Russian television is talking up a storm about Xi’s visit to Saudi Arabia and the enormously significant agreement to denominate Chinese purchases of oil in Yuan. In this regard, Russian commentators are running well ahead of the more cautious description of ‘agreements under discussion’ and ‘partial payments in Yuan’ that we find in yesterday’s Global Times, an English language semi-official Chinese newspaper.
However, there is every reason to believe that the Russians know more than the Chinese or Saudis are willing to say publicly. After all, there are now news leaks to the effect that the Chinese have for months been sending many planeloads of military gear to Russia each week in support of its Ukraine campaign, in violation of their supposed neutrality on the issue. That by itself is subject to a news blackout that Washington, for obvious reasons, does not violate. To do so would accelerate the economic decoupling with China in a way that would leave all U.S. retail shelves bare in a very few months. Replacement of the Chinese global factory in supply chains is still several years away.
Let us recall that China is the world’s biggest petroleum importer and trade in their currency instead of the dollar is the landmark event that dooms the U.S. dollar as the world’s reserve currency. Creation of the Petroyuan will, in a very few years, end the U.S. Treasury’s free ride on the global bond market. Interest rates in the States on government bonds will rise from their present phony levels to match those of others in the industrialized world, with the consequence that U.S. taxpayers will see the advent of ‘pay as you go’ financing of America’s wars abroad. With some luck, if we make it through the present fraught confrontation with Russia over Ukraine, Peace on Earth may become a year-long theme song and not just a tune for one or two days at the end of each year.
And whom do we have to thank for this oncoming development that is plain as the wart on Uncle Sam’s face? It is Vladimir Putin and his David stand versus the US-NATO Goliath now proceeding on the territory of Ukraine.
It is patently obvious that the change of direction in the Middle East against the United States and towards the rising world power, China, as well as towards its close ally Russia, was prompted precisely by the U.S. sanctions on Russia, by the freezing of 350 billion dollars of Russian assets on deposit in the West. These exceptional and unprecedented punishments could just as easily be applied to Riyadh at any time for a multitude of reasons. And, unlike Russia, the Saudis could not possibly resist an economic and financial assault from the West.
So, I say, thank you, thank you again to Vladimir Vladimirovich for setting the world well on its way to peaceful multipolarity and balance of powers.
©Gilbert Doctorow, 2022
See below translation into Italian (Roberto Pozzi) , French (Youri), German (Andreas Mylaeus) and Brazilian Portuguese (Evandro Menezes)
Xi, l’ammazza-dollaro
La televisione russa sta sollevando un polverone a proposito della visita di Xi in Arabia Saudita e dell’importantissimo accordo per la denominazione in yuan degli acquisti cinesi di petrolio. A questo proposito, i commentatori russi si spingono chiaramente più avanti rispetto agli stessi cinesi, che parlano più cautamente di “accordi in discussione” e “pagamenti parziali in yuan” sul Global Times di ieri, un giornale cinese semi-governativo in lingua inglese.
Tuttavia, ci sono buone ragioni per credere che i russi ne sappiano più di quanto i cinesi o i sauditi siano disposti a dire pubblicamente. Dopo tutto, sono recentemente trapelate notizie secondo cui i cinesi da mesi inviano ogni settimana molti carichi di materiale militare alla Russia a sostegno della sua campagna in Ucraina, in violazione della loro presunta neutralità. Questo fatto è di per sé soggetto a un blackout di notizie che Washington, per ovvie ragioni, non viola. Il solo parlarne accelererebbe la fine della globalizzazione e delle importazioni dalla Cina, cosa che lascerebbe gli scaffali dei negozi americani vuoti in pochi mesi. La sostituzione della fabbrica globale cinese nelle catene di approvvigionamento occidentali è una prospettiva ancora molto lontana nel tempo.
Non dimentichiamoci che la Cina è il più grande importatore di petrolio al mondo e che il potenziale uso della sua valuta negli scambi commerciali in alternativa al dollaro è l’evento storico che potrebbe segnare l’inizio della fine per il dollaro americano come valuta di riserva mondiale. La creazione del Petroyuan potrebbe porre termine, nel giro di pochi anni, alla centralità del Tesoro americano sul mercato obbligazionario globale. Se la domanda di dollari si riducesse, i tassi di interesse sui titoli di stato americani si alzerebbero rispetto ai livelli “artificiali” di oggi, normalizzandosi rispetto ai livelli di quelli di altri paesi del mondo industrializzato, con la conseguenza che i contribuenti americani si accorgerebbero finalmente di quanto costa il finanziamento delle guerre americane [NDT: che al momento invece pagano i contribuenti di tutti gli altri paesi del mondo proprio attraverso i più alti tassi di interesse che loro pagano a causa del ruolo rel dollaro come riserva monetaria mondiale]. Con un po’ di fortuna, se riusciremo a superare l’attuale scontro con la Russia per l’Ucraina, la pace sulla terra potrebbe diventare uno slogan da usare tutto l’anno e non solo uno o due giorni a Natale.
E chi potremmo dover ringraziare per questo potenziale cambiamento, evidente come la verruca sulla faccia dello zio Sam? Vladimir Putin, ovviamente, novello Davide contro il Golia-NATO- americano che si muove sul territorio ucraino.
È evidente che il cambio di rotta in Medio Oriente contro gli Stati Uniti e verso la nascente potenza mondiale, la Cina, nonché verso la Russia, è stato indotto proprio dalle sanzioni statunitensi contro la Russia, e soprattutto dal congelamento di 350 miliardi di dollari di beni russi depositati in Occidente. [Non deve essere sfuggito agli arabi che] queste punizioni, eccezionali e senza precedenti, potrebbero infatti essere applicate anche a Riyadh in qualunque momento e per qualunque motivo. E, a differenza della Russia, i sauditi non potrebbero resistere a un assalto economico e finanziario da parte dell’Occidente.
Quindi dico grazie, grazie ancora a Vladimir Vladimirovich per aver messo il mondo sulla strada di un multipolarismo pacifico.
Xi, le fossoyeur du dollar
La télévision russe parle abondamment de la visite de Xi en Arabie saoudite et de l’accord extrêmement important visant à négocier l’achat de pétrole chinois en yuan. À cet égard, les commentateurs russes devancent largement la description plus prudente des « accords en cours de discussion » et des « paiements partiels en yuan » que l’on trouve dans le Global Times d’hier, un journal semi-officiel chinois de langue anglaise.
Cependant, il y a tout lieu de croire que les Russes en savent plus que ce que les Chinois ou les Saoudiens sont disposés à dire publiquement. Après tout, il y a maintenant des fuites d’informations selon lesquelles les Chinois envoient chaque semaine depuis des mois de nombreuses cargaisons de matériel militaire à la Russie pour soutenir sa campagne en Ukraine, en violation de leur prétendue neutralité sur la question. Cette information fait l’objet d’un black-out médiatique que Washington, pour des raisons évidentes, ne viole pas. Agir ainsi accélérerait le désengagement économique avec la Chine d’une manière qui laisserait tous les rayons de détail américains vides en très peu de mois. Le remplacement de l’usine mondiale chinoise dans les chaînes d’approvisionnement ne se fera pas avant plusieurs années.
Rappelons que la Chine est le plus grand importateur de pétrole au monde et que l’échange de sa monnaie au lieu du dollar est l’événement marquant qui condamne le dollar américain comme monnaie de réserve mondiale. La création du Pétroyuan mettra fin, en très peu d’années, à la position libre du Trésor américain sur le marché obligataire mondial. Les taux d’intérêt sur les obligations d’État aux États-Unis augmenteront et passeront de leur niveau actuel à celui des autres pays industrialisés, ce qui aura pour conséquence que les contribuables américains verront l’avènement du financement des guerres américaines à l’étranger selon le principe du « paie ce que tu utilises ». Avec un peu de chance, si nous parvenons à surmonter la confrontation actuelle avec la Russie au sujet de l’Ukraine, la paix sur la Terre pourrait devenir le refrain de toute l’année et pas seulement une chanson pour un ou deux jours à la fin de chaque année.
Et qui devons-nous remercier pour cette évolution à venir, aussi évidente que la verrue sur le visage de l’Oncle Sam ? Il s’agit de Vladimir Poutine et de son combat de David contre le Goliath des États-Unis et de l’OTAN qui se déroule actuellement sur le territoire de l’Ukraine.
Il est évident que le changement de direction au Moyen-Orient contre les États-Unis et en faveur de la puissance mondiale montante, la Chine, ainsi que de son proche allié, la Russie, a été provoqué précisément par les sanctions américaines contre la Russie, par le gel de 350 milliards de dollars d’avoirs russes en dépôt en Occident. Ces punitions exceptionnelles et sans précédent pourraient tout aussi bien être appliquées à Riyad à tout moment pour une multitude de raisons. Et, contrairement à la Russie, les Saoudiens ne pourraient pas résister à un assaut économique et financier de l’Occident.
Je dis donc merci, merci encore à Vladimir Vladimirovitch pour avoir mis le monde sur la voie de la multipolarité pacifique et de l’équilibre des pouvoirs.
Im russischen Fernsehen wird viel über den Besuch von Xi in Saudi-Arabien und die enorm bedeutsame Vereinbarung, chinesische Öl-Käufe zukünftig in Yuan abzurechnen, geredet. Diesbezüglich sind die russischen Kommentatoren viel deutlicher als die vorsichtigeren Formulierungen wie „Vereinbarungen im Gespräch“ und „teilweise Zahlungen in Yuan“ in der gestrigen Global Times, einer englischsprachigen halboffiziellen chinesischen Zeitung
Es gibt jedoch sehr gute Gründe anzunehmen, dass die Russen mehr wissen, als die Chinesen oder die Saudis bereit sind, öffentlich zu sagen. Immerhin gibt es bereits Nachrichten-Leaks darüber, dass die Chinesen im Gegensatz zu ihrer angeblichen Neutralität in dieser Sache seit einigen Monaten wöchentlich zahlreiche Flugzeug-Ladungen militärischen Geräts als Unterstützung für den Feldzug in der Ukraine an Russland schicken. Dies ist an sich schon Gegenstand eines Nachrichten-Blackouts, den Washington aus offensichtlichen Gründen nicht unterläuft. Würden sie das nicht machen, würde sich die wirtschaftliche Abkoppelung von China in einer Weise beschleunigen, dass innerhalb von einigen Monaten die Regale der amerikanischen Einzelhandelsgeschäfte leer wären. Ein Ersatz für die weltweite chinesische Fabrik in den Versorgungsketten ist erst in einigen Jahren möglich.
Wir sollten uns daran erinnern, dass China der wichtigste Erdöl-Importeur der Welt ist und der Handel in dessen Währung anstelle von Dollar der Wendepunkt ist, der das Ende des Dollar als weltweite Reservewährung einläutet. Die Schaffung des Petroyuan wird in einigen Jahren die freie Fahrt des amerikanischen Schatzamtes im weltweiten Markt für Schatzanleihen beenden. Die Zinssätze für amerikanische Staatsanleihen werden sich von ihrer gegenwärtigen künstlichen Höhe so ändern, dass sie denjenigen anderer Industriestaaten entsprechen mit der Konsequenz, dass die Steuerzahler der USA erleben werden, wie die Finanzierung von Amerikas Kriegen in der Welt den tatsächlichen Kosten entsprechen. Mit etwas Glück könnte das Lied „Frieden für die ganze Welt“ die Erkennungsmelodie für ein ganzes Jahr und nicht nur für einen oder für zwei Tage am Jahresende werden, wenn wir es durch die nervenaufreibende Konfrontation mit Russland wegen der Ukraine schaffen.
Und wem müssen für diese sich abzeichnende Entwicklung danken, die so offensichtlich ist wie die Warze auf Uncle Sam’s Gesicht? Es ist Vladimir Putin und sein Kampf von David gegen den US-Goliat, der derzeit auf dem Gebiet der Ukraine stattfindet.
Es ist absolut offensichtlich, dass die Richtungsänderung im Nahen Osten weg von den Vereinigten Staaten und hin zu der aufsteigenden Weltmacht China und zu deren engem Alliierten Russland exakt durch diejenigen U.S. Sanktionen gegen Russland ausgelöst wurde, wodurch die russischen Vermögenswerte in Höhe von 350 Milliarden Dollar im Westen eingefroren wurden. Diese außergewöhnlichen und nie dagewesenen Strafaktionen könnten Riad jederzeit aus irgendeinem Grund auch treffen. Und anders als Russland könnten die Saudis einem derartigen wirtschaftlichen und finanziellen Angriff des Westens nicht widerstehen.
Daher sage ich vielen Dank und nochmals vielen Dank an Vladimir Vladimirovich dafür, dass er erfolgreich den Weg in eine friedliche und multipolare Welt der Gewaltentrennung zu beschreiten begonnen hat.
Xi, o destruidor do dólar
A televisão russa está falando muito sobre a visita de Xi à Arábia Saudita e sobre o acordo extremamente importante para denominar as compras chinesas de petróleo em Yuan. A este respeito, os comentaristas russos estão bem à frente da descrição mais cautelosa de “acordos em discussão” e “pagamentos parciais em Yuan” que encontramos no Global Times de ontem, um jornal semioficial chinês na língua inglesa.
No entanto, há muitos motivos para se acreditar que os russos sabem mais do que os chineses ou os sauditas estão dispostos a admitir publicamente. Afinal, agora há vazamentos de notícias no sentido de que os chineses há meses enviam muitos aviões carregados de equipamento militar para a Rússia toda semana, em apoio à sua campanha na Ucrânia, violando sua suposta neutralidade sobre o conflito. Isto está sujeito a um silêncio sobre tais notícias, que Washington, por razões óbvias, não viola. Fazer isto aceleraria o desacoplamento econômico com a China de uma forma que deixaria todas as prateleiras dos varejistas nos EUA vazias em poucos meses. A substituição da fábrica global chinesa nas cadeias de suprimentos ainda está muitos anos adiante.
Lembremos que a China é o maior importador de petróleo do mundo e o comércio em sua moeda, em vez do dólar, é o evento marcante que arruinaria o dólar americano como moeda de reserva mundial. A criação do Petroyuan irá, em poucos anos, acabar com os privilégios do Tesouro dos EUA no mercado global de títulos. As taxas de juros nos Estados Unidos para os títulos do governo aumentarão de seus atuais níveis irrealistas para igualarem-se às de outros países do mundo industrializado, com a consequência de que os contribuintes dos EUA verão o advento do pagamento à vista pelas guerras dos Estados Unidos mundo afora. Com um pouco de sorte, se sobrevivermos ao atual confronto tenso com a Rússia na Ucrânia, Paz na Terra pode se tornar uma música-tema para o ano todo e não apenas uma música para um ou dois dias no final de cada ano.
E a quem devemos agradecer por este desenvolvimento iminente que é claro como a verruga no rosto do Tio Sam? É Vladimir Putin e seu David, que se posicionam contra o Golias dos EUA e da OTAN, que agora avança no território da Ucrânia.
É evidentemente que a mudança de direção do Oriente Médio em relação aos Estados Unidos e em relação à potência mundial em ascensão, a China, bem como em relação a sua aliada próxima, a Rússia, foi motivada precisamente pelas sanções dos EUA à Rússia, pelo congelamento de 350 bilhões de dólares em ativos russos depositados no Ocidente. Essas punições excepcionais e sem precedentes poderiam facilmente ser aplicadas a Riad a qualquer momento por uma infinidade de razões. E, ao contrário dos russos, os sauditas não poderiam resistir a um ataque econômico e financeiro do Ocidente.
Portanto, digo, obrigado, obrigado novamente a Vladimir Vladimirovich por encaminhar o mundo para a multipolaridade pacífica e ao equilíbrio entre as potências.
Gilbert Doctorow 
A great read passing along important portents for the next very-soon years!
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Great points as usual. Truly interesting times, and if no widening destructive war escalates out of control then as you say there will appear a better fairer world. Putin and his diplomatic team have directed all their energies into a diplomatic campaign adjacent to the military campaign of historical and unprecedented importance.
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Well I am sympathetic to the idea that the dollar will crash, it is not so simple to create an alternative Reserve currency.
A reserve currency needs a steady supply of short term assets. If you can’t just plonk down the odd billion or two on a whim in single transactions, it is not a reserve currency. I don’t think the Yuan is that deep, indeed probably only the Euro and maybe the Yen is that deep.
Which is why the dollar had such a huge advantage – a massive double deficit in government budget and trade meant huge requirements for both long term borrowing and short term borrowing by banks to finance their loan. Short term loans to those banks are from the customers point of view the very short term assets they are looking for.
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It would not surprise me in the least if China were sending munitions by the planeload to Russia, munitions and anything else they can think of. I would not be surprised if they ultimately sent troops. There are blockbuster mainstream movies in China today portraying Chinese victories fighting the US in Korea:
“The Battle at Lake Changjin is a 2021 Chinese war film commissioned by the Chinese Communist Party as part of the Party’s 100th anniversary celebrations. The film depicts the story of the Chinese People’s Volunteer Army forcing U.S. forces to withdraw in the Battle of the Chosin Reservoir during the Korean War. The film grossed $913 million at the worldwide box office, making it the second-highest-grossing film of 2021, the highest-grossing Chinese film of all time, the highest-grossing non-English film, and the second highest-grossing film in a single market. A sequel to the film, The Battle at Lake Changjin II, was released on 1 February 2022.”
It seems to be still possible to watch it on the Internet at:
https://www.google.com/search?q=The+Battle+at+Lake+Changjin+full+version&rlz=1CAOTWH_enUS840&sxsrf=ALiCzsaWhCbmdtU7MPHPsdiVkfvCmqRCtw%3A1670606182638&ei=Zm2TY6u9Jvip5NoPmfyx2Aw&ved=0ahUKEwiriM2Ahe37AhX4FFkFHRl-DMsQ4dUDCBA&uact=5&oq=The+Battle+at+Lake+Changjin+full+version&gs_lcp=Cgxnd3Mtd2l6LXNlcnAQAzIFCCEQoAEyBQghEKsCMgUIIRCrAjoHCCMQsAMQJzoKCAAQRxDWBBCwAzoECCMQJzoECC4QQzoECAAQQzoFCAAQgAQ6CggAEIAEEIcCEBQ6BQguEIAEOgYIABAWEB46CAghEBYQHhAdSgQIQRgASgQIRhgAUPQJWLYqYLAsaARwAXgAgAGqAYgBrw2SAQM4LjiYAQCgAQHIAQnAAQE&sclient=gws-wiz-serp#fpstate=ive&vld=cid:5793854b,vid:dHoYV8md2XE
However, it has been taken off YouTube.
And then we may ask, has the United States done anything except economic imperialism a la the UK in India to endear itself to China? Quite the contrary, it has been practicing smoldering regime change against China nonstop for decades, right up until the present moment when it has levied “sanctions” against China for human rights abuses. Also for illegal fishing, which incidentally, is practiced more by US clients (Taiwan, Thailand…) than China.
Which brings us to Taiwan. Taiwan’s balance of trade is predominantly with China. 42% of Taiwan’s trade is with China and Hong Kong. 14% is with the U.S. Recent local elections in Taiwan saw the ruling US puppet government trounced across the entire country by the China friendly opposition. The demographics of Taiwan are not even remotely the same as Ukraine. To sum up, every day the war in Ukraine continues, it becomes more likely that Taiwan will be absorbed in the mainland without a shot being fired. And that is the end of US hegemony, period.
US foreign and domestic policy today is devoted to salvaging what it can from this catastrophe. Not a task easily undertaken by the war hawks and grifters running the show. And, as you say, one man is responsible for the whole thing. No wonder he is demonized 24/7 in the US.
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Unless… unless, the US “intervenes” in some sort of “event” in Taiwan involving a supposed Chinese “invasion” and simply bombs Taiwan out of existence while establishing a “no-fly” zone in a maneuver proclaimed to be defensive in nature. Thus we may ask, what would the international order look like if Taiwan did not exist? In that scenario, China’s trade relationship would be a liability, not an advantage.
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Think Nord Stream II.
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In general, the US has no ability to build nations. W. Edwards Deming was not a prophet in his own land. He was however in Japan which caused “made in Japan” to convert to something sought after from something despised after WWII, more specifically after the US gratuitously dropped two atomic bombs on Japan. But Japan and Germany are exceptions, other countries have taken longer to recover, if ever. The residents of Taiwan are awakening to the fact that, like the residents of Ukraine, they are disposable from the point of view of the US. They will help their brothers in China hold off the inevitable destruction by the United States long enough I hope. And China will do everything in it’s power to help Russia in Ukraine including rebuilding that country after the war. Unless the US’ tantrum prevails.
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Excellent analysis! Re “…the war hawks and grifters running the show”: Not a day passes that I don’t lament that the US State Department is infested from the (blinkin’) top down with incompetents, dual-loyalists, and warmongering go-alongs for whom “active listening and diplomacy” are foreign and forbidden concepts. (…and my tax dollars are *PAYING* for this?!)
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With all due respect Mr. Doctorow, you are incorrect in your analysis of the demise of the dollar as the world’s reserve currency.
I agree that it is a good thing that China and Saudi Arabia, and others are making trade deals in their own currencies, as it does reduce somewhat the hegemonic power of the dollar.
However, that will not undermine the dollar’s reserve currency status. For one thing, the US Treasury does not depend on the global bond market, the market depends on treasury securities for a secure place to put excess cash which thay know be returned in full, at par.
Interest rates on US Treasury securities do not depend on the bond market. They are set by the Federal Reserve which also has the power to keep them at whatever level they desire.
This is all part of the heterodox economic theory known as Modern Monetary Theory. If you’re not familiar with it I recommend you look at Prof. Bill Mitchell’s blog:
http://bilbo.economicoutlook.net/blog/ He is one of the original developers of MMT.
Also see Warren Mosler: http://moslereconomics.com/ another developer of MMT.
I hope we get the multipolar geopolitical world you hope for, but the dollar will almost certainly remain as the world’s reserve currency.
For the deep-in-the-weeds details about why the dollar will retain its reserve status see these two recent posts from Naked Capitalism:
https://www.nakedcapitalism.com/2022/12/dethroning-the-dollar-why-the-alternatives-are-not-ready-for-prime-time.html
https://www.nakedcapitalism.com/2022/12/dethroning-the-dollar-what-governments-propose-it-disposes.html
I very much appreciate your political analysis if the Russia/Ukraine situation and your insightful reporting from St. Petersburg. I look forward to more of the same.
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Technically you are correct. US, like any other country with a central bank may “control” interest rates on government debt by buying endlessly government and other bonds, but the point was that as a huge trade deficit country, US will pay for attempting that in a lower dollar-demand global environment through much higher inflation. Either you let interest rates rise or suffer much more horrendous inflation. This leads to extreme internal stability.
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I think it will be a very long time yet before the dollar is supplanted as the world’s foremost reserve currency. The main reason for this is that the US is willing to be the importer of last resort. It is the only nation on earth that is willing to run sustained, very high trade deficits. It will never run out of money because the Federal Reserve is the buyer of last resort for it’s bonds (it loans the money into existence). I am not cheerleading for the US, just calling it as I see it.
In order for another currency to supplant the dollar, the issuer of that currency would have to run very high, sustained trade deficits for a long period of time (and it would have to have a large economy, so there are only a couple of candidates). Most nations are unwilling to do this, because it is far and away the most effective way to de-industrialize, and only corrupt trash are willing to do this to their citizenry. So although it is good to see many nations taking back their monetary sovereignty, the dollar is not going anywhere anytime soon, at least the way I see it.
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Allow me to direct attention to another side of the fundamental issue I was addressing, which was not the reserve currency status as such but the ability or inability of the US Government to finance its wars by means of very cheap loans from the Rest of the World given the stable value of its currency and deep markets. If major components of global trade, and hydrocarbons are surely one of the biggest such components, are traded not in dollars but in Yuan or by swaps in other currencies, then demand for the dollar to realize these transactions will fall precipitately and the value of the dollar will fall with demand. That, in turn, will choke off the foreign financing of U.S. budget deficits. You will surely agree that stabilization of a currency whose value in a currency basket is declining is directly related to the prevailing interest rates in that currency.
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As a monetary sovereign, the US will never lack the ability to fund it’s spending. The bonds will simply be purchased by the Federal Reserve, which prints the money into existence. The bulk of US bonds have been purchased by the Fed for a very long time now, as we have seen. Demand for the dollar exists because foreign producers want to sell their products in the US market, not because hydrocarbons have been priced in dollars. I would also conclude that the fact that the US produces little in the way of physical production also incentivizes foreign producers that sell in the US market to buy bonds- so I am not entirely sure we will see much of a drop in demand there, in any case. I do not think we will see a big decline in the dollar until we start to see supply issues (which is entirely possible, as resource limits take hold, sanctions take products out of circulation, or China/Russia actually get angry enough to cut off trade). One of two big losses to the US will be due to the fact that many countries will be leaving the SWIFT system. Because of it’s de facto control over the SWIFT system, the US uses SWIFT as a major intelligence gathering tool- it is able to see who is buying what from who, including oil and all other commodities, and especially weapons, etc. The other big loss, for those in control of the US Empire, is it’s decline in the ability to use it’s own interest rates as a weapon. As the rest of the world moves away from financing their own governments with loans denominated in dollars, the US will be less able to punish them for disobedience by raising it’s interest rates, therefore making dollars more expensive in relation to their own currencies, and making their sovereign debts more difficult to pay down. We are seeing this effect in action as we speak, due to the global south’s refusal to side with the US against Russia.
To be clear, I see the move away from the dollar as a positive development. I want the empire to die, and I consider it a privilege to watch this occur.
Just my thoughts, and I very much enjoy your writing. Thank you.
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I would also welcome the end of the US empire. As I see it, the end game of the US-dominated unipolar world has already begun. The rise of China and its ever-closer relationship with Russia will lead to a multi-polar world and the US had better get used to it.
I just hope that the people of the US can wrench some control back from the wealthy elites that rule our society and politics.
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Good points, Arkady, you called it as it truly is.
The US has demonstrated the truth of what you said about deindustrialization over the past 30 years or more, especially since Clinton’s NAFTA, because we have been ruled by “corrupt trash” since then.
I would add that the financialization of the US economy has also been a major contributor to deindustrialization.
For more on this see Michael Hudson: https://michael-hudson.com/
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Oh, and allow me to add one more observation regarding the pricing of oil in dollars. The move away from dollars removes the ability of the US to make oil more expensive for other nations to buy. The pricing of oil in dollars allows the US to manipulate the price of oil relative to other nations currencies via US interest rates, as stated above in relation to other nations foreign debts denominated in dollars- it works the same way. The other nation has to obtain dollars to buy the oil, and higher interest rates makes those dollars more expensive. Again, it is a positive development, but it does not hinder US federal borrowing/spending.
Thank you again.
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Isn’t liquidity the definition of a reserve currency. Market value is meaningless without liquidity. If you can’t sell it, market value has no meaning. I believe that is the essence of the arguments Yves Smith in Naked Capitalism makes against other currencies replacing the dollar as the reserve currency.
But the dollar, or more specifically the United States, has been having a problem with liquidity recently. Aren’t, in fact, all the “sanctions” the US has imposed on other countries, in fact, the denial of liquidity, up to and including seizing Russian assets totally billions of *dollars*. If you’re a sovereign state such as Saudi Arabia and you see Russian assets being seized by the US, aren’t you entitled to ask, Am I next?
So, either the US can provide liquidity without exception, or if it refuses to, can other countries take independent action to guarantee the liquidity of their assets?
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You are correct about Yves Smith’s points about liquidity, Frederick.
The other point she makes that is probably equally important is the very long time frame that would be required in order for the banking and payments systems to reconfigure all of the computers and coding that sustain those systems. It took the Eurozone two decades of planning and execution to make the Euro a viable currency.
See the second link to Naked Capitalism in my first post above.
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I don’t think Russia and Saudi Arabia and China are thinking about reprogramming computers. I think they’re concerned about a heavily armed thief in their midst.
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ROFL, so true.
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Reblogged this on Calculus of Decay .
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No “Like” from here. A position of agreement, augmentation, disagreement or dissent is what blogs and comments allow. Surly disrespect is curmudgeonly and despicable on any level.
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My comment to a comment (received via email) was directed at Yevgheny Makachev. Don’t find his ‘contribution’ in this roster/display of comments…a matter of timing?
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Makachev’s ‘contribution’ was intended as an insult, an ad hominem attack. Such contributions are sytematically deleted from this website
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Thank you again for your insights. I’m still stuck, however, on the question of whether the economists and politicians in the U.S. can’t see what is going on and what is likely to happen or are they so deluded by American hubris they feel above it all. I realize I am being simplistic, but is it ignorance? Arrogance? Or is there another option I’m missing?
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