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US bank trouble heralds end of dollar reserve system
Asia Times ^

Posted on 03/25/2023 4:47:43 AM PDT by FarCenter

NEW YORK – The US banking system is broken. That doesn’t portend more high-profile failures like Credit Suisse. The central banks will keep moribund institutions on life support.

But the era of dollar-based reserves and floating exchange rates that began on August 15, 1971, when the US severed the link between the dollar and gold, is coming to an end. The pain will be transferred from the banks to the real economy, which will starve for credit.

And the geopolitical consequences will be enormous. The seize-up of dollar credit will accelerate the shift to a multipolar reserve system, with advantage to China’s RMB as a competitor to the dollar.

Gold, the “barbarous relic” abhorred by John Maynard Keynes, will play a bigger role because the dollar banking system is dysfunctional, and no other currency—surely not the tightly-controlled RMB—can replace it. Now at an all-time record price of US$2,000 an ounce, gold is likely to rise further.

The greatest danger to dollar hegemony and the strategic power that it imparts to Washington is not China’s ambition to expand the international role of the RMB. The danger comes from the exhaustion of the financial mechanism that made it possible for the US to run up a negative $18 trillion net foreign asset position during the past 30 years.

Germany’s flagship institution, Deutsche Bank, hit an all-time low of 8 euros on the morning of March 24, before recovering to 8.69 euros at the end of that day’s trading, and its credit default swap premium—the cost of insurance on its subordinated debt—spiked to about 380 basis points above LIBOR, or 3.8%.

That’s as much as during the 2008 banking crisis and the 2015 European financial crisis, although not quite as much as during the March 2020 Covid lockdown, when the premium exceeded 5%. Deutsche Bank won’t fail, but it may need official support. It may have received such support already.

This crisis is utterly unlike 2008, when banks levered up trillions of dollars of dodgy assets based on “liar’s loans” to homeowners. Fifteen years ago, the credit quality of the banking system was rotten and leverage was out of control. Bank credit quality today is the best in a generation. The crisis stems from the now-impossible task of financing America’s ever-expanding foreign debt.


TOPICS: News/Current Events
KEYWORDS: americahaters; blameamerica; bricsisajoke; davidgoldman; davidpgoldman; putinisgay
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1 posted on 03/25/2023 4:47:43 AM PDT by FarCenter
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To: FarCenter

Some banks have substantial commercial real estate loans out there.

That may be the next domino to fall.


2 posted on 03/25/2023 4:50:47 AM PDT by cgbg (Claiming that laws and regs that limit “hate speech” stop freedom of speech is “hate speech”.)
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To: FarCenter

Yeah, and Russia at war eliminates the Ruble, troubles with Swiss and German banks eliminate the Swiss Franc and the Euro, and nobody trusts the Chinese which eliminates the Yuan.

So what does that leave as a possible global currency? Japan’s Yen? Britain’s Pound?

Hardly.


3 posted on 03/25/2023 5:11:22 AM PDT by Yo-Yo (Is the /Sarc tag really necessary? Pray for President Biden: Psalm 109:8)
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To: FarCenter

The story of the de-dollarization of the world’s commerce is underlying the current developments, and the media are assiduously working to keep the story from the American public. Meanwhile, BRICS nations are openly talking about a future gold backed cbdc which would spell the end of the dollar as the world reserve currency. This will result in catastrophic inflation. It looks increasingly like the gold bugs are finally right, physical precious metals may soon become the only refuge for the average man.


4 posted on 03/25/2023 5:12:55 AM PDT by hinckley buzzard ( Resist the narrative.)
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To: Yo-Yo

The world of bad actors has given the Fed/Treasury a license to print money—and they are gonna ride this pony until it collapses.


5 posted on 03/25/2023 5:13:52 AM PDT by cgbg (Claiming that laws and regs that limit “hate speech” stop freedom of speech is “hate speech”.)
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To: hinckley buzzard

I would like someone to explain how we are supposed to pay our taxes in gold—is there any scenario where that is possible?


6 posted on 03/25/2023 5:15:17 AM PDT by cgbg (Claiming that laws and regs that limit “hate speech” stop freedom of speech is “hate speech”.)
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To: FarCenter

The article fails in one extremely important set of facts........China is on it’s financial ass.

Banks all over the country are failing. Depositors can’t get at their money even from “good” banks. Regional governments have no money. Having relied on land sales for revenue, they can’t collect enough taxes to come close to the expenses when the land market no longer exists. Business is very bad and employees aren’t being paid. Some have worked as long as 16 months without a pay check.

China has in fact failed and there is no possibility at all of the RMB becoming the world currency standard


7 posted on 03/25/2023 5:23:54 AM PDT by bert ( (KWE. NP. N.C. +12) Juneteenth is inequality day )
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To: FarCenter

Soros, with a little help from the World Economic Forum, does it again... This time on a bigger scale, and STILL walks about as a free man..


8 posted on 03/25/2023 5:24:39 AM PDT by unread ("It's not enough that we do our best; sometimes we have to do what's required." W. Churchill.)
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To: unread

George Soros had nothing to do with the fiscal mismanagement in the U.S. over the last 50+ years.


9 posted on 03/25/2023 5:27:43 AM PDT by Alberta's Child ("I've just pissed in my pants and nobody can do anything about it." -- Major Fambrough)
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To: unread
Soros, with a little help from the World Economic Forum, does it again...

Yup. Just waiting in the wings with a global digital currency. Make sure your ESG and signed oath to satan are up to date.

10 posted on 03/25/2023 5:28:57 AM PDT by Sirius Lee (They intend to murder us. Prep if you want to live and live like you are prepping for eternal life)
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To: Sirius Lee

Do I get to choose which of my hands the digital chip goes?


11 posted on 03/25/2023 5:40:41 AM PDT by moovova ("The NEXT election is the most important election of our lifetimes!“ LOL...)
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To: cgbg
The world of bad actors has given the Fed/Treasury a license to print money—and they are gonna ride this pony until it collapses.

The subprime mortgage crisis of 2008 was when the Fed started making money out of absolutely nothing by buying US Treasuries directly.

11 years later, everyone looked around and figured that noting much bad happened because of it, so when COVID hit they turned the money printers up to 11.

To paraphrase Winston Churchill, the Dollar is the worst form of reserve currency in the world, except for every other.

12 posted on 03/25/2023 5:44:19 AM PDT by Yo-Yo (Is the /Sarc tag really necessary? Pray for President Biden: Psalm 109:8)
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To: FarCenter

The USA borrowed $200 billion so it could give it away to Ukraine, FOR FREE! That’s just ONE country, not including the trillions borrowed to give away to all the other countries in the world.

Now the succeeding generations are stuck with paying that bill.


13 posted on 03/25/2023 5:44:34 AM PDT by Flavious_Maximus (Tony Fauci will be put on death row and die of COVID!)
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To: FarCenter

“As of 2022, none of the world’s countries use the gold standard”

https://www.bing.com/images/search?q=gold%20backed%20currency%20countries&qs=MM&form=QBIR&sp=3&ghc=1&lq=0&pq=gold%20backed%20currency&sk=MM2&sc=10-20&cvid=073562137CEC4D36AC07266CCA26C5B4&first=1


14 posted on 03/25/2023 5:48:47 AM PDT by bert ( (KWE. NP. N.C. +12) Juneteenth is inequality day )
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To: Yo-Yo

I’m going back to the security of Beanie Babies and Gone With the Wind decorative plates.


15 posted on 03/25/2023 5:51:50 AM PDT by super7man (Madam Defarge, knitting, knitting, always knitting.)
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To: FarCenter

Asia Times, China influenced news outlet?


16 posted on 03/25/2023 5:53:29 AM PDT by Chgogal (Welcome to Fuhrer Biden's Weaponized Fascist Banana Republic! It's the road to hell.)
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To: moovova

No, you get it right in the forehead, like all the other Conservatives the allow to be alive. *Kachunk* Ow!


17 posted on 03/25/2023 5:59:48 AM PDT by Sirius Lee (They intend to murder us. Prep if you want to live and live like you are prepping for eternal life)
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To: moovova

Or which finger!?


18 posted on 03/25/2023 6:11:49 AM PDT by JoJo354 (We need to get to work, Conservatives!)
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To: FarCenter

FULL TRANSPARENCY:

Installation of democrats Barack Obama and Joe
Biden as presidents dedicated to the fundamental
transformation of America from a Constitutional
Republic with a capitalistic economic system to a
"woke", racist, oligarcy with a socialist/communist
economic system has created the current US bank
troubles and the end of dollar as the international
reserve currency.


19 posted on 03/25/2023 6:12:59 AM PDT by Iron Munro ( Michael Byrd: "Well, Somebody had to do it - Babbitt wasn't gonna' shoot herself!")
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To: cgbg

The big secret is that pony been dead for a while the fed is just put wires on it and it’s making it dance around puppet like


20 posted on 03/25/2023 6:19:51 AM PDT by rottweiller_inc (inter canem et lupum)
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