Sep 05

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Russia Is Going To Pass A Law Formally Dumping The U.S. Dollar (Economic Collapse, Sep 2, 2015):

Russian President Vladimir Putin has introduced legislation that would deal a tremendous blow to the U.S. dollar.  If Putin gets his way, and he almost certainly will, the U.S. dollar will be eliminated from trade between nations that belong to the Commonwealth of Independent States.  In addition to Russia, that list of countries includes Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan and Uzbekistan.  Obviously this would not mean “the death of the dollar”, but it would be a very significant step toward the end of the era of the absolute dominance of the U.S. dollar.  Most people don’t realize this, but more U.S. dollars are actually used outside of the United States than are used inside this country.  If the rest of the planet decides to stop accumulating dollars, using them to trade with one another, and loaning them back to us at ultra-low interest rates, we are going to be in for a world of hurt.  Unfortunately for us, it is only a matter of time until that happens.

When I first read the following excerpt from a recent RT article, I was absolutely stunned…

Russian President Vladimir Putin has drafted a bill that aims to eliminate the US dollar and the euro from trade between CIS countries.

This means the creation of a single financial market between Russia, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan and other countries of the former Soviet Union.

“This would help expand the use of national currencies in foreign trade payments and financial services and thus create preconditions for greater liquidity of domestic currency markets”, said a statement from Kremlin.

For a long time, tensions have been building between the United States and Russia over Syria, Ukraine, the price of oil and a whole host of other issues.  But I didn’t anticipate that things would get to this level quite yet.  It is expected that Putin’s new bill will become law, and this is only one element of a much larger trend that is now developing.

You see, the truth is that Russia and China have both been dumping dollar-denominated assets for months.  The following comes from a recent piece by Mac Slavo

Last year Russia began unloading massive amounts of their US dollar reserves. In the month of December 2014 alone Putin sold some 20% of the country’s U.S. Treasurys, a move that further increased tensions surrounding what can only be described as economic warfare between East and West.

Then, as if part of a coordinated effort, this summer it was revealed that China had implemented a similar strategy, dumping half a trillion in dollar denominated assets.

But that’s just the beginning of the end for the US dollar. Amid a major meltdown in Chinese stock markets the People’s Republic sold off billions in dollar assets last week in what was reported to be an effort to stabilize their collapsing financial markets.

And now, as Russia’s economy collapses under the weight of American and European sanctions, including what many believe to be widespread downward manipulation of oil prices, Vladimir Putin is sending a clear signal to the central bank of the world’s reserve currency.

China has the second largest economy on the entire planet, and Russia has the tenth largest.  In recent years, these two superpowers have become much tighter.  For example, just consider this headline from Sputnik News that I came across just today: “Crippling US Foreign Policy Draws Russia, China Closer Together“.

And I don’t know if you have noticed, but U.S. relations with China have turned rather sour lately.  Lots of accusations about spying and trade violations have been flying around, and just this week five Chinese warships were spotted off the coast of Alaska.  In the months ahead, expect our relationship with China to continue to unravel.

If China and Russia were to both fundamentally reject the U.S. dollar at some point, much of the rest of the world may choose to follow suit.

So why is that important?

The fact that most of the nations of the world use our dollars to trade with one another creates a tremendous amount of artificial demand for our currency.  In other words, the U.S. dollar is valued much higher than it otherwise would be just because it is the de facto reserve currency of the planet.

As a result, we can import massive amounts of products at super cheap prices.  When we go to Wal-Mart or the dollar store, we can fill up our carts with lots and lots of ridiculously inexpensive stuff.  Our standard of living is way higher than it actually should be.

And because the U.S. dollar is used so widely in global trade, major exporting nations end up with giant piles of our currency which they have been willing to lend back to us at ultra-low interest rates.  This has made it possible to fund our massively bloated federal government and to go 18 trillion dollars in debt.

If the rest of the world stops using our dollars and stops playing our game, we will be in a tremendous amount of trouble.  The cost of imported products would absolutely skyrocket and our standard of living would go way down.

In addition, the federal government (along with state and local governments) would have to pay much more to borrow money which would rapidly create a gigantic debt crisis.

So Russia knows where they could really hurt us.  Most of the “power” that America currently projects around the world is based on having the de facto reserve currency of the planet.  If you take our financial power away, we would be far, far less imposing on the global stage.  Sadly, the truth is that the U.S. military is rapidly shrinking and has largely been defanged by the Obama administration.

A lot of people that will read this article will not understand this, but it is very, very important to keep an eye on this emerging Russian/Chinese alliance.  I believe that it is going to play a critical role in world events during the years ahead.

So do you agree with me or do you disagree?  Please feel free to join the discussion by posting a comment below…

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One Response to “Russia Is Going To Pass A Law Formally Dumping The U.S. Dollar”

  1. Marilyn Gjerdrum Says:

    Every time I read this guy’s work, I find the same thing, some facts (logos) and lots of emotion and fear (pathos). Those are the things that make up propaganda in his case, it is pure fear mongering. He has some of the story, but not all. This isn’t China or Russia waging war on us; it is pure economics.

    In 2008, China held almost $4 trillion in US debt. Russia also held some, as did much of the world. The US dollar was the world reserve currency, and it was used in every international trade….100% of every transaction between nations were completed in US dollars.

    In March, 2003, the US invaded Iraq claiming they were the cause of 911, regardless not a single Iraq citizen was involved…..it was all Saudis. Iraq had called for a return to the gold standard for the world reserve currency……this was the response……Saddam ought to have been quieter about it……it cost him his life, and destroyed the infrastructure of a healthy country.

    The rest of the world was appalled…

    In 2008-09, the US caused the worst global economic collapse in modern history. The US had always been trustworthy and credible in financial matters. The world looked to the US to see what they would do….Nothing was done to repair the problem, assume any damage…. entire nations went bankrupt, and the US leaders ignored it…..None of the wrongdoers were punished; a weak bill called Dodd-Frank was finally passed, but it didn’t clean up much.

    After Obama took office in 2008, many people in the US and abroad, looked to see if he would fulfill any of his campaign promises around the economy……..he did nothing, the central banks took over and the money printing continued to get worse.

    By 2010, it was obvious the once credible US had been consumed by corruption, and the world began to move away from the US. In Spring of 2010….I was watching, and I caught it……Hugo Chavez introduced the first electronic currency, the Sucre, for the 12 tiny countries that made up the South American Trade Alliance.

    The Sucre allowed member nations to trade directly with each other, using their own currencies, leaving the dollar out. For the first time in modern history, countries did not have to first convert to the US dollar to make a trade with another country. The association was so small, it flew under US radar. The crafty Hugo Chavez launched an economic monkey wrench into the dominance of the dollar.

    Russia and China watched; and adopted an identical trade agreement between each other. This way, they could trade directly with each other, using their own currencies, leaving the dollar out. China went on to introduce this new trade tool to much of the world; this was economics, not war. In the terms of the greedy guts, it was just good business.

    Over the next couple of years, most of the emerging African economies, including South Africa, Brazil and much of South and Central America, India, Turkey, Iran, Australia, Canada, and others.

    Electronic currencies have made the need for any world reserve currency obsolete. It is common sense, not warfare……I urge the writer of this article to take a class in micro & macro economic theory. Economics are the ultimate exercise in pragmatic logic, and it controls the world.

    It is true that China dumped $100 billion in the week the markets crashed radically…but they went from $1.5 trillion to 1.4 trillion. Since 2009, due to lack of response by the US to the misery the Crash caused the world, China has been quietly divesting itself of US treasuries. They have no interest in causing the dollar to collapse, they want to get their money out…..

    Today, less than 50% of global transactions are completed in US dollars, and it will continue to decline due to the ease electronic currency systems offer, and to the fact the US leaders threw away its hard won credibility and respect.

    Incendiary declarations such as “Our relationship with China has soured over the last few weeks” are absurd. China spread the electronic currency concept around the world, since they adopted an electronic currency in November of 2010.

    I don’t think much of this article, the writer just rants…The other day, it was Russia dumping the dollar….he didn’t even mention the Euro was included as well….

    We don’t need more panic and noise. In times like this, we need to hang on to our senses. What is happening now is no surprise to the owner of this site or to those who read and post here. It was inevitable because economic truth or reality is implacable……Nobody can hide forever.

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