DOLLAR, RUBLES, YUAN & GOLD

The following was submitted by An Acres of Diamonds Man. It explains how things are changing in the world market place. Change is upon us a Nation, and as a people.

May, 2022            Suffering from U.S. and EU sanctions, Russia made a surprise move—its central bank fixed the price of 5,000 rubles to a gram of gold. Few Western investors or executives noticed.            Then, Russia sprang its trap. Its finance ministry announced that it would require payment for oil, natural gas and other of its significant exports in rubles.            By tying the ruble to gold, Russia pushes to make its currency independent of comparisons to the U.S. dollar. Requiring countries to buy its desired major exports with the ruble is an attempt to create an alternative global financial path and also to increase the amount of gold it holds.            “It’s sending [other countries] a signal that it’s time to start destroying western monopoly and the financial strength of the dollar.” Russia isn’t alone in its desire. “China has been explicit” in its desire to displace the dollar and make the yuan more central.            China is taking preliminary measures to defend their state-owned assets against financial sanctions similar to those the U.S. launched against Russia. Regulators from China’s central bank met with domestic and foreign banks to discuss protecting its overseas against possible U.S.-led sanctions, which could be triggered if China were to exert military force against Taiwan, a vulnerable island that China considers its territory.            Get ready for a new round of attempts by Russia and China to displace the U.S. dollar as the world’s reserve currency—the trusted default for financial transactions everywhere.            The desire to supplant the U.S. dollar as the world’s reserve currency is not new. “Historically the European Union wanted to do this,” said Christopher Mitchell, assistant professor of politics and international relations at Mt. Holyoke College. “I think there’s a global sense that the euro isn’t ready for that role until the EU supports it with a fiscal and political union. As long as they have these existential questions even as Europeans want to make a bid for it, there are too many questions about the EU and the Eurozone.”            Today, virtually all international transactions occur in U.S. dollars – everything from agriculture and ammunition to credit cards and oil barrels. This gives the United States some unique advantages: its national debt is denominated in its own currency and it’s generally cheaper to borrow in greenbacks than in rubles or yuan. If the dollar lost its special status as the “world’s reserve currency,” the price of its imports would rise and the price of its exports would fall.            And Americans would be forced to export in order to earn foreign currencies to pay its national debt, which has already topped $30 trillion.            “The stronger a nation’s currency, the cheaper imports are going to be from other countries,” Giacomo Santangelo, a senior lecturer of economics at Fordham University said. “Their currency goes  further in the world market.” Companies and individuals see their purchasing power go further. The country can also borrow at lower interest rates, which is critical for the U.S. given its penchant for national debt financing.            Neither Russia nor China, nor even the EU, is yet in a position to displace the supremacy of the dollar. Still, a series of unfortunate events could quickly dethrone king dollar. “The dominant role of a global currency is on a tipping point model,” say Mitchell, who points to a time when the British pound served in the role until the 1950s, when the country was perceived as “too weak to support a dominant currency.” The British pound never recovered its global role.            There wouldn’t be a slow transition, more an “accumulation of dissatisfactions with the current order that don’t manifest in change until they suddenly do,” Mitchell said. “Certainly, China and Russia and some other countries would love to displace the dollar’s central role. That was one of the big dangers of the U.S. engaging in central bank sanctions [on Russia]. There are little pushes toward actors becoming less comfortable with the central role of the dollar.”   From the Scriptures for America Dragon Slayer newsletter, 2022, Volume 6.