The Washington clowns still trying to increase more Chinese companies in their Entity List to hurt China. China on the other hand is quietly working towards full decoupling with the US. When China is fully decoupled from the US, it does not need to trade with the Americans, no need to buy anything from the Americans. If the Americans want to buy Chinese goods, they have to buy from third countries. When this stage is reached, China does not need US$ anymore. It can then dump all its holdings of Treasury Bills and dollars into the market. China's holding of the Treasury Bills is down to US$680 billion from a high of US$1.4 trillion, and shrinking everyday. China can then order all Chinese banks and businesses to stop accepting the US dollar. Can this be possible?
When China no longer accepts the dollar, all its trading partners can only pay for Chinese goods in Yuan or other currencies except the dollar. They too will have to liquidate their dollar holdings, or reduce it to only what they need for trades with America and countries that are still using the dollar.
The effect is that there will be an over supply of dollars in the system. America will continue to print more dollars to roll over its multi trillion dollar debt. With China dumping the dollar, and with more countries reducing their holding of the dollar, dollars will be overflowing everywhere. American banks will be flooded with dollars. American banks cannot refuse to accept the dollar as a means of exchange. Soon a vicious cycle will be activated, with countries trying to hold less of the abundant dollars for their own safety.
The BRICS countries and the Global South countries would also be trading with their own currencies and if possible, will also not accept dollars for payments as they too have lesser use of the dollar. Plenty of dollars would return to America to make America very rich with all the dollars they have printed and are continuing to print.
The net effect of having so many dollars in the system but with lesser utility value and lesser users, is not difficult to guess. The question is can it happen, when will it happen?
Russia has already started not to accept the Euros for oil and Russian goods. The Euros would end up as an illegitimate currency outside Europe. And there is the BRICS formula for trading in their own currencies except the dollar and also the Euros. There is an alternative financial system in place outside the SWIFT system. When the Global South countries are trading among themselves, there is no place for the dollar and Euros.
Good riddance to bad rubbish. The end of the dollar, and the Euros, is around the corner.
2 comments:
The headline reads - Trump demands that countries in BRICS not to do trade outside the US$. The word 'demand' evokes contempt over his mafia-like behavior. BRICS was set up specifically to assist countries to de-dollarize by using other currencies and there is nothing Trump can do about it.
Why is the Trump now worried about countries using other currencies to trade among themselves? Wasn't Western media and analysts galore brushing aside BRICS as irrelevant and just an irritant against the mighty US$?
China and Russia do not do unnecessary things just for fun, like setting up alliances for irrelevant purposes. They do things after serious thought and planning, not making decisions after waking up from a nightmare or from the wrong side of bed. The irony is that some countries after making mistakes on the spur of the moment, still refused to accept their failings and still move further ahead suffering more consequences instead of correcting them.
Anyway, just let this continue and China should just continue to adopt the maxim 'never try to correct the mistakes of your enemy'.
The question is not when, but how fast.
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