The World Is Dedollarizing

Peter Koenig

Global Research

What if tomorrow nobody but the United States would use the US-dollar? Every country, or society would use their own currency for internal and international trade, their own economy-based, non-fiat currency. It could be traditional currencies or new government controlled crypto-currencies, but a country’s own sovereign money. No longer the US-dollar. No longer the dollar’s foster child, the Euro. No longer international monetary transactions controlled by US banks and – by the US-dollar controlled international transfer system, SWIFT, the system that allows and facilitates US financial and economic sanctions of all kinds – confiscation of foreign funds, stopping trades between countries, blackmailing ‘unwilling’ nations into submission. What would happen? – Well, the short answer is that we would certainly be a step close to world peace, away from US (financial) hegemony, towards nation states’ sovereignty, towards a world geopolitical structure of more equality.

We are not there yet. But graffities are all over the walls signaling that we are moving quite rapidly in that direction. And Trump knows it and his handlers know it – which is why the onslaught of financial crime – sanctions – trade wars – foreign assets and reserves confiscations, or outright theft – all in the name of “Make America Great Again”, is accelerating exponentially and with impunity. What is surprising is that the Anglo-Saxon hegemons do not seem to understand that all the threats, sanctions, trade barriers, are provoking the contrary to what should contribute to American Greatness. Economic sanctions, in whatever form, are effective only as long as the world uses the US dollar for trading and as reserve currency.

Once the world gets sick and tired of the grotesque dictate of Washington and the sanction schemes for those who do no longer want to go along with the oppressive rules of the US, they will be eager to jump on another boat, or boats – abandoning the dollar and valuing their own currencies. Meaning trading with each other in their own currencies – and that outside of the US banking system which so far even controls trading in local currencies, as long as funds have to be transferred from one nation to another via SWIFT.

Many countries have also realized that the dollar is increasingly  serving to manipulate the value of their economy. The US-dollar, a fiat currency, by its sheer money mass, may bend national economies up or down, depending in which direction the country is favored by the hegemon. Let’s put the absurdity of this phenomenon in perspective.

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The Deadlock between China and the West is taking its Toll on New Zealand’s Economy

Sofia Pale
New Eastern Outlook

 

Throughout 2018, the trade war mounted between China and the US. This is part of a larger standoff between China and the English-speaking world led by America, which is not only putting obvious economic interests at stake, but is also creating security issues and questioning who should possess global leadership in technology. The states who are getting involved in this dispute on the US side will suffer significant losses due to the disruption of long-established economic relations with China. One of these states is New Zealand.

New Zealand has traditionally been seen as an important player in the Anglosphere and a close partner of the United States. The two countries are engaged in close economic, political and military cooperation, which dates back to the Second World War. In 1951, along with the United States and Australia, New Zealand signed the ANZUS Security Treaty, created to oppose communist insurgencies in South-East Asia and the USSR which was supporting these movements. Later, New Zealand–United States relations began to deteriorate due to widespread protests against the Vietnam War in New Zealand, and also because New Zealand refused to host nuclear weapons on its territory. Then a new period began, relations started to thaw, and in 2012, New Zealand and the US signed the Washington Declaration, which was also aimed at strengthening the countries’ defense relations.

[...]

It would appear that the current trade war between China and the United States has gotten tangled up in a more significant rivalry between two different civilizations, between China and the Western world. The massive attack on Huawei is taking place right now, just when humanity is on the verge of making a large-scale transition from fourth generation wireless communication (4G) to 5G mobile communication and internet. The companies and countries whose technologies will be most in demand during this transition will become world leaders in technology for many years to come. For hundreds of years, the West has become grown used to leadership, and even given all of its current development, China was used to copying Western technology.

However, we are now in a situation where Chinese telecom companies, primarily Huawei, have the potential to become the most popular in the world, they could seize the key global markets and begin setting new international standards for internet and mobile communications, overtaking and replacing their Western competitors. Apart from this, the use of Chinese equipment in US telecom networks actually puts America in a position where it is dependent on China to a certain extent, which would also provide China with a lot of scope for intelligence activities. Thus, although China’s main rival is the United States, US partners in the Five Eyes Alliance do not want to grant China access to their 5G networks either, and are not hesitant to support Washington’s war against Huawei and ZTE. New Zealand is no exception. Whether or not the country shares its partners’ fears of Chinese intelligence is neither here nor there; New Zealand has no other choice than to follow suit and align itself with the Five Eyes.

In November 2018, New Zealand’s Government Communications Security Bureau (GCSB) said that using Huawei technologies in the New Zealand 5G broadband network–which a local company called Spark is working on–poses a threat to the New Zealand’s national security. As a result, Spark has been banned from purchasing or using equipment from Huawei. In December of the same year, the GCSB published a report, claiming that New Zealand had been repeatedly subjected to hacking, allegedly involving Chinese hackers.

The Chinese took offence at these actions, which had an adverse effect that soon became visible in China-New Zealand relations. China has begun to make things more complicated for New Zealand’s companies operating on Chinese territory, and has been reducing the number of exchange of students sent to and from New Zealand, etc. New Zealand’s Prime Minister Jacinda Ardern also had to cancel her visit to Beijing. The visit was planned for the beginning of 2019, but the Chinese have put the invitation on hold, citing “clashes in their schedules.” Given that this trip was to be Jacinda Ardern’s first official visit to China as the new Prime Minister of New Zealand, such an affront could cast a shadow over relations between the two countries for years to come.

In January 2019, the Chinese government issued a recommendation for employees at China’s large state-owned companies, telling them to avoid trips to countries that are Five Eye Contributors, including New Zealand. If the trip is unavoidable, China recommends that its citizens coordinate all their actions with the authorities and take extra security precautions to protect information, for example by using special electronic media, etc.

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Russia Sells Off Record Amount of US Treasury Bonds

Arkady Stravitsky

Strategic Culture

The US Treasury Department report for April published on June 15 revealed that Russia sold $47.4 billion out of the $96.1 it had held in Treasury bonds (T-bonds). In March, Moscow cut its Treasury holdings by $1.6 billion. In February, Russia reduced its bond portfolio by $9.3 billion. Other holders did it too. Japan sold off about $12 billion, China liquidated roughly $7 billion. Ireland ditched over $17 billion.

The tariff wars unleashed by Washington stirred fears that financial markets may be in for a rough ride with American treasuries dumped by some partners, including such major holders as China and Japan, each holding over $1 trillion in bonds.

Russia has cut its holdings in American securities following numerous rounds of sanctions imposed by Washington against Moscow and amid the ongoing trade wars between the US and its allies and partners.

This is bad news and ominous warning for Washington. The foreign demand is critical to offset an expected surge in federal borrowing needs. The Treasury Department needs to finance the huge spending bill along with tax cuts that were passed by Congress in December 2017. It plans to auction off around $1.4 trillion in treasuries this year with a glut of sellers and a shortage of buyers in the bond market the government plans to add $600 billion to.

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Russia Dumps Half of Its US Treasury Bonds

The Most Revolutionary Act via 
Socio-Economics History Blog

Russia responds to tightening sanctions by selling off Treasury bonds that finance skyrocketing US debt. China also sells off $7 billion worth. If too many countries sell off their Treasury bonds, the US dollar will collapse and the US government will be forced to live within its means.

RT:

Russia has held a major selloff of US Treasury bonds, dumping some $47bn-worth of papers and momentarily dropping six places on a list of major foreign holders of US securities, recently released statistics for April have shown.
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In just one month, Russia proceeded to sell $47.4 billion out of the $96.1 billion the country had in US treasury bonds in March. The latest statistics released by the US Treasury Department on Friday showed that, in April, Russia had only $48.7bn in American assets, occupying 22nd place on the list of “major foreign holders of Treasury securities.”–
China, which holds the most US Treasury bonds, also sold off some seven billion-worth of its American assets, from March to April, and now has $1.18 trillion invested in securities. Japan, which is positioned second on the list, in the same timeframe sold…

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The Trade War Begins: US Slaps China With $50BN In tariffs; Announces Target List Of Targeted Chinese Goods

ZeroHedge

Update: China immediately vows to retaliate to the trade war:

• CHINA SAYS DOESN'T WANT TRADE WAR, BUT WILL HAVE TO RETALIATE
• CHINA TO IMMEDIATELY TAKE MEASURES OF SAME SCALE AGAINST U.S.
• CHINA COMMERCE MINISTRY SAYS THE MEASURES HARM INTERESTS ON BOTH SIDES

* * *

At 8am EDT on Friday, as previewed extensively the  the US formally announced the list of Chinese products to be hit with tariffs.

In the first official shot in the US-Chinese trade wars, the US will implement 25% tariff on $50BN in Chinese imports, representing 1,102 product lines with the list of imported goods among those listed on China’s 2025 plan.

The tariffs will be implemented in two tiers, the first one on July 6, and will cover $34BN in imports, and a second wave, which will cover the remaining $16BN, or 284 product lines, and will undergo further review in a public notice and comment process, including a hearing.

Today's official escalation followed the disclosure in April of a preliminary list targeting about 1,300 products worth $50 billion in Chinese imports, and which was subject to public comment.
Having warned earlier in the week that he would confront China “very strongly” over trade in the coming weeks, Trump this morning said in a statement that the “The United States can no longer tolerate losing our technology and intellectual property through unfair economic practices."

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