This article was originally published by Brandon Smith at Alt-Market.com
Blind faith in the U.S. dollar is perhaps one of the most crippling disabilities economists have in gauging our economic future. Historically speaking, fiat currencies are animals with very short lives, and world reserve currencies are even more prone to an early death. But, for some reason, the notion that the dollar is vulnerable at all to the same fate is deemed ridiculous by the mainstream.
This delusion has also recently bled into parts of the alternative economic movement, with some analysts hoping that the Trump Administration will somehow reverse several decades of central bank sabotage in only four to eight years. However, this thinking requires a person to completely ignore the prevailing trend.
Years before there was ever an inkling of a trade war, multiple nations were establishing bilateral agreements that would cut the dollar as the primary exchange mechanism. China has been a leader in this effort, despite it being one of the largest buyers of U.S. Treasury debt and dollar reserves since the 2008 crash. In the past few years, these bilateral deals have been growing in scope, starting small and then expanding into massive agreements on raw commodities. China and Russia are a perfect example of the de-dollarization trend, with the two nations forming a trade alliance on natural gas as far back as 2014. That agreement, which is expected to start boosting imports to China this year, removes the need for dollars as a reserve mechanism for international purchases.
Russia and parts of Europe, including Germany, are also growing closer in terms of trade ties. With Germany and Russia entering into the Nordstream 2 gas pipeline deal despite condemnations from the Trump Administration, we can see a clear progression of nations moving away from the U.S. and the dollar, and into a “basket of currencies”.
Energy Secretary Rick Perry has suggested that sanctions are possible over the Nordstream project, but trade war policies only seem to be hastening the international departure from the U.S. as the center of trade influence. American sanctions on Iranian oil support this argument, as China, Russia and much of Europe are working together to sidestep U.S. restrictions on Iranian crude.
China has even instituted its own petroyuan market, and the first shipments of oil from the Middle East to China paid for through a petroyuan contract occurred in August of this year. Mainstream economists like to point out the small portion of the global oil market that the petroyuan represents, but they seem to have missed the bigger picture entirely. The issue is, now an alternative to the petrodollar exists where none existed before. And this is the crux of the matter that needs to be examined: The trend towards alternatives, and all alternatives leading to centralization by global banks.
Beyond the shift away from the U.S. dollar as a global reserve, there is a new matter of alternative international payment systems. SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a global network of “financial messages” between major banks, including central banks. Transactions are recorded through the SWIFT network, which allows fast confirmation of “messages” and updates of accounts across the world.
Originally founded in Brussels, for decades SWIFT has been the only such banking network with global capacity, and until recently the primary data centers have been in the U.S. and the Netherlands.
The U.S. government has exploited extensive economic control using influence on SWIFT, including mass surveillance of international financial transactions and denying countries like Iran access to SWIFT through sanctions. In the past, the U.S. has seized or frozen funds being transferred through SWIFT between banks outside of U.S. borders, including entirely legal transactions, indicating that the U.S. has overt control over the system. The world reserve status of the dollar, combined with U.S. influence over the most important tool in international banking transactions, has solidified U.S. fiscal dominance for many years.
But the dollar’s reign is quickly coming to an end, as global banks like the IMF seek to centralize monetary authority under a single world structure. The great illusion being perpetrated is that the “multi-polar world order” that is arising is somehow “anti-globalist”. This is simply not the case.
So, what is actually happening? The world is getting smaller as everyone EXCEPT the U.S. is consolidating economically. This includes alternatives to SWIFT.
Russia dumps U.S. Treasuries but maintains close ties to the IMF and BIS, calling for a world currency system under the IMF’s control. China does the same, increasing ties to the IMF through its SDR basket system, while cutting its ties to the dollar one by one. Europe is embracing closer trade with both Russia and China, working to defy U.S. sanctions.
Now, all of these nations are building new SWIFT-like networks in order to cut the U.S. out of the loop. In other words, the U.S. is becoming the bumbling villain of our global soap opera, and through its own hubris, it is setting the stage for its own destruction. The U.S. is acting as a catalyst, helping global banks by frightening enemies and allies into further centralization. At least, that is the narrative I suspect future historians will repeat.
As part of the effort to undermine U.S. sanctions on Iranian oil, the EU has established a program to construct a new SWIFT system outside of U.S. influence. It is a model that Russia, China and Iran have agreed to participate in, and the news has gone mostly ignored by the mainstream. The Wall Street Journal begrudgingly reported on the development but dismissed it as ineffective in thwarting U.S. sanctions. And this seems to be the consensus among the MSM – to shrug off or ignore the implications of an alternative SWIFT.
Dollar bias rears its ugly head once again, and the dangers of this kind of denial are many. The dollar can be, and is being, bypassed through bilateral trade deals. U.S. dominance of oil markets is being bypassed through alternative petro-contracts. And now, U.S. control of financial networks is being bypassed through alternative SWIFT programs. The only thread that is holding the dollar and, by extension, the U.S. economy together is the fact that these alternatives are not widespread yet. This will inevitably change.
So, the question is – When will it change?
I believe the pace of the trade war will dictate the pace of the de-dollarization shift. The more aggressive that tariffs become between the U.S. and China, Iran, Europe and Russia, the faster that already existing alternative systems will be implemented. Currently, the speed of the U.S.-China conflict suggests a move away from the dollar and into an international basket of currencies by the end of 2020, with the process taking approximately another decade to become concrete. That is to say, the SDR basket system will act as a bridge over time to a new world reserve currency; a single global currency system.
With current tariffs encompassing at least half of Chinese trade, and the other half under threat if China retaliates in any way, I believe that it is only a matter of months before China uses its own dollar and treasury reserves as a weapon against the U.S. And, when this happens, China will not announce the move publicly, nor will the mainstream media pick up on the event until it is far too late.
So not expect Europe to come to the aid of America if this happens. To me, it seems to be clear from the EU’s recent behavior that they plan to remain neutral, at the very least during escalation, if not fully side with China and Russia out of economic necessity.
Preparing for this event requires as much financial independence as possible. This means tangible alternatives to the dollar, like precious metals, and localized economies based on barter and trade. Once the dollar loses world reserve status the transfer of price inflation into the U.S. will be immense. Dollars held overseas will come flooding back into the country as they will no longer be needed for international exchange of goods and resources. This switch could occur very quickly, like an avalanche.
Again, do not expect much of a warning before foreign creditors dump dollar-based assets, and do not expect a large window of time before the negative effects are visible on Main Street.
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No one else in the world is in any better shape than we are, and most are far worse than us.
Like it or not, the US is the one that holds the world up today. If or when that changes, it will be a big step downwards for everyone and both economic and social chaos will rule the day.
Which would, IMO, be a necessary step toward fulfillment of the prophecies (something I don’t see the US playing any significant role in), so maybe it is not a bad thing so see happen when it finally does.
> Like it or not, the US is the one that holds the world up today. If or when that changes, it will be a big step downwards for everyone and both economic and social chaos will rule the day.
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DELUSIONAL! It’s this fuking EXCEPTIONAL thinking that keeps getting the (former) US Republic into all these corrupt warmongering ZOG expeditions.
Recently, Russia just surpassed the US as the world’s TOP wheat producer. And their stuff is GMO FREE! Did you hear me? GMO FREE!! It’s the law in Russia that no GMO crops are allowed.
Who do you think the rest of the FREE world would rather purchase healthy wheat from? Toxic GMO-Monsanto (er Bayer) wheat? Or GMO free Russian wheat which is probably way cheaper too?
Thankfully for MonSATAN, they have corrupted YOUR leaders so you have zero choice in this matter to avoid GMO crap appearing on your grocery store shelves.
In Manufacturing, Tech, etc., the EU can build cars (Germany is tops!), planes (Airbus), and other sh!t too. And Russia’s new SuperJet is really looking good. Also, Russia has tons of cheap oil & gas, and gold. China is now the world’s goto manufacturer for all home consumables.
Ok, I give the nod to the US in IT/microprocessors, etc. But when it comes to software, I feel Russians are even better programmers & scientists since they haven’t dumbed down their population like the commie Dem/GOP political hacks. You can clearly see that in their new military tech – and on a $50 billion Defence budget.
So tell me again, Anonymous, can the rest of the world live without the US? Or, can the US live without its exceptional meddling in the rest of the world’s affairs and using its Dollar hegemony to sanction with impunity?
I think everyone here on SHTF knows the answer to that question. China, Russia, the useless spineless vassal entourage (France, Japan, UK, Canada, Germany, Italy, Sweden, Norway, Australia), Brazil, Argentina and rising India can produce ALL goods & services that’s required for global consumption.
Welcome to the new multi-polar world. Let that sink into your head!
Excellent article, Brandon! I mostly come to SHTF to read your stuff.
Be safe, friend! 😉
-TPCS
“We live in this very strange situation in which the role of the dollar in global finance is more idiotic than the role of the American economy itself”
anonymous,
do you refer to the phrases ‘young lions of tarshish’ and ‘the isles afar off’ when you see the americas not having much to do with the end times?
thanks.
drjh
When the Bretton Woods Agreement was abandoned in 1971 divorcing the USD from gold it was inevitable that military might would be its backing. US military actions are not a sign of strength but rather desperation.
Yes and if a man has not already spent years learning to grow food from seed he and his family will starve to death sooner or later.
Kevin2, it was inevitable that the world would start breaking away from the US. I don’t blame them one bit. Who knows, one day we the people may have to break away ourselves.
The Deplorable Renegade
“Who knows, one day we the people may have to break away ourselves.”
Thats not too far fetched. There is a worldwide pushback over this type of control that I think started with the breakup of the Soviet Satellite Client States and then the USSR itself. Technology makes local rule feasible and economical. “Bigger is better”, regardless of noble intent, is in actuality, “one size fits all” that ends up fitting no one well. I can envision, assuming future progressive political victory done through the system, (as promising FREE, FREE, FREE gets votes), “we know better” policy’s being implemented. The 1861-65 “Civil War” was not appropriately named. Its wasn’t a civil war, it was a War Of Succession. The South just wanted to leave the union not overtake it. I can see traditional US States invoking the 10th Amendment and the USSC intellectually abandoning its clear phraseology thus codifying its moot status. These States are now great breadwinners with food and fuel while the aged “has been” states reap their fruit. Its a combined recipe for a future succession.
Glad those dollars are comming home. I could use a raise! Looking forward to the $1,000.00 loaf of bread. Yum! Costly bread is tasty bread.
DM,
Since the state of North Dakota alone grows enough wheat to supply all our domestic needs, I doubt that we will see hyperinflation of wheat prices.
Also I make my own flour and bread from red and white wheat berries. You should try it.
It used to be just making flour from “wheat.” Why are people in recent years calling it “wheat berries”? I’ve never seen any “berries” on a stalk of wheat, only grains.
I just notice how so many terms for things seem to be changing for an unknown reason.
“Wheat berries” are the whole kernels.
“Wheat” usually refers to the ground product (flour).
Congratulations.
I hope to make homemade bread soon; machine, berries and other ingredients are ready
Can’t happen soon enough.
The U.S. is about to be left behind as power seems to be moving to Europe which will be The New Empire in the future.
The dollar will drop in value as U.S. influence is replaced by another currency. Nato may collapse and an EU Army replace it.
Watching the slow death of an empire.
But, better to be disconnected from the global disaster that is unfolding that is just a socialist/communist style government in disguise.
Under the term of The Global Community in which there is a total oneness or uniting of the human race.
The last time man tried to do this, God had to come down and confuse their language which (Tower of Babel) caused the dispersion of the human race across the planet into individual cultures who spoke the same language.
The reason that happened because united as one, mankind believed they could build a stairwell to heaven:According to Genesis, the Babylonians wanted to make a name for themselves by building a mighty city and a tower “with its top in the heavens.”
In Brussels, there is a image to The Tower of Babel.
Our time is about over. Is something we are going to have to get use to and Trump is moving us out to retain our nations individuality, I hope; opposite of where most recent U.S. Presidents have been taking us.
My thoughts on this matter.
And the Bad News is????
The world will fall apart when they are done, and then like after WW1 they will come running back to US for help.
I have two words for all of them F#$K OFF!!!!
Sgt.
Disclaimer: I do not support any of the 2016 presidential candidates. They are ALL incompetent and, or imbeciles.
Israel is dictating U.S. foreign policy. If the U.S. wants to recover and someday have a functional economy. Israel has to go.
No more aid, no more fighting Israel’s wars.
The Iran policy, instituted by the President, is 100% Israel policy.
I don’t know if Trump realizes that many of the people who voted for him are staunch anti-Israel moderates and conservative.
And while the Christian-Zionists, predominately Evangelicals, are the main driver behind the pro-Israel constituency, they’re numbers are not sufficient to re-elect him in 2020.
Whether he cares more for America or Israel will become quite apparent in the next two years.
So you think Hillary would have been better? I think you just hate a group of people. Sounds also like you respect Islam. Now I’ve got it! You are a fucking imbecile.
M Edward… you knocked that one right out of the park. This US government and the foreign controllers you mention are pure evil. Case in point read: Real and Proven: The American Plan, Germ Warfare Depopulation at veteranstoday.com The American people are largely brainwashed.
don’t look now but what do you think president trump is trying to do the sooner the better
They hate Trump and they hate us. Good! I love clarity.
I am tired of waiting.
Bring it on and, in time, we will overcome whatever happens.
Goodbye United Nations and good riddance….was never gonna happen anyway.
A very insightful article.
Insightful because it corroborates what I see happening? Time will tell.
Not all Christians support Israel. As I’ve said many, many times, the Jews are no longer God’s chosen. They broke the covenant they had with God, and they did not accept Jesus Christ as the Messiah. The Jewish Pharisees were responsible for His crucifixion. Of course this had to take place, it was part of the greater plan. This is the one important fact that allowed the Gentiles access to the redemption offered to those who believed Jesus Christ was indeed the Son of God and Savior of man. Now, the USA needs to get their sh*t together and start really putting the USA first and planning for its survivability. The USA is capable of total self preservation. They need to burn all GMO plants and plant uncontaminated seeds. Bring manufacturing back to this country. End all military support to foreign nations and concentrate on our own country’s military power in order to insure our survival against the foreign powers. The citizens with any intelligence at all would support this. Of course though, the Bible in Revelations tells us again what must take place, and this cannot be changed, it is written. Jesus Christ is mans only real hope.
Ezekiel 36:21-23
Colossians 2:14, I Corinthians 10:18, Matthew 21:43 The Law covenant was abolished in 33 C.E. Acts 10:1-48 Repent and be baptized in Jesus’ name.
aimho —
(On the other hand, I have just decided that I am a guru. Pay me money, to re-publish my improvised, personal opinions. But, do not hold me legally accountable, if you experience losses.)
If, if they want less liquidity, they could just raise interest rates, encouraging saving.
The theoretical, arbitrary price of commodities could be pegged to a higher point, offsetting the cheaper, foreign imports, if your main objective is to reduce the amount of dollars, in circulation.
(Can I be chairman of the Fed, now?)
The Trump never movement is world wide, it’s really isn’t Trump never, but rather Marxist now.
The deep state and globalists is a cornered animal and is prepared to destroy America if they can’t win. They are like the crazy jealous boyfriend who would kill his girlfriend if he can’t have her.
The globalists in Europe also want their Marxist planes for the world to continue and they will help crash the US economy if it puts a leash on Trump.
We live in dangerous times.