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Goodbye Dollar, It Was Nice Knowing You!

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https://www.strategic-culture.org/news/2019/07/04/goodbye-dollar-it-was-nice-knowing-you/

Goodbye Dollar, It Was Nice Knowing You!


Philip Giraldi


July 4, 2019
© Photo: Pixabay

Over the past two years, the White House has initiated trade disputes, insulted allies and enemies alike, and withdrawn from or refused to ratify multinational treaties and agreements. It has also expanded the reach of its unilaterally imposed rules, forcing other nations to abide by its demands or face economic sanctions. While the stated Trump Administration intention has been to enter into new arrangements more favorable to the United States, the end result has been quite different, creating a broad consensus within the international community that Washington is unstable, not a reliable partner and cannot be trusted. This sentiment has, in turn, resulted in conversations among foreign governments regarding how to circumvent the American banking system, which is the primary offensive weapon apart from dropping bombs that Washington has to force compliance with its dictates.

Consequently, there has been considerable blowback from the Make America Great Again campaign, particularly as the flip side of the coin appears to be that the “greatness” will be obtained by making everyone else less great. The only country in the world that currently regards the United States favorably is Israel, which certainly has good reason to do so given the largesse that has come from the Trump Administration. Everyone else is keen to get out from under the American heel.

Well the worm has finally turned, maybe. Even the feckless Angela Merkel’s Germany now understands that national interests must prevail when the United States is demanding that it do the unspeakable. At the recently concluded G20 meeting in Tokyo Britain, France and Germany announced that the special trade mechanism that they have been working on this year is now up and running. It is called the Instrument in Support of Trade Exchanges (Instex) and it will permit companies in Europe to do business with countries like Iran, avoiding American sanctions by trading outside the SWIFT system, which is dollar denominated and de facto controlled by the US Treasury.

The significance of the European move cannot be understated. It is the first major step in moving away from the dominance of the dollar as the world’s trading and reserve currency. As is often the case, the damage to US perceived interests is self-inflicted. There has been talk for years regarding setting up trade mechanisms that would not be dollar based, but they did not gain any momentum until the Trump Administration abruptly withdrew from the Joint Comprehensive Plan of Action (JCPOA) with Iran over a year ago.

There were other signatories to the JCPOA, all of whom were angered by the White House move, because they believed correctly that it was a good agreement, preventing Iranian development of a nuclear weapon while also easing tensions in the Middle East. Major European powers Germany, France and Great Britain, as well as Russia and China, were all signatories and the agreement was endorsed by the United Nations Security Council. The US withdrawal in an attempt to destroy the “plan of action” was therefore viewed extremely negatively by all the other signatories and their anger increased when Washington declared that it would reinstate sanctions on Iran and also use secondary sanctions to punish any third party that did not comply with the restrictions on trade.

Instex is an upgrade of a previous “Special Purpose Vehicle” set up by the Europeans a year ago to permit trading with Iran without any actual money transfers, something like a barter system based on balancing payments by value. The announcement regarding Instex came as a result of last week’s meeting in Vienna in which the JCPOA signatories minus the US got together with Iranian ministry spokesman Abbas Mousavi, who called the gathering “the last chance for the remaining parties…to gather and see how they can meet their commitments towards Iran.”

Iran is quietly pleased by the development, even though there are critics of the arrangement and the government is officially declaring that Instex is not enough and it will proceed with plans to increase its uranium production. This produced an immediate response from Secretary of State Mike Pompeo last week speaking in New Delhi “If there is conflict, if there is war, if there is a kinetic activity, it will be because the Iranians made that choice.” Nevertheless, Instex could possibly be a model for mechanisms that will allow Iran to sell its oil without hindrance from Washington. But a sharp reaction from the White House is expected. While Instex was in the development phase, US observers noted that the Iranian Special Trade and Finance

Instrument, that will do the actual trading, includes government agencies that are already under US sanctions. That likely means that Washington will resort to secondary sanctions on the Europeans, a move that will definitely make the bilateral relationship even more poisonous than it already is. A global trade war is a distinct possibility and, as observed above, the abandonment of the dollar as the international reserve currency is a possible consequence.

Trump has already been “threatening penalties against the financial body created by Germany, the U.K. and France to shield trade with the Islamic Republic from US sanctions.” The Treasury’s undersecretary for terrorism and financial intelligence, Israeli Sigal Mandelker, warned in a May 7th letter that “I urge you to carefully consider the potential sanctions exposure of Instex. Engaging in activities that run afoul of US sanctions can result in severe consequences, including a loss of access to the US financial system.”

Indeed, the White House appears to be willing to engage in economic warfare with Europe over the issue of punishing Iran. The Treasury Department issued a statement regarding the Mandelker letter, saying “entities that transact in trade with the Iranian regime through any means may expose themselves to considerable sanctions risk, and Treasury intends to aggressively enforce our authorities.” Mike Pompeo also was explicit during a visit to London on May 8th when he stated that “…it doesn’t matter what vehicle’s out there, if the transaction is sanctionable, we will evaluate it, review it, and if appropriate, levy sanctions against those that were involved in that transaction. It’s very straightforward.”

It is perhaps not unreasonable to wish the Europeans success, as they are supporting free trade while also registering their opposition to the White House’s bullying tactics using the world financial system. And if the dollar ceases to be the world’s trade and reserve currency, what of it? It would mean that the Treasury might have to cease printing surplus dollars and the US ability to establish global hegemony on a credit card might well be impeded. Those would be good results and one might also hope that some day soon the United States might once again become a normal country that Americans would be proud to call home.
 

GOLDBRIX

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#2
FUCK Philip Giraldi, the EU, Iran, France ( can't win a fight EVER), Merkle's Germany, and anybody else supporting the terrorists governing and controlling IRAN.
 

Zed

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#3
... but what is the USD going to devalue against in currency terms? Nothing else is better off... USD will rise if we have a global issue, for the foreseeable future it has to play that way. Gold may still rise in USD but the USD will do quite well.
 

BarnacleBob

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#4
Anyone want to make a substantial bet that the $ remains "King of the Hill" for the next 5, 10 or 20+ years??? There is not one other sovereign or private entity capable of replacing the $ & more importantly dollar institutions....
 

Ebie

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#6
I don't understand why any one currency needs to be the "king"
Russia and China can easily trade in non-dollars, for example.
That is what nations used to do, before the dollar became "king"
It is not complicated and is happening now.

Anyone want to make a substantial bet that the $ remains "King of the Hill" for the next 5, 10 or 20+ years??? There is not one other sovereign or private entity capable of replacing the $ & more importantly dollar institutions....
 

Joe King

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#7
don't understand why any one currency needs to be the "king"
it's not that it needs to be, but rather just that it is, because it is so widely used.
...and why is it so widely used? Because historically it's been and still is trusted as much or more than other currencies.


Russia and China can easily trade in non-dollars, for example.
what if Russia doesn't need more yuan and China doesn't need more runles?
That is what nations used to do, before the dollar became "king
I thought that before the dollar became king, there was a gold standard?
 

Zed

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#8
I don't understand why any one currency needs to be the "king"
Because internationally traded commodities need to be priced in a common currency.

Russia and China can easily trade in non-dollars, for example.
Yes, save for that fact that they always need to get back to USD in order to buy commodities chief of which is oil hence the "petro dollar".

That is what nations used to do, before the dollar became "king"
Then it was Pound Stirling, the UK was the super power and it was reportedly backed by gold.

It is not complicated and is happening now.
It's not simple either, if you are a producer planning and hedging exposure to fluctuating currencies is hard enough when you are only dealing with one common reserve currency. Introduce a few more variables and it becomes a nightmare.

The reserve currency status isn't so much decided as it is 'won'. Basically it is a measure of global confidence and it represents that economy's significance in the global economy. Even if they dictated a common reserve people would still migrate to using the most trusted nations currency. China's problem with becoming reserve is not so much size but more confidence in governance and the nature of its financial system. Basically the US leaves some pretty big shoes to fill and any change will not happen in a hurry. We may see fragmentation but I doubt you will see a wholesale move away from the US for a while.

It is this way because it make sense and works... there is no other reason.

IMO It would actually be really hard for the US to lose the reserve currency status EVEN if they tried. You'd have to intentionally fuck up the entire economy.

Face it, you guys are the best deal in town.... terrifying aint it?

:shit happens:

My 2c
 
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Zed

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#9
Once the world trusts another countries political and financial system more than the US's then the USD is toast. If the Euronutz ever got their act together they could be a threat... but alas instead they are a basket case. The political system is the main issue outside the west.
 

GOLDBRIX

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#10
it's not that it needs to be, but rather just that it is, because it is so widely used.
...and why is it so widely used? Because historically it's been and still is trusted as much or more than other currencies.
I know this was true back in the 80s. As I was leaving from South Africa I had several thousand Rand I wanted to convert back to USDs before leaving the country. The banks were ripping off travelers through conversion, so I tried the "underground" economy. That market wanted USDs and would not take Rand. So I bought gold Krugerrands, and what little Rand I had left converted at the airport.
Just my experience in the matter.
 

the_shootist

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#11
The best way to position one's self in today's financial environment IMHO is diversity.....have your wealth spread across several investment areas. Have cash, have metals, have guns and ammo. Hell, even place some wealth in the markets. If the economy continues to fly on a magic carpet and the market keeps going up, you'll be reaping benefits. If the economy tanks you'll have a safety net. If the market tanks but cash is still king you'll have some stashed for that scenario. If the SHTF you'll be locked and loaded!

It's all about mitigating risk now!!

My .02
 
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GOLDBRIX

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#12
The best way to position one's self in today's financial environment is diversity.....have your wealth spread across several investment areas. Have cash, have metals, have guns and ammo. Hell, even place some wealth in the markets. If the economy continues to fly on a magic carpet and the market keeps going up, you'll be reaping benefits. If the economy tanks you'll have a safety net. If the market tanks but cash is still king you'll have some stashed for that scenario. If the SHTF you'll be locked and loaded!

It's all about mitigating risk now!!

My .02
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Purdy Much what he said.

:2 thumbs up:
 

Ebie

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#15
The best way to position one's self in today's financial environment is diversity.....have your wealth spread across several investment areas. Have cash, have metals, have guns and ammo. Hell, even place some wealth in the markets. If the economy continues to fly on a magic carpet and the market keeps going up, you'll be reaping benefits. If the economy tanks you'll have a safety net. If the market tanks but cash is still king you'll have some stashed for that scenario. If the SHTF you'll be locked and loaded!

It's all about mitigating risk now!!
My .02
The stock market is a con game...
 

Joe King

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#16
That only works for wealthy people. Most of America trades in clad, is in debt and 2 paychecks away from homelessness.
it'll work for anyone. The only requirement is to have made good life choices that result in one not being perpetially broke and in debt.


Reverse that: China is a happy to accept Yuan, etc
my point was that unless the trade always averages out so that neither nation runs a trade deficit, one or the other will always end up with an ever increasing amount of the others currency.
Can Rubles be spent in China?
 
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Joe King

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#18
All policies target the destruction of the American middle class.
I hear tell of the disappearing middle class quite often, but have seen little hard data supporting that assertation. What data are you basing that statement on?
 

Joe King

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#19
your support of the status quo,
me thinks you haven't a clue as to what I support, or not.
....and yes, good life choices. If more people made more of them, more people would not constantly be so dead broke all the time.
 

Joe King

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#20
Like not letting your small business go under because of gov't regulations and gov't "tweaks" to the economy?
so all businesses go under because of some gov regulation? If not, then there is a reason as to why some might go under while others thrive with those very same regs in place.


Like not being drafted into mercenary service?
there is no draft. Bring that up when/If there ever is one again.


Just another support the Status quo, and a distraction effort.
as I already said, you haven't a clue as to what I support or not.


The dishonest and 100% controlled and corrupt system doesn't easily allow such good life choices to work out. All the good life choices can still fall apart when your kid's leg is blown off or your small business is destroyed by corrupt, well-connected, fascist criminals.
good life choices can so make big difference in people's lives.
People make lots of piss poor decisions about everything from what to spend their paycheck on to who to do the horizontal tango with, that ends up costing them tons of money that could have otherwise been put to good use, had it not been for their prior decisions that were seemingly made with absolutely no foresight involved.

People like you seem to want there to be no personal responsibility involved.
 
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the_shootist

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#21
The stock market is a con game...
The reasons for me keeping some $$ in the market is I take advantage of my company match of 6% for 401K contributions. The first 50% of what I lose in the stock market over the foreseeable future is their money. In the meantime I understand the risk but don't know how long the current upswing will carry. If they keep propping up the market and it keeps trending north, I want to get some of that action too. There is no one thing you can be invested in and expect instant gratification. You can plan for the SHTF and have all your worth in metals, food, water, guns and ammo but what if things stay relatively the way they are for the next 5/10 years? It's a balance where you weigh the risks and benefits accord to your gut.
 

Joe King

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#22
When did I use the word all?
you said that due to excessive gov regulations that it's impossible to stay in business regardless of whether one makes good decisions or bad.


When did I say I was against personal responsibility?
when you said that making good life decisions has no bearing at all on whether or not one gets ahead in life.


Also, you keep saying that the middle class is being destroyed. Where's your data that shows that?
 

Joe King

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#23
I never said either of those statements - you make assumptions.
You said you could make all the right life choices and still not get ahead because of over regulation and getting drafted.


You also said that only rich people can diversify. I said no, anyone can and it helps a lot if one makes good life decisions.
That when you started up about excessive gov regs and the draft.

All I was getting at is that if more people made better decisions, their lives would be a lot better. If for no other reason than by not being mired in debt and constantly broke. Then they'd have the funds to diversify their investments.
 

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#24
Funny how the Central Banks store GOLD....out of tradition of course!

 

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#25

GOLDBRIX

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#27
When Russia and China nuke North America the $ will be T.P. SC
AND you think there will be no repercussions or retributions ?
Who is ever left alive all fiat worldwide will become toilet Paper.
 

SilverCity

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#28
AND you think there will be no repercussions or retributions ?
We might like to think so, but our globalist enemies may have other plans.

Me, I'm stocking up on an old standby--corn cobs.

SC
 

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#30

GOLDBRIX

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#31
it is not my opinion !
I did not say it WAS your's.
Without evidence / proof to back it up the writer's statement is still only conjecture.
 

Strawboss

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#32
Have you read the writings of those who founded our nation? They didn't ever provide you with evidence?

I don't understand your post about a lack of evidence. Those "opinions" as you call them and those "facts and simple logic" which I call them, have plenty of evidence to support them. The entire history of the modern world is full of this evidence.

When a society is well armed, poor workers and owners alike, fear of the gov't, fear of the military, fear of criminals, fear of telling the truth, fear of getting into a debate or being a witness, or defending yourself from those who may be brutally attacking or molesting your children - those fears go away. The entire history of the world clearly demonstrates that - or at least the way it was written down by our founders.
Evidence? Whatever do you mean good sir?

What is this evidence you allude to?
 

kiffertom

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#33
I don't understand why any one currency needs to be the "king"
Russia and China can easily trade in non-dollars, for example.
That is what nations used to do, before the dollar became "king"
It is not complicated and is happening now.
http://www.economicreason.com/usdol...ppened-during-previous-periods-of-transition/

a cut from the whole article!


the country that dominates global commerce during any given period is usually marked with the status of having the reserve currency. Spain and Portugal dominated the 15th and 16th centuries, the Netherlands the 17th century, France and Britain the 18th and 19th centuries, and the US dominated the 20th century.
Throughout the Age of Exploration, Portugal created a dominant global empire. Traditional trade routes to Asia were no longer feasible due to the growth of the Ottoman Empire and their 1453 capture of Constantinople, and so the need for alternative trade routes emerged. Thanks to advances in navigational technology as well as other auspicious circumstances, the Portuguese, and soon the Spanish, were to reach Africa, Asia, and the New World. Consequently, the Portuguese and later the Spanish currencies became the primary currencies used in global trade at that time. The Portuguese, throughout their travels and discoveries, established military outposts along the coasts of Africa, India, Malaysia, Japan, and China (Macau), etc.; when they became over-extended, the empire eventually declined due to attacks and competition from other countries (mainly the Dutch, British and French). Portugal and Spain then merged together to create the Iberian union; however, it collapsed through wars and revolutions by the mid-17th century.
 

Joe King

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#35