It Begins: Russia Officially Announces ‘Time Has Come…To Get Rid of the Dollar’

 As the United States continues to pile on an ever-growing list of  sanctions on to Russia, the country is fighting back by abandoning the  US dollar. Although they have been expressing their desire to break away  from the hegemony of the U.S. petrodollar and the global dollar-based  payment systems for years, Russia’s deputy foreign minister, Sergei  Ryabkov, said this week that they are accelerating those efforts, to  “get rid of the dollar.” 

“The time has come when we need to go from words to actions,  and get rid of the dollar as a means of mutual settlements, and look  for other alternatives,” he said in an interview with International Affairs magazine.

Over 60 percent of global reserves and 80 percent of global payments are currently denominated in U.S. dollars, according to James Rickards,  author of Currency Wars. 

This gives the U.S. extreme control over other  countries’ imports and exports and they are able to force countries  into submission using sanctions. However, those days of global monetary control appear to be coming to  an end, especially as other countries aside from Russia abandon U.S.  dollar as well. “Thank God, this is happening, and we will speed up this work,”  Ryabkov said, explaining the move would come in addition to other  “retaliatory measures” as a response to a growing list of US sanctions.  

Russian Energy Minister Aleksandr Novak recently noted that a growing  number of countries are interested in replacing the dollar as a medium  in global oil trades and other transactions, according to RT. “There is a common understanding that we need to move towards the use  of national currencies in our settlements. There is a need for this, as  well as the wish of the parties,” Novak said. 

This year, the Russian government has also drastically reduced their holdings of United States Treasury bonds, with Russian ownership of U.S. bonds declining from $96.1 billion in March to $48.7 billion in April—and then further reducing their holdings to just $14.9 billion in May; an 11-year low. 

As the Free Thought Project has recently reported, Russia has been buying large amounts of gold during its gradual sell-off of U.S. Treasury bonds, and it recently overtook China as the world’s biggest holder of gold with $80.5 billion worth. 

The reason gold is so critical is that it cannot be manipulated by  U.S.-based economic warfare, as it cannot be frozen out as other forms  of digital and paper fiat can be. Gold can simply be loaded onto pallets and shipped to another state  to make a payment, thus bypassing targeted economic sanctions that are  currently being used by the United States as a means of attempting to  force geopolitical compliance by Russia and other countries. 

The  strategic significance of gold is so great, that even when oil prices  and Russian financial reserves were collapsing in 2015, they continued  to acquire gold. Additionally, the U.S. is the only country with veto power at the  International Monetary Fund, known as the global lender of last resort.  

Thus, one of the most crucial weapons wielded by Russia, in its war to  free itself from the hegemony of the petrodollar, is gold. With the petrodollar being utilized as a weapon by the U.S.  in a time of increased economic warfare, gold is a clearly a means of  bypassing U.S. sanctions. What’s more, as we previously reported, China has also moved to bypass the U.S. dollar by launching petro-yaun earlier this year. 

The Chinese government reportedly plans to allow the crude oil  futures contract priced in yuan to be fully convertible into gold. As TFTP reported  at the time, in addition to serving as a hedging tool for Chinese  companies, the contract will allow for increased use of the yuan in  trade settlement. These contracts will thus enable China’s trading partners to pay with  gold or to convert yuan into gold without the necessity to keep money  in Chinese assets or turn it into US dollars, according to Bloomberg.  

However, China has already agreed to stop using the dollar in global  trade. Essentially, the new benchmark will allow exporters, such as Russia,  Iran or Venezuela to avoid US sanctions by trading oil in yuan that is  convertible to gold – thereby negating the hegemony of the petrodollar. It seems that the U.S. is slowly losing its power to sanction other  countries into submission and it is at the expense of your paycheck. As  other countries begin to dump the U.S. dollar to avoid being sanctioned  by America, an inevitable inflation crisis will ensue and the  government’s hubris may bring on a new great depression. 

“It is more of a game changer for the US. As soon as other  nations have a real credible alternative to the US dollar, they can dump  dollars and switch to the yuan which can spark a dollar crisis. If that  happens, not only will there be inflation from the tariffs, but also  from the flood of dollars,” Ann Lee, Adjunct Professor of  Economics and Finance at New York University and author of the book  ‘What the US Can Learn From China’, said.