Golly gee, but US Dollar suffering stunning collapse for value and acceptance after attempted weaponization against Russkies

Apollonian

Guest Columnist

US Dollar Suffering ‘Stunning Collapse’, Losing Reserve Status Due to Currency Weaponization: Report​

Henry Kanapi
April 26, 2023

Link: https://dailyhodl.com/2023/04/26/us...-status-due-to-currency-weaponization-report/




The US dollar’s global supremacy is reportedly eroding at an exponential rate, with countries backing away after witnessing how America used USD to impose sanctions against Russia.
In a new Bloomberg report, Stephen Jen and Joana Freire of asset management firm Eurizon SLJ Capital reveal that in 2022, the US dollar’s market share in global reserves plunged 10 times its average speed of the past 20 years.

Considering the fluctuations in exchange rates, the dollar lost about 11% of its market share since 2016 and twice that amount since 2008.
Jen and Freire say in an investor note that countries located in Asia, Latin America, Africa, the Carribean and the Pacific Islands – collectively known as the Global South – are shedding their dollar reserves as they look for an alternative to avoid sharing Russia’s fate.
“The dollar suffered a stunning collapse in 2022 in its market share as a reserve currency, presumably due to its muscular use of sanctions. Exceptional actions taken by the US and its allies against Russia have startled large reserve-holding countries.”
According to Jen and Freire, the dollar now accounts for 58% of global reserves, drastically down from 73% over two decades ago when the currency was considered as the “indisputable hegemonic reserve.”
Although the dollar’s dominance appears to be on the decline, Jen and Freire note that the USD’s status as the world’s reserve currency is unlikely to change in the near future as emerging economies continue to depend on the greenback to settle international trades.
However, the duo warns that the developing countries’ reliance on the US dollar is not “preordained,” and it is possible that more nations hop on the trend of de-dollarization.
“The prevailing view of ‘nothing-to-see-here’ on the US dollar as a reserve currency seems too innocuous and complacent. What needs to be appreciated by investors is that, while the Global South is unable to totally avoid using the dollar, much of it has already become unwilling to do so.”
 

Escobar: De-Dollarization Kicks Into High Gear​

BY TYLER DURDEN
FRIDAY, APR 28, 2023 - 10:40 PM
Authored by Pepe Escobar via The Cradle,

Link: https://www.zerohedge.com/geopolitical/escobar-de-dollarization-kicks-high-gear

The US dollar is essential to US global power projection. But in 2022, the dollar share of reserve currencies slid 10 times faster than the average in the past two decades...

It is now established that the US dollar’s status as a global reserve currency is eroding. When corporate western media begins to attack the multipolar world’s de-dollarization narrative in earnest, you know the panic in Washington has fully set in.
The numbers: the dollar share of global reserves was 73 percent in 2001, 55 percent in 2021, and 47 percent in 2022. The key takeaway is that last year, the dollar share slid 10 times faster than the average in the past two decades.
Now it is no longer far-fetched to project a global dollar share of only 30 percent by the end of 2024, coinciding with the next US presidential election.
The defining moment – the actual trigger leading to the Fall of the Hegemon – was in February 2022, when over $300 billion in Russian foreign reserves were “frozen” by the collective west, and every other country on the planet began fearing for their own dollar stores abroad. There was some comic relief in this absurd move, though: the EU “can’t find” most of it.
Now cue to some current essential developments on the trading front.
Over 70 percent of trade deals between Russia and China now use either the ruble or the yuan, according to Russian Finance Minister Anton Siluanov.
Russia and India are trading oil in rupees. Less than four weeks ago, Banco Bocom BBM became the first Latin American bank to sign up as a direct participant of the Cross-Border Interbank Payment System (CIPS), which is the Chinese alternative to the western-led financial messaging system, SWIFT.
China’s CNOOC and France’s Total signed their first LNG trade in yuan via the Shanghai Petroleum and Natural Gas Exchange.
The deal between Russia and Bangladesh for the construction of the Rooppur nuclear plant will also bypass the US dollar. The first $300 million payment will be in yuan, but Russia will try to switch the next ones to rubles.
Russia and Bolivia’s bilateral trade now accepts settlements in Boliviano. That’s extremely pertinent, considering Rosatom’s drive to be a crucial part of the development of lithium deposits in Bolivia.
Notably, many of those trades involve BRICS countries – and beyond. At least 19 nations have already requested to join BRICS+, the extended version of the 21st century’s major multipolar institution, whose founding members are Brazil, Russia, India, and China, then South Africa. The foreign ministers of the original five will start discussing the modalities of accession for new members in an upcoming June summit in Capetown.
BRICS, as it stands, is already more relevant to the global economy than the G7. The latest IMF figures reveal that the existing five BRICS nations will contribute 32.1 percent to global growth, compared to the G7’s 29.9 percent.
With Iran, Saudi Arabia, UAE, Turkey, Indonesia, and Mexico as possible new members, it is clear that key Global South players are starting to focus on the quintessential multilateral institution capable of smashing Western hegemony.
Russian President Vladimir Putin and Saudi Crown Prince Mohammad bin Salman (MbS) are working in total sync as Moscow’s partnership with Riyadh in OPEC+ metastasizes into BRICS+, in parallel to the deepening Russia-Iran strategic partnership.
MbS has willfully steered Saudi Arabia toward Eurasia’s new power trio Russia-Iran-China (RIC), away from the US. The new game in West Asia is the incoming BRIICSS – featuring, remarkably, both Iran and Saudi Arabia, whose historic reconciliation was brokered by yet another BRICS heavyweight, China.
Importantly, the evolving Iran-Saudi rapprochement also implies a much closer relationship between the Gulf Cooperation Council (GCC) as a whole and the Russia-China strategic partnership.
This will translate into complementary roles – in terms of trade connectivity and payment systems – for the International North-South Transportation Corridor (INSTC), linking Russia-Iran-India, and the China-Central-Asia-West Asia Economic Corridor, a key plank of Beijing’s ambitious, multi-trillion-dollar Belt and Road Initiative (BRI).
Today, only Brazil, with its President Luiz Inácio Lula Da Silva caged by the Americans and an erratic foreign policy, runs the risk of being relegated by the BRICS to the status of a secondary player.

Beyond BRIICSS

The de-dollarization train has been propelled to high-speed status by the accumulated effects of Covid-linked supply chain chaos and collective western sanctions on Russia.
The essential point is this: The BRICS have the commodities, and the G7 controls finance. The latter can’t grow commodities, but the former can create currencies – especially when their value is linked to tangibles like gold, oil, minerals, and other natural resources.
Arguably the key swing factor is that pricing for oil and gold is already shifting to Russia, China, and West Asia.
In consequence, demand for dollar-denominated bonds is slowly but surely collapsing. Trillions of US dollars will inevitably start to go back home – shattering the dollar’s purchasing power and its exchange rate.
The fall of a weaponized currency will end up smashing the whole logic behind the US’ global network of 800+ military bases and their operating budgets.
Since mid-March, in Moscow, during the Economic Forum of the Commonwealth of Independent States (CSI) – one of the key inter-government organizations in Eurasia formed after the fall of the USSR – further integration is being actively discussed between the CSI, the Eurasia Economic Union (EAEU), the Shanghai Cooperation Organization (SCO) and the BRICS.
Eurasian organizations coordinating the counterpunch to the current western-led system, which tramples on international law, was not by accident one of the key themes of Russian Foreign Minister Sergey Lavrov’s speech at the UN earlier this week. It is also no accident that four member-states of the CIS – Russia and three Central Asian “stans” – founded the SCO along with China in June 2001.
The Davos/Great Reset globalist combo, for all practical purposes, declared war on oil immediately after the start of Russia’s Special Military Operation (SMO) in Ukraine. They threatened OPEC+ to isolate Russia – or else, but failed humiliatingly. OPEC+, effectively run by Moscow-Riyadh, now rules the global oil market.
Western elites are in a panic. Especially after Lula’s bombshell on Chinese soil during his visit with Xi Jinping, when he called on the whole Global South to replace the US dollar with their own currencies in international trade.
Christine Lagarde, president of the European Central Bank (ECB), recently told the New York-based Council of Foreign Relations – the heart of the US establishment matrix – that “geopolitical tensions between the US and China could raise inflation by 5 percent and threaten the dominance of the dollar and euro.”
The monolithic spin across western mainstream media is that BRICS economies trading normally with Russia “creates new problems for the rest of the world.” That’s utter nonsense: it only creates problems for the dollar and the euro.
The collective west is reaching Desperation Row – now timed with the astonishing announcement of a Biden-Harris US presidential ticket running again in 2024. This means that the US administration’s neo-con handlers will double down on their plan to unleash an industrial war against both Russia and China by 2025.

The petroyuan cometh

And that brings us back to de-dollarization and what will replace the hegemonic reserve currency of the world. Today, the GCC represents more than 25 percent of global oil exports (Saudi Arabia stands at 17 percent). More than 25 percent of China’s oil imports come from Riyadh. And China, predictably, is the GCC’s top trading partner.
The Shanghai Petroleum and Natural Gas Exchange went into business in March 2018. Any oil producer, from anywhere, can sell in Shanghai in yuan today. This means that the balance of power in the oil markets is already shifting from the US dollar to the yuan.
The catch is that most oil producers prefer not to keep large stashes of yuan; after all, everyone is still used to the petrodollar. Cue to Beijing linking crude futures in Shanghai to converting yuan into gold. And all that without touching China’s massive gold reserves.
This simple process happens via gold exchanges set up in Shanghai and Hong Kong. And not by accident, it lies at the heart of a new currency to bypass the dollar being discussed by the EAEU.
Dumping the dollar already has a mechanism: making full use of the Shanghai Energy Exchange’s future oil contracts in yuan. That’s the preferred path for the end of the petrodollar.
US global power projection is fundamentally based on controlling the global currency. Economic control underlies the Pentagon’s ‘Full Spectrum Dominance’ doctrine. Yet now, even military projection is in shambles, with Russia maintaining an unreachable advance on hypersonic missiles and Russia-China-Iran able to deploy an array of carrier-killers.
The Hegemon – clinging to a toxic cocktail of neoliberalism, sanction dementia, and widespread threats – is bleeding from within. De-dollarization is an inevitable response to system collapse. In a Sun Tzu 2.0 environment, it is no wonder the Russia-China strategic partnership exhibits no intention of interrupting the enemy when he is so busy defeating himself.
 

Why China & Its Trading Allies Are Well Placed To Topple The Dollar​

BY TYLER DURDEN
SUNDAY, MAY 07, 2023 - 03:30 PM
Authored by Wolfgang Munchau via NewStatesman.com,

Link: https://www.zerohedge.com/geopolitical/why-china-its-trading-allies-are-well-placed-topple-dollar

After decades meting out sanctions and financial coercion, the US may soon feel its grip on world trade beginning to loosen...

Change is good, but dollars are better, a US author of romance novels once wrote. A similarly light-hearted sentiment often inspires discussions about the future role of the US dollar as the world’s leading currency. The consensus view is that the dollar is safe. I think the consensus is wrong.
The dollar is the foundation of US global leadership, and the future of the dollar is therefore intricately linked to the debate about geopolitical fragmentation.
Brazil’s president, Luiz Inácio Lula da Silva, asked during his recent visit to China:
“Why should every country have to be tied to the dollar for trade?… Who decided the dollar would be the [world’s] currency?”
These are good questions.
The perhaps surprising answer is that he himself made that decision, together with the former leaders of the other “Brics” group of nations: Brazil, Russia, India, China and South Africa. Their economic-development models have succeeded but have also critically depended on the US dollar. During the period of hyperglobalisation – which I date from 1990 to 2020 – the US became the global importer of last resort, and let its trade deficit against the rest of the world increase. China and many other fast-developing economies built up savings in the currency they were paid in – the US dollar. They invested those savings into US bonds and other assets. The willingness of the US to absorb the world’s savings surpluses was the engine of globalisation. It ensured that the dollar would maintain its status as the world’s leading currency.
This mechanism explains what happened in the last 20 years, but it won’t tell us what will happen in the next 20. Yet the dollar fans assume that the geopolitical and geo-economic environment will stay broadly the same.
If the five Brics countries wanted to end their dependence on the dollar, they would have to do more than just choose another currency to trade in. It is not a menu choice, as Lula suggested during the same speech. He and his fellow Brics leaders would have to change how they interact with the rest of the world, and with one another.
China is key. In 2021, the country derived 43 per cent of its GDP from investment. This is approximately twice the level of the US and other Western countries. If China managed to shift some of its GDP to consumption, it would reduce its external trade surplus, as consumers tend to buy more imported goods. If you wanted to be less reliant on the US dollar, this is where you would have to start. As a second step, China and the other Brics countries could start trading more with each other, become more self-reliant in their supply chains, and set up their own financial infrastructure.
Changing economic models is hard. Three years after Brexit, the UK is still struggling to move away from a model that depended on close integration with the EU. Germany is finding it hard to maintain competitiveness without cheap Russian gas and with impaired global supply. It takes decades to build industrial production lines and supply chains. In China, there are an awful lot of vested political interests at the regional level, which rely on the investment boom continuing. If President Xi Jinping was really keen to extricate China from the US dollar, he would need to impose policies that would meet with resistance from regional leaders. In parallel, China would also have to start a long process of shifting at least part of its $3.2trn worth of foreign reserves held in dollars into other currencies. All of this would take a long time – one or two decades, perhaps.
The reason I think China, Brazil and others will ultimately go down that difficult route is the overuse of economic sanctions by the US. When the war in Ukraine began, the first decision taken by the Western alliance was to freeze Russia’s central-bank reserves held in the West. Previously, the US had threatened German firms involved with the Nord Stream gas pipeline, by cutting off their and their banks’ entire dollar cash-flows. If two people transact in dollars via their banks, at some point the transaction goes through US jurisdiction. This is why it is possible for the US to impose sanctions in the first place.
It was the Obama administration that began developing dollar-based economic sanctions as a primary policy tool. Dollar sanctions have since become a mainstay of US diplomacy. The most insidious version are so-called secondary sanctions. European companies, for example, were forced to comply with US sanctions against Iran because they would otherwise have lost access to dollar markets. On top of those financial sanctions, the US has become far more aggressive in the use of targeted trade sanctions. The Trump administration banned Huawei. The Biden administration has banned high-performance semiconductor sales to China. The EU is also now cautiously starting to subject trade policy to geopolitical considerations.
Sanctions can bring short-term policy successes, but they come with a long-term cost that is often not accounted for. That cost will be a reduced role for the dollar as the world’s largest currency. Sanctions give incentives to countries to reorganise their economies. We are seeing this happening in Russia right now.
Having the world’s leading currency is an “exorbitant privilege” – an expression often attributed to Charles de Gaulle. But if you use a privilege too often it ceases to be seen as a privilege and begins to lose its value. This is the mechanism I see at work here.
This is the non-fiction version of a story in which dollars are not better after all.
 

China Sells US Debt, Stockpiles Gold Amid De-Dollarization Trend​

Link: https://sputnikglobe.com/20230513/c...d-amid-de-dollarization-trend-1110316383.html

Yesterday
Gold bars - Sputnik International, 1920, 13.05.2023



Svetlana Ekimenko
All materialsWrite to the author

Amid the growing de-dollarization trend and increased awareness of the importance of diversification of foreign exchange reserves, starting in 2022, China began to sell US Treasury debt and use the dollars to stock up on gold.
China has been boosting its gold bullion reserves, while selling US Treasury debt, according to a report on Baijiahao.
China's Central Bank has been accumulating gold reserves, with the Asian powerhouse boasting official gold holdings of 66.76 million ounces - an increase of 260,000 ounces from the previous month. Official figures show that previously, between September 2019 and October 2022, China’s gold reserves remained unchanged, and only November 2022 saw Beijing start bulking up on the precious metal.
Gold has become a safe haven and go-to choice for investors, with spot gold up 0.3% at $2,045.79 per ounce on May 4, just $27 below the all-time high of $2,079.67 per ounce. Other countries besides China have also embraced the gold frenzy, with data from the World Gold Council revealing that in the first quarter of 2023, global central banks increased their gold holdings by a total of 228 tons.
The People's Republic of China (PRC) has been accumulating gold by selling off US Treasuries amid higher dollar interest rates and a volatile international environment, using the greenbacks to invest in the precious metal. US Treasury Department data released in March showed that China's holdings of Treasury debt had dropped to $859.4 billion in January 2023, declining for the sixth straight month.
Gold Bullion - Sputnik International, 1920, 22.04.2023
Asia
Why is China Boosting Its Gold Reserves?
22 April, 10:29 GMT

'Abuse' of Dollar’s Hegemony​

The trends cited in the report are all part-and-parcel of the drive to cut dependence on the US dollar and switch to national means of payment in international settlements. This trend is gaining steam across the globe, as Washington has "abused" the dollar’s hegemony, the media report underscored. Amid the self-inflicted damage from the sweeping anti-Russian sanctions that the West has cobbled together, the freezing of its Central Bank reserves, severing it from SWIFT, along with restrictions imposed on China's industries, many countries have become leery of relying on the greenback.
The US banking crisis earlier in the year amid the Federal Reserve continuing to raise interest rates to curb inflation, the ongoing bitter standoff in America's Congress over the debt ceiling, fears of a default with its global repercussions - all of this has prompted the urgency of shedding US government bonds, too. Against the backdrop of the chaotic situation with the US economy, only gold can be relied upon to grow in price, said the authors of the report on the Baidu-launched blog-style platform.
The global trend of de-dollarization is also paving the way for the boosted international standing of China's own currency - the yuan. Moscow has adopted the yuan as a reserve currency, while pledging to use the Chinese means of payment "between Russia and countries of Asia, Africa, and Latin America." China and Brazil recently struck an agreement to carry out trade and financial transactions directly, exchanging yuan for reals. Meanwhile, more and more countries, especially in the Global South, are mulling doing the same. China uses mutual settlements in national currencies with more than 30 countries of the world, Russian analysts have told Sputnik.
According to official data cited by Chinese media outlets, the country's yuan has become the world's fifth-largest payment currency, third-largest currency in trade settlement, and fifth-largest reserve currency.
Amid the clamor for using alternatives to the dollar in global trading, BRICS member states will debate introducing a common currency, South Africa's minister of international relations and cooperation recently stated. BRICS nations - Brazil, Russia, India, China, and South Africa - are set to meet for a summit on August 22 in Johannesburg, South Africa. The bloc has long been working on measures to reduce the share of the dollar in mutual payments, and the possibility of a single currency emerging in BRICS is not being ruled out by officials and analysts.
Burning dollar - Sputnik International, 1920, 07.05.2023
Economy
If China Ditches Dollar Amid 'Emerging New Trade Order,' Consequences for US 'Could Be Stark'
7 May, 10:54 GMT
 

The dollar’s international decline is becoming really obvious​

May 15, 2023 3:50 pm by IWB
by Simon Black

Link: https://www.investmentwatchblog.com/the-dollars-international-decline-is-becoming-really-obvious/
Depositphotos_129571846_XL-1-1024x600.jpg

On the morning of February 23, 1944, US President Franklin Roosevelt sent an important telegram to two of his key allies overseas– British Prime Minister Winston Churchill, and Joseph Stalin of the Soviet Union.
World War II was still raging. And while the allies had seized the upper hand, peace was more than a year away.

Surprisingly, though, Roosevelt didn’t write to his allies to discuss the war. He was already thinking about what the world would look like AFTER the war was over… and in the telegram, Roosevelt invited them to participate in a conference on “postwar economic collaboration”.
The United States was already the largest and most powerful economy in the world. America was the only major power that hadn’t been devastated by war. And, most importantly, the US was so RICH that they were the world’s primary creditor.
Britain, in fact, was heavily in debt to the United States… and at the time was actually negotiating to borrow even more money. So Churchill couldn’t exactly refuse Roosevelt’s invitation.
44 allied nations ultimately attended what would become known as the Bretton Woods Conference that took place in July 1944. This event famously established a new, post-war monetary system in which the United States and US dollar became the epicenter of global commerce and finance.
What a lot of people don’t know is that a sort of ‘pre-conference’ took place the month before, in June 1944, in Atlantic City.
That site was chosen specifically for its cooler weather. British economist John Maynard Keynes suffered from a terrible infection in his heart valves, and hot weather made him feel much worse.
Keynes even pleaded to senior Treasury official Harry Dexter White, “For God’s sake do not take us to Washington. . .” where the weather was sweltering in the summer.
In the end they settled on Atlantic City, specifically for Keynes’s health. And the first meeting to shape the new global financial system even took place on the beach!

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Despite the balmy setting, however, Keynes was a thorn in the side of the American delegation; he was adamantly opposed to a post-war economic system in which the US dollar had total dominance.
As an alternative solution, Keynes advocated for competing reserve currencies… as well as a special central bank reserve currency that he wanted to call the ‘bancor’.
In the end, though, Keynes was overruled. The United States was the only country capable of calling the shots, and the rest of the world accepted America’s new dominance.
It’s been this way for the past 80 years. Even today, the US dollar continues to be used for the the majority of cross border trade, foreign reserves, and international financial transactions.
But as I have written many times before, this status is not written in stone. And it’s beginning to change very rapidly.
One very recent development is that, in China, the yuan just overtook the US dollar as the most widely used currency for international trade.
China has essentially been the manufacturer to the world for decades and does business with nearly every country on the planet.

Yet, up until last month, most of China’s trade was conducted in US dollars. If a Chinese manufacturer sold machinery to a Brazilian company, for example, or if a Chinese producer bought cobalt from Indonesia, those transactions traditionally took place in US dollars.
Over time, however, China has been gradually using its own currency for trade. And other countries have been happy to go along.
So now, for example, China might buy cobalt from Indonesia using yuan instead of US dollars.
This means that other countries will start holding more and more yuan to trade with China… and hence fewer and fewer US dollars.
This is not an accident. Back in 1944, the US was very aggressive in whipping the rest of the world into accepting the US dollar. China is following the same playbook– aggressively rallying other countries against the US dollar and towards the yuan.
And it’s really becoming obvious.
After a recent visit to China, French President Macron urged Europe to move towards independence from US foreign policy, and to rely less on the US dollar.
France… which is literally America’s oldest ally, one of the largest economies in Europe, and a key leader of the European Union, is pushing against the dollar.
In addition, China and France recently completed their first yuan-settled LNG (liquified natural gas) trade. Again, this shows a shift from France solely using the US dollar for foreign trade, to also using the yuan.
Just before that, China and the United Arab Emirates made history with the first ever LNG trade settled in yuan. Then Brazil and China reached a deal to ditch the US dollar and trade in their own currencies.
Malaysia’s Prime Minister has proposed an “Asian Monetary Fund” to reduce dependence on the US dollar. Malaysia also struck a deal with India to trade in the Indian rupee.
India and Russia are settling oil deals without US dollars.
Then there is “BRICS”— Brazil, Russia, India, China, and South Africa which account for about 40% of the global population and a quarter of the global economy.
At a Bretton Woods-esque summit planned for this summer, BRICS will discuss creating a new currency, potentially pegged to gold, which they can use to trade.
Most importantly, Saudi Arabia is open to breaking the petrodollar and to start selling oil in yuan; on top of this, Saudi’s crown prince recently stated that he was “no longer interested in pleasing the US”.

The pace at which countries are turning away from the US dollar reminds me of the Hemingway line I mentioned recently about going broke: “gradually, then suddenly.”
I’ve been warning readers about the decline of the dollar’s reserve status for over a decade. And it may have seemed controversial back then that the dollar could be dethroned.
Now it is blatantly obvious. This is no longer a prediction, it’s happening in front of our very eyes.
 

Three Lies They’re Telling You about the Debt Ceiling​

by Ryan McMaken | Mises Institute
May 23rd 2023, 2:25 pm

Link: https://www.infowars.com/posts/three-lies-theyre-telling-you-about-the-debt-ceiling/

The next time Joe Biden or Janet Yellen go on television to insist the US has never defaulted, know that you are being lied to.

Negotiations over increasing the federal debt ceiling continue in Washington. As has occurred several times over the past twenty years, Republicans and Democrats are presently using increases in the debt ceiling as a bargaining chip in negotiating how federal tax dollars will be spent.

Most of this is theater. We know how these negotiations always end: the debt ceiling is always increased, massive amounts of new federal debt are incurred, and federal spending continues its upward spiral. In fact, since the last time we endured a major debate over the debt ceiling—back in 2013—the national debt has nearly doubled, soaring from $16.7 trillion ten years ago to $32 trillion in 2023. Over that same period, federal spending has increased more than 80 percent from $3.4 trillion in fiscal year 2013 to $6.2 trillion in fiscal year 2022.


So here we are again with policymakers essentially discussing how long it will take for the national debt and federal budget to double again. As far as Washington is concerned, that’s all fine. The debt ceiling will rise sizably. We know this because what really matters—as far as DC policymakers are concerned—is that the taxpayer gravy train never stops. Equally important is that the federal government not default on any of its massive debt to ensure continued access to cheap debt—and thus massive amounts of deficit spending—now and forever.

To take this narrative at face value, however, we have to buy into some big myths that policymakers are quite enthusiastic about repeating. These lies persist because the regime needs to convince the voters and the taxpayers that no matter what happens, no major changes to the tax-and-spend status quo can ever be allowed to occur. Let’s look at three of those myths now.

One: The Republicans Want Austerity
In Washington, when politicians use the word “cut,” they usually are talking about small reductions in the rate of increase in spending. For example, if Pentagon spending has been increasing at 2 percent per year (which has indeed been the average for the past decade) then an increase next year of 1.5 percent will be denounced by some as a “cut.” In reality, it’s not a cut at all, of course. Spending has increased. But in the minds of Washington policymakers, taxpayer money is rightfully theirs, so any slowdown in the flow of free money is branded a “cut.”

That’s the basic premise of what we’re seeing now when advocates of limitless increases of the debt ceiling bemoan “cuts” to Social Security or any other welfare program. In the current debate, the Republicans say they want “less spending than last year” for the 2023 fiscal year, and then a “cap” on spending at 1 percent increases in each year for the next ten years.

But before anyone claims that this is indeed some sort of meaningful “cut” let’s look at the federal outlays over the past twenty years (the 2023 FY total is CBO’s forecast):



outlays
After some moderation in spending during the second Obama term, spending again accelerated during the Trump years as then surged to new off-the-charts highs as Trump doubled down on massive spending increases during the Covid panic. Naturally, this surge continued during the Biden years, and spending now remains well above trend. Indeed, to bring spending back to the pre-2019 trend would require massive budget cuts totaling more than a trillion dollars to the annual budget

That’s certainly not in the cards right now. Rather, the Republicans are seeking a tiny reduction in spending from the CBO 2023 estimate of $6.4 trillion down to slightly below 2022’s spending of $6.27 trillion. Even with this slowdown, there is no danger of the 5-year moving average falling below where it was in 2022.

According to the GOP plan, after the proposed miniscule reduction for 2023, it’s back to annual increases of one percent. But, it’s important to remember that this “cap” on annual increases to one percent is in no way binding on future Congresses. Congress can—and will, if history is any guide—forget about any previous agreement and increase spending to meet perceived “needs” at any time.

Rather, the “cuts” we keep hearing about—even if the GOP is successful—are likely to look like the so-called “sequestration” we kept hearing about back in 2013. That was supposed to usher in an age of austerity. Instead, federal spending and debt has nearly doubled in the decade since.

In other words, any claim that Republicans want to cut spending is true in only the most narrow short-term sense. Spending remains and will likely continue to remain, far above even Trump’s huge (at the time) 2019 budget increases. The post-Covid mega-spending isn’t going away.

Two: The US Has Never Defaulted

Central to the debt-ceiling and budget debate is the often-repeated claim that negotiations must be concluded immediately to ensure that the US does not miss payments on any of its debts. After all, we are told, the US has never missed a payment.

This is an out-and-out lie. The US has absolutely, indisputably defaulted before. This began in in the wake of the American Revolution when the US defaulted on domestic loans. After the new constitution was in place in 1790, the federal government renegotiated past debt at less favorable terms for investors. That’s a default.

Then there was the Greenback default of 1862. The original greenbacks were $60 million in demand notes which were redeemable in specie. Less than five months later, in January of 1862, the US Treasury defaulted on these notes by failing to redeem them on demand.

Perhaps the most egregious case was the Liberty Bond default of 1934. The US was contractually obligated to pay back its debts on these bonds in gold. Franklin Roosevelt decided to default on the whole of the domestically-held debt by refusing to redeem in gold to Americans and devaluing the dollar by 40 percent against foreign exchange. The US refused to make good on its end of these bond contracts. That was also a default.

Then there was the short default of 1979. As Jason Zweig noted in 2011:

In April and May 1979, amid computer malfunctions, heavy demand from small investors and in the wake of Congressional debate over raising the debt ceiling, the U.S. failed to make timely payments on some $122 million in Treasury bills. The Treasury characterized the problem as a delay rather than as a default. While the error affected only a fraction of 1% of the U.S. debt, short-term interest rates—then around 9%—jumped 0.6 percentage point and the U.S. was promptly sued by bondholders for breach of contract.
So, the next Time Joe Biden or Janet Yellen go on television to insist the US has never defaulted, know that you are being lied to.

Three: Default Is the End of the World

Any talk of default is sure to bring predictions of economic devastation. Those who have lived through a financial crisis or two will know how this works. As soon as signs of trouble in the economy appear, the regime lines up “experts” to tell us that unless the government is empowered to spend endlessly on bailouts and “stimulus,” then the economy will collapse, unemployment will surge, and hell on earth will ensue.

The taxpayers certainly heard this repeatedly in 2008 and 2009 as the regime insisted it must be free to hand over trillions of dollars in bailout funds to wealthy bankers and auto makers and financiers. We were told that the central bank must be able to print up trillions of dollars so as to buy up government bonds and mortgage backed securities to pad the balance sheets of the investor class. We were told this would “fix” the economy.

Naturally, when the recession turned out to be the worst since 1982, the “experts” then said—without any evidence whatsoever—that things “would have been worse” without all their bailouts.

We’re hearing the same thing now about possible default on the $32-trillion national debt. “Give us new debt ceiling increases with no strings attached” appears to be the constant refrain. Without this carte blanche, we are told, there will be economic catastrophe.

But it is all the same scare tactics the regime trots out every time it wants a new series of bailouts or immense amount of new spending. Trump hysterically said the same thing when he demanded passage of his $2.2 trillion covid “rescue plan.” We’re told there is no alternative, and any opposition is “reckless.” Rather, we must approve any and all new spending now and deal with the consequences later. But “later” never comes because the strategy is always to just kick the can further down the road. To not do so, the experts insist, will destroy the economy.

Well, the time has come to start doubting this narrative and demand that the federal government start being more honest about its runaway and unpayable debt. And yes, today’s massive federal debt is unpayable. It’s not even manageable. For an example of how it is unmanageable, just look at how interest on the debt is gradually consuming all other federal spending. With interest rates rising, debt service is ballooning. According to an analysis from the Committee for a Responsible Federal Budget:

Net interest will surpass defense spending by 2028, Medicare spending by 2044, and Social Security spending by 2050, becoming the largest single line item in the budget. By 2053, net interest will consume approximately 7.2 percent of GDP – nearly 40 percent of federal revenues.
It’s clear at this point that the only strategy the federal government the Federal Reserve have for dealing with this is to inflate away the dollar with easy money so as to bring interest rates back down and pay back the debt in devalued dollars. Paying back debts with devalued dollars is a type of default, of course, but this method helps hide the fact. But make no mistake: when the US government chooses to manage its debts by inflating away the dollar, it is defaulting.

A more honest and rational approach would be to explicitly default. Rather than trying to dishonestly inflate away the debt obligation, a less deceptive federal government would simply admit that it can only afford to pay back its debt at some reduced amount, say 90 cents on the dollar, or less. Naturally this would cause interest rates to surge as has occurred in the past when the US has defaulted. This, however, would simply be the process of bringing interest rates more into line with the real risks that go with investing in government debt.

The current political status quo, however, is built around protecting investors—rather than the taxpayers who ultimately pay all the billsfrom risk. This method of turning debt into inflation is attractive to governments and their Wall Street enablers because it shifts the burden of runaway spending to ordinary savers and consumers who pay the real price of de facto inflationary default through price inflation, unaffordable homes, stagflation, and falling real wages.

When the experts who oppose any sort of explicit default insist that default would bring disaster, what they really mean is that it would bring disaster for their friends on Wall Street and in the government. The experts prefer the status quo which is instead a slow-motion inflationary disaster that’s playing out in the household budgets of ordinary Americans.
 

More than 30 countries want to join the BRICS​

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Published
2 days ago on May 24, 2023
By Newsroom

Link: https://moderndiplomacy.eu/2023/05/24/more-than-30-countries-want-to-join-the-brics/
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https://moderndiplomacy.eu/2023/05/24/more-than-30-countries-want-to-join-the-brics/#
South Africa’s representative to BRICS Ambassador Anil Sooklal has hinted that the grouping is set to grow bigger this year with more than 30 countries having formally and informally applied to join the alliance.
The latest report indicates that the countries ready to join the BRICS alliance are Afghanistan, Algeria, Argentina, Bahrain, Bangladesh, Belarus, Egypt, Indonesia, Iran, Kazakhstan, Mexico, Nicaragua, Nigeria, Pakistan, Saudi Arabia, Senegal, Sudan, Syria, the United Arab Emirates, Thailand, Tunisia, Turkey, Uruguay, Venezuela, and Zimbabwe.
The development will come as a blow to the United States of America and other Western nations, which will see their GDPs dwindle to that of the BRICS.
Market watchers believe the move by Zimbabwe is aimed at neutralising an insatiable appetite for the US$ among its citizens, a development which authorities blame for continued economic shocks.
BRICS is an acronym for the powerful grouping of the world’s leading emerging market economies, Brazil, Russia, India, China and South Africa. The BRICS mechanism aims to promote peace, security, development and cooperation.
Plans by the community to replace the US$ in international trade are set to reach a new high when discussions on the feasibility of introducing a common currency take place at a summit to be held in South Africa later this year.
 

Argentina dumps US dollar for Chinese yuan: How nations are jumping on the de-dollarisation bandwagon​

Link: https://www.firstpost.com/explainer...on-countries-currency-for-trade-12519242.html

Argentina has joined Brazil to be the latest south-American nation to dump the dollar and trade in the Chinese yuan. Nations across the world, including India, are indulging in de-dollarisation – a push back against the American currency’s hegemony across the world​

FP Explainers April 28, 2023 11:34:39 IST
Argentina dumps US dollar for Chinese yuan: How nations are jumping on the de-dollarisation bandwagon

China and Russia are leading the pack in the de-dollarisation drive. Other countries too are dumping the dollar now. Image used for representational purposes/Freepik
The king of currency, the dollar, is on shaky ground. In this past one year, there’s a growing trend of countries sidestepping the US dollar and choosing to use their own local currencies for bilateral trade.
The de-dollarisation process – moving away from trading in the dollar and instead choosing local currency – has received a boost after the Russia-Ukraine war and as Washington’s tensions with Beijing rise even further.
In South America, China’s yuan has made greater inroads. After Brazilagreed to trade with China in the local currency, Argentina, on Wednesday, too agreed to the same. The South American country announced that it would pay for Chinese imports in yuan rather than dollars, in a measure to save the country’s dwindling dollar reserves.

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As per a Reuters report, Buenos Aires said that it aims to pay $1 billion of Chinese imports in yuan instead of dollars and thereafter around $790 million of monthly imports will be paid in yuan.
As an increasing number of countries move away from the dollar, let’s take a better look at what exactly is de-dollarisation, which countries are practising it and is it a viable strategy.

De-dollarisation explained
Before we delve into de-dollarisation, one has to understand how the dollar became the acknowledged currency for international trade.
After World War II, the US dollar replaced the British pound as the dominating currency worldwide. In 1944, the Bretton Woods Agreement established the dollar as the world’s reserve currency. The original Bretton Woods Agreement is dead, but the dollar remains the international reserve currency.
This means that contracts for commodities like crude oil and natural gas are almost always priced in dollars. This, in turn, gives Washington economic powers beyond belief. It is because of the dominance of the dollar, or greenback as it is called, that Washington has been able to freeze half of Russia’s foreign currency reserves and also ban it banks from the SWIFT payment system in the aftermath of Vladimir Putin’s invasion of Ukraine in February 2022.
Argentina dumps US dollar for Chinese yuan How nations are jumping on the dedollarisation bandwagon
Graphic: Pranay Bhardwaj
Now, de-dollarisation is the process of reducing dependency on the dollar and effectively weakening US’ global position. Several countries are undertaking this process because they would like to call a halt to dollar hegemony. They believe that the dollar has long given Washington a disproportionate amount of influence over other economies and they would like to put a stop to it.
If you still don’t understand de-dollarisation, an influencer on TikTok has explained it, using the famous movie Mean Girls as a reference.

Countries wanting to unseat the dollar
While de-dollarisation has picked up pace in recent times, it is not a new trend. There are several countries that have been calling for reducing reliance on US dollar for decades.
The greenback has been facing competition for long. In fact, in 2011, Japan and China agreed to dump the dollar and trade with their respective currencies.
China and Russia in recent times have pushed more aggressively to unseat the dollar. Both countries, which are perceived as anti-US, are trading in their local currency with one another. When Chinese President Xi Jinping visited Moscow in March, his Russian counterpart Vladimir Putin revealed that two-thirds of the countries’ bilateral trade is already conducted in the rouble and renminbi.
Argentina dumps US dollar for Chinese yuan How nations are jumping on the dedollarisation bandwagon
US dollar and China yuan notes. Reuters
“It is important that our national currencies are increasingly used in bilateral trade“, Putin said. “We should continue promoting settlements in national currencies, and expand the reciprocal presence of financial and banking structures in our countries’ markets”.
Also read: Xi Jinping in Moscow: Will Chinese president convince 'good old friend' Vladimir Putin to end war in Ukraine?
The Russian leader added, “We support using Chinese yuan in transactions between the Russian Federation and its partners in Asia, Africa and Latin America”.
A week after Xi Jinping visited Russia, China announced that it used yuan to buy liquefied natural gas (LNG) from the UAE.
Also read: Petrodollar vs Petroyuan: Can China overthrow US in the global oil market?
Earlier in the month, Brazil president Luiz Inacio Lula da Silva also took aim at the dollar. Speaking during his visit to China, the veteran leader said, “Why should every country have to be tied to the dollar for trade? Who decided the dollar would be the (world's) currency?”
Interestingly, Brazil and China trade in the yuan and it was just reported that the yuan had surpassed the euro to become Brazil’s second-largest international reserve currency after the US dollar.
A Bloomberg report dated on 26 April stated that China’s slow move away from the dollar had reached a milestone. The yuan usage in its cross-border transactions had jumped ahead of the dollar for the first time in March.
But it’s not just Russia and China that are steering clear of the dollar. Iran, which is sanctioned by the US, is also carrying out trade with Russia and China in the local currency. Saudi Arabia, one of the biggest exporters of crude is also mulling trade with China in yuan.
It has also been reported that the BRICS collective (Brazil, Russia, India, China and South Africa) is working on a creating a new currency to facilitate trade. The new financial agreement could be seen as soon as in August when the countries meet for their annual summit in South Africa. Alexander Babakov, the deputy chairman of the State Duma, was then quoted as saying that the BRICS nations are in the process of creating a new medium for payments — established on a strategy that “does not defend the dollar or euro”.
Countries in Southeast Asia are also de-dollarising. India has been slowly moving away from the dollar. Just recently, Bangladeshbecame the 19th country to agree to bilateral trade in Indian rupees. Other countries that have agreed to trade with India in rupee is Russia, Singapore, Sri Lanka, Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Seychelles, Tanzania, Uganda and the United Kingdom.
Argentina dumps US dollar for Chinese yuan How nations are jumping on the dedollarisation bandwagon
Graphic: Pranay Bhardwaj
The ASEAN collective is also trying to reduce dependence on the US Dollar, Euro, Yen, and British Pound from financial transactions and move to settlements in local currencies.
Malaysia is also advocating de-dollarisation. Prime Minister Anwar Ibrahim met with China’s Xi Jinping on 31 March and it’s reported that the two discussed plans to create an ‘Asian Monetary Fund’ and weaken the US dollar hegemony. A Bloomberg report quoted Malaysia’s prime minister Anwar Ibrahim as saying, “There is no reason for Malaysia to continue depending on the dollar.”

Even countries in the African continent are dedollarising. Kenya has signed an agreement with Saudi Arabia and the UAE to buy oil in March, using the shilling – the country’s local currency. This is because Kenya’s dollar reserves are running low.
As the Financial Times acknowledged in a March report that these were historic developments and part of a transition to a “multipolar currency world“.The chair of the Financial Times’ editorial board and US editor-at-large, Gillian Tett, wrote that “US banking turmoil, inflation and looming debt ceiling battle is making dollar-based assets less attractive”.

Challenges to de-dollarisation
But even as countries move away from the dollar, the US currency isn’t going away any time soon. As the recent International Monetary Fund report stated that the dollar still plays “an outsized role” in global markets despite the US economy representing a shrinking share of global output over the last two decades.

Moreover, it doesn’t seem to be a longterm viable option. The American Institute of Economic Research said this strategy is not foolproof. Moving away from an established currency like dollar will impact a country’s networking effect and create substantial barriers.
India’s very own Kumar Vivek, deputy commissioner at the ministry of finance, also said that there are challenges to overcome to move away from the dollar. He said policymakers must be vigilant and take appropriate measures to safeguard financial stability.
Secondly, to replace the dollar with another currency, it needs to have a certain degree of stability, liquidity, and acceptability. Currently, no single currency fully meets these criteria, although the euro and the Chinese yuan have made strides in this regard.
Last but not the least de-dollarisation could result in increased volatility in currency exchange rates, particularly during the initial phases of transition. Exchange rate fluctuations could impact trade, investment, and capital flows, particularly for countries with less developed financial markets or limited policy tools to manage exchange rate volatility
Also, the most pertinent question that remain in the de-dollarisation debate is which currency replaces the US dollar. Will it be the yen, the euro or even the rupee? That, we think, only time will tell.
 

Joe Biden’s America: Price Of Ketchup, Mustard And Relish Skyrocket​


Women System May 29, 2023

Link: http://www.womensystems.com/2023/05/joe-bidens-america-price-of-ketchup.html

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Joe Biden’s America.
The price of ketchup, mustard and relish have skyrocketed in the last week.
Food prices have steadily climbed over the last two years thanks to Joe Biden’s tax-and-spend policies.

Food prices are up nearly 12% over the past year.
That's Joe Biden's legacy.
— Tom Cotton (@TomCottonAR) February 14, 2023

Biden has repeatedly downplayed the record increases in food prices.
The cost of eggs, poultry and beef have all increased thanks to Bidenflation.
And now the price of mustard, ketchup and relish have all increased…just in time for the Memorial Day holiday weekend.
Enjoy!
CNN reported:
A 32-ounce bottle of ketchup went from $4.08 on average the week of May 16, 2022, to $5.22 in the week of May 15, 2023, according to Datasembly, which measures weekly changes in grocery prices at over 150,000 US stores for its Grocery Price Index. That’s a jump of nearly 28%.
Other condiments are also pricey. A 20-ounce bottle of mustard rose about 13% in that time period, and 26-ounce bottles and jars of relish jumped about 12%.
Proteins were more reasonably priced, with beef hot dog prices going up just 3%. And if you like your burgers plain, sans bun, you’re in luck: The price of 80/20 fresh ground beef hamburgers was essentially flat. Together, hamburger buns, hot dog buns, relish, mustard, burgers, hot dogs and, of course, ketchup cost nearly 9% more this year than last.
 
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