The War to topple US and West sanctions and the US dollar

11 posts / 0 new
Last post
iyraste1313
The War to topple US and West sanctions and the US dollar

At their conference in Tehran, the three leaders forged an economic-strategic pact to create measures for fighting American sanctions. One measure approved was to contract all business deals among Russia, Iran and Turkey, including gas and oil, in local currencies instead of American dollars. The same rule would apply to banking transactions. Russian Foreign Minister Sergei Lavrov first raised this proposal when he remarked that Russia and Turkey could conduct their bilateral trading deals to their national currencies instead of the US dollar.

US and Israel paid special note to the trilateral decision reached in Tehran to convert the massive projects for Syria’s post-war recovery (after Iran had solidified its military foothold there) into a back-door hatch for escaping US sanctions against Iran. During the Obama presidency, Oman and Abu Dhabi served this purpose; under Donald Trump, it will pass to Damascus, with the added benefit of  protection from the deepening Russian-Iranian-Syrian military cooperation.

...from Debka

This thread is long in the making....When the forces to eliminate the US dollar are strong enough, US dollar demand will crash, along with it its price...this will explode inflationary effects, bringing down the global financial system.....

iyraste1313

ARKADY SAVITSKY | 15.09.2018 | BUSINESS

Russia’s Eastern Economic Forum Wrap Up: De-Dollarization Tops Agenda

70% of all world trade transactions account for the dollar, while 20% are  settled in the euro, and the rest falls on the yuan and other Asian currencies. The dollar value is high to make the prices of consumer goods in the US artificially low. The demand for dollars allows refinancing the huge debt at low interest rates. The US policy of trade wars and sanctions has triggered the global process of de-dollarization. Using punitive measures as a foreign policy tool is like shooting oneself in the foot. It prompts a backlash to undermine the dollar’s status as the world reserve currency – the basis of the US economic might. The aggressive policy undermines the US world standing to make it weaker, not stronger.

Michael Moriarity Michael Moriarity's picture

iyraste1313 wrote:

This thread is long in the making....When the forces to eliminate the US dollar are strong enough, US dollar demand will crash, along with it its price...this will explode inflationary effects, bringing down the global financial system.....

Is it your hypothesis that Russia, China, Iran and others have the intention of "bringing down the global financial system"? I can understand and believe that they want to undermine the predominant position of the U.S. dollar, but crashing the world financial system would be a disaster for themselves as well, would it not?

Mr. Magoo Mr. Magoo's picture

I have to assume that the United States benefits when the USD is used as the "lingua franca" of international commerce.

And it makes complete sense if other countries would like to enjoy similar benefits if their currency is used in international commerce.

But is there a specific reason that countries choose to use the USD instead of their own currency, or why they would be better off buying oil in Yuan, instead of their own currency?  I have to assume that if using a different currency would benefit them, they'd have been doing it by now.

Pogo Pogo's picture

We buy gloves from Malaysia and pay in US dollars.  We understand US dollars and it interacts with Canadian currency.  They undersand how it reacts with their currency.  Indeed though we buy stuff from all over our costing sheet has basically two currencies Canadian and US.  So when we are pricing our items for the next quarter someone will look in depth at the US currency and then come up with a safety margin that we will add to our costs ($.05 is often the number) which provides a comfort zone.  The more currencies you add the difficult this step becomes the more likely the uncertainty grows (read extra costs passed along).

Secondly, you have to buy currency.  A common exchange markup for US dollars is 1-2%.  For other currencies the markup grows.  

I can see other countries pushing to oust the US dollar and I think it would be a good thing for the world not to have one country having a dominant position.  I just don't see it happening easily.

Mr. Magoo Mr. Magoo's picture

Quote:
We buy gloves from Malaysia and pay in US dollars.

Because we insist, or because they insist?

iyraste1313

crashing the global system is still just seen as a theory, though the collapsing bubbles attest to the fact that it is real.....

What Russia, China, Turkey and Iran are more concerned about is the weapon being used by the present US dollar based system and US Government to sanction and tariff, them and their allies that buy Russian etc. energy and mass industry produced goods......

Also these countries have real economies, which means they could readily become more self reliant, as well as intertrade...so their plans to establish financial mechanisms outside US control.

Collapsing the global financial system refers to financial institutions, not economics.

Pogo Pogo's picture

They insist.

 

NDPP

Perhaps it should also be understood that the US prints 37 billion a day in a fiat currency which is essetially an IOU made of  paper with pictures of presidents, unbacked and uncollateralized by anythng except the country's escalating multi-trillion dollar debt. There is a reason why both Russia and China now hold huge gold reserves and are ditching the dollar as fast as they can. 

Mr. Magoo Mr. Magoo's picture

The Bureau of Engraving and Printing prints 37 million notes a day with a value of around $696 million dollars.

Also worth noting that no country remains on a gold standard.  Sure, some countries collateralize their failing currency by backing it with a six-month old "cryptocurrency" that is itself collateralized by some gunky oil that they can't even seem to extract any more, but fortunately these countries are few and far between.

kropotkin1951 kropotkin1951's picture

Like many things in our economy the creation of money is not an exclusive government function and in fact most money in the modern economy is in the form of bank deposits, which are created by commercial banks. I went in and borrowed money for my mortgage. Voila, the bank and I created money that did not exist until I borrowed it. Printing money is a small part of the equation in the modern world. I suspect that Obama's use of quantitative easing to create scads of new US currency might have made other countries around the world think about using a more stable currency.

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/201...