De-Dollarization an Idea Whose Time Has Come
by Stephen Lendman (stephenlendman.org – Home – Stephen Lendman)
Dollar hegemony as the world’s reserve currency facilitates US global dominance.
It finances Washington’s reckless spending, global militarism, its empire of bases, endless wars, corporate takeovers, as well as speculative excesses creating bubbles and economic crises – at the expense of democratic freedoms and beneficial social change.
Economist Michael Hudson calls this system a “sinister dynamic (because) the US payment deficit pumps dollars into foreign economies.”
They have “little option except to buy US (debt) which the Treasury spends on financing an enormous, hostile (global) military build-up” – facilitating endless imperial wars.
Russia, China, and other nations are increasingly trading in their own currencies, threatening dollar dominance.
Venezuelan President Nicolas Maduro halted trading in US dollars, especially for oil, the nation’s key commodity.
Henceforth oil and other commodities will be traded in a basket of currencies, including the euro, Chinese yuan, Indian rupee, Russian ruble, others and cryptocurrency.
The price of Venezuelan oil is now listed in yuan. State-owned oil company PDVSA told its joint venture partners to convert to euro trading.
The country’s main currency auction system, Dicom, stopped selling dollars. Maduro’s aim is countering US economic war, including illegal sanctions.
Reportedly, India was offered a 30% crude oil discount if willing to pay in El Petro, the country’s petrocurrency, the first digital currency backed by five billion barrels of oil reserves.
Economist Mark Weisbrot said measures Maduro instituted are helpful – short of addressing Venezuela’s main economic problem, an inflation-depreciation spiral, things worsening dramatically in recent years.
Economic recovery is unattainable without changing things, the risk of greater hyper-inflation real, destroying Venezuela’s currency altogether, US sanctions worsening things, why they were imposed.
William Engdahl explained “China (and) Russia…are taking decisive steps to create a very viable alternative to the tyranny of the US dollar over world trade and finance. Wall Street and Washington (can’t) stop it.”
America needs a dollar glut to finance its militarism and imperial wars. Michael Hudson explained the “inter-related dynamics” of:
- “surplus dollars pouring into the rest of the world for yet further financial speculation and corporate takeovers;”
- global central banks “recyl(ing) these dollar inflows (into) US Treasury bonds to finance the federal US budget deficit; and most important, the military character of the US payments deficit and the domestic federal budget deficit.”
China, Japan, Russia and other countries buying US bonds finance its hegemonic agenda. Engdahl explained a Sino/Russian alternative – “a viable, gold-backed international currency and potentially, several similar currencies that can displace the unjust hegemonic role of the dollar today.”
“China and Russia, joined most likely by their major trading partner countries in the BRICS (Brazil, Russia, India, China, South Africa), as well as by their Eurasian partner countries of the Shanghai Cooperation Organization (SCO) are about to complete the working architecture of a new monetary alternative to a dollar world.”
Putin explained disturbing US dollar dominance, aiming to counter it saying:
“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies.”
“We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”
Dollar hegemony’s days are far from over, but important steps undertaken by China, Russia, Venezuela and other countries threaten its dominance as the world’s reserve currency.
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