitated toward the U.S. This requires conversion by other world currencies into the dollar.But, now, an unpublicized component of the recent Sino-Russian Alliance has been a joint effort to campaign for its relative currencies to be accepted in lieu of the greenback. This is based on Russia’s massive exports of oil and natural gas, and China’s unparalleled dominance in world export of finished commercial, industrial and consumer goods, as well as commodity components. A few preliminary statistics indicate progress in that direction:
1) China’s foreign exchange reserve, which has increased from $2.2 trillion in 2009 to $3.4 trillion currently, has been offset by China’s U.S. dollar reserves decrease from 69% to 54% during the same time period.
2) The People’s Bank of China has signed nearly two trillion yuan worth of currency swap deals with 20 countries and regions, including Hong Kong.
3) China and Russia have aggressively built up their gold reserves, still recognized worldwide as a stabilizing backup for world currencies used in ongoing international trade. This has greatly curbed the U.S.’s one indisputable world lead, which the China/Russia combine is attempting to eventually overtake. http://voices.mydesert.com/2013/08/09/chinarussia-attempt-to-dethrone-us-dollar-currency-supremacy/
China continues to hoard gold en masse. In June, China imported 104.6 tonnes from Hong Kong. That would bring China’s gold imports from Hong Kong to 1,160 tonnes since the beginning of this year. Officially, China reports its total gold holdings at around 1,000 tonnes. Yet speculation is widespread that it could be holding somewhere between 7,000 to 10,000 tonnes, surpassing the United States’ 8,113 tonnes. China is apparently preparing to adopt an impending gold standard.
Yao Yudong, a member of the People’s Bank of China’s Monetary Policy Committee, recently penned an article in the China Securities Journal, in which he called for a new Bretton Woods system. This would help stabilise the global exchange rates. By implication, he is calling for a return to the gold standard.
Under the old Bretton Woods system, the US dollar was the global reserve currency, fixed to gold at US$35 per ounce. This is known as the gold standard system, based on which paper currencies were issued. But President Richard Nixon ended this gold standard in 1971 by floating the US dollar outright.
By doing so, the world moved into the fiat currency system – or paper money system. Ever since, the dollar has been printed out of thin air. But the US has also been able to guard the dollar as the world reserve currency. This fiat currency system has given rise to huge debts, an expansion of the banking system and financial markets, and has become the mother of all volatility.
Now China is attempting to challenge this fiat currency system. It is no secret that China would like to float the yuan to become an international reserve currency. But China will not bank on the fiat currency system to do so. It is now pegging its yuan to the US dollar tightly. When the timing is right, China will de-link the yuan from the US dollar and fix it to gold instead. This will have far-reaching implications for the global financial system, creating further dislocations and crisis on a global scale.
Also, China has been entering currency swap contracts with other countries to bypass the US dollar. It has currency swap agreements with Brazil, Russia, Iran, Australia and the UK, to name a few. This scheme is developing fast to supplant the dollar with the yuan. http://www.nationmultimedia.com/opinion/Prepare-for-a-new-gold-standard-30212197.html
In simple terms, Russia and China want to increase the convertibility of the rouble and the yuan, and to increase the two currencies’ role in international trade – and then to propose them as global reserve currencies.
The United States, where the level of sovereign dept is approaching 110 per cent of GDP, will be unable to meet such a challenge.
Next step: kick the chair from under the USA
To that end, China and Russia will need to back their currencies with gold. Last year China held 30.2 per cent of the global gold and currency reserves. It is unclear how much of the Chinese reserves are being held in gold, since the country does not disclose such details.
There is no doubt, however, that China’s gold reserves are growing. http://rbth.asia/business/2013/07/25/china_russia_working_to_undermine_dollars_central_role_48177.html
In 2017, it was reported that the Germans have repatriated gold, and ahead of schedule (see Germany has brought back its gold and EU approves CETA and/or watch Germany, Gold, and the US Dollar). The German Europeans are also taking other steps towards world dominance (e.g. ‘Undemocratic’ European Union has become a German empire).
More events have happened since.
Notice also the following:
March 13, 2018
- Hungarian National Bank (MNB) to repatriate 100,000 ounces gold from Bank of England
- Follows trend of Netherlands, Germany, Austria and Belgium each looking to bring gold back to home soil ...This is not an unusual move. In recent years we have seen the likes of Germany, Venezuela and the Netherlands each repatriate their gold from various locations. The pace does appear to have been picking up since the late Hugo Chavez decided to bring home 180 tonnes of gold in 2011.
Furthermore, huge central banks namely Russia and China have been adding to their gold hoards, one more publicly than the other. Both have also been encouraging the use of gold as a means of payment in international trade as a means of avoiding US dollar hegemony. ...
Russia, China and Turkey have each materially increased their gold reserves in recent years. Since March 2015 Russia has bought gold every single month. January's purchase took their reserves above those of China, a level which had previously been monitored as an example of the East's great interest in moving away from US dollar dominance. ...
Russia's reasons for buying so much gold is akin to those of China, Turkey and smaller countries such as Kazakhstan. Gold gives each of these countries independence from the US dollar amid financial sanctions, trade wars and ongoing posturing by the West.
Whilst many in the West are dismissive about gold, the behaviour of central banks suggests quite a different mindset. ...
Gold cannot be devalued as the euro, dollar, sterling and all fiat currencies currently are. ...
Gold is a borderless money that acts as the ultimate reserve and safe haven in a diversified portfolio. This is something central banks are strongly aware of. The difference between the East and West banks is that the East is making big strides to bring gold to the forefront of their international affairs.
By adding gold to their reserves they are gaining equal footing with Western banks who have so far tried to dominate under a US-centric financial system. https://www.zerohedge.com/news/2018-03-13/hungarys-gold-repatriation-adds-growing-protest-against-us-dollar-hegemony
The Bible is clear that a leader in Europe will be interested in gold in the end times. Gold will have value when the USA dollar becomes worthless.
Deutsche Welle reported the following from Germany:
Trump’s policies add luster to gold at dollar’s expense
11 June 2019
Central banks in emerging countries are hoarding the precious metal at the fastest pace in decades. The “weaponization” of the dollar by President Trump is making countries increasingly wary of the greenback.
Twenty years after central banks in the West dumped gold in what many saw as the end of the metal’s role in the global monetary system, their counterparts in emerging countries are hoarding gold at rates not seen in over 50 years.
Central banks bought 145.5 tons of gold in the first quarter of 2019, an increase of 68% compared with last year and the strongest first quarter since 2013, according to the World Gold Council. In the past four quarters, these banks have hoarded over 715 tons of the precious metal — the highest that the industry-led body has ever recorded. …
US President Donald Trump’s weaponization of economic tools in pursuit of foreign policy breakthroughs is also prompting countries to look for alternatives to the dollar as the preferred repository for world savings.
“The trade war is a new reason in this decadelong trend, but in itself it looks less important for central bank gold buying than the message which Trump’s tariffs send about Washington asserting its foreign policy through finance and economics,” Adrian Ash, director of research at investment firm BullionVault, told DW. “Selling dollars for gold puts part of a nation’s reserves outside Washington’s control of the dollar clearing system.” …
Russia was the biggest purchaser of gold during the first quarter, followed by Turkey and China. The three have seen their ties with Washington fray over the past few years. …
Russia has been aggressively hoarding gold in response to Western sanctions in 2014 over Moscow’s actions in Ukraine. The country’s central bank has bought more than 200 tons of gold every year since then, while drastically cutting down on its US treasury holdings amid tensions with the US and the likelihood of further sanctions. …
“When they [the Russians] are talking about political risks, they’re talking about sanctions. They’re talking about geopolitics. They’re talking about the US dollar financial system and how gold can help them manage an element of that risk,” Alistair Hewitt, a director at the WGC, told DW. “I think that probably a theme that’s affecting many other central banks as well.” …
Last year, Hungary and Poland also joined the gold-buying spree …
Reserves held in US dollars fell to $6.62 trillion, or 61.69% of total foreign exchange reserves, in the fourth quarter of 2018, from $6.63 trillion, or 61.94%, in the third quarter. The dollar’s share has now fallen for three straight quarters. https://www.dw.com/en/trumps-policies-add-luster-to-gold-at-dollars-expense/a-49135607
While some consider gold to be ‘real money’ and others simply a relic from past ages, the reality is that many nations in Europe as well as Asia have taken steps the past several years to ‘repatriate’ their gold (and/or increase their gold holdings). Meaning that they have had gold stored in places like the USA and the UK, but now have been getting gold transferred back to themselves.
Notice a headline on this:
Turkey repatriates gold from US in bid to ditch dollar
20 April 2018 https://www.rt.com/business/424670-gold-turkey-repatriation-dollar/
Why do various nations want gold?
The official answer would probably have to do with financial stability.
But another reason is for them to be able to exist in a world where the US dollar is no longer the reserve currency for the world.
While gold-adovcates and others have been warning about the demise of the US dollar, relatively few have paid attention to those warnings.
But in 2019, even J.P. Morgan Chase has been willing to publicly provide warnings. Notice the following:
The U.S. dollar could lose its status as the world’s dominant currency. How does this affect investors?
July 10, 2019
The U.S. dollar (USD) has been the world’s dominant reserve currency for almost a century. As such, many investors today, even outside the United States, have built and become comfortable with sizable USD overweights in their portfolios. However, we believe the dollar could lose its status as the world’s dominant currency (which could see it depreciate over the medium term) due to structural reasons as well as cyclical impediments. ...
There is nothing to suggest that the dollar dominance should remain in perpetuity. ... the USD will likely lose value compared to a basket of other currencies, including precious commodities like gold. ...
Dollar’s declining role already under way?
Recent data on currency reserve holdings among global central banks suggests this shift may already be under way. As a share of overall central bank reserves, the USD’s role has been declining ever since the Great Recession ...
Trade Wars have long-term consequences
The current U.S. administration has called into question agreements with nearly all of its largest partners—tariffs on China, Mexico and the European Union, renegotiating NAFTA, as well as abandoning the Trans Pacific Partnership. A more adversarial U.S. administration could also encourage countries to reduce their reliance on USD in trade. Currently 85% of all currency transactions involve the USD despite the U.S. accounting for only roughly 25% of global GDP.
Countries around the world are already developing payment mechanisms that would avoid using the dollar. These systems are small and still developing but this is likely to be a structural story that will extend beyond one particular administration. In a recent speech on the international role of the euro, Bank for International Settlements Chief Economist Claudio Borio brought up the benefits of pricing oil in the euro saying, “Trading and settling oil in the euro would move payments from dollars to euros and thereby shift ultimate settlement to the euro’s TARGET2 system. This could limit the reach of U.S. foreign policy insofar as it leverages dollar payments.”
The European Central Bank also alluded to this theme in a recent report saying that “growing concerns about the impact of international trade tensions and challenges to multilateralism, including the imposition of unilateral sanctions seem to have lent support to the euro’s global standing.” ...
Given the persistent—and rising—deficits in the United States (in both fiscal and trade), we believe the U.S. dollar could become vulnerable to a loss of value relative to a more diversified basket of currencies, including gold. https://privatebank.jpmorgan.com/gl/en/insights/investing/is-the-dollar-s-exorbitant-privilege-coming-to-an-end. https://privatebank.jpmorgan.com/gl/en/insights/investing/is-the-dollar-s-exorbitant-privilege-coming-to-an-end
Well, the US dollar will one day lose its reserve currency status. And yes, sanctions, trade policies, and US debt will be contributing factors. Plus the fact that many nations are currently accumulating gold as part of an effort to push the US dollar aside for international trade.
In 2017, I reported the following:
Both Europe and China want to dominate the world. Currently, on certain matters, they are working together and with other countries, to dethrone the dominance of the USA and its Anglo-Saxon descended allies, like the UK., notice also the following:
China is currently modifying the terms of its oil trade with Saudi Arabia. Specifically, China is working on a deal to pay for Saudi oil using Chinese yuan. This effort poses a direct threat to the security of the dollar.
If this China-Saudi deal happens — yuan for oil — it’s another step closer to the grave for the petrodollar, which has dominated global finance since 1974. You can revisit Jim Rickards article about the Assault on the Dollar, here.
To recap, the petrodollar is weakening because the dollar is losing power as the world’s reserve currency. This is similar to the way pounds sterling gradually fell out of favor during the decline of the British Empire. The decline may take a long time, but what we’re seeing today is another step in the death march of the dollar.
Since 1974, Saudi has accepted payment for almost all of its oil exports — to all countries — in dollars. This is due to an agreement between Saudi and the U.S., dating back to the days of President Nixon.
Beginning about 15 years ago, China ceased being self-sufficient in oil, and began buying Saudi oil. As per all Saudi customers, China had to pay in dollars. Even today, China still pays for Saudi oil in U.S. dollars and not yuan, which perturbs China’s leaders.
Since 2010, China’s total oil imports have nearly doubled. According to Bloomberg News, China has surpassed the U.S. as the world’s largest oil importing nation. …
If Saudi begins accepting yuan for oil, all bets are off on the petrodollar. Yuan-for-oil will entirely change the monetary dynamics of global energy flows. I expect the U.S. dollar to weaken severely when that news breaks.
Much of this oil-for-yuan news is public information. Yet, for some strange reason, there’s a form of blindness within western policymaking and media circles concerning the implications of yuan-for-oil. The idea is so “off-the-wall” that many policy leaders simply ignore it. http://www.zerohedge.com/news/2017-06-01/chinas-next-step-destroy-dollar
What is the petrodollar?
Essentially, it is the fact that although the US dollar is no longer backed by gold, since most oil is priced in US dollars, that gives the US dollar a backing in through a needed commodity, hence always insuring that the US dollar will have value. So it is sometimes called a petrodollar–which is broader than the term’s original intent. …
The existence of the ‘petrodollar’ seems to have helped the USA be in a position to increase its debt and that will not end well (cf. Habakkuk 2:2-8; Daniel 11:39).
As far as China goes, it wants more world influence and ultimately domination (watch Is China paving roads to Armageddon?), but the Bible shows that while China will be prosperous for a time, it will be a power from Europe that will essentially dominate the world for the last 3 1/2 years before Jesus returns. (Thiel B. China trying to benefit from US withdraw of Paris accord, while also working to eliminate the ‘petrodollar’. COGwriter, June 2, 2017)
Notice also:
September 9, 2017
Venezuelan President Nicolas Maduro said Thursday that Venezuela will be looking to “free” itself from the U.S. dollar next week, Reuters reports. …
“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in a multi-hour address to a new legislative “superbody.” He reportedly did not provide details of this new proposal.Maduro hinted that the South American country would look to using the yuan instead, among other currencies.“If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro also said.Venezuela sits on the world’s largest oil reserves but has been undergoing a major crisis, with millions of people going hungry inside the country which has been plagued with rampant, increasing inflation. In that context, the recently established economic blockade by the Trump administration only adds to the suffering of ordinary Venezuelans rather than helping their plight. …
Iran has been using alternative currencies like the yuan for some time now and shares a lucrative gas field with Qatar, which may ultimately be days away from doing the same. …
Nuclear giants China and Russia have been slowly but surely abandoning the U.S. dollar, as well, …
Now Venezuela may ultimately join the bandwagon, all the while cozying up to Russia …
This moves comes just days after The BRICS Summit where Putin unveiled his “fair multipolar world,” which culminated, as Pepe Escobar explained, in the following
Meet the oil/yuan/gold triad
It’s when President Putin starts talking that the BRICS reveal their true bombshell. Geopolitically and geo-economically, Putin’s emphasis is on a “fair multipolar world”, and “against protectionism and new barriers in global trade.” The message is straight to the point. …
And then, Putin delivers the clincher;
“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”
“To overcome the excessive domination of the limited number of reserve currencies” is the politest way of stating what the BRICS have been discussing for years now; how to bypass the US dollar, as well as the petrodollar.
Beijing is ready to step up the game. Soon China will launch a crude oil futures contract priced in yuan and convertible into gold.
This means that Russia – as well as Iran, the other key node of Eurasia integration – may bypass US sanctions by trading energy in their own currencies, or in yuan.
Inbuilt in the move is a true Chinese win-win; the yuan will be fully convertible into gold on both the Shanghai and Hong Kong exchanges. http://www.zerohedge.com/news/2017-09-08/venezuela-about-ditch-dollar-major-blow-us-heres-why-it-matters
As far the Chinese go, they do have a public plan:
Trading Oil for Gold: China’s Gold-Backed Petro-Yuan Market, Threatens the US Dollar?
China recently announced they will trade oil for yuan “backed” by gold. …
We also know China has been a huge importer of gold for the last 4-5 years and done so publicly via Shanghai receipts and deliveries. …
China is now suggesting THEY will be the ones to trade oil and not use the dollar for settlement. Instead, settlement will be in yuan.
… does China want to become the world’s reserve currency? I do not think so as they have seen economies of the issuers of the reserve currency destroyed time after time throughout history. Rather, China wants to lead the parade away from the dollar or at least steer it. Whether via a larger slice of the SDR pie, or another as yet to be introduced currency I do not know.
What we do know: the U.S. is broke and very likely nearly out of gold. …
Wrapping this up, we need to know “what” all this means? Most importantly it means the world will have an alternative to settling in dollars …which means less overall demand for dollars. This alone will weaken the dollar much further than the huge move we have already seen. A weaker dollar will mean much higher prices (inflation) for the imported goods we no longer manufacture at home.
There is a bigger problem here that few are thinking of yet. How will the U.S. settle trade if the dollar becomes so weak it becomes shunned …AND we have no gold for international settlement left? This is a very serious question and one pertaining directly to the standard of living for Americans. …
China is leading a world that is ready to follow in a direction away from dollars. As for gold, it will explode in price in terms of a weakening dollar but there is potentially more. http://www.globalresearch.ca/trading-oil-for-gold-chinas-gold-backed-petro-yuan-market-threatens-the-us-dollar/5608136
China sees new world order with oil benchmark backed by gold
DENPASAR, Indonesia — China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into gold in what analysts say could be a game-changer for the industry.
The contract could become the most important Asia-based crude oil benchmark, given that China is the world’s biggest oil importer. Crude oil is usually priced in relation to Brent or West Texas Intermediate futures, both denominated in U.S. dollars.China’s move will allow exporters such as Russia and Iran to circumvent U.S. sanctions by trading in yuan. To further entice trade, China says the yuan will be fully convertible into gold on exchanges in Shanghai and Hong Kong.
“The rules of the global oil game may begin to change enormously,” said Luke Gromen, founder of U.S.-based macroeconomic research company FFTT. …
Yuan-denominated gold contracts were also launched in Hong Kong in July — after two unsuccessful earlier attempts — as China seeks to internationalize its currency. The contracts have been moderately successful.
The existence of yuan-backed oil and gold futures means that users will have the option of being paid in physical gold, said Alasdair Macleod, head of research at Goldmoney, a gold-based financial services company based in Toronto. “It is a mechanism which is likely to appeal to oil producers that prefer to avoid using dollars, and are not ready to accept that being paid in yuan for oil sales to China is a good idea either,” Macleod said. 09/01/17 https://asia.nikkei.com/Markets/Commodities/China-sees-new-world-order-with-oil-benchmark-backed-by-gold
Notice that, “The rules of the global oil game may begin to change enormously.” That means that some see this is a significant step in the demise of the dominance of the US dollar.
On March 26, 2018, the Petro-Yuan was introduced:
March 27, 2018
While It seems to be gaining some ground this morning, the greenback is under pressure from a one-two punch:
China’s new yuan-denominated oil futures contract, which is open to foreign investors, challenges the buck as the currency base for commodities. Oil exporters usually re-invest their proceeds from US sales in Treasury bonds. The rise of the petro-yuan could thereby also jeopardize a key source for US deficit spending.
Global central banks are planning to convert some of their currency reserves to euro, at the expense of the dollar. According to some analysts, this is a direct consequence of Trump’s trade negotiation strategy with China. However, if that’s true, central banks may revert their exposure if and when trade war jitters come to a close. https://www.investing.com/analysis/opening-bell-200300959
March 27, 2018
Two of the world’s biggest oil traders gave China’s crude futures contract a go on its long-anticipated trading debut.
Commodity giants Glencore and Trafigura Group were among foreign participants as the yuan-denominated futures started on the Shanghai International Energy Exchange Monday. After an initial surge in volume that outpaced overnight transactions in global benchmark Brent crude in London, trading tapered off toward the end of the session and the contract closed at 429.9 yuan a barrel ($US68.22). The contract was trading around 428 yuan on Tuesday.
In a first for Chinese commodities, the futures are open to foreign participation, which is seen as critical for the long-term success of the contract. …
While he’s not particularly watching it closely for the moment, ANZ’s Chinese desk is very focused on it, he said.
Then there are the bulls, such as hedge fund manager Adam Levinson, who says the start of a “petro-yuan” will be a “huge story” and increase the use of the Chinese currency in trade settlements. http://www.afr.com/business/energy/oil/global-trading-giants-dip-toes-in-china-oil-futures-20180327-h0y10d#ixzz5AxBtOQt1
So, the ‘petro-yuan’ has been introduced, the introduction looks like a financial success, it is intended to increase the acceptance of the Chinese yuan, and thus also decrease the need to use US dollars in international trade.
It is not just petroleum that will be involved.
It has long been my view that gold would be involved in backing a replacement to the US dollar.
And while the gold-petro-yuan is NOT the final replacement to the US dollar as the world’s primary reserve currency, it is a step that will weaken US dollar dominance.
Consider the following:
13 September 2017
US threats to impose sanctions on big Chinese companies over Beijing’s support for North Korea have sparked a guessing game over the form such measures might take, and the potential fallout.
On Tuesday US president Donald Trump warned that the UN’s latest sanctions were “nothing compared to ultimately what will have to happen”, while Ed Royce, chairman of the House foreign affairs committee, said Washington should target “major Chinese banks doing business with North Korea.” https://www.ft.com/content/d66c2a76-977d-11e7-a652-cde3f882dd7b
13 September 2017
U.S. Treasury Secretary Steven Mnuchin warned China, North Korea’s main ally and trading partner, that if it did not follow through on the new measures, Washington would “put additional sanctions on them and prevent them from accessing the U.S. and international dollar system.” https://beta.theglobeandmail.com/news/world/north-korea-defiant-over-un-sanctions-as-trump-says-tougher-steps-needed/article36234794/?ref=http://www.theglobeandmail.com&
The USA has clearly threatened China economically if it does not do what the USA wants done related to North Korea.
At this time, China does not want to be restricted from “accessing the U.S. and international dollar system.”
The main reason is the world trade is highly tied to the US dollar. China’s yuan is not considered to be in the same league.
Yet, the dominance of the US dollar, as well as threats against China like this, are motivating China to dethrone the US dollar as the world’s primary reserve and trading currency. Notice the following:
Beijing is launching a yuan-denominated crude oil futures market that may soon eclipse the hitherto dominant US dollar-based Brent and West Texas Intermediate (WTI) exchanges. In an additional challenge to the dollar’s role as the global reserve currency, the new “petro-yuan” will be convertible into physical gold at the Shanghai and Hong Kong gold exchanges. China had shrewdly plotted the dollar’s dethronement for years. http://www.business-standard.com/article/opinion/upending-the-dollar-hegemony-117090900657_1.html
China has been working at many ways to get around the US dollar's reserve currency dominance.
After I originally posted this article, the following came out:
September 18, 2017
The issue of when a global reserve currency begins or ends is not an exact science. There are no press releases announcing it, and neither are there big international conferences that end with the signing of treaties and a photo shoot. Nevertheless we can say with confidence that the reign of every world reserve currency has to come to and end at some point in time. During a changeover from one global currency to another, gold (and to a lesser extent silver) has always played a decisive role. Central banks and governments have long been aware that the dollar has a sell-by date as a reserve currency. But it has taken until now for the subject to be discussed openly. The fact that the issue has been on the radar of a powerful bank like JP Morgan for at least five years, should give one pause. ... there are simmering shifts in the global currency system.
The trend becomes ever more tangible and can be described by the following term: de-dollarization. The world is looking for alternatives to the dollar — and finds them more and more often. At the same time the big oil producers and the largest exporters have stopped accumulating US debt securities. In one sentence: Since 1973 the dollar standard has been based on “usage demand” for dollars — they were needed. But when China and Russia find alternatives for their bilateral trading activity, they need fewer dollars. The same applies to European countries which have adopted the euro since 1999. ...
For example, since 2008, an agreement exists between Saudi Arabia, Kuwait, Bahrain, and Qatar which provides for the creation of a monetary union. The planned new currency is nicknamed — rather unimaginatively — the “gulfo.” “The project is inspired by the European currency union, which is seen as a great success in the Arab world,” according to an article by Telegraph journalist Ambrose Evans-Pritchard. He inter alia quotes Nahed Taher, the CEO of Bahrain Gulf One Investment Bank: “The US dollar has failed. We need to delink from it.” However, it appears the plan has been put on hold in recent years. As recently as mid-2013 a statement was issued according to which the common currency was going to be put in place “by 2015 at the latest.” Today it is no longer even talked about. Moreover, other potential members such as the United Arab Emirates or Oman have so far failed to join the club. One should nevertheless keep an eye on developments in the Gulf.
A clear signal that something is afoot would be the abolition of the Saudi riyal's peg to the US dollar ...
The Russians and Chinese are quite open about their views regarding the role of gold in the current phase of the transition. Thus, Russian prime minister Dimitri Medvedev, at the time president of Russia, held a gold coin up to a camera on occasion of the 2008 G8 meeting in Aquila in Italy. Medvedev said that debates over the reserve currency question had become a permanent fixture of the meetings of government leaders.
Almost ten years later, the topic of currencies and gold is on the Sino-Russian agenda again. In March, Russia's central bank opened its first office in Beijing. Russia is preparing to place its first renminbi-denominated government bond. Both sides have intensified efforts in recent years to settle bilateral trade not in US dollars, but in rubles and yuan. Gold is considered important by both countries.
The gradual move away from the USD to a multi-polar monetary order has several important effects, which only make sense when viewed through this lens. ...
The process of moving away from the dollar — prepared by Europe and triggered by China and Russia — can no longer be stopped. And as a “supra-national” reserve asset, gold plays an important role in it. (Stöferle RP. The World Is Creeping Toward De-Dollarization. Mises Wire, September 18, 2017)
Global Research reported the following:
A Failing Empire: Russia and China’s Military Strategy to Contain the US
Looking at the global political landscape over the last month, two trends are becoming more apparent. The infamous military and economic power at America’s disposal is declining, whereas in the multipolar field, an acceleration has occurred in the creation of a series of infrastructures, mechanisms and procedures to contain and limit the negative effects of America’s declining unipolar moment. …
One of the most tangible consequences of the decline of US military power can be observed in the Syrian conflict … (the US is not even part of the Astana peace talks) in future negotiations concerning the country’s future. …
Another indicator of American decline in military terms can be clearly seen on the Korean peninsula. The DPRK has obtained a full nuclear capability through a development program that has paid scant attention to American, South Korean and Japanese threats. …
Russian military power and Chinese economic might have thus played an invaluable role in restricting the US war machine. The DPRK even took a further step by attaining a formidable nuclear and conventional deterrent, effectively blocking the United States from influencing domestic events by bringing about destruction and chaos.
While this reality is difficult for Washington to take, it must come to accept it. After almost seventy years of imperialistic chaos and destruction wrought all over the globe, America’s friends and enemies are starting to react to this situation. Washington is left with a president full of sound and fury, but a credible militarily posture is now but a thing of the past.
The financial mechanisms that have allowed for this indiscriminate military spending are based on an intrinsic bond between dollar, oil, and the role of American money as the world reserve currency. The transition of the world order from a unipolar reality to a multipolar one is deeply tied to the economic and diplomatic strategies of Russia and China. The … role of gold, investment, diplomacy and the petroyuan, … are all decisive factors that have accelerated the transformation and division of power on a global scale.
While the USA still has the strongest military forces, it is in decline and the petro-yuan is starting emerge to challenge the dominance of the ‘petro-dollar’ (watch US Dollar being challenged by Gold-Petro-Yuan).
Various ones see that the process of eliminating the US dollar as the world's reserve currency is in-progress, and that gold is involved.
Since that came out, notice the following development:
October 11, 2017
SHANGHAI (Reuters) – China has established a payment versus payment (PVP) system for Chinese yuan and Russian ruble transactions in a move to reduce risks and improve the efficiency of its foreign exchange transactions. …
The PVP system for yuan and ruble transactions was launched on Monday after receiving approval from China’s central bank, according to a statement by the country’s foreign exchange trading system.
It marks the first time a PVP system has been established for trading the yuan and foreign currencies, said the statement, which was posted on Wednesday on the website of the China Foreign Exchange Trade System (CFETS).
PVP systems allow simultaneous settlement of transactions in two different currencies. …
CFETS said it plans to introduce PVP systems for yuan transactions with other currencies based on China’s Belt and Road initiative, and complying with the process of renminbi internationalization.
China has ambitious plans to create a New Silk Road to expand links between Asia, Africa, Europe. http://www.reuters.com/article/us-china-yuan-rouble/china-establishes-yuan-ruble-payment-system-idUSKBN1CH0ML
Notice also the following:
Putin’s revenge may see petro-yuan replace petrodollar
Beijing’s scheme aims to shift trade in “black gold” from petrodollars to a proposed petro-yuan. Which benefits China by making its currency more attractive internationally and providing greater energy security. However, the biggest winners may well be in Moscow. Because any decline in the dollar’s status severely dilutes Washington’s ability to wage economic war against Russia, via sanctions.
As the world’s biggest petroleum producer, Russia is vital to Beijing’s project. And, in turn, as the planet’s largest crude importer and most sizable economy (measured by purchasing power parity), China is the only country with the heft to challenge American financial hegemony.
Of course, Vladimir Putin and Xi Jinping can’t achieve their aims alone. Because if the petro-yuan is to succeed, other leading oil-drilling nations, will need to come on board. And, while Iran, Indonesia, and Venezuela have indicated their interest in the project, the key is tempting the Arab states to trade in yuan. And this essentially means Saudi Arabian cooperation is the big prize. …
The roots of the petro-yuan lie in a series of “color revolutions” in the former USSR, which convinced Moscow that the West would never treat it as an equal partner. This culminated in a March 2014 speech, in the Kremlin’s majestic Georgievsky Hall, where Vladimir Putin addressed over 1,000 Russian dignitaries. …
Indeed, ever since the United States imposed anti-Russia sanctions, first in 2012, ostensibly due to death of an accountant named Sergey Magnitsky, and the European Union, in 2014, in response to the Ukraine crisis, Moscow has been searching for ways to push back at the coercive measures. …
There is little doubt Moscow is hoping to engineer a US economic crisis to cripple its perpetual foe. Indeed, as CNBC also notes: “Russia and China have sought to operate in a non-dollar environment when trading oil. Both countries have also increased their efforts to mine and acquire physical gold if, or perhaps when, the dollar collapses.”
Meanwhile, there are high expectations for the petro-yuan. Because anything that weakens the American ability to wage economic war, and destabilize the Eurasian space, is a major win for the Kremlin. Furthermore, Putin may also consider the end of dollar dominance to be an important part of his legacy as he prepares for a likely final term as Russian President. 10/27/17 https://www.rt.com/op-edge/408006-china-oil-petro-yuan-russia/
Intentional steps to bypass and dethrone the US dollar are in progress.
Now, I have been warning since early 2017 that US sanctions hurt the US dollar. Notice some from Russia in mid-2018:
May 26, 2018
Russia's Finance Minister Anton Siluanov said at the St. Petersat the St. Petersburg International Economic Forum that settlements in US currency could be dropped by Russia in favor of the euro.
"As we see, restrictions imposed by the American partners are of an extraterritorial nature. The possibility of switching from the US dollar to the euro in settlements depends on Europe’s stance toward Washington’s position,” said Siluanov, who is also Russia’s first deputy prime minister.
“If our European partners declare their position unequivocally, we could definitely see a way to use the European common currency for financial settlements, such as payments for goods and services, which today are often subject to restrictions,” Siluanov added, dangling the bait in front of Merkel and Macron.
The global economy is facing a threat of a spiraling protectionist measures that can lead to a devastating crisis, Vladimir Putin warned. Nations must find a way to prevent this and establish rules on how the economy should work.
The Russian president spoke out against the growing trend of using unilateral restrictions to achieve economic advantage, as he addressed guests of the St. Petersburg International Economic Forum (SPIEF) on Friday.
“The system of multilateral cooperation, which took years to build, is no longer allowed to evolve. It is being broken in a very crude way. Breaking the rules is becoming the new rule,” he said.
Putin sharply criticized the sanctions, saying they signal "not just erosion but the dismantling of a system of multilateral cooperation that took decades to build."
Putin called for a change of course, for free trade to be defended, and for rules-based regulation of the global economy, which would alleviate the chaos resulting from the rapid technological transformations arising from the development of digital technology.
“The disregard for existing norms and a loss of trust may combine with the unpredictability and turbulence of the colossal change. These factors may lead to a systemic crisis, which the world has not seen yet,” he said.
Simply put, Putin concluded:
"US sanctions hurt trust in the US dollar as the world's reserve currency."
All of which appears to confirm many conspiracy-theorist's reasoning for why Russia is stockpiling gold faster than any other nation on earth...
Sanctions are pressing governments, not to change into the image that the US government wants--they are pushing more countries to look away from the USA dollar.
Here is something I posted in 2023:
ZeroHedge reported the following:
Another Blow To The Petrodollar: India & The UAE Complete First Oil Sale In Rupees
August 16, 2023
In another blow to dollar dominance, India and the United Arab Emirates settled an oil trade without converting local currencies to dollars for the first time on Monday, as India’s top refiner made a payment for oil in rupees.
Indian Oil Corp. bought a million barrels of oil from Abu Dhabi National Oil Company in a dollar-free transaction.
The oil sale was the first after the two countries entered a Memorandum of Understanding (MoU) in July. The deal established the Local Currency Settlement (LCS) system, facilitated by the Reserve Bank of India and the Central Bank of the United Arab Emirates. The system allows the two countries to engage in bilateral trade using the rupee and dirham. According to a statement by the Reserve Bank of India, the agreement will facilitate “seamless cross-border transactions and payments, and foster greater economic cooperation.”
The first test of the LCS involved the sale of 25 kg of gold from a UAE gold exporter to a buyer in India at about 128.4 million rupees ($1.54 million).
According to WIONews in India, the LCS system will reduce costs and speed up transactions between the two countries.
Additionally, reliance on national currencies is anticipated to bolster economic resilience and strengthen bilateral relations. Moreover, any surplus balances in the local currencies can be invested in various local assets, including corporate bonds, government securities, and equity markets.”
India has also purchased oil from Russia using non-dollar currencies.
India ranks as the third-largest oil importer in the world.
If the trend of dollarless transactions expands to other countries, the minimization of the dollar in the global oil trade would be bad news for the United States.
As it stands, the majority of global oil sales are priced in dollars. This ensures a constant demand for the greenback since every country needs dollars to buy oil. This helps support the US government’s “borrow and spend” policies, along with its massive deficits. As long as the world needs dollars for oil, it guarantees demand for greenbacks. That means the Federal Reserve can keep printing dollars to monetize the debt.
ZeroHedge explained how the process works.
One of the core staples of the past 40 years, and an anchor propping up the dollar’s reserve status, was a global financial system based on the petrodollar – this was a world in which oil producers would sell their product to the US (and the rest of the world) for dollars, which they would then recycle the proceeds in dollar-denominated assets and while investing in dollar-denominated markets, explicitly prop up the USD as the world reserve currency, and in the process backstop the standing of the US as the world’s undisputed financial superpower.”
Simply put, de-dollarization would drastically diminish US economic power and wreck the country’s economy. https://www.zerohedge.com/geopolitical/another-blow-petrodollar-india-uae-complete-first-oil-sale-rupees
Does the government of the USA still care about what has been called the “petrodollar’?
Yes.
Notice something that the government of the USA has been doing:
August 10, 2023
The United States is negotiating behind the scenes with Saudi Arabia, pressuring the country to keep selling its oil in dollars.
Washington is concerned that Riyadh may price its crude in other currencies, particularly China’s renminbi.
Saudi Arabia is one of the world’s top three oil producers. Since the 1970s, Riyadh has agreed to sell its crude in dollars, helping maintain the greenback’s hegemonic status as the global reserve currency. …
The petrodollar system has been a key pillar holding up the hegemony of the US currency.
The fact that countries that import oil need dollars to pay for it ensures steady demand for Washington’s currency around the world.
This stabilizes the dollar, helping to finance the massive current account deficit the United States has maintained for decades.
When most countries have a consistent trade deficit, their national currency depreciates against the currency they use to pay for imports. As the local currency weakens, this makes imports more expensive and exports cheaper, encouraging the country to balance its trade.
However, the United States has long been able to maintain a gargantuan trade deficit with the rest of the world because there is so much demand for its currency.
The petrodollar system is one important reason for this high demand for dollars …
Saudi Arabia’s finance minister confirmed for the first time in public this January that Riyadh is indeed considering selling oil in other currencies.
However, although there has been a lot of speculation about this in the financial press, the Saudi government has not publicly announced any plans to price its crude in yuan or any other currency. https://geopoliticaleconomy.com/2023/08/10/us-saudi-arabia-sell-oil-dollars-chinese-yuan/
Well, despite pressure on other nations, the US is in the process of losing its unique “petrodollar” role.
Consider what the Saudis have just been doing:
August 16, 2023
Saudi Arabia’s stockpile of US Treasuries fell to the lowest level in more than six years, …
The Gulf country in June sold more than $3 billion in US government debt, offloading the securities for a third consecutive month to bring its holdings to $108.1 billion, according to Treasury Department data. The neighboring United Arab Emirates sold nearly $4 billion.
The Arab Gulf region’s petrostates are seeking out new avenues for investing to get higher returns in a world where a backlash is building against the hegemony of the US dollar. For Saudi Arabia, whose holdings of Treasuries are down over 41% since early 2020, …
Saudi Arabia is the world’s largest oil exporter and a pillar of a petrodollar system established in the 1970s that relies on pricing crude exports in the US currency. While maintaining a peg to the dollar for decades, it’s now also seeking to strengthen its relations with crucial trade partners including China as part of an effort to diversify the economy away from energy. https://finance.yahoo.com/news/saudi-hoard-us-treasuries-six-071928880.html
... The moves by the Saudis and the Emirates to dump more of their USA Treasury holdings, Chinese moves, plus the deal between India and the United Arab Emirates are causing more cracks in the power of the USA to keep its petrodollar policy in place. (Thiel B. COGwriter. ZH: Another Blow To The Petrodollar: India & The UAE Complete First Oil Sale In Rupees. August 16, 2023)
As this article has pointed out, financial sanctions by the USA against others causes those sanctioned to take financial actions of there own.
Notice the following:
July 18, 2018
The dollar constitutes about 60% of global reserves, 80% of global payments and almost 100% of global oil transactions. European banks that make dollar-denominated loans to customers have to borrow dollars to fund those liabilities.
Those banks do their borrowing in the eurodollar deposit market, or with dollar-denominated commercial paper or notes. Being based in Switzerland or Germany does not allow you to escape from the dollar’s dominance.
The U.S. not only controls the dollar itself. It controls the dollar payments system. This consists of the Treasury’s digital ledger of holders of U.S. debt, the Fedwire payments system among U.S. Fed member banks and the Clearing House Association (successor to the New York Clearing House and proprietor of CHIPS, the Clearing House Interbank Payments System) composed of the largest U.S. banks.
A dollar payment going from a bank in Shanghai to another bank in Sydney runs through one of these U.S.-controlled payments systems.
In short, the dollar is the oxygen supply for world commerce and the U.S. can cut off your oxygen whenever it wants.
The list of ways in which the dollar can be weaponized is extensive.
The International Emergency Economic Powers Act of 1977, IEEPA, gives the president of the United States dictatorial power to freeze and seize assets and block payments.
Rickards J. Zerohedge
Notice something from the BRICS 2018 conference:
July 27, 2018
President Vladimir Putin said that Russia does not renounce the US dollar as a universal reserve currency.
“Russia does not renounce the dollar as a universal reserve currency,” the Russian leader said at a press conference following the results of the BRICS summit.
“We are not going to make any drastic moves, we are not going to renounce the dollar, we are using it and will use it as far as the financial authorities of the United States do not hamper the use of the dollar in settlements,” Putin said.
He noted that the euro also can “more or less” claim the status of a universal reserve currency but “not in full”.
“Therefore, we are quite aware of what the dollar represents today,” the Russian president concluded.
Speaking about reserve currencies in general, Putin noted that some currencies can play the role of “regional reserve currencies.” In a way, the Russian ruble is such currency in relation to the CIS countries or the countries of the EAEU (Eurasian Economic Union).
“But, in general, any national currency is so strong and good as the economy that is behind it is strong and good. Therefore, we must proceed from this fundamental factor,” the Russian leader stressed.
“As for the dollar, we should minimize risks, because we see what is going on due to these sanctions, these actually unlawful limitations. We are aware of these risks and are trying to minimize them,” Putin said.
“As far as our US partners and restrictions introduced by them are concerned, including for settlements in dollars, I believe this is a major strategic mistake of our US partners,” the Russian president said.
“They [the US] thereby undermine confidence in the dollar as in the reserve currency,” Putin noted. …
“A lot of countries state that it is necessary to expand the possibilities of global financing, the world economy and to create new reserve currencies. That will make the world economy and world finances more sustainable,” the head of the Russian state said. http://tass.com/economy/1015096
So, Vladmir Putin says that Russia will not make any drastic moves now as far as the US dollar is concerned. And I believe that is correct as Russia has already gotten rid of most of its US Treasury holdings.
Now also notice that he said that the Euro was becoming a reserve currency, but is not ready yet. He also said that the world wants more world currencies, which effectively means the toppling of the USA dollar.
Furthermore, he noted that the USA is undermining its position as the world’s primary reserve currency through its sanctions and other policies.
This, too, is an unintended consequence of Donald Trump’s policies.
This is NOT just a Russian view:
9 August 2018
Teheran (AsiaNews / Agencies) – Iranian Foreign Minister Mohammad Javad Zarif has responded to US President Donald Trump’s threats saying that the United States will not be able to prevent the Islamic Republic from exporting oil. …
In the first row between those who want to preserve business relations with Tehran there is Brussels and the block of European countries, according to which the nuclear agreement works and should not be canceled. In spite of the American sanctions, the Union intends to continue to buy oil from the Islamic Republic and to do so it is willing to “create accounts” in the Iranian Central Bank. “The result of these measures – concludes Zarif – will be US isolation”.
The words of the head of Iranian diplomacy are confirmed by some experts and analysts of international politics who believe the economic and commercial war launched by the US administration against Teheran will eventually isolate the United States. In an editorial published in Strategic Culture the British scholar Finian Cunningham urges Washington to respect multilateralism as other nations do. Otherwise, the risk is “economic isolation” by the rest of the international community. In particular, Trump reinforces the course undertaken by Russia and China that intend to free themselves from the US dollar in international trade. Without the reserve currency privilege, the US economy would collapse. http://www.asianews.it/news-en/Zarif-responds-to-Trump:-US-sanctions-will-not-stop-Iranian-oil-44622.html
Note: the statement “Without the reserve currency privilege, the US economy would collapse.”
Many nations are working to make that happen--including the BRICS group--which has growing influence.
Forbes wrote:
March 29, 2023
- A currency collapse is when a country's currency loses all its value and becomes practically worthless in day to day use
- This is generally as a result of political or economic upheaval, hyperinflation or war
- It’s not a common occurrence, but we’ve seen it happen before in various places around the world
- For investors, it’s a risk to be aware of, though luckily it’s fairly easy to protect yourself against it
- While technically the US dollar could collapse, it’s backing from the largest economy in the world and its status as the global reserve currency, makes that highly unlikely
Whoa, that’s a big statement. If you're someone from Argentina, Venezuela or Russia, you understand the realities of what can happen when your home currency fails. It’s a big deal, and it can cause immense financial damage to the economy and individuals.But is it actually realistic to think that the US Dollar, the world's reserve currency, could collapse too?
Look, we’ll cut to the chase. It’s unlikely. But, it’s not impossible. https://www.forbes.com/sites/qai/2023/03/29/could-the-us-dollar-collapse/?sh=5816b0e518a0
It is more than unlikely, it will happen.
Notice also:
April 2, 2023
WHAT HAPPENS WHEN THE U.S. DOLLAR COLLAPSES?
Forbes describes a currency collapse as "when a country's currency loses all its value and becomes practically worthless in day to day use."
"This is generally as a result of political or economic upheaval, hyperinflation or war."
America checks all four of the boxes, since we are using Ukraine as a proxy in our war against Russia.
In an older article about the consequences of a dollar collapse, we see likely scenarios for Americans, and we should be prepared for one or all of the following to happen.
Bank runs: Americans will want to get their money out of the bank as the value rapidly drops, to either invest in other currencies or to get precious metals while they can still use the Dollar to do, or even to buy food and necessities to last long enough for the initial shockwaves to pass.
Capital controls: The government passing laws to prevent private citizens from converting their dollars into foreign currency to "protect" the dollar from falling further.
Rising unemployment: "Unemployment could rise dramatically as manufacturers find it impossible to purchase needed parts from other parts of the world, which would be prohibitively expensive."
More inflation: Imported goods will cost more, so Americans would be paying more.
Food scarcity: "Scarce food supplies could set in as well because the cost of purchasing food is tied in large part to the price of oil, which would now have to be purchased with expensive foreign currency."
Public riots: "In extreme cases, rioting could ensue and martial law could be imposed in order to restore order."
I would add that food scarcity itself would lead to food riots. Also the inability to buy what a family needs could also lead to civil unrest.
BOTTOM LINE
The collapse and death of the dollar is coming sooner than anyone predicted. With multiple, huge global economies now working together to bypass the U.S. dollar in trade, and the BRICS expanding while working toward the creation of an alternate currency, the greenback's days of being the world's reserve currency are coming to an end. https://allnewspipeline.com/Death_Of_The_Dollar_Is_Coming_Sooner_Than_Predicted.php
The USA is taking risks and one day its dollar will not be the world’s reserve currency.
The BRICS nations continue to work on ways to bypass the US dollar. They are now considering a gold-backed system:
December 2, 2017
Sergey Shvetsov, First Deputy Chairman of Russia’s central bank, the Bank of Russia ... provided an update on an important development involving the Russian central bank in the worldwide gold market, and gave further insight into the continued importance of physical gold to the long term economic and strategic interests of the Russian Federation.
Firstly, in his speech Shvetsov confirmed that the BRICS group of countries are now in discussions to establish their own gold trading system. As a reminder, the 5 BRICS countries comprise the Russian Federation, China, India, South Africa and Brazil.
Four of these nations are among the world’s major gold producers, namely, China, Russia, South Africa and Brazil. Furthermore, two of these nations are the world’s two largest importers and consumers of physical gold, namely, China and Russia. So what these economies have in common is that they all major players in the global physical gold market.
Shvetsov envisages the new gold trading system evolving via bilateral connections between the BRICS member countries, and as a first step Shvetsov reaffirmed that the Bank of Russia has now signed a Memorandum of Understanding with China (see below) on developing a joint trading system for gold, and that the first implementation steps in this project will begin in 2018.
Interestingly, the Bank of Russia first deputy chairman also discounted the traditional dominance of London and Switzerland in the gold market, saying that London and the Swiss trading operations are becoming less relevant in today’s world. He also alluded to new gold pricing benchmarks arising out of this BRICS gold trading cooperation.
BRICS cooperation in the gold market, especially between Russia and China, is not exactly a surprise, because it was first announced in April 2016 by Shvetsov himself when he was on a visit to China.
At the time Shvetsov, as reported by TASS in Russian, and translated here, said:
“We (the Central Bank of the Russian Federation and the People’s Bank of China) discussed gold trading. The BRICS countries (Brazil, Russia, India, China and South Africa) are major economies with large reserves of gold and an impressive volume of production and consumption of the precious metal. In China, gold is traded in Shanghai, and in Russia in Moscow. Our idea is to create a link between these cities so as to intensify gold trading between our markets.”
Also as a reminder, earlier this year in March, the Bank of Russia opened its first foreign representative office, choosing the location as Beijing in China. At the time, the Bank of Russia portrayed the move as a step towards greater cooperation between Russia and China on all manner of financial issues, as well as being a strategic partnership between the Bank of Russia and the People’s bank of China. https://www.bullionstar.com/blogs/ronan-manly/russia-china-new-gold-trading-network/
China has also been looking into ways to back its currency with gold as a way to push aside the USA dollar, which some have called the petro-dollar (watch US Dollar being challenged by Gold-Petro-Yuan).
What about Russia?
March 25, 2018
The US’s overhang of debt and looming trade war is worrisome on many levels as the value of the dollar keeps decreasing and the national debt spiraling. So, what should we make of the fact that the Central Bank of Russia has been steadily amassing vast gold reserves since 2015? By the end of 2017, its total gold reserves rose to 1,828.56 tons, usurping China’s place as the country with the fifth largest gold reserves.
Russia has been aggressively increasing its gold reserves for a reason. It has seen the US dollar dominate as a global currency and is working with China to end the US/Western currency supremacy. Their strategy appears to be working. Russia and China are in the midst of rumors of introducing gold-backed futures to circumvent the U.S dollar.
With speculation of Russia and China working on a gold-backed currency, a shift in monetary power from the West to the East seems to be their ambitions. The situation between East and West is exacerbated by recent tensions between Russia and the UK, since the alleged Kremlin poisoning of former spy Sergei Skripal and his daughter. British Prime Minister Theresa May has ousted 23 Russian diplomats from Great Britain. Geopolitical tension is once again, high.
It seems Russian may have tossed aside Das Kapital as its economic guidebook. Not only is creating a gold-backed currency appearing more likely month over month, but Russia has also brought inflation way down over the past decade. More importantly, Russia continues to lower their national debt, while the US has been increasing its debt to a record $21 trillion. …
Russia’s financial strategy is making the country less vulnerable to volatile geopolitics. Not only is it a significant player in gold, but it is also the world’s third-largest gold producer, with the Central Bank of Russia buying up its supplies. During the past decade, Russian has mined more than 2,000 tons of gold, with tonnage expected to increase by 400 tons annually by 2030. http://www.goldtelegraph.com/russia-stockpiles-gold-but-why/
May 24, 2018
A major blind spot in U.S. strategic economic doctrine is the increasing use of physical gold by China, Russia, Iran, Turkey and others both to avoid the impact of U.S. sanctions and create an offensive counterweight to U.S. dominance of dollar payment systems.
This is the Axis of Gold.
This gold-based payments system will dilute and ultimately eliminate the impact of U.S. dollar-based sanctions.
Gold offers adversaries significant defenses against these dollar-based sanctions. Gold is physical, not digital, so it cannot be hacked or frozen. Gold is easy to transport by air to settle balance of payments or other transactions between nations.
Gold flows cannot be interdicted at SWIFT, the international payment system. Gold is fungible and non-traceable (it is an element, atomic number 79), so its origin cannot be ascertained. ...
The U.S. is still unprepared for this coming strategic alternative to dollar dominance.
Meanwhile, U.S. trade sanctions on China, Russia and Europe are just beginning to bite. Trump’s new sanctions on Iran may be the last straw in the world’s willingness to tolerate what is perceived as U.S. bullying through the use of dollar-based sanctions. https://dailyreckoning.com/axis-gold-will-drive-gold-higher-end-2018/
There is a concerted effort to drive trade away from US dollar dominance. Consider the following:
June 12, 2019
A European payment system set up to circumvent US sanctions on Iran will be ready soon, according to German Foreign Minister Heiko Maas.
This is yet another move in a global effort to minimize dependence on the US dollar.
According to an Al Jazeera report, Maas recently met with Iranian President Hassan Rouhani and Foreign Minister Mohammad Javad Zarif in Tehran in an effort to salvage the nuclear arms deal negotiated in 2015. Pres. Trump withdrew the US from the agreement last year.
The new payment system called INSTEX (Instrument in Support of Trade Exchanges) will allow France, Britain and Germany, along with other EU nations, to continue trade with Iran outside of the dollar-based SWIFT payment system. When EU foreign policy chief Federica Mogherini announced the plan, she said the new payment channel would allow companies to preserve oil and other business deals with Iran despite US sanctions. ...
The Russians have already developed an alternative payment system that has reportedly surpassed SWIFT in popularity within that country. ..
Weaponizing the Dollar
The United States has taken advantage of the fact that the dollar serves as the world reserve currency by using it as leverage to achieve its foreign policy goals.
In effect, the US has weaponized the dollar.
The fact that the global system facilitating financial transactions uses the dollar gives the US a great deal of economic and geopolitical leverage. https://schiffgold.com/key-gold-news/european-alternate-payment-system-to-circumvent-us-iran-sanctions-nearly-ready/
June 28, 2019
With the world waiting for the first headlines from the Trump-Xi meeting, the most important and unexpected news of the day hit moments ago, when Europe announced that the special trade channel, Instex, that will allow European firms to avoid SWIFT and bypass American sanctions on Iran, is now operational.
Following a meeting between the countries who singed the Iran nuclear deal, also known as the Joint Comprehensive Plan of Action (JCPOA), which was ditched by US, French, British and German officials said the trade mechanism which was proposed last summer and called Instex, is now operational. …
The statement came after the remaining signatures of JCPOA gathered in Vienna for a meeting that Iranian ministry spokesman Abbas Mousavi called “the last chance for the remaining parties…to gather and see how they can meet their commitments towards Iran.” …
Until today, Tehran was skeptical about EU’s commitment to the deal and threatened to exceed the maximum amount of enriched uranium allowed it by the deal after US had imposed a series of sanctions on the country.
Meanwhile, opponents of Instex – almost exclusively the US – have argued that the mechanism is flawed because the Iranian institution designated to work with Instex, the Special Trade and Finance Instrument, has shareholders with links to entities already facing sanctions from the U.S. …
The announcement will likely send president Trump off the rails, because in late May Bloomberg reported that as part of Trump’s escalating battle with “European allies” over the fate of the Iran nuclear accord, he was “threatening penalties against the financial body created by Germany, the U.K. and France to shield trade with the Islamic Republic from U.S. sanctions” including the loss of access to the US financial system.
According to Bloomberg, the Treasury Department’s undersecretary for terrorism and financial intelligence, Sigal Mandelker, sent a letter on May 7 warning that Instex, the European SPV to sustain trade with Tehran, and anyone associated with it could be barred from the U.S. financial system if it goes into effect.
“I urge you to carefully consider the potential sanctions exposure of Instex,” Mandelker wrote in an ominous letter to Instex President Per Fischer. “Engaging in activities that run afoul of U.S. sanctions can result in severe consequences, including a loss of access to the U.S. financial system.”
Germany, France and the U.K. finalized the Instex system in January, allowing companies to trade with Iran without the use of U.S. dollars or American banks, allowing them to get around wide-ranging U.S. sanctions that were imposed after the Trump administration abandoned the 2015 Iran nuclear deal last year.
This is something I have been warning about for some time.
Can this hurt the USA?
If fully implement, yes Instex could.
This modified ‘Instrument in Support of Trade Exchanges’ (INSTEX) will provide a major alternative to the main US dollar-dominated financial systems. I call it modified, because originally the USA was involved in parts of its development.
Here is more related to Russia:
In a speech at the International Economic Forum, in St. Petersburg, Russia, “Russian Davos”, President Putin reaffirmed his position regarding the Federal Reserve Note and it’s international role. For the record, we see the abuse of the Federal Reserve and the Federal Reserve Note, U.S. dollar, in similar light as President Putin. The current status of “world reserve currency” should not be allowed in this day and time. The absolute abuse of power, excessive power granted and the ability to shackle entire nations through the use of a currency that is not even their own should have never been allowed but it is way past time for this system to be dissolved.
In a speech at a plenary session, Mr Putin accused Washington of seeking to “extend its jurisdiction to the whole world.”
“But this model not only contradicts the logic of normal international communication. The main thing is, it does not serve the interests of the future.” Source
As recently we pointed out Russia has been and is, apparently readying, a gold backed cryptocurrency to use as global trade settlement. When a man steps up to the microphone and says to the world – “The main thing is, it (U.S. dollar) does not serve the interests of the future.” while at the same time announcing that Russia, along with China, are working on a global trade settlement mechanism outside the dollar, well, you would have to be some kind serious stupid to ignore those words. https://thedailycoin.org/2019/06/09/putin-sets-the-table-to-leave-the-dollar-behind/
So, we have seen various ones 'attacking ' the US dollar. Or, perhaps more accurately, looking how to circumvent the use of the US dollar as an economic weapon. Ultimately, as more nations look to bypass the US dollar, its fall as the world's primary reserve currency gets closer.
While the USA has imposed sanctions on Russia related to Ukraine matters, and cut many Russian banks off of SWIFT, there are risks and ramifications:
Why the enormous scale of financial pain being inflicted on Russia worries some in the West
March 3, 2022
Russia is under unprecedented economic pressure after invading Ukraine. Many in the West feel vindicated, even happy that the financial might of the United States, Europe and other allies is being fully used against Russian President Vladimir Putin and his allies after years of half measures and looking the other way.
But some experts and analysts aren’t feeling triumphant. Instead, they’re worried. Worried that these sanctions will have collateral damage in Russia and beyond, potentially even hurting the very countries that impose them. Some even worried that the sanctions intended to deter and weaken Putin could end up emboldening and strengthening him. …
The number of U.S. sanctions designations has grown substantially year on year since 2000. …
These sanctions could end up hurting the West, too. …
Artyom Lukin, a professor at the Far Eastern Federal University in Vladivostok, Russia, said …“Perhaps the only thing that is certain to me is that in the wake of the sanctions Russia’s geoeconomic dependence on China will grow substantially,” https://www.washingtonpost.com/world/2022/03/03/sanctions-worries-russia-west-scale/
Just like most roads go two ways, sanctions have affects on those who impose them and those they are imposed upon.
ZeroHedge posted the following:
Zoltan Pozsar Warns Russian Sanctions Threaten Dollar’s Reserve Status
March 3, 2022
Over the weekend, the world gasped in shock when Western powers announced that the nuclear option would be used against Russia in retaliation for its invasion of Ukraine – sanctions against the country’s central bank and targeted expulsions of key banks from SWIFT, a move which has effectively locked Russia out of the western financial system and left its vast oil export industry – a key lifeline for the Putin regime – in limbo. But the real reason for the shock is that this was the first time the global reserve currency was weaponized against a G20 economy …
Reuters’ Mike Dolan wrote that the move quickly prompted questions about whether targeting reserve holdings as an act of “economic warfare” may prompt a rethink by reserve managers across the globe – not least in countries that may be at loggerheads or face a potential conflict with U.S. or EU governments – over where to bank their national stash.
It’s a potentially huge issue for world markets given that central bank foreign currency reserves totaled a record $12.83 trillion late last year – a rise of $11 trillion over the past 20 years. This money is held mostly in U.S. and European government bills and bonds – with the U.S. dollar still accounting for almost 60% of that and the euro about 20%. …
China itself – for all its fraught relationship with the West – has been the biggest reserve stockpiler since it joined the global trading system 20 years ago amid tight control of its exchange rate. More than $3 trillion of its $3.22 trillion hoard was amassed since 2000 – precisely to offset foreign inflows to keep a lid on the yuan.
But is that about to change, and did western sanctions against Russia marked the beginning of the end of the dollar as the world’s reserve currency?
Berkeley professor and expert on world reserve management Barry Eichengreen reckons that of the two imperatives behind reserve stockpiling – to intervene or stabilize domestic markets or as a war chest against shocks, disasters or balance of payments crises – the latter may now be in question. “The main effect may be declining demand for reserves,” he said. …
But the most surprising take comes from former NY Fed staffer, current repo guru and Credit Suisse money market guru Zoltan Pozsar – who on any other day would be a stalwart advocate of the status quo – and who ominously said that the response to Russia may have set off a sequence of events in motion that eventually leads to the demise of the dollar as the reserve currency.
Speaking to Bloomberg, Pozsar – who this weekend warned that the lockout of Russia from the global financial system could prompt central banks to aggressively pump liquidity to stabilize markets – said noted that wars tend to turn into major junctures for global currencies, and with Russia losing access to its foreign currency reserves, a message has been sent to all countries that they can’t count on these money stashes to actually be theirs in the event of tension. …
Of course, none of this is a surprise to Russia, which has been feverishly rotating out of its “inside money” dollar reserves, including dumping off all of its U.S. Treasuries in 2018 according to official data, and amassing a record stockpile of gold in the process. In fact, as Pozsar noted over the weekend, “the Bank of Russia now has more gold than deposits at foreign central banks!” https://www.zerohedge.com/markets/zoltan-pozsar-warns-russian-sanctions-threaten-dollars-reserve-status
Russia has long seen problems with the USA dollar and its dealings with the USA. While it is being harmed by USA sanctions, it took steps–including looking at the use of gold.
Other nations are looking at gold as well.
As far as gold goes, the Bible shows that it will have value AFTER the USA is gone.
Consider the following involving the end time European King of the North:
37 He shall regard neither the God of his fathers nor the desire of women, nor regard any god; for he shall exalt himself above them all. 38 But in their place he shall honor a god of fortresses; and a god which his fathers did not know he shall honor with gold and silver, with precious stones and pleasant things. 39 Thus he shall act against the strongest fortresses with a foreign god, which he shall acknowledge, and advance its glory; and he shall cause them to rule over many, and divide the land for gain.
40 "At the time of the end the king of the South shall attack him; and the king of the North shall come against him like a whirlwind, with chariots, horsemen, and with many ships; and he shall enter the countries, overwhelm them, and pass through. 41 He shall also enter the Glorious Land, and many countries shall be overthrown; but these shall escape from his hand: Edom, Moab, and the prominent people of Ammon. 42 He shall stretch out his hand against the countries, and the land of Egypt shall not escape. 43 He shall have power over the treasures of gold and silver, and over all the precious things of Egypt; (Daniel 11:37-43)
There would be no point in getting gold if it was worthless after the USA is gone.
But the point I wish to make today is that the threat of dollar sanctions against China will even further motivate China to work to make a trading system that is NOT dependent upon the US dollar.
While China will NOT fully succeed in this, the fact is that other countries (like Russia, Iran, Brazil, South Africa, India, Turkey, and Venezuela) also want to dethrone the US dollar as does the European Union.
Notice something that China and Europe are working on:
The UN General Assembly (UNGA) in New York is a place where world leaders are able to hold important meetings behind closed doors. Russia, China, the UK, Germany, France, and the EU seized that opportunity on Sept. 24 to achieve a real milestone.
The EU, Russia, China, and Iran will create a special purpose vehicle (SPV), a “financially independent sovereign channel,” to bypass US sanctions against Tehran and breathe life into the Joint Comprehensive Plan of Action (JCPOA), which is in jeopardy. "Mindful of the urgency and the need for tangible results, the participants welcomed practical proposals to maintain and develop payment channels, notably the initiative to establish a Special Purpose Vehicle (SPV) to facilitate payments related to Iran's exports, including oil," they announced in a joint statement. The countries are still working out the technical details. If their plan succeeds, this will deliver a blow to the dollar and a boost to the euro.
The move is being made in order to save the 2015 Iran nuclear deal. https://www.strategic-culture.org/news/2018/09/28/eu-uk-russia-china-join-together-dodge-us-sanctions-iran.html
There is a price to USA sanctions.
The Bible shows that Mystery Babylon will use gold. Once Babylon is destroyed, notice:
10 ... Alas, alas, that great city Babylon, that mighty city! For in one hour your judgment has come.'
11 "And the merchants of the earth will weep and mourn over her, for no one buys their merchandise anymore: 12 merchandise of gold and silver, precious stones and pearls, fine linen and purple, silk and scarlet, every kind of citron wood, every kind of object of ivory, every kind of object of most precious wood, bronze, iron, and marble; 13 and cinnamon and incense, fragrant oil and frankincense, wine and oil, fine flour and wheat, cattle and sheep, horses and chariots, and bodies and souls of men. 14 The fruit that your soul longed for has gone from you, and all the things which are rich and splendid have gone from you, and you shall find them no more at all. 15 The merchants of these things, who became rich by her, will stand at a distance for fear of her torment, weeping and wailing, 16 and saying, 'Alas, alas, that great city that was clothed in fine linen, purple, and scarlet, and adorned with gold and precious stones and pearls! (Revelation 18:10-16)
They will be using gold in end time Babylon. More on gold can be found in the article: The Plain Truth About Gold in Prophecy. How Should a Christian View Gold?
Consider also the following:
For what seems like decades, other countries have been tiptoeing away from their dependence on the US dollar.
China, Russia, and India have cut deals in which they agree to accept each others’ currencies for bi-lateral trade while Europe, obviously, designed the euro to be a reserve asset and international medium of exchange.
These were challenges to the dollar’s dominance, but they weren’t mortal threats.
What’s happening lately, however, is a lot more serious. ..
Gold, Oil and De-Dollarization? Russia and China’s Extensive Gold Reserves, China Yuan Oil Market
(Global Research) – China, increasingly backed by Russia—the two great Eurasian nations—are taking decisive steps to create a very viable alternative to the tyranny of the US dollar over world trade and finance. Wall Street and Washington are not amused, but they are powerless to stop it. ...
De-Dollarization Spikes – Venezuela Stops Accepting Dollars For Oil Payments
(Zero Hedge) – Did the doomsday clock on the petrodollar (and implicitly US hegemony) just tick one more minute closer to midnight? ...
This first step towards one or more gold-backed Eurasian currencies certainly looks like a viable and — for a lot of big players out there — welcome addition to the global money stock.
Venezuela, meanwhile illustrates the growing perception of US weakness. It used to be that a small country refusing to take dollars could expect regime change in short order. Now, maybe not so much.
And then there is the Euro.
Iran made a move that way in 2018:
April 19, 2018
Iran’s central bank will dump the dollar and ‘manage’ its local currency using primarily the euro, a state-run news agency reported, amid a deepening confrontation with the US.
President Hassan Rouhani and his cabinet decided Wednesday that the euro will also be used when giving the rial’s exchange rate in all official statements and accounts, Iranian Students’ News Agency cited a government statement as saying. It didn’t say when the decision would come into effect. https://www.thenational.ae/world/mena/iran-dumps-dollar-in-favour-of-euro-1.722930
That is not a surprise. Other nations will look more and more toward Europe's money in the future.
Barron's reported the following:
The U.S. economy is about 25% of the global total in dollar terms, and significantly less if you adjust for price differences across countries. It is even smaller relative to world trade, yet the dollar is the dominant currency for trade invoicing and cross-border payments. More than 50% of all international trade is denominated in dollars, while 30% is denominated in euros. The rest is a mix of other currencies, mostly the British pound, Japanese yen, and Chinese yuan.
This, however, understates how much global trade is denominated in U.S. dollars because intra-European transactions, such as Germany to the Netherlands, or Hungary to Austria, are treated as equivalent to trade between Brazil and China, or between Korea and Thailand. After all, the point of European economic integration is to make national borders within Europe irrelevant for the purposes of trade and finance.
According to Swift, the international payments service, about 80% of genuinely “inter-regional” payments were invoiced in dollars, compared to just 6% in euros. The European Central Bank reports “there is limited evidence that the euro is used for invoicing when transactions do not involve the euro area.”
The importance of the dollar for trade has naturally extended to finance. Companies that pay for imported components in dollars and book export revenues in dollars naturally borrow in dollars and save in dollars. Governments generally prefer to borrow in currencies they can print, but when they lack that option, they will issue debt in the currency with the biggest financial market: the U.S. dollar.
According to the Bank for International Settlements, there is roughly $11.8 trillion in debt owed by non-Americans. That compares to just €3.3 trillion borrowed by people outside the euro area. Most of that euro-denominated debt, however, is issued by entities in the European Economic Area, including countries such as Denmark that have formally locked their exchange rate to the euro. Outside of Europe, more than 80% of international debt is denominated in dollars and two-thirds of foreign exchange reserves (including within Europe) are also denominated in dollars. ...
The more straightforward alternative to the dollar, at least in theory, is the euro. It is the currency of the world’s second-largest economy and the largest contributor to global trade. Europe is a rich democracy with strong property rights. Unfortunately, Europeans have been unwilling to accept the costs associated with reserve currency status. They do not want to issue enough debt to satisfy their own domestic needs, much less those of the rest of the world. This choice is essential for understanding the dollar’s continuing predominance. https://www.barrons.com/articles/the-dollar-is-too-dominant-one-central-banker-has-a-solution-51566986400
When the world does move away from the US dollar, the USA will find that its economy was much more fragile than its leaders or people thought. The crash will be loud.
Since around 1800 the United Kingdom began to dominate world trade in a major way and the USA began massive expansion (for prophetic reasons they are biblically referred to as Israel, check out the article Anglo - America in Prophecy & the Lost Tribes of Israel).
For many decades, the British pound sterling was the primary reserve currency of the world.
When that status switched to the US dollar, the UK had major economic problems for years.
In the 21st century, we are seeing the rise of predominantly Gentile confederations/organizations (see BRICS, Silk Road, SCO, Eurasian Union, and European Union: Final time of the Gentiles?). There is the European Union, China's One-Belt One-Road (Silk Road) project, the Shanghai Cooperation Organization, Brazil-Russia-India-China-South Africa (BRICS), Mercosur, the Arab League, and the Eurasian Union (now called the Eurasian Economic Union).
Part of the objective of the BRICS, EAEU, SCO, EU, and Silk Road arrangements is to establish a new world order (SCO, EAEU, and BRICS defining a ‘new world order’?)–an order no longer dominated by the USA and its Anglo-Saxon allies, like the UK.
How will this end?
Let's look at the following prophecies from the Old and New Testaments:
23 ‘Make a chain,
For the land is filled with crimes of blood,
And the city is full of violence.
24 Therefore I will bring the worst of the Gentiles,
And they will possess their houses;
I will cause the pomp of the strong to cease,
And their holy places shall be defiled.
25 Destruction comes;
They will seek peace, but there shall be none. (Ezekiel 7:23-25)6 Ask now, and see,
Whether a man is ever in labor with child?
So why do I see every man with his hands on his loins
Like a woman in labor,
And all faces turned pale?
7 Alas! For that day is great,
So that none is like it;
And it is the time of Jacob’s trouble,
But he shall be saved out of it. (Jeremiah 30:6-7)24 ... And Jerusalem will be trampled by Gentiles until the times of the Gentiles are fulfilled. (Luke 21:24)
2 But leave out the court which is outside the temple, and do not measure it, for it has been given to the Gentiles. And they will tread the holy city underfoot for forty-two months. (Revelation 11:2)
Notice that Jeremiah Ezekiel, Jesus (whose words are recorded in Luke), and John (who penned Revelation) were talking about the same time. Jeremiah write of a time none was like it, and it should be noted that in Matthew 24:21 Jesus said "there will be great tribulation, such as has not been since the beginning of the world until this time, no, nor ever shall be"--this is essentially the same time as what Luke referred to.
Also notice that it is during “the time of Jacob’s trouble” that the “Gentiles” are dominating. This means those that are descended from Israel and/or have the name of Jacob (cf. Genesis 48:14-16) will be mainly be trampled. One of the peoples that God says He will use to punish the descendants of Israel, Assyria (Isaiah 10:5-11), are a Gentile people–they will normally lead during the time of the Gentiles. This will be a terrible time.
The phrase "until the times of the Gentiles are fulfilled" in Luke 21:24 is also translated: "until the heathen's day is over" (Philips), "until the time granted to the Gentile nations has run out" (Knox), "until the period of the Gentiles comes to an end" (ESV), "till the times of the nations be fulfilled" (DRB) and "until the time of heathen domination will have come to an end" (Norlie).
And as far as Australia and New Zealand go, they will be ‘swallowed up’ in a sense by one or more Gentile powers–this will happen during the Great Tribulation (Matthew 24:21; Daniel 8:24-25), which is when the USA will be conquered (Daniel 11:39; see also USA in Prophecy: The Strongest Fortresses) as well as Canada and the UK (Daniel 8:24-25; Isaiah 17:3).
The final time of the Gentiles includes the last 3 1/2 years before Jesus returns and takes control of the governance of this planet (cf. Revelation 11,19)--to establish the millennial Kingdom of God .
Currently, a new world order is developing. Many in the world are working against the hegemony of the USA, and to a lessor degree its Anglo-Saxon descended allies. See also The Times of the Gentiles.
But because of its debt, the fall of the US dollar will be worse than the earlier fall of the British pound sterling as the world's reserve currency.
Being the world's primary reserve currency has allowed the USA to become the most indebted nation of all time.
The Bible teaches that debt is one of the curses that happen to the disobedient:
15 “But it shall come to pass, if you do not obey the voice of the Lord your God, to observe carefully all His commandments and His statutes which I command you today, that all these curses will come upon you and overtake you: (Deuteronomy 28:15)
43 “The alien who is among you shall rise higher and higher above you, and you shall come down lower and lower. 44 He shall lend to you, but you shall not lend to him; he shall be the head, and you shall be the tail.
45 “Moreover all these curses shall come upon you and pursue and overtake you, until you are destroyed, because you did not obey the voice of the Lord your God, to keep His commandments and His statutes which He commanded you. 46 And they shall be upon you for a sign and a wonder, and on your descendants forever.
47 “Because you did not serve the Lord your God with joy and gladness of heart, for the abundance of everything, 48 therefore you shall serve your enemies, whom the Lord will send against you, in hunger, in thirst, in nakedness, and in need of everything; and He will put a yoke of iron on your neck until He has destroyed you. 49 The Lord will bring a nation against you from afar, from the end of the earth, as swift as the eagle flies, a nation whose language you will not understand, 50 a nation of fierce countenance, which does not respect the elderly nor show favor to the young. 51 And they shall eat the increase of your livestock and the produce of your land, until you are destroyed; they shall not leave you grain or new wine or oil, or the increase of your cattle or the offspring of your flocks, until they have destroyed you. (Deuteronomy 28:43-51)
Will the currenct US President fix this?
Notice some statements from now US President Donald Trump (see also Donald Trump in Prophecy):
I’m the king of debt. I love debt. (Egan M. Donald Trump: ‘I’m the king of debt.’ CNN, May 7, 2016)
Donald Trump also said:
I have borrowed, knowing that you can pay back with discounts. And I have done very well with debt. Now, of course, I was swashbuckling, and it did well for me and it was good for me and all that. …
Now we’re in a different situation with a country, but I would borrow knowing that if the economy crashed you could make a deal. And if the economy was good it was good so therefore you can’t lose. …
I don’t want to renegotiate the bonds, but I think you can do discounting. … I’m not even suggesting that we don’t borrow money at very low rates long term so we don’t have to worry about when they come due. (Kurtzleben D. Donald Trump’s Messy Ideas For Handling The National Debt, Explained. NPR, May 9, 2016)
Nobody knows debt better than me. I’ve made a fortune by using debt and if things don’t work out, I renegotiate the debt. Well, you go back and you say, ‘hey, guess what? The economy just crashed. I’m going to give you back half. (“Trump recession”? Presumptive GOP nominee fires back at Clinton. CBS, June 22, 2016)
It sounds like Donald Trump believes that debt is good and there is nothing wrong with defaulting or otherwise not intending to pay the total debt back. Other USA politicians have also basically suggested paying the debt back in inflated currency or something else other than the original value of the debt.
The Bible says the wicked have that attitude:
21 The wicked borrows and does not repay, But the righteous shows mercy and gives. (Psalms 37:21)
Donald Trump has also filed for bankruptcy four times—presumably to not pay back debt, while he claims a financial worth around $10 billion.
He may consider that to be ‘good business,’ but his practices and intents sound biblically immoral.
Notice further two translations of an end time prophecy:
2 And the Lord answered me:
“Write the vision;
make it plain on tablets,
so he may run who reads it.
3 For still the vision awaits its appointed time;
it hastens to the end—it will not lie.
If it seems slow, wait for it;
it will surely come; it will not delay.
4 “Behold, his soul is puffed up; it is not upright within him,
but the righteous shall live by his faith.a
5 “Moreover, wineb is a traitor,
an arrogant man who is never at rest.c
His greed is as wide as Sheol;
like death he has never enough.
He gathers for himself all nations
and collects as his own all peoples.”
Woe to the Chaldeans
6 Shall not all these take up their taunt against him, with scoffing and riddles for him, and say,
“Woe to him who heaps up what is not his own—
for how long?—
and loads himself with pledges!”
7 Will not your debtors suddenly arise,
and those awake who will make you tremble?
Then you will be spoil for them.
8 Because you have plundered many nations,
all the remnant of the peoples shall plunder you,
for the blood of man and violence to the earth,
to cities and all who dwell in them. (Habakkuk 2:2-8, ESV)2 Then the Lord answered me and said:
"Write the vision
And make it plain on tablets,
That he may run who reads it.
3 For the vision is yet for an appointed time;
But at the end it will speak, and it will not lie.
Though it tarries, wait for it;
Because it will surely come,
It will not tarry.4 "Behold the proud,
His soul is not upright in him;
But the just shall live by his faith.5 "Indeed, because he transgresses by wine,
He is a proud man,
And he does not stay at home.
Because he enlarges his desire as hell,
And he is like death, and cannot be satisfied,
He gathers to himself all nations
And heaps up for himself all peoples.6 "Will not all these take up a proverb against him,
And a taunting riddle against him, and say,
'Woe to him who increases
What is not his — how long?
And to him who loads himself with many pledges'?
7 Will not your creditors rise up suddenly?
Will they not awaken who oppress you?
And you will become their booty.
8 Because you have plundered many nations,
All the remnant of the people shall plunder you,
Because of men's blood
And the violence of the land and the city,
And of all who dwell in it. (Habakkuk 2:2-8)
The USA is the most indebted nation of all time (its offical debt exceeds US$24 trillion).
What has it done since COVID-19?
Increased debt further!
April 12, 2020
There’s no doubt that the Coronavirus is a serious infection that can lead to severe illness or death. There’s also no doubt that ‘virus hysteria’ has been used for other purposes. Wall Street, for example, has used virus-panic to advance its own agenda and get another round of trillion dollar bailouts. In fact, it took less than a week to get the pushover congress to ram through a massive $2.2 trillion boondoggle without even one lousy congressman offering a peep of protest. That’s got to be some kind of record. ...
Well, according to Trump’s chief economic advisor, Larry Kudlow, the first bailout installment is $6.2 trillion (after the Fed ramps up the Treasury’s contribution of $450 billion.). Then there’s the $2.3 trillion in additional programs the Fed announced on Thursday. Finally, the Fed’s QE program adds another $2 trillion in bond purchases since September 17, when the repo market went haywire.
Altogether, the total sum amounts to $10.5 trillion. ...
So, how does this end? It ends in a flash of monetary debasement preceded by a violent and destabilizing currency crisis. It’s plain as the nose on your face. The Fed knows that when a nation’s sovereign debt exceeds 100% of GDP, “there’s almost no mathematical way to service that debt in real terms.” Well, the US passed that milestone way-back in 2019 before this latest drunken spending-spree even began. It’s safe to say, we’ve now entered the financial Twilight Zone, the Land of No Return. If we add the Fed’s bulging balance sheet to the final estimate, (after all, it’s just another shady Enron-type Special Purpose Vehicle) the national debt will be somewhere north of $33 trillion by year-end, which means that Uncle Sam will be the greatest credit risk on Planet Earth. http://www.informationclearinghouse.info/55052.htm
The status of its dollar, and the wrong views of its politicians, have placed the USA in a position where it will be taken over.
When that happens, the US dollar will get to the point it is basically worth the scrap value of the cotton-plastic paper it is written on.
BRICS, the Eurasian Union, Russia, China, the European Union, North Korea, Iran, Venezuela and others want the US dollar dethroned as the world's primary reserve currency.
The shift from the petro-dollar to version of the gold-petro yuan is further setting the stage for the end of US dominance.
Cutting Russian banks from SWIFT is also sending a signal to others to look at divesting from USA dollars.
If enough influential nations decide, and then take enough steps, that the US dollar should not be world’s reserve currency, it no longer will be--andmany nations are in the process of bypassing the US dollar.
We are getting closer to the great tribulation (Matthew 24:21; see also When Will the Great Tribulation Begin?) and final time of the Gentiles (Luke 21:24).
The time of Jacob's trouble (Jeremiah 30:7) is getting closer to be replaced by the final Time of the Gentiles.
Do not think that the US dollar or the USA itself will continue.
It will not.
But there is good news. Jesus will return years after the US dollar is gone and establish the millennial Kingdom of God.
A related video is also available: US Dollar being challenged by Gold-Petro-Yuan.
Thiel B. The End of US Dollar Dominance. http://www.cogwriter.com/end-of-us-dollar.htm (c) COGwriter 2017/2018/201/2020 /2022/ 2023 / 2024 1204