The Move To Ditch The US Dollar Is Gathering Momentum
China and Brazil this week concluded a deal to conduct trade between their nations in their own in their own currencies, ditching the established reserve currency for global trade, US dollar as an intermediary, the Brazilian announced said on Wednesday. This is Beijing’s latest strike against the almighty greenback in its currency war aimed at shifting the balance of geopolitical and economic power from west to east.
The deal will empower China, the top rival to US economic hegemony, and South America's biggest economy, Brazil, to conduct their massive trade in Brazilian commodities and Chinese manufactured goods, and the associated financial transactions directly, exchanging yuan for reais and vice versa instead of going through the dollar, a system which allowed US businesses and goverment agencies to skim off the cream from each transacyion for themselves.
It is this systematic abuse of the financial power gained from being issuer of the reserve currency that has kept the US economy on top throughout the past 30 years of failing US foreign and industrial policy.
“The expectation is that this will reduce costs... promote even greater bilateral trade and facilitate investment,” the Brazilian Trade and Investment Promotion Agency (ApexBrasil) said in a statement.
It is not the first bilateral agreement to abandon the US$ as the de facto world currency this week.
China settled its first LNG trade in yuan; but gold remains the bigger winner in the global de-dollarization.
The U.S. dollar's role as the world's reserve currency was further tested as more nations chose to settle commodity trades with national currencies or the Chinese renminbi.
On Tuesday, the Shanghai Petroleum and Natural Gas Exchange announced that it completed its first yuan-settled trade for liquid natural gas between China's National Offshore Oil Corporation and France's TotalEnergies.
According to press releases from the financial markets, confirmed by Reuters, 65,000 tonnes of LNG imported from the United Arab Emirates (UAE) changed hands. This latest trade deal comes as China tries to establish the renminbi as an international non - dollar currency.
The trade also came after President Xi Jinping traveled to Saudi Arabia in early December to strengthen economic ties with the Middle East and encourage the region to use the renminbi to settle its oil and gas trades, a visit that has resulted in detente between the formerly hostile regional powers, Saudi Arabia and Iran, the latter being a long term ally of China..At the same time, the renminbi has been Russia's defacto reserve currency for the past year since it invaded Ukraine, which prompted Western Nations led by the U.S. to impose harsh economic sanctions, cutting the nation off from Western financial markets.As a result of this collaboration with China, now also supported by India, the west's economic sanctions have economically harmed America's NATO allies far harder that they have Russia, which had no problem finding customers in South est Asia and Aftica eager to buy it oil and minerals without having to pay exorbitant commissions to Ameican middle - men.
23 Countries Now Abandoning US Dollar
A new world monetary system is being set up right now which will completely kill the US dollar, which is the world's reserve currency.
23 countries (60% of the world's GDP) are setting up swap lines which bypass the dollar and SWIFT, which is the dollar-based worldwide financial transaction system.
These countries include Russia, China, India, and even Germany, France, and the United Kingdom.
Once the new system is in place, the dollar won't be needed in these countries and a new reserve currency will come into being. All those dollars in foreign accounts will come home, which will annihilate the dollar dominated monetary system.
Also, China just announced that it will stop purchasing US Treasury bonds (holding dollars in reserve). This will force The Federal Reserve to print even more dollars than the $85 billion per month it's currently printing. NB: References to printing money in the financial press refer to the practice of borrowing money by selling bonds for hard currency. The seller must pay interest to the bondholder and also redeem the bond at face value after a fixed term (usually 2,5 or 10 years.) Bond trading is a complicated business and this is not the place for a more detailed explanation.)