[Editor's Note: The following post is by TDV Editor-In-Chief, Jeff Berwick]
The empire has no clothes. Debt weighs down the crony-capitalist system and flowers of alternative realities are cropping up. The middle class has been brought to the brink, practically eviscerated over the past ten years in the western world. Stock markets – high on intraveneous debt cocktails – post record nominal highs daily.
The US government has become its people's own worst enemy. It has told Americans that terrorists pose the greatest threat, while in the meantime destroying the citizens of the country, and we see this playing out now clearer than ever. It's going after foreign institutions with reckless abandon and the world doesn't appreciate it. It is behaving like an indebted drunk around a poker table yelling racial slurs, throwing glasses and drawing weapons, scantily able to keep balance.
And so the world is ejecting the sinking ship of the dollar, at the heart of which you of course find the US. This means the biggest employer in the US will soon go bankrupt: The US government. At least 250 million Americans will be without a main or major source of income – the ones who suckle at the teet of the government.
*Welfare above includes those on food stamps (over 50 million)
It's The End Of The Monetary System As We Know It (TEOTMSAWKI), and although it will be a difficult time for so many, I generally feel fine. I think it's part of an overall evolution mankind is experiencing.
FRANCE JOINS IN DE-DOLLARIZATION
France's political and business establishment has joined the de-dollarization rumbling. The alienation reached a boiling point when US authorities last week fined BNP Paribas $9 billion for ignoring certain US sanctions. French finance minister, Michel Sapin, quickly urged for a “rebalancing”of currencies used in international trade, offering that the BNP Paribas case should "make us realise the necessity of using a variety of currencies."
“We [Europeans] are selling to ourselves in dollars, for instance when we sell planes," he told the Financial Times. "Is that necessary? I don’t think so. I think a rebalancing is possible and necessary, not just regarding the euro but also for the big currencies of the emerging countries, which account for more and more of global trade.”
Chief executive Christophe de Margerie, of France's second biggest company by market capitalisation, Total, said he foresaw no reason for oil purchase to be required to be paid in dollars. “Companies like ours are in a bind because we sell a lot in dollars but we do not always want to deal with all the US rules and regulations,” he said.
Sapin pledged to raise the topic of dollar alternatives with other eurozone finance ministers today in Brussels. He declined to detail the practical steps which might emerge.
BRICS NOW ANTI-DOLLAR ALLIANCE
The governor of the Russian Central Bank met Vladimir Putin to report on an upcoming ruble-yuan swap deal with the People's Bank of China and Kremlin used the meeting to demonstrate the technical details of an international trade alliance that went around the dollar. Russian academics have for a long time signaled that it was time to put an end to dollar hegemony, so recent actions – especially in the face of US sanctions, some of which are being carried out unilaterally by US banks – are unsurprising.
In recent history (post-internet) much discussion has centered around the fact that de-dollarization is inevitable. In other words, the market would ultimately decide the fate of the US Empire and there was no way, with Washington DC's policy as it has been, it could take long for people to want out of the destructive cycle made possible by fiat dollar supremacy. That's why we started The Dollar Vigilante in 2009. History is now coming to pass quicker than ever and we see now we live at the end of the Dollar System. Today the discussion does not revolve around that de-dollarization is inevitable, but the technicalities of such a change. World finance leaders (or more aptly misleaders) the world over are ackowledging that deciding the where, what whens and hows of a new world order will be very difficult in the years ahead. But I have great news for them! They will not have to decide…the market will do so. As the old saying goes, "may the best man win." In the discussion with Putin, the head of the Russian central bank proposed a solution to the problem:
“We've done a lot of work on the ruble-yuan swap deal in order to facilitate trade financing. I have a meeting next week in Beijing…We are discussing with China and our BRICS partners the establishment of a system of multilateral swaps that will allow to transfer resources to one or another country, if needed. A part of the currency reserves can be directed to [the new system].”
A new basket of currencies is being created as we speak and the US is nowhere near the discussion table. These embryonic new partnerships between the BRIC nations has the potential to do more than supplant the dollar. It also could act as competition for the International Monetary Fund (IMF). By joining into such trade agreements as outlined above by Russia's central bank, these countries are virtually displaying that they do not have too much interest in sticking around as the western world – particularly Europe and the US – collapse. They seek alternatives. They're creating alternatives.
It doesn't end there. On Friday China assigned a clearing bank in Seoul for yuan transactions in South Korea. China is working to make the renminbi an increasingly agreed upon form of currency in international trade to represent its place as the second largest nation in the world.
RUSSIA, CHINA, FRANCE, BRAZIL, INDIA & SOUTH KOREA OPEN ABOUT DITCHING DOLLAR
Currently over 50% of cross-border loans and deposits are done in US dollars. In a recent global survey $5 trillion daily traded in foreign exchange markets, and the dollar was on one side of 87 percent of all trades. If this changes, it will come with dire consequences for a population in debt and largely on the cusp of starvation. History presents illuminating examples for those who wish to be attentive students. Once demand for dollars drops, a tidal wave of dollars will be repatriated back into the US. Hyperinflation then ensues:
What's worse most of the people in the US have no idea that a collapse of their way of life is even possible. So few are buying precious metals like gold and silver that their exposure to paper markets will bankrupt them and possibly cost them their livelihoods and possibly life. And even fewer have begun to move into bitcoin or get any remaining assets they have outside of the US. This will be a painful transition, but there are steps any informed individual can take for protection.