Thread by CulturalHusbandry
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- Feb 26, 2022
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China-Russia will ditch dollar:
-In 2015 90% of their bilateral transactions were conducted in dollars.
-By Q1 2020 46% of their bilateral transactions were conducted in dollars.
-De-dollarization results in a Defacto Alliance.
-They've been doing this since 2014.
-WHEN not IF.
-In 2015 90% of their bilateral transactions were conducted in dollars.
-By Q1 2020 46% of their bilateral transactions were conducted in dollars.
-De-dollarization results in a Defacto Alliance.
-They've been doing this since 2014.
-WHEN not IF.
Traditionally the dollar has had three major advantages to other currencies: the ability to maintain value in the form of limited inflation and depreciation, the sheer size of the American domestic economy, and the US having financial markets that are deep, liquid and open.
We have lost #1: Limited Inflation is no longer limited. While it may not yet be astronomical, it is at +40yr highs and no longer considered transient. #2 has been sidestepped by China as their Domestic Economy is now massive by any metric. #3 still stands.
Economic sanctions are a powerful tool in general. However, when overused (and they have been) those on the receiving end start to look for solutions. And that is just what has happened. China has made sure our sanctions have limited effect and Russia has made efforts as well.
China and Russia have an economic agreement in place that allows them to gain access to the other's currency without having to purchase it on the foreign exchange market. This has been going on since 2014.
Fastforward to June 2019 and Putin & Xi decide to settle all transactions between each other's nations in native currency and develop systems independent of SWIFT by conducting trade in rubles and yuan.
But here is what few seem to recognize. Russia has been rapidly accumulating yuan reserves at the expense of the dollar. In early 2019, Russia's central bank revealed that it had slashed its dollar holdings by $101 billion -- over half of its existing dollar assets.
One of the biggest beneficiaries of this move was the yuan, which saw its share of Russia's foreign exchange reserves jump from 5% to 15% after the central bank invested $44 billion into the Chinese currency.
As a result, Russia acquired 1/4 of the entire world's yuan reserves.
As a result, Russia acquired 1/4 of the entire world's yuan reserves.
Russia's sovereign wealth fund has also begun investing in yuan and Chinese state bonds.
This blind to reality concept that Western leadership has of "The US dollar will always be the world's reserve currency" is based on old truths that are slipping as our head is in the sand.
This blind to reality concept that Western leadership has of "The US dollar will always be the world's reserve currency" is based on old truths that are slipping as our head is in the sand.
These things take time, and I am not saying that de-dollarization happens tomorrow. But make certain it IS happening.
asia.nikkei.com/Politics/International-relations/China-and-Russia-ditch-dollar-in-move-toward-financi...
asia.nikkei.com/Politics/International-relations/China-and-Russia-ditch-dollar-in-move-toward-financi...
Those who say "Show me where the dollar is not..." don't get it. You're watching the bomb fall through the sky saying "well no explosion has happened yet". By the time we have examples of the developing world primarily trading in something other than dollars it will be too late.
These 2 nations are working to get away from the dollar. They have agreements in place to this effect. Their economies and financial industries reflect this shifting reality. We can continue to ignore it, or we can recognize it & adjust certain practices to strengthen our nation.
WHEN not IF.
Be Kind To Your Neighbors.
valdaiclub.com/a/highlights/brics-pay-single-payment-system-of-the-brics/
valdaiclub.com/a/highlights/brics-pay-single-payment-system-of-the-brics/
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Jack Murphy @jackmurphylive
ยท
Feb 28, 2022
Important thread.