Posted on 04/06/2023 7:52:14 AM PDT by thegagline
Joe Biden is dethroning King Dollar in real time. The US dollar’s financial dominance is under siege from a uniquely bad combination of foreign and domestic policies, and Americans should be deeply concerned by the fallout if the dollar loses its 80-year reign as the world’s reserve currency.
In just the past weeks, China conducted the first major LNG sale in renminbi instead of dollars, struck a major deal with Brazil to conduct trade in their own currencies, and just announced the sale of 65,000 tons of LNG to France denominated in yuan. This dovetails with the Biden administration’s inflationary policies and ham-handed sanctions on Russia that accelerated foreigners’ flight from the dollar at the very moment the world doubts if the dollar remains a safe and reliable store of value.
Since the Bretton Woods agreement in 1944 and the petrodollar deal in 1945, the dollar has enjoyed preeminent status around the world, especially for international trade and exchange. This created huge demand for dollars abroad and allowed the US to export inflation, to spend beyond our means and leaving foreigners to soak up the extra.
As the Federal Reserve created billions for the government to spend in the 1960s, it threatened America’s gold reserves. At the time, all major currencies were redeemable for dollars, and dollars were redeemable for gold. When “guns and butter” policy led to a run on gold, President Nixon ended the dollar-gold-exchange standard with what was supposed to be a temporary measure. Ending the dollar’s link to gold freed the Fed to create yet more money and yet more inflation. While inflation moderated in the early 1980s, it has now returned with a vengeance. Four-decade-high inflation has undermined the dollar’s stability, one of the necessary characteristics of a reserve currency.
A second critical feature of a reserve currency is its apolitical nature. Which Biden is now gutting. After both parties in Washington destroyed the dollar’s stability with inflation, now the Biden administration has chosen to wield the dollar as a weapon. Together, the message to foreigners they should get out while they still can.
In response to Russia’s war with the Ukraine, the US froze the dollar reserves of Russia’s central bank. To be clear, these were not American assets, but were dollars owned by the Russian central bank and the Russian people. The seizure was intended to cause bank runs and collapse Russia’s credit system. It didn’t work.
Instead, it exposed the Biden administration’s willingness to violate the trillions of dollars foreigners rightfully own. The danger of this precedent is difficult to overstate.
Every nation in the world must now wonder if the Biden administration will threaten their dollar assets too if they do something the administration doesn’t like. Perhaps a foreign country disagrees with Biden on “green” energy mandates, or transgender policies, or diversity quotas. Is there some ESG threshold of wokeness where your national treasury is drained without warning?
This is not a justification of Putin’s actions, this is about shooting ourselves in the foot. The Biden administration crossed the Rubicon when it weaponized the dollar at a time when it was already teetering from four-decade-high inflation and record levels of debt.
This has given China, our greatest adversary, all the ammunition it needs to launch a worldwide offensive to replace the dollar. It is now making rapid progress.
If the de-dollarization progresses what becomes of the trillions of dollars accumulated around the world since 1944?
If foreigners no longer want them for trade, central bank reserves, private wealth funds, and the official currency of about a dozen countries, all those dollars have nowhere to go but back to us in a flood like our country has never seen. This flood will compete for goods and services in the US against the dollars already here as decades of accumulated trade deficits come flooding back all at once.
At that point, hyperinflation will not be hyperbole.
In 2024 when Congress sends billions to Ukraine will the thankyou note read “thanks for the case of cheap beer”?
Frankly, there is no stopping it from happening.
Right now the mainstream media are painting a deceptive picture, but even the market last week already admitted it is functioning as though our economy and banks have already failed. This is the reason the market has not collapsed on itself ...yet. They are trying to save their hides, get what they can and are planning for the new world currencies or commodities.
This means ...when the average man in the street witnesses the fall, he will panic.
Those who have been paying attention and preparing are just holding our breath for now. It has been a slow unravelling, but those last few pieces of rope will snap seemingly sudden.
Excellent post!
And the rope could suddenly snap at any time.
Note: When the Dollar loses its status as the Global Reserve Currency, there will not be a successor.
There will not be a Global Reserve Currency. Trade will be unilateral and multilateral bartering.
Global Trade as we know it will be over.
Once dollars are no longer accepted for buying oil, it’s done.....................
This is bigger than anything else going on.
“China conducted the first major LNG sale in renminbi instead of dollars, struck a major deal with Brazil to conduct trade in their own currencies, and just announced the sale of 65,000 tons of LNG to France denominated in yuan.”
This “expert” doesn’t seem to know that the Chinese currency is tied to the dollar.
Yuan denominated = dollar denominated. It does nothing to dethrone the dollar.
One step at a time, until we turn into Germany’s Weimar Republic, later this Summer.
BIDEN has NO idea what is happening.
OBAMA—RICE—Jarrett—Yellen & others are doing all the dirty work.
BIDEN IS A PUPPET FIGUREHEAD
You might want to do some research. The dollar as the World Reserve Currency is dying. It will be replaced.
Check out what is up with the BRICS nations and how many countries, including Mexico, want to join them and abandon the US.
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“You might want to do some research. The dollar as the World Reserve Currency is dying. It will be replaced.”
Last year 88% of all Forex trades were in USD. Up from 60% in 1990.
For 200 years anyone who has bet against America has lost, and that streak shows no sign of ending.
This is going to be a slow bleed—may take more than a decade for the dollar to fail.
Enjoy every minute while you can—because when the world economy crashes watch out below...
That is what is so cool about chaos theory.
Everything is fine—until suddenly and for no one specific reason—it is not.
I sure hope you’re right, but if we get another leftists in the WH in 2024, we’re done.
“thanks for the case of cheap beer”?
Cheap as in price or quality?
I love a good pilsner.
So the dollar will be like any other currency in the world. Should help exports.
As long as The Big Guy chomo gets his cut he cares nothing for America or Americans.
No, the dollar will wet taco.
The only reason it hasn’t wet taco’ed already under Congress’ spendthrift ways is that people have needed dollars to buy oil.
“That is what is so cool about chaos theory. Everything is fine—until suddenly and for no one specific reason—it is not.”
Except that doesn’t apply to history.
The USA passed the UK as the largest economy around 1890, but it was not until 1945 that the US replaced the UK as the world’s dominant power.
The transition before that it was a 100 year process of the UK passing France.
Extinction of empires requires events on the WWII/Napoleonic Wars level. One moron for a president won’t cost us our empire.
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