Ditching the Dollar – Natural Act for a Dying Empire

Ditching the Dollar

By Jeff Thomas

One of the symptoms of a declining empire is that it becomes less and less productive and therefore less relevant to other countries. Any empire, whilst in its prime, will have a strong currency. As its productive relevance declines, so will its currency. Invariably, its leaders attempt to keep the currency strong, in spite of the decline in national relevance. Rather than return to a more productive condition, the empire almost invariably resorts to force.

The US has been unusually forceful in this regard. In order to retain the dollar as the currency upon which oil is denominated and paid for, the US has attacked countries (Iraq, Libya) when their leaders have announced that they will, in future, accept other currencies or gold as payment for oil.

The US has also attempted to retain the dollar as the default currency of the world by applying sanctions (refusal to allow the use of the SWIFT system, lowering oil prices, demanding that its allies cease to trade with offending countries, etc.).

This approach to solving the waning strength of a currency rarely works and in the case of the US, has failed spectacularly.

For hundreds of years, Russia and China have been less than friends and even when they are getting along, have always remained suspicious of one another. However, the measures imposed by the US have caused them to join forces out of mutual interest. They have both built up their gold reserves, are in the process of laying their own trans-Atlantic cable to allow independent worldwide communications, are creating their own SWIFT system (the Double Eagle Project), and have recently inked the largest energy deal the world has ever witnessed, to be paid for in the ruble and the yuan.

In each case, these developments have been undertaken to sidestep US force, which had been intended to retain its level of power in the world. Had the US not applied such force, it might have declined to slowly become one of three major powers. Instead, it’s actually achieving the opposite to what was desired: it’s pushed Russia and China into creating alternatives to the US, making the US, in some ways, unnecessary.

Of course, both countries, especially China, will wish to continue trading with the US, but they’re creating a condition in which the US is the odd one out. Its teeth are being removed one at a time, leaving it soon to be a lesser player in the world.

At first, the moves to side-line the US were performed quietly, but increasingly, as each development by Russia and China has been successfully achieved, they’ve become emboldened, and in November 2014, Russian President Vladimir Putin stated publicly that he plans to leave the “dollar dictatorship” of the market and to increase the use of the ruble and the yuan in trading with China. (Between January and September of 2014, settlements in yuan between China and Russia have increased 800%.)

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