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Money-world splits into two: Is this the end of an era of US dollar as reserve currency?

The ante was upped

Just like that: The US froze Russian bank accounts. It broke all the rules. In return, Russia is freezing gas deliveries unless people pay in roubles. The US played a very big wildcard, and Joe Biden and the USA may lose in a big way. The World’s Reserve currency is the US Dollar, and it’s a powerful tool for the US. But if the dollar were weakened, by say 50 years of inflation, and the trust it is based on was blown, the bluff may be up.

US dollar image, IOU, fiat currency.

One thing leads to another. Who will blink first?

Does Russia need the money more than Europe needs the gas?

Europe Is Facing Supply Disruptions As Russia’s Gas-For-Rubles Deadline Looms

OilPrice:

Russia’s insistence that its “unfriendly” nations pay in rubles for Russian natural gas risks disrupting European supplies as soon as this week as the deadline set by Putin for moving to ruble payments is drawing closer.

Europe, which depends on Russian natural gas for more than one-third of its demand—with some countries, including the biggest economy Germany, depending on Russia for half of its consumption—has rejected the gas-for-rubles idea, saying it would be a breach of contracts to switch the currency in payments.

Russia, for its part, says it demands only rubles for its gas and will not ship gas for free.

With too much debt there are no good choices left for the US Federal Reserve:

How the West Was Lost: A Faltering World Reserve Currency

By Matthew Piepenburg, InvestmentWatch

As I wrote then, and will repeat now: Debt destroys nations, financial systems, markets, and currencies. 

The inflationary financial system is now failing because its debt levels have rendered it impotent to grow economically, react sensibly or sustain its chronic debt addictions naturally.

The Fed has driven itself, and hence the U.S. markets and economy, into an all-too predictable corner and historically dangerous crossroads.

If it turns to the left (i.e., more money printing/liquidity) to protect a record-breaking risk asset bubble, it faces an inflationary flood; if it turns to the right (and raises rates or tapers UST purchases), it faces a market inferno. …

Once trust is broken it may never return:

Imagine, for example, if your bank accounts were frozen for any reason. Would you then trust the bank that froze your accounts down the road once the issue was resolved? Would you recommend that bank to others?

Well, the world has been watching Western powers effectively freeze Putin’s assets, and regardless of whether you agree or disagree with such measures, other countries (not all of which are “bad actors”) are thinking about switching banks — or at least dollars…

If so, the US has just shot itself in the foot while aiming for Putin.

As previously warned, the Western sanctions are simply pushing Russia and China further together and further away from US Dollars and US Treasuries.

Such shifts have massive ripple effects which Biden’s financial team appears to have ignored.

One simply cannot underestimate (nor over-state enough) the profound significance of a weakening Petrodollar world.

It would have devastating consequences for the USD and inflation, and would be an absolute boon for gold.

Already, Xi is making plans to negotiate with Saudi Arabia, which is China’s top oil supplier. Meanwhile, Aramco is reaching out to China as well. …

As of this writing, Arab states are in private discussions with China, Russia and France to stop selling oil in USD.

As David Evans points out: Many US dollars used for world trade overseas will return home to the US, where they can still buy something. That will cause major inflation inside the US as many more dollars seek the same number of goods. This is fifty years of chickens coming home to roost, so to speak. US Dollars that were used to buy something a long time ago may finally return to call in that debt.

The mighty dollar and “globalization” dreams of the West are slowly witnessing an emerging era of inflationary de-globalization as each country now does what is required and best for itself rather than Klaus Schwab’s megalomaniacal fantasies.

The cornered US, of course, will likely try to sanction gold transactions with Russia, but this would require fully choking Russia energy sales to the EU, which the EU economy (and citizens) simply can’t afford.

Michael Hudson: Clearing the Fog

h/t Snow Leopard

Dollar hegemony seems to be the position that has just ended as of this week very abruptly. Dollar hegemony was when America’s war in Vietnam and the military spending of the 1960s and 70s drove the United States off gold. The entire US balance of payments deficit was military spending, and it began to run down the gold supply. So, in 1971, President Nixon took the dollar off gold. Well, everybody thought America has been controlling the world economy since World War I by having most of the gold and by being the creditor to the world. And they thought what is going to happen now that the United States is running a deficit, instead of being a creditor.

The US was the official printer of global IOU’s:

This gave America a free ride. Imagine if you went to the grocery store and you just paid by giving them an IOU. And then the next week you want to buy more groceries and you give them another IOU. And they say, wait a minute, you have an IOU before and you say, well just use the IOU to pay the milk company that delivers, or the farmers that deliver. You can use this as your money and just — [you will] as a customer, keep writing IOU’s and you never have to pay anything because your IOU is other people’s money. Well, that’s what dollar hegemony was, and it was a free ride. And it all ended last Wednesday when the United States grabbed Russia’s reserves having grabbed Afghanistan’s foreign reserves and Venezuela’s foreign reserves and those of other countries.

And all of a sudden, this means that other countries can no longer safely hold their reserves by sending their money back, depositing them in US banks or buying US Treasury Securities, or having other US investments because they could simply be grabbed as happened to Russia. So, all of a sudden this last week, you’re seeing the world economy fracture into two parts, a dollarized part and other countries that do not follow the neoliberal policies that the United States insists that its allies follow. We’re seeing the birth of a new dual World economy.

Split the world into two currencies:

 I’ve been talking to people all over the world in the last few days and the consensus is that everybody is now deciding the only place, certainly if you’re China or Russia or Kazakhstan or you’re in the Eurasian orbit, South Asia, East Asia, you realize, wait a minute, if all we have to do is something like Allende did in Chile or all we have to do is refuse to sell off our industry to American investors and they can treat us like they’ve treated Venezuela. So you can imagine that everybody’s watching this and there’s an expectation that as a result of the war in Ukraine, that’s really America’s NATO war, that this is going to create a balance-of-payments crisis throughout the whole Global South as their energy prices go up, oil prices soar, food prices are going to soar and this is going to make it impossible for them to pay their foreign debts unless they go without food and energy. Obviously, this is a political crisis. That is, the only result can be to split the world in two.

A moral line in the sand was crossed and there may be no way back:

Nothing like this has happened in modern history, even in the 19th century wars. In the Crimean War in the mid-19th century, Russia, England and Germany, everybody kept paying the debts to the countries they were fighting against because the idea is that debts were sacrosanct. And now, all of a sudden, not only are debts are not sacrosanct, but countries can just grab foreign savings. I guess the problem began after the Shah of Iran fell and the United States grabbed Iran’s money and refused to let it pay its bond holders and started the whole war against Iran for trying to take control of its own oil resources. So, all of a sudden, the United States grabbing this has ended what everybody thought was an immutable morality.

Not necessarily a One World Order — perhaps a Multi World Order?

MH: Well, as President Putin and Lavrov have said, the fighting in Ukraine isn’t really over Ukraine at all. It’s a fight over what shape the world will take and whether the world will be unipolar or, as it now appears, multipolar.

Fiat money, based on nothing but trust, imposes little discipline. As voters vote themselves the treasury, and big players eat smaller players, easy money feeds temptation and corruption. Something based only on trust and not on tangible assets can crumble in a moment.

9.5 out of 10 based on 81 ratings

147 comments to Money-world splits into two: Is this the end of an era of US dollar as reserve currency?

  • #
    el+gordo

    In 1944, nearing the end of WW2, the US dollar became the offical reserve currency.

    ‘The decision was made by a delegation from 44 Allied countries called the Bretton Woods Agreement.’

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    • #
      Peter Fitzroy

      if it loses reserve currency status the US going to have to balance is books, it has a massive trade deficit to the world, and will not be able to sell bonds to cover that debt

      194

      • #
        Scissor

        You mean I can’t pay off my credit cards with a loan?

        70

        • #
          Broadie

          Well you bloody should if the bank lets you. Essentially you could convert your greater than %10 interest debt to a less than %10 interest debt. The only problem with this strategy is that average punter will then go out and run up the credit card debt again.

          Same with paying to remove a tattoo, they are straight off to get a bigger one to cover the damaged area.

          Back on topic.
          We are a clearly seeing a war on the United States of America’s Constitution. The US is being weakened from within, diluted from across its Southern border and castrated by the New World Order.

          It will be a test of their Constitution and their ability to fight for those principles.

          130

          • #
            David-of-Cooyal-in-Oz

            G’day Broadie,
            My view is the US constitution is fine, but it’s not being followed by the current administration, and their abuses are being ignored, or maybe supported by their poorly named Department of Justice and Supreme Court.
            My heart bleeds for America.
            Cheers
            Dave B
            (This is a copy of my original, which I managed to misplace further down.)

            110

      • #
        Bozotheclown

        Fffft. If that happens we all will be eating paste. It ain’t just the US.

        If you really think it will happen (along with nuclear war) then save up some water and beans.

        Don’t come looking for my beans.

        20

      • #
        tonyb

        Correct Peter

        I am always fascinated by the US debt clock-see how fast the numbers ratchet up. Scary

        https://www.usdebtclock.org/?debtclock

        The indebtedness of all other nations can be reached from the same site.

        America is bankrupt. Its standard of living is sustained by Debt. As the Worlds reserve currency they could get away with it. As the currency of a faltering debt laden nation who seems to have abandoned Pax Americana and its global role, it is a different proposition. As 2 million Known illegal migrants have poured over the border in the last 6 months it is becoming even more of a diluted nation state.

        110

        • #
          Curious George

          Biden administration is already taking care of the problem. With a 7% inflation, the debt will halve in just 10 years. And they can go well over 7%.

          10

    • #
      mundi

      America of course have defaulted twice. First they denied their own citizens changing USD for Gold. Then they simply ‘closed the gold window’. Since then they have destabilized any country that threatened to use non-USD for a major amount of resources (oil,coal,gas). The amount of money they flooded out during the GFC and then COVID is probably going to come back to hurt them. If they USD is reserve currency its all going to come flooding home.

      20

  • #
    TdeF

    It’s an extraordinary play by the Russians who are always underestimated by the West, as happened in 1941. The dominance of the American dollar has destroyed the value of the Ruble, but inside Russia its value remains the same. All that has happened is the currency does not buy many American dollars and American dollars are needed for essential things like semiconductors. English speaking Russians have called their currency Rubbles for years. But how many countries still have their own currency anyway?

    So to pay for gas in Rubles means that you have to pay vast numbers of worthless rubles which still have real value throughout Russia and buy food and machinery and labor and gold and diamonds and weapons because Russia is self sufficient in these. In fact Russia is the world’s biggest exporter of wheat and Ukraine third, which is why there is a big problem. It is also amazing that starving India has such productivity that they are seeking to fill the gap. A result of new fertilizers, mechanization, increased CO2 and global warming.

    The gas checkmate has the potential to revitalize Russia by making Russians rich in Euros and dollars and Rubles. And of course the value of the Ruble goes up because it is needed to buy gas which is a sellers’ market thanks to insane Green policies which keep brown coal in the ground. Marking Russians rich is the reverse of what the US wanted to do. And of course Europe and the US are over a barrel or would that be a pipeline?

    But the people who are running a feckless geriatric sock puppet as President are no more clued up about international finances than they are about international politics or gas prices or Iran or Venezuela or OPEC. Turning off America’s self sufficient oil supply has pushed gas prices through the roof. So they are blaming the oil producers, retailers, the Arabs, OPEC and Putin, everyone but themselves. And they will make Russia richer and put more $US and Euros in the hands of Russians for what were worthless Rubles.

    690

    • #
      Saighdear

      simply put: Quite right IMHO. I go so far as to say and agree with others that Putin has done us all a favour: that we should look at ourselves in the Mirror and reflect on all those self-indulgent and Green Policies.

      461

      • #
        Rupert Ashford

        Amazing, we went through a phase like that from about 2015/16, which gave rise to the election of Trump and he built it further. And then the backlash started and the globalists started fighting back with all they had, and the woke culture started its ascendancy. Now many Western countries are living/operating in their own imaginary bubble where “international visible transgender day” is a thing, while the likes of China, Russia and those aligned with them (India and most of SEA will play a game of what’s best for them so don’t for one moment think they’ll automatically side with the West) operate in the real world.

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        • #
          Honk R Smith

          I’m telling ya’, it was the hat.
          ‘Make America Great Again’
          In Blue states you could be ordered by police to take them off.
          Not kidding.
          Were I to don one in my city, I would have to fight my way home.
          The police would arrest me for provocation.
          Trump’s slogan was the true existential threat to the NWO.

          The rainbow flags in my neighborhood have been replaced with Ukraine flags.
          Weird.

          100

    • #
      Popeye26

      TdeF

      “feckless geriatric sock puppet as President” the most succinct description of the wanna be guy in the Whitehouse I’ve heard from anybody – FANTASTIC! 🙂

      Buy GOLD I say.

      Cheers,

      170

      • #
        Honk R Smith

        Joe Biden is not a sock puppet.
        He is obviously a well crafted professionally made puppet.
        Doting Grandpa model.
        To counter mean Orange Dad.
        Your Manchurian candidate is much more controllable after the Alz sets in.
        Need only function long enough to push America off that last precipice.
        Had to be brought up from reserve after the Hillary dirigible went down in flames.

        00

    • #
      Ian

      “But the people who are running a feckless geriatric sock puppet as President are no more clued up about international finances than they are about international politics or gas prices or Iran or Venezuela or OPEC. ”

      I think you’ll find it was Trump that started the decline of the US dollar.

      “Since the end of the second world war the United States has had a deal with the rest of the world. If all countries use the dollar for global transactions, America will supply the currency to keep the wheels of global trade, finance and commerce turning. The huge benefits America derives from what’s been called an “exorbitant privilege” underpin much of its global power. Strangely, Donald Trump and the US Federal Reserve appear determined to undermine it, and Covid-19 has stepped on the accelerator.

      This mutually beneficial arrangement between the United States and the rest of the world comes with well-understood trade-offs. For the Americans, the trade-off means dominance of the global financial system, something they’re happy to use for geopolitical purposes. The appreciated dollar means US consumers and businesses can buy cheap. So the US dollar wins the “least ugly contest,” as economist Adam Posen puts it. But that’s not to say the other candidates couldn’t be contenders in the future. If enough countries become fed up with the US dollar then these alternative futures could become the present quicker than you think. Strangely, Trump and the US Federal Reserve are making these alternative arrangements look increasingly appealing.

      President Trump wants to have his cake and eat it too. He wants to keep the geopolitical benefits, cheap borrowing and cheap goods and services that come from being the world’s financial boss, but he doesn’t want the “cost” of the US trade deficit. This is a bit like wanting to be tall and short at the same time: you can’t have it both ways. The reason the United States runs a trade deficit is that its governments, households and companies spend and invest more than they save. The shortfall is borrowed from overseas, pushing up the exchange rate and resulting in a trade deficit.
      The ANU’s Warwick McKibbin and I modelled what would happen if Trump got his wish of a reduced trade deficit. It’s The reason the United States runs a trade deficit is that its governments, households and companies spend and invest more than they save. The shortfall is borrowed from overseas, pushing up the exchange rate and resulting in a trade deficit. It’s simply the reserve situation: higher borrowing costs, more expensive imports and less geopolitical pull.

      Undeterred by reality, Trump has imposed trade tariffs and quotas in a pointless endeavour to reduce the trade deficit. Reports suggest he wants to cancel debts to China. Like his predecessors, he has used the US dollar as a weapon against his enemies — applying or threatening sanctions and asset seizures to cause pain for geopolitical rivals — and he has also repeatedly pressured the US Federal Reserve to weaken the value of the dollar. None of this will change the trade deficit. But all of it makes alternatives to the dollar-based global system much more appealing.”

      https://insidestory.org.au/the-decline-in-americas-financial-supremacy-just-got-faster/
      https://www.smh.com.au/business/banking-and-finance/trump-era-spurs-new-efforts-to-undermine-us-dollar-s-status-20210120-p56vij.html

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      • #
        Bozotheclown

        What time zone are you in Ian?

        140

        • #
          Jonesy

          More like, what planet are you on?

          190

          • #
            b.nice

            Ian exists on a planet where everyone he knows leans so far to the left, that their left ears scrape the ground.
            He is so bent left-sideways the horizon seems vertical. Level ground and balance are a total anathema to him.
            He has never let facts influence his far-left prejudices.

            50

        • #
          Ian

          Always on “Happy Time” here.

          And Jonesy you state “More like, what planet are you on?

          It’s the one where facts take precedence over prejudice. In this instance it is not only the one where the body of informed opinion considers Trump began undermining the US dollar but also provides evidence to support that opinion.

          Where are you?

          016

  • #
    Richard+Ilfeld

    All of which likely means a de-facto return to — The Gold Standard? The priceless commodity is trust. While one can grant that the US has forfeited much of its, will, as a reaction the Chinese gain? OK what exactly is the Chinese succession? Is the next regime going to engage the world the same way; memories of Mao are fresh. How about a basket of Euros? Er, what/who exactly is the European Union and what will its shape be moving forward. Crypto? Call me in a hundred years. Gold doesn’t actually have to be traded; there simply has to be a market where all currencies maintain convertibility, and contracts among nations contain risk premiums based on the term of contract currency stability expectations for each participant. There is an opportunity here for an honest broker (which eliminates the UN); The Swiss have experience. Countries will still sell bonds across their borders; and need to hold reserves that are safe and convertible. The scale is immense and there is far to little gold (but most countries already hold quite a bit, hmmm), but there are many commodities in short supply that are durable in storage, such as the metals that constitute batteries. There are already transparent markets for all. The US, though damaged goods, is not out of the running; one solution is likely to be superior and dominate. A new administration in three years may get a second chance.

    240

    • #
      Kalm Keith

      🙂

      70

      • #
        Ted1

        It was there to see that The Dollar might get overtaken in this new cold war. Biden’s threats were laughable.

        Right now the “standard” is gas, and Putin holds a lot of aces.

        There’s a new world order just around the corner. Starting with harder times for most of us.

        I read that the first unit has shut down at Liddell. That leaves three to go.

        60

        • #
          David-of-Cooyal-in-Oz

          G’day Broadie,
          My view is the US constitution is fine, but it’s not being followed by the current administration, and their abuses are being ignored, or maybe supported by their poorly named Department of Justice and Supreme Court.
          My heart bleeds for America.
          Cheers
          Dave B

          50

        • #
          David-of-Cooyal-in-Oz

          And now to (hopefully) reply to Ted 1.
          The ABC has a story about the Liddell closure:
          https://www.abc.net.au/news/2022-04-01/liddell-power-station-closure-wind-down-coal/100957890

          This is all they tell us about the effects of this shut down:
          ” AGL says today’s unit closure will deliver a reduction in greenhouse gas emissions equivalent to taking about 400,000 cars off the road. ”

          Somehow the loss of its 24/7 reliable power isn’t even questioned.

          ABC, guardians of the nation.

          Cheers
          Dave B

          90

          • #
            Ted1

            About Liddell. When it was planned it was recognised that in the event of drought there might not be enough water available in the river for the cooling. So they designed it to run on sea water, similar I guess to Munmorah and Vales Point, with the story that if there ever was a shortage of water they would put in a pipeline to the sea.

            When the drought came they took the water off the farmers.

            I remember that the cooling evaporated 34 cusecs of water.

            20

        • #
          Lawrie

          I recall heading back to school in 1960 and out front of the Muswellbrook station was the biggest pump I have ever seen. It was on its way to the new Liddell power station. They were the days when we built things. Self sufficiency is looking far more valuable and maybe it is time for a dose of realism. Woke people can go hungry and without power just like the rest of us. The rest of us, however, are far more resilient, mentally tougher and have experience on our side. We will survive while the woke beg to be saved.

          Getting back to the thread. To whom do we owe that 750 billion? What happens if they call in the debt? Can we continue to pay those who think the dole is a wage for doing nothing?

          40

    • #
      bobby b

      “All of which likely means a de-facto return to — The Gold Standard?”

      I doubt that will become the new standard, but it certainly augers well for purchasing physical gold right now. It may not rule outright – but it certainly isn’t going to suffer.

      80

  • #
    el+gordo

    The Yuan is firming as favourite, but Beijing may have to adopt democracy and a proper justice system before they get the nod.

    https://asiatimes.com/2022/03/can-the-yuan-be-a-key-world-reserve-currency/

    05

    • #
      Cranton

      I’m guessing you mean democracy and a proper justice system like in the west? That’s going really well…. Not corrupted at all.

      140

      • #
        el+gordo

        Beijing is in no hurry to adopt Western democracy, which for all intents and purposes often appears flawed.

        00

  • #
    Binny Pegler

    How the people of Europe respond to this will set the will set the tone of the world for the next generation. If they stand their ground and endure some discomfort now. Tyrants around the world will be put on notice. If they choose comfort now a time will come when they have those tyrants on their doorstep

    160

    • #
      Saighdear

      Well, does that mean, as tyrants, our green Bori -Tories and his / their Windnills ?

      140

      • #
        GlenM

        Plus numerous other so-called social democrats who repressed their citizens for over 2 years. I have Russian friends in Crimea and what they tell me suggests they have more freedom under an autocrat than we have in a democracy. Ha!

        221

    • #
      Jan

      The EU is so energy dependent that even Denmark buys Russian oil and.. Biomass! yes! Trees to burn! They are now desperately seeking to replace all things Russian. They may have some chance. Uk has some chance. US has some chance. Germany is thinking of rationing and shutting down manufacturing. But how long will the war go on? How long can they not make things in Germany, job losses utter economic shutdown? Can they afford to pay the high price and wait for the slow delivery of US gas by Ship in ports with backlogs already? Will they try and buy more Iranian oil (Iranian Gas when it come on line will be controlled by Russia)? Putin can put up with not earning money for gas as they also sell – wait for it – fertiliser and wheat.. historically a next exporter. They now say all things bought from Russia will need to be in Rubles… which is a game changer. The Ruble is already up to pre-war levels and rising fast.
      Russia has Europe chained. They are trying to wriggle out but they will fail – Hungary is not even trying.

      190

      • #
        tonyb

        I think Putin made the mistake of not waiting another few months until Nordstream 2 came on stream and Germany and many other European nations became even more dependent on Russian energy whilst sidelining Ukraine

        20

        • #
          KP

          I think he moved now because he realised the Yanks were never going to let Nordstream 2 work.

          It would be “regime change” in Germany if they had started it up.

          There are a lot of factors at play currently. I’m hoping the overall effect is the Yanks have to work for a living and then they slash the Pentgon’s budget enough so they can’t afford these endless wars. $850 billion this year, just on ways to kill people. No wonder they have a homeless problem and a medical system people can’t afford.

          51

  • #
    David Maddison

    The Biden Maladministration has done more damage to the US in less time than any other US “Presidency” in history.

    That much damage in so short of a time is more than just extreme incompetence. It has to be deliberate and malicious.

    671

  • #
    Ross

    The possibility that Europe’s gas supply could be turned off on April Fools day, if they don’t pay their bills in Russian rubles, is rather comical.

    230

    • #
      Jan

      Putin is so relaxed with the way things are going generally over the last 8 years (the war is only one part of the whole), he has developed a sense of humour, which may make him more dangerous as he does not, as a younger Putin, take himself so seriously, so the US psyops don’t bother him. His timing is impeccable. He waited to invade until there was chaos and divisions (it is lie to say there is unity in NATO or even the EU there is ‘more unity’ perhaps to a point). He waited to dump demands on the ‘Iran deal’ to the last possible moment just as they got a deal – then dumped them, so either there is no deal or Russia is free, in effect cancelling sanctions. Instead of being nasty and cutting off gas, as he could have, he is playing being nice to those who are nice to Russia but changing the terms of delivery to Rubles for his enemies on April fools (at short notice so none can co-ordinate a strategy). But I have never found Putin’s sense of humour funny. I understand it as irony and derision… What I consider is that Putin seems to have a lot of power without the gulags.. Russia until this war was much free-er that China! There was a bit more religious freedom than China as long as you were not too powerful to challenge the Russian Orthodox Church. There was much more freedom of the internet than China. So I ponder – how did he do it.. Putin is not personally shutting down protest. There was more freedom to trade and make money than China.

      170

    • #
      RicDre

      I read that Russsia is offering a compromise by allowing the EU to pay in euros or dollars to the Gazprom bank which they would then convert to rubles. Assuming that they use the current exchange rates, I don’t see how that would be a problem for the EU.

      … However, in a call with German Chancellor Olaf Scholz on Wednesday, Putin said European companies could continue paying for gas supplies in euros or dollars.

      The money will be paid into Gazprom Bank and transferred in rubles to Russia, German broadcaster Deutsche Well reported. …

      https://www.cnbc.com/2022/03/31/europe-energy-russia-appears-to-soften-its-gas-for-rubles-demand.html

      100

      • #
        Graeme No.3

        No real difference. The EU pays Euros to buy Rubles and Russia (via Gazprom) get foreign exchange.
        The other difference is that the EU can pay Euros and pretend that they aren’t buying Rubles.
        Putin is smarter than the average bear.

        90

        • #
          Mullumhillbilly

          > foreign exchange
          … that can’t be spent because of sanctions.
          So it’s a stop gap temporary measure so the EU can work out how they will start transferring gold at the rate of approximately 3 tonnes per day ($200m)

          20

        • #
          Lawrie

          Too many people have underestimated Putin over the years. They laughed when he rode a horse bare chested but we have to take stumbling Joe seriously. When this war finally ends Putin may have done the West a great service by illuminating its weaknesses and its stupidity. We have often said here that it would take a disaster to wake up the West and expose those who would do us harm. Well this is the disaster and those who would do us harm are on the front page every day.

          21

  • #
    Mark Allinson

    “If so, the US has just shot itself in the foot while aiming for Putin.”

    It has been obvious from the moment the Biden Junta assumed power that the long-term goal of the far left was in reach – the destruction of the USA, the nation which has stood in the way of Globalist Communism for 50 years.

    For Biden, bringing down the almighty dollar is a feature not a bug.

    511

    • #
      John R T

      — Obama,2008, “America is not special.”

      240

      • #
        David Maddison

        Obama hated America.

        250

        • #
          PeterS

          Yes but America loved Obama and he had two terms. So, who is to blame for what happened under his watch? Are mirrors in the US in short supply yet?

          60

          • #
            Bozotheclown

            Yes but America loved Obama and he had two terms.

            Obama had the benefit of the same election “system” as Biden. Lots of America did not love him.

            00

    • #
      Mark Allinson

      As evidence of the Biden admin’s animus towards the US consider this meme I saw just now:

      “If cutting off the Russian pipeline is the best way to cripple the Russian economy, then why did the USA and Canada voluntarily cut off their own oil pipelines?”

      Many people seem to believe that Biden is a bumbling fool and all these events are his fault – I think that is nonsense, and that every move is intended.

      231

    • #
      KP

      “the nation which has stood in the way of Globalist Communism for 50 years”

      Rubbish- They stood for “America, first over the world”, the rest was window dressing. The thing stopping Communism was people voting against it. These days they vote for it!

      61

  • #
    David Maddison

    Despite massive election fraud against President Trump in the coup d’état against him, many people did in fact for the Biden junta.

    They should be ashamed of themselves.

    It was no secret what his Maladministration was intending to do to the US. Ignorance is not an excuse.

    321

  • #
    BJ

    There are reports this morning that Putin has signed a Decree halting gas exports if the payments aren’t made in Rubles.

    https://www.zerohedge.com/commodities/putin-signs-decree-ordering-gas-exports-be-halted-if-buyers-dont-pay-rubles

    110

    • #
      Ross

      Can you technically “turn off” a pipeline or do things go **bang** if you try?? Just wondering. I’m sure there are engineers here who could answer the question.

      20

      • #
        Ronin

        “Can you technically “turn off” a pipeline or do things go **bang** if you try?? Just wondering. I’m sure there are engineers here who could answer the question.”

        The main thing to watch is that the line pressure stays above atmospheric, don’t want any oxygen getting in.

        60

  • #
    David Maddison

    Why did the Europeans allow gas contracts that could allow Putin require payments in Rubles?

    Most contracts specify what currency/s is or are to be used for payment.

    Trump was right YET AGAIN for trying to dissuade Europeans from taking Russian gas.

    212

    • #
      bobby b

      To the extent that Europe looks to American LNG to replace what it cannot buy from Russia, expect large US tariffs soon. The American public is not going to want to pay European gas prices, and will fight to keep what’s here, here. Tariffs do that.

      80

    • #
      Mark Allinson

      “Trump was right YET AGAIN for trying to dissuade Europeans from taking Russian gas.”

      But why did they snort in Trump’s face at this suggestion?

      Given Germany’s Green desire to wreck their economy, why not hand the reins of the gas supply to the hands of your enemy?

      Then you can blame THEM (the Russians) for the destruction.

      110

  • #
    Lance

    Remember ‘Black Wednesday”, 16 Sep 1992? Soros shorted the GBP, dumped $10 Billion GBP, and broke the Bank of England.

    UK was in a high inflationary period with low interest rates. Similar to the US today.

    https://www.investopedia.com/ask/answers/08/george-soros-bank-of-england.asp

    It could happen to the USD. Biden is making it more likely than not.

    This isn’t a game. People are going to be destroyed.

    180

  • #
    Peter Fitzroy

    If the US dollar loses that reserve currency status, buy crypto.

    225

    • #
      bobby b

      If the US dollar loses that reserve currency status, buy things you can hold in your hand.

      350

      • #
        Peter Fitzroy

        like?

        15

        • #
          KP

          A very difficult question PF! Money in a bank account is worst, that could vanish overnight. Cash is a little less transient, but will get inflated away as per Argentina or Venezuela. Land is great but too expensive for most people.

          Metals seem the most useful as a store of value, but the Govt can ban people owning them overnight, as per USA.

          So, antiques? Cars? Toilet paper? Get a few friends together and pool your savings, buy a tractor and lease it to a farmer… Get a few friends together and offer second-mortgages to people?

          When you find out let us know!

          50

          • #
            Lawrie

            Guns and ammo? I agree about land but then again governments can steal land as Bob Carr did in locking it away to “save the planet” you know.

            20

          • #
            Plain Jane

            Land is great but too expensive for most people. .. And the govt has got rid of paper title and privatised the land titles office so they can get rid of land title at the blink of a cyber pandemic and then since it is privatised it isnt even the governments fault. Makes having your life savings in gold tied around your wifes neck seem like a good idea.

            10

    • #
      el+gordo

      There will be a gradual change, two reserve currencies will initially come into play. Along the belt and road they’ll be using Beijing crypto.

      17

      • #
        Peter Fitzroy

        That is possible, but my friends in coinbase are betting on a system where the crypto is stateless, the problem is getting banks (which are state controlled) to accept it.

        15

        • #
          b.nice

          Betting on an imaginary virtual friend, hey!

          Just like you do with climate.

          30

        • #
          bobby b

          I normally like “stateless”, but any crypto system really does need a safe “home base” – a home state that will protect access to and use of that crypto. If crypto is truly stateless, it loses all protection, and your internet access to it gets that much dicier.

          Imagine trying to access an internet site that holds some asset that all states outlaw. Maybe some good techies can set up and use some system like another dark net, but most of us would be lost.

          I like gold and silver coin, for high values – and 5.56 ammo for lower values. Price never seems to drop, has intrinsic value like gold, fungible (mostly), and not too value-dense, so it will be useful for common purchases. (1 cartridge == 1 loaf of bread.)

          You can buy investment-grade 5.56 in 55-gallon barrels. Stores for a long time.

          30

        • #
          el+gordo

          Beijing is developing their own crypto, which should give them opportunity at grass roots level, but when it comes to a Reserve Currency they are still a long way from home.

          ‘For now, greenbacks comprise 60% of global reserves versus the yuan’s 2.5%. And in global payments volume, the dollar accounts for 40% while the yuan has about 3%, even though China is the world’s second biggest economy, trailing closely behind the US, Philipson said.’ (Market Insider)

          00

        • #

          ” the problem is getting banks (which are state controlled) to accept it.”
          Not really. This is a problem which one would not expect from the ‘free marketeers’. i.e. That the banks are run by the politicians / hucksters / thieves. Breakdowns of the system are just profit taking.

          10

  • #
    TdeF

    Seriously, no one keeps their wealth in actual $US. Real estate, government backed bonds, shares,cars, yachts but not actual cash. Cash is only used for trading and as such it has a very temporary use. In an electronic world cash is vanishing completely. So things might be denominated in $US or RMB or Yen or EUROS or even Australian dollars but they are quickly exchanged for goods or permanent assets.

    Scrooge McDuck and his money bin never existed and while massive gold reserves like Fort Knox still exist, they are relics. Gold the product though is very popular in a world of electronics and jewellery. Gold would be valuable anyway, which is the point. Not just because of the traditional view that it is rare and costs a lot to extract, but it has real value.

    Consider Bitcoin and other unique (non fungible) expensive tokens which can be traded as easily as cash you never actually see but I suspect they are far too volatile and have no intrinsic value except their uniqueness. Which is fine for rapid trading free from government oversight and taxes but at the risk that they could be truly worthless overnight. But irresistible for the world of illegal trading in drugs and arms, to name two, which is a perpetual if very dangerous market. And of course gambling is a religion in Asia so wildly fluctuating values in Bitcoin is a real attraction. Go to any casino and you will see them at the tables.

    Again the move to force people to pay in Rubles is brilliant strategically. The Russians are not asking for one cent more, not one kopek so the traders would not care. Russia is asking for respect, which costs nothing except politically. Rubles are only a denomination in bartering which would not matter to traders but it is significant in that the value of Rubles expressed in Euros or Dollars or Pounds will soar, which matters to the Russians. And will make Putin a hero at home.

    203

    • #
      TdeF

      And if the Russians become rich in that their currency soars, they will buy more European and American goods, which will really boost world trade. Like Mercedes cars or French wine or Italian machinery. The slow Cold War grind to oppress the Russians might come to an end, which would benefit all the countries because the real disgrace is the terrible poverty in places like Ukraine and Moldava because they get paid nothing for their massive resources. An increasing currency would make the people richer and of course they can buy the goods and services which improve their quality of life.

      I think Putin’s move would be good for everyone and would finally end the de facto economic warfare aimed at Russia and the Russian people and members of the former SSR. The cold war may have ended, but the economic oppression of the cold war is still alive and well and at the essence of the war in Ukraine. You can push people only so far, especially when you need what they have.

      171

    • #
      PeterS

      Tell that to the holders of their bonds, treasury notes, atc., which amount to over $20 trillion US dollars.

      30

    • #
      bobby b

      “Seriously, no one keeps their wealth in actual $US.”

      Temporarily, there are an awful lot of Canadians and Americans sitting on piles of US dollar bills right now, hastily withdrawn when Boy Justin knocked banking trust for a loop. I’m sure it’ll go somewhere safer eventually, but right now, it’s out there.

      10

  • #
    farmerbraun

    Did anyone really believe that the U.S was going to repay its inconceivably massive debts to the rest of the world, with anything other than freshly created 0s and 1s ; the debt was always repayable in U.S. dollars ,right?
    Of course , that would make the U.S. dollar worthless .
    Are we there yet?

    130

    • #
      PeterS

      No, not there yet but we will be one day. Could be a matter of years but whenever it happens it will be the end of the US as we know it. At the moment it’s just the beginning of the end.

      31

      • #

        The USA isn’t dead yet.

        50

        • #
          Lawrie

          It just has a corpse running the show.

          10

          • #

            The US dollar may be a dead man walking, but USA is more than the currency.
            It might potentially be the end of an empire — but it doesn’t have to be.

            50

            • #
              bobby b

              It won’t be the end. Currency machinations aside, we still retain a huge productive capacity and the resources to feed it. We’ll be fine.

              It might be a lot more expensive to buy other people’s stuff for a while, but that will just accelerate the adjustment.

              10

    • #

      Maybe the plan is to devalue the debt through inflation? It’s happened before. I’ve not seen this mentioned yet…

      60

  • #
    TdeF

    Perhaps the most shocking part of Justin Trudeau’s attack on his own people by arbitrarily closing personal bank accounts highlights the dangers of a cashless society, whatever the nominated currency. When you were paid in cash, you paid for the food you needed in cash, the services you needed in cash or cheque, the fuel you needed in cash or credit card.

    If Trudeau can shut down someone’s bank account for making a $10 donation over the internet to support the Truckers so that they could eat, he can starve his people to death as easily. And if no one has cash, what do they use?

    I do not think any move in the last few decades has been more frightening in demonstrating the dangers of a cash less society controlled by banks. And it does not matter if your wealth was denominated in Canadian Dollars or US dollars or Rubles, Trudeau demonstrated he controls the private enterprise banks by edict and so he controls whether anyone in his country can live. You can turn off whole cities which displease you, companies, banks. You can effect a Holomador with a single order and starve cities into submission.

    The power in an electronic world is now at the hands of tyrants in a world without barter. And Justin Trudeau is the simply the first tyrant to demonstrate to his own people that their lives are utterly in his hands and at his whim in a cashless society. Now try turning off the internet and people would not even know what was happening to them and they would not even have telephones. In a way we should be grateful to Trudeau for exposing the risks in an internet cashless world. What does it matter if your money is designated in Canadian dollars or Rubles, the government controls your money and can turn it off in a heartbeat.

    And you can forget buying food with Bitcoin if the internet is turned off. Pieces of Eight will make a return.

    I believe what Trudeau ordered must be made illegal in a democratic society. What he did was past reprehensible.

    450

    • #
      David Maddison

      The push by the Left for a cashless society is very strong, just so everybody’s purchases can be monitored and controlled, rationed or prohibited.

      And did you notice how in Australia about 50% of ATMs, perhaps more, have been removed from service?

      Apparently this is because people are using so little cash.

      In my local shopping street in a wealthy area there used to be 4 ATMs and four bank branches. Now there is one ATM and zero branches.

      90

      • #

        On the other hand, I can just get cash out at Woolworths.

        It’s hard to put in cheques and deposit cash though. I guess businesses have some secure pick up arrangement. Branches are rare.

        81

        • #
          TdeF

          As a declared enemy of the state, none of your credit cards would work. Not even debit cards. And cash from Woolworths is your cash, so not even that. Telephone potentially shut off, anything connected. You would have to borrow a credit card or cash. And your car could be traced on freeways and not refuelled, so a car as well. You could be recognized by image identification from the thousands of cameras. Criminals are prepared for this and have multiple identities but not ordinary Canadians. It is all about what is allowed under the law and the emergency powers gave Trudeau these rights in a declared National emergency. He could declare anyone an enemy of the state.

          It’s a frightening prospect being doxxed and shut down. And Justin Trudeau convicted everyone who was a donor under his executive rights in an alleged but unjustifiable emergency which had ended before he invoked these powers, even for a $10 donation.

          The only reason he then backed down was that Parliament was meeting and would rescind those powers!

          Trudeau should be removed as Prime Minister by his own party or by the Governor for waging war on his own people when he was just peeved. None of the donors had done anything illegal in their wildest dreams. And $10 is not going to bring down the state. As the Europeans commented in public, such behaviour was not seen even in the time of communist rule in the Eastern block. And Trudeau is unrepentant and still Prime Minister.

          If Will Smith can be banned for slapping a comedian, surely a Prime Minister who slapped tens of thousands of Canadians in the face should face some reckoning?

          130

          • #
            TdeF

            And I have no idea why you would get a red thumb. People should have to explain red thumbs because I have seen them on simple facts.

            30

            • #

              Or maybe I was slack, replying to a minor point in moderation about using the lack of ATMs as evidence.

              I wasn’t referring to the bigger danger of a cashless economy, or your comment TdeF, which I agree with. In the moderation window there is no context…

              Obviously totalitarians want a surveillance state and a Chinese Social Credit System shows us the awful potential of that.

              30

      • #
        Dave Ward

        The push by the Left for a cashless society is very strong, just so everybody’s purchases can be monitored and controlled, rationed or prohibited

        Economist at World Government Summit says new financial world order about to shift in dramatic new direction

        00

    • #
      David Maddison

      And I don’t trust crypto currency simply because it relies on the Internet and computers, either of which can be wiped out by a computer virus or have tyrants “pull the plug”.

      Any currency has to be independent of technology e.g. physical artefacts like precious metals or appropriate items for barter like food, fuel etc..

      180

      • #
        Lawrie

        I like the idea of gold but how do you buy things with it? That is a serious question. Does it need to be converted to cash first? I know that back in gold rush days stores kept scales to weigh it out and the value was an agreed amount and widely known.

        10

        • #
          David Maddison

          We need gold or other precious metal coins of appropriate value or a gold-backed currency but the latter won’t happen because it forces government to be financially responsible.

          00

        • #
          bobby b

          Gold and silver coinage is a great repository for large values, but you also need some smaller denominations, so you can actually buy something from someone without getting $2000 in change.

          In the US, it’s moving to 5.56 ammunition. Checks all the right boxes.

          00

  • #
    PeterS

    There appears to be some confusion over how Russia is to negotiate payments for their gas to other nations.

    “The Presidential Decree published today explaining exactly how to sell and pay for Russian gas was predictably misinterpreted.”
    About the Sale of Russian Gas for Rubles

    70

  • #

    Surely this is largely irrelevant?
    The World Economic Forum has been planning for decades to take over with a “One World Government” controlling their ideal World population of One Billion people all of whom have had their DNA genetically modified. The WEF is well on the way to achieving the latter with the ‘jab’ and the second is in the works. Bill Gates has already suggested that another pandemic should strike soon and he should know, he has paid mega-bucks to make it happen. Even our ever-insightful Federal Government is ready with their enormous stock pile of jabs to give us our fourth injection prior to winter.

    Finally we will all be micro-chipped and our complete details including our assets will be controlled by a WEF digital currency. No reserve currency necessary so we will have nothing to worry about. Just sit back and let it happen and ‘be happy’ – won’t we?

    71

    • #

      Not irrelevant: Russia has more nuclear weapons than any country on Earth. China is the second largest economy and the largest population. They don’t like the WEF.

      The WEF would like you to believe they have control, but they are also a bunch of people given obscene wealth by a financial system loophole. They are cocky, overconfident, have no idea what is happening in the street. They would like you to be fatalistic, to surrender to their schemes, but “overreach” is a given. They may think they alone installed Biden, but Xi may think that too, and they don’t have the same aims. Who controls Biden: The FBI, the CCP, Klaus Schwab? It may be none of them or all of them. Or it may instead be “Some Bankers”.

      220

      • #
        Serge Wright

        The WEF has one benefit that both Chin and Russia are craving, the end of the liberal democracy. This is what China sees as it’s greatest threat – the uprising from within due to the greener grass they see on the western side of the fence. WEF could take over North America and Western Europe and China is then happy to see the back of democracy.

        40

      • #
        TdeF

        The EU is likely second, but it’s not a country. The combined GDP of France, Germany and Italy would come close even without the UK. Plus the other states. And Japan has been passed but substantial. I suppose I should check the latest facts though.

        21

        • #
          TdeF

          US $21Tn
          China $15Tn
          Germany, France, Italy, Spain and the UK $13Tn
          Japan $5Tn
          and Russia comes in at a tiny $1.5Tn but as I argued above, measured as “purchasing power” it is closer to $4Tn and Germany which makes more sense.

          This is all connected to the dominance of the $US, which is why you need to measure purchasing power.
          The other great anomaly is giant India which shows as only $2.68Tn in GDP but a purchasing power of nearly $9tn.

          Note: “Purchasing power parity” (PPP) is a popular metric used by macroeconomic analysts that compares different countries’ currencies through a “basket of goods” approach.

          In many countries people far prefer to hold $US in notes as a shield against the volatility of their own currencies and that is certainly true in Russia. However Putin’s move will cancel US attempts to devalue the Russians currency and disrupt their economy, which is difficult now that they have Germany by the pipeline. And indirectly, Ukraine.

          40

          • #
            TdeF

            And officially, the nuclear missile count is

            Russia (6,257)
            United States (5,550)
            China (350)
            France (290)
            United Kingdom (225)
            Pakistan (165)
            India (156)
            Israel (90)

            but it is hard to measure when the US and Russia have MIRV, Multiple Independently Targetable Reentry Vehicles on a single missile. It’s a great multiplier. If war broke out, it would all be over in about 30 minutes. And China is rapidly doubling their number. It’s all about parity, in a quite insane way.

            40

      • #

        Jo Nova, I suspect that you underestimate just how powerful the WEF is.

        The Davos 2022 meeting had an opening address given by President Xi Jinping. Amongst other addresses there was even one by our PM Scot Morrison. Members of the WEF include Angela Merkel, Vladimir Putin, Jacinda Ardern, President Macron, Canadian PM Trudeau and many of his cabinet, even our Federal Health Minister, Mark Zuckerberg, Bill Gates, whose billions in donations give the WEF influence over the WHO and numerous other world bodies see: https://principia-scientific.com/global-technocrat-cabal-exposed-through-network-analysis/

        and many other members holding high office around the world.

        Even some of our Parliamentary bills read as if they are straight out of the WEF play book, eg the Cyber Security (Insecurity ?) Bill.

        20

        • #

          Already covered it. https://joannenova.com.au/2022/03/evil-or-just-greedy-time-to-talk-about-the-wef/

          It’s the biggest private club in the world and Trudeau / Ardern / Hunt sure look like WEF patsies. Spread the word. Soon people won’t want to “parrot the lines”. But belonging to it isn’t unidirectional control. Victor Orban was a member. Xi is a member. Does Xi control the WEF? Does the WEF Control Xi?

          The bigger question is who controls the WEF and who opposes it? There are many players and cabals and we mainly see the ones they want us to see. Look behind.

          70

      • #
        Lawrie

        The Democrats are anxious to get rid of the 2nd Amendment because the threat of an armed uprising is always possible. The US has had two popular uprisings in the past and are quite proud of their birth through fire. There is always the risk that various states could leave the union if it was in their best interest to do so. Secession was mooted by Texas after the election and states like Florida and some of the fly over country might say we control the resources and the food so we could go it alone. Like the breakup of India it would leave the East and west coast isolated and largely impotent. I don’t believe it would ever come to that because after November there will be a new congress that will stop the Biden excesses and make him, and his socialist cabal, irrelevant. The people have seen the destructiveness of socialism and will cast it down.

        00

  • #
    NuThink

    Gerhard Schröder (born 7 April 1944) is a German lobbyist and former politician, who served as the chancellor of Germany from 1998 to 2005.

    Gerhard was and still is really buddy buddy with the Russian leadership.

    Did he have anything to do with allowing Germany to become dependent on Russia?

    Watching early morning DW in English they showed him behaving like footy mates with the Russian leadership.

    80

    • #
      RobB

      The Germans killed 20 million Russians. They have needed to be friends with the Russians to atone for their sins and avoid a repeat in reverse.

      70

  • #
    Alistair Crooks

    It is interesting to juxtapose this post with the map of countries which haven’t signed up to sanctions against Russia. It perhaps gives an indication of just how many sceptics there are out there
    See Wentworth Report of a couple of days ago.

    30

  • #

    Gold Standard here we come

    Gold is the only way forward. Stop the cheating, manipulation, money printing and the lying. Gold is a great leveller and its the way of the future.

    30

    • #
      David Maddison

      I believe in the gold standard but I’m not sure what the implications are of the fact that there is not enough gold in existence to convert to the value of all the currency in existence. Does that mean gold is underpriced?

      70

      • #
        KP

        “Does that mean gold is underpriced?”

        Absolutely! Its price is set by pieces of paper called gold futures, and everyone knows there are more futures contracts out there than the amount of real gold.

        If gold was around $50K an ounce it would represent the money in the world about 5years ago, I saw it somewhere back then.

        I reckon we should go back on it, the first country to do so will have an appreciating currency as others realise that currency can’t devalue by printing paper. Then competing currencies will have to also go on a gold standard to stop their devaluation.

        Ukraine was ruined once the World Bank got in there, so typical of the 2nd/3rd world. They doubled the debt in 2014 and then crippled the people trying to pay it back. As usual, the privatisation of Govt services lead to billionaires and corruption.

        70

  • #
    Bozotheclown

    Wait. Help me out here. People that own euros are being asked to pay for their means to stay warm with rubles. Meanwhile, Russian wealth has been locked up by the rest of the world, including the US.

    So how will the Europeans pay if the rubles are locked up? If Russia prints more, then the Ruble is in the hole. Russia will go with it.

    Why would this “problem” cause a currency problem for the US dollar?

    Problems staying warm? Yes, for Europe. Too bad they got so green. They could still find some coal if the have a pick and shovel.

    Problems for US dollars? No they still buy US food and US fuel. No problem for USA.

    I do worry some but I don’t know any good alternative except to squash the invader. If you can’t bring yourself to that reality then chop some wood or dig some coal.

    30

    • #
      Serge Wright

      Not quite.

      If countries are forced to use Chinese Yuan to purchase oil, then it means everyone sells their piles of USD held in their reserve banks and buys Yuan. At that point you get the same outcome as with the old German Mark. Down here, our own reserve bank sold most of its gold bullion years ago and now use $USD to back up our own $AUD, so we are already part of the run of domino chips waiting for the US to topple first.

      You are correct that energy independence is a partial salvation, but the US is now needing more and more imports as Biden’s GND policies bite. Down here we killed our oil industry and we’ll pay the price.

      120

  • #

    Biden is destroying the World Economic System. Their is no Build Back Better. That is BS. As Martin Armstrong has said many times, the World’s Financial Centre is headed for Asia (China) in 2032. I will likely be dead by then so I will have fun, eating, drinking, sleeping, dreaming, walking, reading, kayaking, swimming and all of those good things as keeping contact with good friends and family. Then Heaven I guess…………………………

    60

  • #
    Serge Wright

    “MH: Well, as President Putin and Lavrov have said, the fighting in Ukraine isn’t really over Ukraine at all. It’s a fight over what shape the world will take and whether the world will be unipolar or, as it now appears, multipolar.”

    Jo, you snipped my comment alluding to this last week. The new world order – where authoritarianism replaces democracy and where we own nothing but apparently we’re all happy. The world will be multi-polar, which means there will very likely be a division of lands to the relevant rulers. We assume the USA will be self-governing as will Europe, but what happens to isolated countries such as our that are resource rich with small populations and almost no defense capability. Right now all we can see a big red shadow approaching and whilst we can see what’s coming, it’s the timing that’s uncertain.

    90

    • #
      KP

      Well, isn’t it just too bad they confiscated all the guns after Port Arthur, instead of issuing every adult with an assault rifle and compulsory training in militia!

      Switzerland has it right!

      Luckily, when the invaders come it will politicians up against the wall, they aren’t interested in the plebs.

      50

  • #
    eilert

    There is however a silver lining in all of this.

    The good thing about the US Dollar loosing is reserve currency status is that US government cannot run 30 Trillion dollar deficits anymore, without severe consequences to the US economy.
    Much of this was corrupted and syphoned off and used by the very enemies of the US and the World, including large globalist multinational companies, who used this money to buy whole industries.

    100

  • #
    UK-Weather Lass

    And now, all of a sudden, not only are debts not sacrosanct, but countries can just grab foreign savings

    In other words trust has vanished within our monetary systems. In the 2007 crash it was debt that was no longer sacrosanct but hidden away in carefully structured and layered packages and then traded making it almost impossible to understand who owed what to whom. The high street banks were also found at this time having insufficient cash to meet their customers’ account balances on demand meaning a sovereign bank note was no longer a promisory note but just a bit of fancy paper. Were we being warned what could happen next?

    Who are the goodies and who are the baddies in the current scenario or have they all become as bad as each other? Looking at what happened to the truckers in Canada recently who really is to be trusted with freedom let alone the money to enjoy that freedom? The ruling classes have a lot to answer for but are we going to have the chance to question them up, close and personal even if we can work out who the really guilty parties are?

    As Serge Wright writes at #24 a big shadow is creeping towards all of us …

    110

  • #

    […] Money-world splits into two: Is this the end of an era of US dollar as reserve currency? […]

    00

  • #
    KP

    ” The ruling classes have a lot to answer for but are we going to have the chance to question them up, close and personal even if we can work out who the really guilty parties are? ”

    Not a chance, but look at it this way- When the big crash comes, they will have a lot further to fall, and THEN we will meet them one on one.

    If the US$ crashes it will take all our pensions with it, and when a billionaire’s house in Sydney is worth $250,000 again the only buyers will be Indonesians or similar, people who actually make things and sell them.

    30

  • #
    ExWarmist

    If the US dollar falls, what’s to stop it being replaced with a full blown CDBC and all that entails?

    20

  • #
    Denny

    In 1945 the US Debt Held by the Public was $235 Billion. By 1961 it was $237 Billion. So 16 years after the massive buildup of WWII debt, it grew by only 1%.
    In 2000 the Debt Held by the Public was $3.4 Trillion. Today it is $23.8 Trillion. Notice the growth rate since 2000?

    The actual numbers aren’t as important as the massive growth rate. The Federal Reserve holding down interest rates has masked the Debt Service costs. Just a 1% increase in interest will bump up debt service by $240 Billion. For perspective, Biden’s “Billionaire’s Tax will generate only $36 Billion per year and that isn’t going to happen. The fastest part of the budget for the rest of this decade will be its debt service costs.

    Note: The US total Debt is $30 Trillion which includes over $6 Trillion owed to itself for past borrowing from the various Trust Funds, of which the Social Security Trust Fund is the largest. The $23.8 Trillion Debt Held by the Public is made up of marketable securities.

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      bobby b

      “The actual numbers aren’t as important as the massive growth rate.”

      Agreeing with you in the main, but I have to note that, ever since junior high school – and I’m now 65 – we’ve been discussing how the American debt is simply too high to maintain, and that it will crash us all. And yet here we are, having that same discussion, fifty years later.

      I imagine we’ll just inflate it away again.

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      Binny Pegler

      Growth is the key if your business is growing faster than the interest debt is not an issue. If interest out strips growth – you’re dead in the water.

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    […] to encourage the conflict because it drives Putin into its arms and WEF elites want it, too, because it has produced a likely dethroning of the US dollar as the world’s reserve currency from the west shutting off Russia’s credit and it, in turn, demanding payment for gas in […]

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    Richard+Ilfeld

    Nonetheless, the US, as noted before still has a chance.

    It is a large economy.
    It is self-sufficient in food, and a net exporter.
    It is still a net exporter of energy, even after having shot itself in both feet.
    It is nearly self-suffiency capable in every commodity necessary for a contemporary society; non-exploitation being an economic of environmental choice.
    It has enormous informal reserves of almost everything, due to the sloppy over-consumption permitted by wealth; You could probably collect enough unused but servicable vehicles and farm equipment and manufacturing equipment in the US to create the seventh or eighth largest economy in the world; and we still on work mostly 40 hour weeks and 46-47 week years with 62% of folks in the labor force.

    If the “want-to” was rekindled, the race for primacy and the ability to set world norms would still see a formidable competitor — it is much easier to see the flaws of a power that is deteriorating than the limitations of one that seems ascendant.

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      Bozotheclown

      Great comment Richard Ilfeld.

      I am comfortable that I won’t freeze to death, or starve to death living where I am in the USA.

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    Global Cooling

    Money needs collateral. Gold and oil are just most commonly known. Western governments as guarantors have worked because they have had some discipline. USA, EU and UK can select their own commodity that they sell and connect $, € and £ to it.

    Read more:
    https://www.goodreads.com/book/show/30231791-the-end-of-alchemy

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      Not quite. Gold is not a commodity. It is not used up. All the gold ever mined pretty much still exists and the amount traded at the LBMA far exceeds the “needs” for jewellery. Each year the world digs up 2500 t of Gold, but each day on the LBMA something like 500 t changes hands.

      Gold is a currency. It’s the only one not controlled by the government. They can’t print it at the mint. That matters.

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      Kim

      Virtual Gold: FX: -ve QEd at source, +ve QEd at destination. No global reserve currency.

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    Kim

    What has happened is that the USA has basically destroyed its soft power. It’s done that in a number of ways including :- i) interventions that are contrary to its supposed democratic principles, ii) wokism, iii) destroying its creativity particularly in the entertainment sphere, iv) destroying its objectivity, honesty and integrity. As such the USA is no longer a moral leader and, thus, has much diminished influence. Hence the movement away from the USA.

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    Esther Cook

    There is a new currency in a few US states called the “goldback.” It is not a dollar, nor denominated in dollars. It is backed by gold–embedded in the paper by a sophisticated process that has not been counterfeited.

    Everyone should get some and start using it at a low level to see whether this will prove viable over the long term.

    Americans (and many other peoples) should also get “junk silver,” which is our own very old coins, well used with no collector value. We should get our neighbors to transact with these, understanding that they are not current “IOU nothings” FRN current value coins. Do not lose them as dimes and quarters.

    I transact with greenback cash (FRNs as paper) when I can, which is important, but not enough.

    Your survival, if it gets as bad as looks certain, will also depend on your neighbors learning these things. Teach the ones that will listen. Transact with each other for practice and to learn what fair value is.

    Silver is real money.

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