Desperate US abusing global dominance of dollar to restore its hegemony in world order
A fundamental aspect of modern property rights is that they must be protected against any irregular expropriation by government. Since World War II, modern economies depend hugely on having reliable access to a reserve currency that offers a stable trading regime. There is deep and growing concern that Washington has now begun an assault aimed at the very foundations of this hallowed regime.
There are two primary facets of this ambush: the way in which the US dollar is being openly exploited, and the more direct attack on the core security expectations associated with property rights. In both cases, this recklessness is aimed at securing certain fervently framed political ends.
Over the last several years, Washington has increasingly misused the immense economic power that comes from running the world's established international currency.
After the Russia-Ukraine conflict began, Jim Rogers said the dollar is now being used as an instrument of war, and it is set to die.
As the conflict in Ukraine developed, an intense rash of property confiscations related to very wealthy Russians living in the West have unfolded.
The role of money, as a primary store of wealth, is now consciously being undermined. Consider two recent examples of rash, currency-based political leveraging that shows what Washington thinks is acceptable today, once it "unfriends" certain governments.
In February, Washington commandeered $3.5 billion, or about half of all Afghanistan public reserves held in the US, to help the families of victims of the Sept 11,2001, terror attacks. This astonishing confiscation was legalized by using a White House executive order. The Taliban government in Kabul, meanwhile, is still denied access to the other $3.5 billion, while wretched, mass misery in Afghanistan has reduced families to selling their children in order to secure food.
A large portion of Russia's foreign exchange reserves of over $600 billion were recently largely rendered useless following the imposition of currency-related sanctions by the US and others.
The world's reserve currency is no longer what we thought it was－that is, a neutral store of value－but has been put to work as a weapon of war. The core aspects of property rights, security and transferability－no longer apply without reservation to all owners of US dollars. Certain owners may now abruptly discover that their rights have been gravely compromised because they fall into a denounced category, solely determined by Washington.
Yet the US assumes that the rest of the world will go along with its own currency-based imperial behavior, and will tolerate whatever may follow. Other states have been threatened that similar high-handed sanctions may be applied if they, too, are precipitously downgraded by the White House. Meanwhile, discussion is already underway about draining those Russian reserves to repair Ukraine.
The US, a borrower already burdened by eye-watering, increasing levels of debt, has used the status of the US dollar not just to borrow cheaply but also to borrow massively increased amounts.
The US is progressively confirming that it's an untrustworthy steward of the world's reserve currency. For now, though, there's no choice but to live with the dominant international standing of the US dollar. The incentive to work on substitutes has, however, been hugely amplified. Various experiments are already afoot, including: potential direct currency swaps, and the further development of sovereign-backed digital currencies. People are also studying the creation of new ratings agencies.
The renminbi, as the currency of the world's largest trading economy, is almost certain to play some role in this coming transition, especially once it becomes fully convertible. One primary lesson to be learned from this alarming, politicized use of the US dollar is that any future replacement needs to be robustly managed as a neutral global currency.
Anonymous
USD getting into trouble:
ReplyDeletehttps://www.zerohedge.com/markets/dark-forces-plain-speak-brighter-gold-feds-sick-end-game
'Today, we see a similar “2018 move” from hyper-liquidity to drying-liquidity by a desperate Fed tapering UST purchases into a market bubble and seeking to raise rates despite a debt bubble.
Why are they repeating this insanity yet again?
Simple: They see a market implosion ahead and need rates to go up now so that they will have something to cut when the next recession and market slide–which they alone created rears its head yet again.
When the current QT liquidity spigot starts to dry up during a “taper,” the liquidity-addicted markets will go into withdrawal convulsions.
In other words, expect some serious volatility in 2023.
To grasp this, it is essential to recognize the illusion of Fed power in general and to embrace the tragic fragility in what was otherwise the most liquid (i.e., doped and artificial) market in the world.
As for Uncle Sam’s embarrassingly unpopular (i.e., distrusted, discredited and un-wanted) IOUs, the ramifications of this debt addiction are severe and far ranging, especially for the global reserve currency.
We’ve been writing extensively of the USD and its slow de-anchoring and decline in prominence, a long-overdue slide only accelerated by the disastrous ripple effect of the myopic sanctions aimed at Putin (but which shot the West’s foot).'
The US stopped being the world's reserve currency after Bretton Woods ended. All countries were free to use gold or whatever currency they want for their reserves since 1976.
ReplyDeleteUS converting international financial system into international sanctions system
ReplyDeleteAll countries face dangerous possibility of being cut off from global financial market at Washington's whim
It is abundantly clear that the United States, by exploiting the U.S. dollar's global dominance, is converting the international financial system into an international sanctions system.
In the mid 1960s, when fixed exchange rates based on the post-World War II gold standard were gradually replaced by a global system reliant on the dollar as the primary means of cross-border payments and reserves, France's then Finance Minister Valery Giscard d'Estaing coined the phrase "exorbitant privilege" to bemoan a United States taking advantage of the dollar dominance for self-interest.
Over the past more than 50 years, the United States has transformed that "exorbitant privilege" into an "exorbitant weapon of mass financial destruction" for geopolitical contention, and pulled the trigger multiple times.
In early of the century, Washington executed the same playbook in its dealing with the Iran nuclear issue, expelling Iranian banks from SWIFT and banning imports of Iranian energy. Even now, the Iranian economy is still struggling in the shadow of Washington's sanctions.
The latest sanctions and threats of more sanctions on Russia are another salient example that Washington is getting increasingly unscrupulous in abusing its dollar hegemony for self-serving purposes. The global community should stay ever more vigilant against Washington's unbounded financial terrorism.
America's messing around is reminding all countries of the dangerous possibility of being cut off from the global financial market at Washington's whim.
As a hedge against the risk of falling into the prey of Washington's financial terrorism, de-dollarization is being accepted as a rational option by more.
Since the 2000s exactly when Washington started using the dollar dominance as a menacing tool for geopolitical coercion, the dollar's position as the world's dominant reserve currency has been going downhill.
According to data from the International Monetary Fund, in 2021, the dollar accounted for less than 60 percent international foreign currency reserves, while in 2000, the number is more than 70 percent.
By contrast, currencies of some emerging economies like the Chinese renminbi are gaining a larger share in international foreign currency reserves and transnational transactions.
People with basic economic knowledge know that the value of a currency rests on people's trust in its issuer, typically a country's government. The eroding dollar dominance is a prognostic indicator of the shrinking trust the world holds towards Washington.
The United States does not lack world-class minds to tell that Washington's addiction to dollar weaponization is provoking a backlash: the world's trust in the U.S. dollar and a global financial transaction system underpinned by the dollar is fading away. There is only one way to explain Washington politicians' craziness: they have grown too hubristic to make rational calls.
Like in the game of Jenga, the tower of the dollar dominance is still standing, yet some of its blocks are being taken away. A complete collapse may take some time, yet seems inevitable in the future if Washington continues down the foolish and destructive path.
- Beijing
Payback Time
ReplyDeleteAccording to ST, new malware tools the United States authorities warned about earlier this month target critical infrastructure and could function as "killware" capable of causing fatalities, said cyber-security experts.
This type of malware could be used against states that take a stand against Russia's invasion of Ukraine.
Experts believe that Singapore cannot be ruled out as a target, while the Government said that it is closely monitoring the situation.
On April 20, the US and its allies warned that Russia is preparing to launch cyber attacks against the critical infrastructure of rivals that support Ukraine and possibly in response to sanctions imposed by them.
PM Lee claimed Singapore is not choosing sides in taking a strong stand against Russia's invasion but standing up for the principles of territorial integrity and sovereignty.
He said Singapore took a similar stance when Cambodia was invaded by Vietnam in 1978, and when the United States invaded Grenada in 1983.
But what's not mentioned in these 2 earlier cases is that Singapore never impose sanctions on Vietnam or the US. This time, it joined the West wagon to hit Russia with sanctions, the only country in ASEAN brave enough to do so.
On 5 March 2022, the Singapore Ministry of Foreign Affairs formally released Singapore’s sanctions, which fall into two broad categories:
ReplyDeleteExport controls on items that may be used as weapons in Ukraine or to contribute to offensive cyber operations.
Financial measures to which all financial institutions in Singapore will be subject that target Russian banks and entities, and fundraising activities benefiting the Russian government.
Export control:
A ban will be implemented on the export, transit and transhipment of all items under the Strategic Goods (Control) Order 2021 which (i) are listed as ‘Military Goods’, and (ii) fall under the ‘Electronics’, ‘Computers’, and ‘Telecoms and Information Security’ categories of the List of Dual-Use Goods, which may have both military and commercial uses.
The tiny city-state said it would not allow export of items that could inflict harm on or subjugate Ukrainians
On 25 April 2022, WSJ reports U.S. Defense Secretary Lloyd Austin said Russia’s military capabilities should be degraded after he and Secretary of State Antony Blinken met with Ukraine’s President Volodymyr Zelensky and announced more U.S. military aid to the country.
“We want to see Russia weakened to the degree that it can’t do the kinds of things that it has done in invading Ukraine,” Mr. Austin said Monday after the highest-level visit of U.S. officials to Kyiv since Russia invaded Ukraine on Feb. 24. Mr. Blinken said: “Russia is failing, Ukraine is succeeding.”
Singapore sanctioning Moscow so that Russia gets less military ware, while US is giving Ukraine more military ware - making it seems the little red dot is trying to do its part to help alter the outcome of the Ukraine-Russia military conflict in favor of Ukraine! Isn't this "taking sides"?
Singapore sanctioning Moscow so that Russia gets less military ware, while US is giving Ukraine more military ware - making it seems the little red dot is trying to do its part to help alter the outcome of the Ukraine-Russia military conflict in favor of Ukraine! Isn't this "taking sides"?
ReplyDeleteNo. Who told you this is taking sides?