Will Sanctions End the Dollar's Global Reserve Currency Status?

[georgephillip]

Thwarting the anti-dollar coalition should be Washington's top national priority

"The United States is currently waging economic warfare against one tenth of the world's countries with cumulative population of nearly 2 billion people and combined gross domestic product (GDP) of more than $15 trillion.

"These include Russia, Iran, Venezuela, Cuba, Sudan, Zimbabwe, Myanmar, the Democratic Republic of Congo, North Korea and others on which Washington has imposed sanctions over the years, but also countries like China, Pakistan and Turkey which are not under full sanctions but rather targets of other punitive economic measures."

The latest sanctions against Russia include restrictions that could induce a massive default on its sovereign and corporate debt, but don't worry, Wall Street has it all covered (with your taxes)

The Big Question on Wall Street Is Which Banks Owe $41 Billion on Credit Default Swaps on Russia

"There is a known $41 billion in Credit Default Swaps (CDS) on Russian debt.

"There is likely many billions more in unknown amounts.

"There are also billions more in Credit Default Swaps on state-owned Russian corporate debt and non state-owned Russian corporate debt.

"In addition to Wall Street not knowing which global banks and other financial institutions are on the hook to pay out on the Credit Default Swap protection they sold in case of a Russian sovereign debt default (or Russian corporate debt default), there is also approximately $100 billion of Russian sovereign debt (whose default is looking more and more likely) sitting on the balance sheets of foreign banks."

For those old enough to remember 911, the Great Recession, and Covid, can you imagine a global crisis vast enough to trump the consequences of those three calamities combined?

Dedollarisation - Wikipedia

 

[Toro]

No.

 

[Mac-7]

Thwarting the anti-dollar coalition should be Washington's top national priority

"The United States is currently waging economic warfare against one tenth of the world's countries with cumulative population of nearly 2 billion people and combined gross domestic product (GDP) of more than $15 trillion.

"These include Russia, Iran, Venezuela, Cuba, Sudan, Zimbabwe, Myanmar, the Democratic Republic of Congo, North Korea and others on which Washington has imposed sanctions over the years, but also countries like China, Pakistan and Turkey which are not under full sanctions but rather targets of other punitive economic measures."

The latest sanctions against Russia include restrictions that could induce a massive default on its sovereign and corporate debt, but don't worry, Wall Street has it all covered (with your taxes)

The Big Question on Wall Street Is Which Banks Owe $41 Billion on Credit Default Swaps on Russia

"There is a known $41 billion in Credit Default Swaps (CDS) on Russian debt.

"There is likely many billions more in unknown amounts.

"There are also billions more in Credit Default Swaps on state-owned Russian corporate debt and non state-owned Russian corporate debt.

"In addition to Wall Street not knowing which global banks and other financial institutions are on the hook to pay out on the Credit Default Swap protection they sold in case of a Russian sovereign debt default (or Russian corporate debt default), there is also approximately $100 billion of Russian sovereign debt (whose default is looking more and more likely) sitting on the balance sheets of foreign banks."

For those old enough to remember 911, the Great Recession, and Covid, can you imagine a global crisis vast enough to trump the consequences of those three calamities combined?

Dedollarisation - Wikipedia

We need to wage economic war against china and all of peking’s vassal states

 

[georgephillip]

No.

When (if ever) would you expect to see any of the following occur?

Dedollarisation - Wikipedia

"Dedollarisation is a process of substituting US dollar as the currency used for:

• Trading oil and/ or other commodities (see Petrodollar)
• Buying US dollars for the forex reserves
• Bilateral trade agreements
• Dollar-denominated assets"

 

[Donald H]

America simply won't accept it!
All of America's power will be brought to bear to stop it.

Unfortunately that will involve China in a very negative way.

Almost assuredly the reason why China hasn't caused it to happen yet.

 

[georgephillip]

We need to wage economic war against china and all of peking’s vassal states

Like Russia?

"Since 2011, China is gradually shifting from trade in US dollar and in favour of Chinese yuan.[1]

"It made agreements with Australia, Russia, Japan, Brazil, and Iran to trade in national currencies.

"It has been reported that in the first quarter of 2020 the share of the dollar in the bilateral trade between China and Russia fell below 50 percent for the first time.[3]

"In 2015, China launched CIPS, a payment system which offers clearing and settlement services for its participants in cross-border Renminbi payments and trade as an alternative to SWIFT.[4]"

Dedollarisation - Wikipedia

 

[Toro]

To be a reserve currency you need to

• Have a massive preferably growing economy
• Be able to convert your currency freely
• Have a trusted banking system
• Abide by the rule of law so those who have contracts believe they'll be fairly enforced

There's only one nation in the world that ticks all these boxes.

Also, the US remains the most desired economy in which to invest. One reason why there are so many dollars floating around the world is because foreigners put their money here.

It is possible that the dollar will be used less as a trading currency given that the financial system has been weaponized against Russia. But about 25% of all global trade is already in non-dollars. Ticking up won't affect the global reserve system much.

 

[Mac-7]

Like Russia?

"Since 2011, China is gradually shifting from trade in US dollar and in favour of Chinese yuan.[1]

"It made agreements with Australia, Russia, Japan, Brazil, and Iran to trade in national currencies.

"It has been reported that in the first quarter of 2020 the share of the dollar in the bilateral trade between China and Russia fell below 50 percent for the first time.[3]

"In 2015, China launched CIPS, a payment system which offers clearing and settlement services for its participants in cross-border Renminbi payments and trade as an alternative to SWIFT.[4]"

Dedollarisation - Wikipedia

China is a house of cards and not a safe investment

 

[georgephillip]

America simply won't accept it!
All of America's power will be brought to bear to stop it.

Unfortunately that will involve China in a very negative way.

Almost assuredly the reason why China hasn't caused it to happen yet.

There has been a critical mass building for decades around de-dollarization that China has done nothing to diminish and there doesn't appear to be much a declining empire like the US can do to prevent it:

Thwarting the anti-dollar coalition should be Washington's top national priority

"But in recent months it seems that America's unwavering commitment to fight all of the world's scourges has brought all those governments and the wealthy individuals who support them to a critical mass, joining forces to create a parallel financial system which would be out of reach of America's long arm.

"Should they succeed, the impact on America's global posture would be transformational."

 

[Donald H]

There has been a critical mass building for decades around de-dollarization that China has done nothing to diminish and there doesn't appear to be much a declining empire like the US can do to prevent it:

Thwarting the anti-dollar coalition should be Washington's top national priority

"But in recent months it seems that America's unwavering commitment to fight all of the world's scourges has brought all those governments and the wealthy individuals who support them to a critical mass, joining forces to create a parallel financial system which would be out of reach of America's long arm.

"Should they succeed, the impact on America's global posture would be transformational."

America is taking action by challenging Russia in a way that has never happened before. Even the Cuban missile crisis didn't come close on account of it being so easily defused by the obvious way out of it all.

Do you think that America can afford to lose the bid for the Ukraine or do you consider it as Russia's bid for the Ukraine, and the expansion of Nato?

I agree that China has done nothing to diminish but also hasn't actively pursued either. To me it seems that China doesn't want to be a part of making it happen. China would understand that would be an act of war.

But for now I would accept your suggestion that China has done nothing to diminish the threat.

 

[georgephillip]

To be a reserve currency you need to

• Have a massive preferably growing economy
• Be able to convert your currency freely
• Have a trusted banking system
• Abide by the rule of law so those who have contracts believe they'll be fairly enforced

There's only one nation in the world that ticks all these boxes.

The Greatest Purveyor of Violence on the Planet.

There's no doubt about the size of the US economy, but its high-growth days appear to be behind it.

We also seem to use SWIFT as a tool of foreign policy instead of its advertised role which inspires a great deal of mistrust.

For example, Putin's war crimes in Ukraine deserve and receive sanctions while MBS's terror in Yemen receives US support.

The rule of law applies to states which support US interests in places like Ukraine but it's ignored whenever it works against American imperialism in Iraq, Afghanistan, and Syria.

 

[georgephillip]

Do you think that America can afford to lose the bid for the Ukraine or do you consider it as Russia's bid for the Ukraine, and the expansion of Nato?

I think America is fighting Russia to the last drop of Ukrainian blood.

The CIA first sacrificed Ukrainian nationals in its attempt to destabilize Russia in 1949 (the year the USSR came into existence)

Imho, very little has changed since that time

Ukraine: A Short History of Meddling

"Over the past few decades, America, its allies, and its institutions have meddled in Ukraine in ways big and small: They helped craft Ukraine’s privatization laws.

"They funneled endless amounts of cash into two Color-type Revolutions — first the Orange Revolution in 2004 and then Maidan’s Revolution of Dignity in 2014.

"They’ve handpicked leaders of the government and secretly threatened to jail oligarchs if America’s orders weren’t followed.

"They’ve forced Ukraine to cut its budget, increase domestic gas prices, and push through highly unpopular taxes on alcohol and tobacco — these weren’t just general suggestions, but a hands-on micromanaging of the economy in return for aid and investment."

 

[toobfreak]

No.

SHADDAP Idiot.

 

[toobfreak]

There's no doubt about the size of the US economy, but its high-growth days appear to be behind it.

Not if we can get the venal leftwing scum out of Washington and restore Trump's rightful place to the WH.

 

[Donald H]

I think America is fighting Russia to the last drop of Ukrainian blood.

The CIA first sacrificed Ukrainian nationals in its attempt to destabilize Russia in 1949 (the year the USSR came into existence)

Imho, very little has changed since that time

Ukraine: A Short History of Meddling

"Over the past few decades, America, its allies, and its institutions have meddled in Ukraine in ways big and small: They helped craft Ukraine’s privatization laws.

"They funneled endless amounts of cash into two Color-type Revolutions — first the Orange Revolution in 2004 and then Maidan’s Revolution of Dignity in 2014.

"They’ve handpicked leaders of the government and secretly threatened to jail oligarchs if America’s orders weren’t followed.

"They’ve forced Ukraine to cut its budget, increase domestic gas prices, and push through highly unpopular taxes on alcohol and tobacco — these weren’t just general suggestions, but a hands-on micromanaging of the economy in return for aid and investment."

Thanks for your info and links george. Some of which I was aware of and some that I was not.

 

[georgephillip]

China is a house of cards and not a safe investment

China has carefully studied the mistakes Russia made in the 1990s when it became ruled by a Western-oriented kleptocracy delivered by the Harvard Boys via Boris Yeltsin and Putin.

The current conflict between the US and China isn't a national rivalry as much as a struggle of economic and social systems.

America’s Neoliberal Financialization Policy vs. China’s Industrial Socialism | Michael Hudson

"From today’s U.S. vantage point, that polarization (between privatization and public utility) is the basic dynamic of today’s U.S.-sponsored neoliberalism.

China and Russia are existential threats to the global expansion of financialized rentier wealth.

"Today’s Cold War 2.0 aims to deter China and potentially other counties from socializing their financial systems, land and natural resources, and keeping infrastructure utilities public to prevent their being monopolized in private hands to siphon off economic rents at the expense of productive investment in economic growth"

 

[Donald H]

China has carefully studied the mistakes Russia made in the 1990s when it became ruled by a Western-oriented kleptocracy delivered by the Harvard Boys via Boris Yeltsin and Putin.

The current conflict between the US and China isn't a national rivalry as much as a struggle of economic and social systems.

America’s Neoliberal Financialization Policy vs. China’s Industrial Socialism | Michael Hudson

"From today’s U.S. vantage point, that polarization (between privatization and public utility) is the basic dynamic of today’s U.S.-sponsored neoliberalism.

China and Russia are existential threats to the global expansion of financialized rentier wealth.

"Today’s Cold War 2.0 aims to deter China and potentially other counties from socializing their financial systems, land and natural resources, and keeping infrastructure utilities public to prevent their being monopolized in private hands to siphon off economic rents at the expense of productive investment in economic growth"

That's as good a term for America's brand of capitalism as any. Appreciated and understood, but just a bit above the pay grade of this forum's schlunks.

Also, an adept comment on China's caution of not falling into the same trap.

 

[Mac-7]

China has carefully studied the mistakes Russia made in the 1990s when it became ruled by a Western-oriented kleptocracy delivered by the Harvard Boys via Boris Yeltsin and Putin.

The current conflict between the US and China isn't a national rivalry as much as a struggle of economic and social systems.

America’s Neoliberal Financialization Policy vs. China’s Industrial Socialism | Michael Hudson

"From today’s U.S. vantage point, that polarization (between privatization and public utility) is the basic dynamic of today’s U.S.-sponsored neoliberalism.

China and Russia are existential threats to the global expansion of financialized rentier wealth.

"Today’s Cold War 2.0 aims to deter China and potentially other counties from socializing their financial systems, land and natural resources, and keeping infrastructure utilities public to prevent their being monopolized in private hands to siphon off economic rents at the expense of productive investment in economic growth"

Its a national rivalry and china is waging war on every front possible

from economic mercantilism, to political pressure to military expansion and threats based on military power

 

[georgephillip]

Thanks for your info and links george. Some of which I was aware of and some that I was not.

You're very welcome, Donald.
I came to the Internet late in 2009, so I missed out on that first decade when EVERYTHING seemed possible.

I think the potential is still there.

I've had numerous extensive political dialogs with individuals I would not have been able to communicate with in a face-to-face setting for five minutes.

If we are approaching the point where the US dollar no longer serves as the principal global reserve currency, finding common ground with political rivals won't be possible without this medium.

 

[Donald H]

You're very welcome, Donald.
I came to the Internet late in 2009, so I missed out on that first decade when EVERYTHING seemed possible.

I think the potential is still there.

I didn't miss out. I started in 99 with the Kosovo war.

I've had numerous extensive political dialogs with individuals I would not have been able to communicate with in a face-to-face setting for five minutes.

I've had some too but very few. Perhaps one or two on this particular board, but that could be because of my attitude of not being able to suffer so many fools. Also too because I'm a Canadian and I don't spare either American political party any criticism. To me it's about America, except that in the case of wars, we're guilty through our Nato alliance.

If we are approaching the point where the US dollar no longer serves as the principal global reserve currency, finding common ground with political rivals won't be possible without this medium.

I essentially agree because there's no other medium that could serve the purpose. However, I consider there to be little hope of people or nations finding common ground on the big important issues such as world war or even ending the proxy wars.

America, China, Russia, and a few new upstarts will compete bitterly for the planet's resources and world domination with which to procure them.

The only hope for peace in the future is through M.A.D.

Don't let me discourage your efforts.

A word on climate change: I think the only progress that will be significant to save us is only going to be negative experience. The battle is lost IMO and only pain can start some winning, at great cost due to lack of action when it could have been more affordable and effective.