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Fiat Currency Zero Hour: Russia And China Might Collectively Challenge The Dollar's Reserve Status
QTR's Fringe Finance ^
| Fenruary 28, 2022
| Quoth the Raven
Posted on 02/28/2022 7:33:51 AM PST by Diana in Wisconsin
The war being waged by Russia in Ukraine shows no signs of coming to any type of peaceful end.
Meanwhile, it appears to me that a separate war on the U.S. dollar could be “officially” waged at any moment, by Russia and China collectively, as the situation in Ukraine grows more dire, as Russia’s options wane and its ties with China grow closer.
While the hope is still to avoid a World War III type scenario, escalating sanctions from the West are forcing an increasingly unhinged Vladimir Putin to consider his options for pushback.
For example, on Sunday, Putin put nuclear deterrence forces on high alert as a response to increasing pressure from NATO, in a move that the U.S. ambassador to the United Nations said “escalates the conflict unacceptably.”
In the same breath that Putin made this announcement, he continued to push back on economic sanctions being levied against Russia:
"As you can see, not only do Western countries take unfriendly measures against our country in the economic dimension - I mean the illegal sanctions that everyone knows about very well.”
This may be because the bigger story over the weekend was the beginning of removing Russia from the SWIFT intra-bank messaging system, along with sanctions targeting Russia’s Central Bank.
SWIFT helps provide services related to the execution of financial transactions and payments between banks worldwide. Central Bank sanctions from the EU and the Fed instantly make Russia - and its currency, the ruble - pariahs elsewhere in the world.
Russia’s Central Bank reserves are generally controlled by foreign central banks. If those foreign banks decide to freeze access to such reserves, Russia only has its tangible assets (such as oil, and gold reserves) to fall back on.
The ruble is expected to collapse as a result of these sanctions.
Said one analyst on Twitter over the weekend, the Kremlin “has no good off-ramps at this point”.
The obvious consequences of these sanctions is a run on Russia’s banks and a crippling of the Russian economy.
The Bank of Russia (Russia’s Central Bank) will now try to prevent a crisis of confidence among the citizens of the country to slow the economic bleeding.
The BBC reported that Russia’s Central Bank has claimed it “has the necessary resources and tools to maintain financial stability and ensure the operational continuity of the financial sector."
Regardless of whether this is true (the global FX markets will be the judge), it brings up a topic that only “conspiracy theorists” have talked about for decades: the resolve of fiat currencies, and the importance of having tangible bank reserves.
During decades of peace, it’s easy to simply ignore critical questions raised about the backing of fiat currencies while the next trillion dollars casually rolls off the Fed printer and is inequitably distributed through programs like the Paycheck Protection Program. Not unlike equity markets when they’re in a mania, few critical questions are asked while loopholes like money printing are exploited until something eventually gives out.
Now, something is giving out. All those quotes about the “world order” changing as a result of Putin’s recent action? They’re worth paying attention to. They’re the definition of something “giving out”.
*SNIP*
While the idea will likely be written off by economic experts, it’s important to remember that, even if such an idea doesn’t succeed, it could still create chaos for global economic markets and life in the West. We’re already in the midst of a supply chain crisis here in the U.S. - now, add to that the facts that:
Russia has tangible reserves in the form of oil and gold. Russia is the top supplier of imported gasoline to the United States. “In 2021, Russia accounted for 21% of all U.S. gasoline imports,” Forbes writes.
China is a major supplier of…basically everything…we use in the West on a daily basis. China was the United States' largest supplier of goods imports in 2020, according to the USTR. China is currently our largest goods trading partner with $559.2 billion in total (two way) goods trade during 2020, the same report notes.
*SNIP*
Now, it could be time for China and Russia to collectively “flip the switch”.
The writing has been on the wall for a while: Russia and China “de-dollarizing”, both countries stacking their gold reserves and China quickly looking to implement a digital currency.
Over the last five years, only overtly paranoid people like me looked at these actions and concluded they were the lead up to something much bigger.
Now that Russia has put itself at war with the West, the potential reasons, all of a sudden, become much clearer.
I have long argued that our arrogant treatment of the US dollar and our reliance on being able to print it whenever we want was a fool‘s errand. Austrian economists and conservatives who made these points were written off as conspiracy theorists for making suggestions that our country should shore up its balance sheet and back its currency with something tangible.
Now, in the midst of one of the most consequential wars in decades, our people may be starting to see exactly why having your monetary policy house in order is a good idea. Because the sh!t, eventually, always hits the fan.
TOPICS: Business/Economy; Conspiracy; Government; Politics
KEYWORDS: dollar; economy; fiat; money; oodaloop; prepper; preppers; putinworshippers; russia; russianaggression; ukraine
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Russia's Current Gold Holdings:
To: blam; metmom; Pollard; Tilted Irish Kilt
2
posted on
02/28/2022 7:34:57 AM PST
by
Diana in Wisconsin
(I don't have, 'Hobbies.' I'm developing a robust Post-Apocalyptic skill set. )
To: Diana in Wisconsin
To: Diana in Wisconsin
I don’t consider Russia and China to be natural allies. They both have an enormous presence in Asia and a long border, and would have a tendency to butt heads.
But I think Biden’s weakness is driving Russia and China together. They both see opportunities in geographic expansion, wealth from trade, and currency domination.
The 21st century may be shaping up right here and I don’t think it looks good for us.
4
posted on
02/28/2022 7:41:19 AM PST
by
ClearCase_guy
(Weak people see themselves as victims; such people should not be in charge of anything.)
To: Diana in Wisconsin
How exactly, the dollar is the currency everyone wants in their pockets the second conflict breaks out. Right now CASH is king. The EU is in shock that they have to go back to cold war spending. The US just needs to change their defence mix, from war on terror, to worse case Cold War 2.0.
Fear about the dollar drives people to the dollar. I almost think these stories are put out by the dollar buyers to shake lose some extra volume to trade on.
Right now dollars are held tighter than bitcoin and bitcoin has remarkable returns over than past decade and the dollar is flat vs gold, silver, oil.
5
posted on
02/28/2022 7:43:08 AM PST
by
protoconservative
(Been Conservative Before You Were Born )
To: Diana in Wisconsin
Thanks for posting.
Russia has been preparing for possible sanctions in the form of SWIFT exclusion since 2014. That was when it faced sanctions for annexing Crimea. It has set up a messaging system SPFS (which translates into a system for the transfer of financial messages), which works within the country. There are plans to integrate it with China’s Cross-border Inter-bank Payments System (CIPS). This will facilitate trade between Russia and China.
Following the collapse of the Soviet Union in 1991, India had entered into a rupee-rouble trade arrangement with Russia to ensure that defence and other imports could continue. In 2018, a pilot project was run where Indian importers paid in roubles for diamond imports. These payments were made to the Indian branch of Russia’s Sberbank. SBI and Canara Bank have a joint venture (The Commercial Indo Bank), which might be able to help Indians there.
What will be the long-term implications of the ban?
The impact on Russia will depend more on the geopolitical situation. However, the second-order impact would be the development of alternate networks. The decision to restrict Mastercard and Visa to stop processing Russian payments in 2014 led to the creation of regional card networks. The same may happen now with cross-border. Before the pandemic, India, Russia and China were planning an alternative to the SWIFT, using the BRICS platform to launch it. Such initiatives may gain steam.
https://timesofindia.indiatimes.com/business/india-business/learning-with-the-times-swift-exclusion-to-affect-russias-trade/articleshow/89878346.cms
6
posted on
02/28/2022 7:43:43 AM PST
by
Rusty0604
(" When you can't make them see the light, make them feel the heat." -Ronald Reagan)
To: politicket
Another “The Sky is falling” huckster, although with their lips wrapped around Putin’s choad to boot.
7
posted on
02/28/2022 7:44:50 AM PST
by
Republican in occupied CA
(I will not give up on my native State! Here I was born, here I fight and die!!)
To: Diana in Wisconsin
The Chinese economy is even more BS than the Russian. They’re just kicking the can down the road until all that debt from the ghost cities finally blows up. They’re already walking the tight rope. A supermajority of the Chinese population have their life savings tied up in houses they never sell, without plumbing, without electricity, falling apart bit by bit or when someone bumps into a wall and crashes through it.
There will be no “China and Russia” challenging the Reserve Status on the long term. Maybe they’ll try some stop gap measures in the short term, but these are fake economies, built on fake crap, and corrupt to the core.
Our economy is all gimmicky as well, but nowhere near their level.
This “Russia and China are just going to supplant the dollar with the shity Yuan, or with Bitcoin, or with the Ruble, or some kind of new currency!” is a pipedream.
To: Diana in Wisconsin
Bullc**p. They’d have to be morons to tie their currencies together.
To: politicket
Amateur hour stupid. They mention the huge export surplus from China. What would happen if the yuan (RMB) dramatically strengthened against the dollar? Now that $1 widget in Walmart costs $1.50 and it’s profitable to be US made. China does not want that an so keeps the yuan weak against the dollar.
If the dollar falls 33% the 3 trillion of US treasuries are now worth 2 trillion.
Not to mention it is hysterically funny that this author thinks the majority of nations will trust China as the reserve currency guardians, especially after their vovid treachery.
To: Diana in Wisconsin
Hey, it was fun while it lasted, playing KING OF THE HILL, even though we were TOTALLY BROKE.
But this will be something for the ‘woke’ Ukranian-supporters to remember while they’re scrounging for food.
11
posted on
02/28/2022 7:52:09 AM PST
by
BobL
(I eat at McDonald's and shop at Walmart, I just don't tell anyone.)
To: Greetings_Puny_Humans
To: Diana in Wisconsin
Major HatTip to [PTC on Twitter] for finding this article and quote. First, the context:
Yesterday the New York Times reported on U.S. intelligence and diplomatic officials from the State Dept sharing intelligence with Chinese officials in the three months leading up to the Russian invasion. {Go Deep on Analysis} The narrative from the article tells the story of the U.S. trying to convince China in December, January and February to intervene and persuade Russia not to cross the border into Ukraine.
Many people have looked at this story from the perspective of incompetence, ie. why would the Biden team think China would not share the intel, etc.
However, when it comes to these types of issues, never ascribe to incompetence that which can be explained by intent.
There’s every reason to believe what the Biden intelligence community and state department were sharing with China, was done with the intention of Beijing giving it to Moscow.
From that perspective the question around intent becomes, what did they push and why did they push it?
Now we get to the story, quote and critical Reuters article from December of 2021. What was being said by Joe Biden to Ukraine President Vladimir Zelenskyy?
Reuters, December 9, 2021 – “U.S. President Joe Biden assured Ukrainian President Volodymyr Zelenskiy that Kyiv’s bid to join the NATO military alliance was in its own hands, Zelenskiy’s chief of staff said after the two leaders spoke on Thursday.
Biden and Zelenskiy had a call two days after Biden held talks with Russian President Vladimir Putin to try to defuse a crisis over Russian troop movements near Ukraine’s borders. (read more)
In mid-December of 2021, Joe Biden was telling President Zelenskyy the entry of Ukraine into NATO was up to Ukraine. If they want in, they’re in.
This is a red line for Russia, Joe Biden knew it. Vladimir Putin had been very clear about his opposition, and everyone knew it. Russia would never concede allowing Ukraine to enter NATO.
Worth noting, this is the same December 2021, timeframe when the U.S. intel community and Dept of State were talking to China about the Russian troop buildup, per the New York Times info.
The Biden administration is not stupid enough to tell Zelenskyy he’s about to enter NATO without knowing this would trigger a definitive military response from Putin.
There’s only one way to look at this. The Biden administration was purposefully baiting Putin, and provoking Putin to invade Ukraine, because the team around Biden wanted Putin to invade Ukraine.
The question then becomes why? Why would the people in/around Biden want to provoke Vladimir Putin to invade Ukraine?
Again, a critical frame of reference is needed to answer that question: never ascribe to incompetence that which can be explained by intent.
With the scale of economic bad news and catastrophic policy outcomes overwhelming the White House, a geopolitical crisis to distract the world’s attention does have major benefits. However, this specific motive is also deeper than that….
This crisis actually helps advance the goals and objectives of domestic policy in multiple ways.
The people around Biden want soaring energy costs, they want huge increases in gasoline costs as part of their Green New Deal agenda. These are ideological travelers, the most intense elements within the Obama crowd, and Biden has been installed as a disposable figurehead allowing them to operate a policy agenda without any concern for political damage.
Paving the path to ‘the great reset’, also known as ‘Build Back Better’ is much easier when the fundamental change crowd can just plow full speed ahead.
These are the most entrenched ideologues who consider federal deficit spending as a means to an end, where the U.S. is fundamentally changed and forever diminished because we are broke.
Through this prism of consequence, all of the negative domestic outcomes from Russia entering Ukraine and our responses therein, are not viewed as bad outcomes. These consequences are domestic and economic pains to be embraced, not avoided. After all, the people delivering these outcomes will never, themselves, feel any of it.
Watch what happens if our own government, these same entrenched ideologues, are successful in leveraging the sanctions against Russia to include the removal of Russia from the SWIFT financial exchanges.
Russia, China and Iran will immediately respond to the “west” blocking Russia from the SWIFT financial system. If they launch a counter trade currency to work around the petro-dollar, it will not take long before the dollar is weakened or removed as the global trade currency. If that happens, it’s game over for the United States of America as we know it.
Now, think about the Obama crew, the most ideological of all ideological traveling globalists…. the same crew who wanted to see the decolonialization of western culture. The crew who wants ‘fundamental and permanent change’…. For this crew, the collapse of the United States is their goal. For this crew, getting to that place by putting SWIFT sanctions on Russia is a net positive.
From that perspective, what is happening in Ukraine-Russia becomes a completely different dynamic.
Why would the people in/around Biden want to manipulate information, stoke, trigger and provoke Vladimir Putin to invade Ukraine?
Well, there’s your answer.
13
posted on
02/28/2022 7:54:09 AM PST
by
Bratch
To: BiglyCommentary
“What would happen if the yuan (RMB) dramatically strengthened against the dollar? Now that $1 widget in Walmart costs $1.50 and it’s profitable to be US made.”
Not with our unions, the Left has that covered too.
14
posted on
02/28/2022 7:55:33 AM PST
by
BobL
(I eat at McDonald's and shop at Walmart, I just don't tell anyone.)
To: Diana in Wisconsin
Going directly after the 500 (est.) Russian Oligarch’s personal and extended family assets, their extended businesses networks, banking assets and their ability to travel would be more painful and not hurt the Russian people.
15
posted on
02/28/2022 7:57:20 AM PST
by
WellyP
(question!)
To: politicket; Diana in Wisconsin
“Not this again...”
I’m sure you meant to say:
“Not this SHIT again...”
The idea that two oligarchies are going to replace the dollar as the reserve currency with their rub(b)le or yuan is beyond preposterous.
16
posted on
02/28/2022 8:00:23 AM PST
by
aquila48
(Do not let them make you "care" ! Guilting you is how they control you. )
To: BiglyCommentary
Amateur hour stupid. Russia and China are factory nations. Their economy only exists due to selling their goods to other nations.
This only happens if they keep their currency very weak against the currencies of their trading partners.
To say that two factory nations are going to combine to displace the US dollar as a reserve currency is asinine.
This doesn't mean that I'm a US dollar fanboi. Our currency, just like the currencies of the world, is wicked - in that it is based on debt (US Treasuries in our case).
The US needs to have the Treasury issue our currency, and only issue it against labor that has been completed - think public works projects for instance, that could then be spent into the economy. There should never be backing by debt - since debt is a claim on the future labor of a society. We are currently slaves to our debt masters.
To: aquila48
“The idea that two oligarchies are going to replace the dollar as the reserve currency with their rub(b)le or yuan is beyond preposterous.”
Sounds like the systems are already up and running. Just depends on how many countries sign up.
18
posted on
02/28/2022 8:03:22 AM PST
by
BobL
(I eat at McDonald's and shop at Walmart, I just don't tell anyone.)
To: BobL
What would happen if the yuan (RMB) dramatically strengthened against the dollar? China's economy would fall into a spiraling recession.
I won't even get into how it would speed the ultimate collapse from their real-estate bubble that was built around "the greater fool" principal.
To: Diana in Wisconsin
Go ahead. No country in their right minds would trust Russian or Chinese central banks.
Not that we are much better…
L
20
posted on
02/28/2022 8:06:32 AM PST
by
Lurker
(Peaceful coexistence with the Left is not possible. Stop pretending that it is.)
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