The edition below concerns a recurring theme in international politics -- the death of the petrol dollar and of the dollar as the world's reserve currency. What the BRICS nations (Brazil, Russia, India, China, and South Africa) might do -- or are actually already doing -- to bring about the dollar's demise are, in this writer's point of view, minor in comparison with what the Fed has been doing to end it -- by quadrupling the amount of money in circulation every few years and keeping interest rates artificially low ;) But nothing compares to the free market, which thought up Bitcoin -- the true arch nemesis of the dollar and other government-issued fiats :D Translated by @peter.tsukev, edited by Yours Truly :)
According to the World Gold Council, the Russian Central Bank’s gold purchases have doubled, and the country's precious metal reserves are now at all-time highs since Putin's mandate began 17 years ago.
Russia's attempts to throw off the hegemony of the American dollar and financial system are well-known. Over 60% of the world’s reserves and 80% of international payments consist of dollars. The US is also the only country with veto power at the IMF, the largest global creditor.
Gold is perhaps the most powerful weapon Russia has in its war against the dollar. The initial knee-jerk reaction of the country has been to accumulate gold, which can be neither denied by the international payment system, nor hacked. If a country owns gold, it can always pay its debts by simply loading the gold onto a plane and sending it to another country — the modern version of the method once used by JP Morgan to make his payments, who transported gold by ship and train in the early 20th century.
Over the last 10 years, Russia has tripled its gold reserves from (approximately) 600 tons to 1800 tons, and the trend shows no sign of a pullback. Even in 2015, when oil prices collapsed and Russian reserves evaporated, the country still went on hoarding gold.
But gold is not the only alternative to the dollar Russia is looking at.
Another is its collaboration with China and other regional trade partners to create payment systems not based on the dollar.
However, the US is using its influence via SWIFT (Society for Worldwide Interbank Financial Telecommunication) — the central nervous system of the global traffic of financial operation information — to incapacitate those countries which it deems a threat.
From a financial viewpoint, such an act is analogous to cutting off the oxygen to an intensive care patient. Russia knows how vulnerable it is due to America's pull and -- naturally -- wants to decrease its dependency in this regard.
It is precisely for this reason that Russia created its own system like SWIFT’s.
Elvira Nabiullina, the head of the Russian Central Bank, recently announced the following to Vladimir Putin: “Our [possible] exclusion from SWIFT is a real threat. However, we have updated our financial operations system, and should there be any problems, all operations in SWIFT will continue. We have simply created an analogous system.”
Additionally, Russia is part of China's plan to create a new international financial order that excludes the U.S. dollar. This plan envisions the possibility of China’s paying for Russian petrol with yuan and of Russia’s using that same yuan to buy gold back on the Shanghai stock market.
It is now clear that Russia has yet another weapon “up its sleeve” in the war against the dollar. It has been said that the Russian Development Bank (RDB) and several Russian government ministers are entertaining the idea of using blockchain technology. Their goal is to create a completely encrypted, accessible, and cheap payment system that is independent of Western banks, SWIFT, or the U.S. Blockchain technology (also known as a technology enabling a decentralized data bank) is the platform that would allow various operations involving a new Russian cryptocurrency backed with gold.
This system has nothing [other than blockchain technology – ed.] to do with Bitcoin, but will be just another type of digital token.
“Putincoin,” perhaps?
In the end, the big losses will be felt by the dollar — yet another reason for investors to diversify their portfolios with other assets, such as gold [and cryptos – ed.].
What do you think -- will Russia's cryptocurrency kill the dollar, or will the Fed's policies put it out of its misery first? Leave your thoughts below, and thanks for upvoting and resteeming this material. We need to get it out there :)
Find the previous entries here:
Ciao за now!
Every additional nail in the coffin gets ignored. It seems that no one cares and believes everything will be OK forever. They are horribly mistaken. I gave up trying to explain the trend to other people. It's just not worth the effort. They will laugh, roll their eyes, and make fun of you for pointing out the truth.
Yes, that's the irony, isn't it?
It is but has serious consequences. :(
This is a great series! Maybe with a more general chapter of Classical Liberalism explained in theory it would make for a nice little book :)
Steem on!
Great idea! Would you like to write it? ;)
Sure, I could do that if I have some free time on my hands :) But if you don't want to wait for me, I'm fine if someone else does it.
Ok, but I don't seem to have anyone around to write it besides you :)
I don't know if the death of the dollar at the hands of the Russians is imminent but it seems they are very focused and could do some significant damage. The U.S. continues to trumpet their "American exceptionalism" all the while playing the victim of Russia's alleged manipulations. The U.S. seems to be their own worst enemy. We will have to wait and see because, after all, we just don't know. ;)
WJDK ... :D
These are some real and potentially war invoking realities... The US won't take this lying down and with such a massive potential dent in trading USD the currency could be very hard hit.
Let's hope we can escape the storm somehow!