https://sputnikglobe.com/20220916/breaking-out-of-dollar-trap-could-bring-an-end-to-unipower-world-experts-tell-sputnik-1100855568.html
Breaking Out of ‘Dollar Trap’ Could Bring an End to ‘Unipower’ World, Experts Tell Sputnik
Breaking Out of ‘Dollar Trap’ Could Bring an End to ‘Unipower’ World, Experts Tell Sputnik
Sputnik International
“Tectonic” shifts in international ties are testimony to the waning global dominance of the US, Russia’s President Vladimir Putin stated at the EEF in... 16.09.2022, Sputnik International
2022-09-16T14:48+0000
2022-09-16T14:48+0000
2023-03-05T10:45+0000
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The new reserve currency mooted by Russia and China as an alternative to the US dollar is a “tempting carrot” to countries around the world to wrest back control of their most valuable national assets, Alex Krainer, founder of Krainer Analytics, told Sputnik. An alternative to the Western-controlled mechanisms of trade would allow developing nations to free themselves of their crushing debts, which are becoming more difficult to service as interest rates continue rising, triggered by soaring inflation, the creator of I-System Trend Following underscored.Amid an already shrinking US dollar dominance, Russia announced in June that it was poised to develop a new global reserve currency alongside China and other BRICS nations: Brazil, Russia, India, China, and South Africa.There are two highly significant aspects to the plan being mulled by Russia and China, Alex Krainer underscored. The two countries have signaled that the system to be used for settling foreign trade and backed by participating nations' commodities, firstly, "would not penalize participating nations if they defaulted on their debt obligations to Western financial institutions," and secondly, "they would not penalize them if they nationalized their resources and industries," he said.Despite the dollar rallying this year by 9% against a basket of six major currencies, central banks have been increasingly looking to diversify their holdings into currencies like the Chinese yuan or non-traditional reserve currencies, International Monetary Fund (IMF) economists said in June. As nations try to raise the value of their own currencies to tame skyrocketing inflation, the trend has gradually resulted in a chipping away at the US dollar's dominance in global payments.‘Game is Up’Breaking out of the “dollar trap” will be viewed by nations as increasingly tempting if a credible alternative is available, Krainer stated.The finance analyst explained that for decades, developing nations had no alternative to the Western dollar-based system. Accordingly, they were forced to submit to a “monopolistic" control of their trade and finances, including the IMF's cruel "structural adjustments" that resulted in chronic poverty for their populations.To defend its hegemony, the West has relied on force of arms since the beginning of the colonization process, Krainer recalled, but now this dominance is being lost. The analyst suggested that Western leaders are now confronted with a scenario once speculated on by Zbigniew Brzezinski, who wrote that, "The most dangerous scenario would be a grand coalition of China, Russia and perhaps Iran - an 'antihegemonic' coalition."US’ Waning CloutDitching dollar dominance has gained particular urgency amid sweeping sanctions targeting Russia - one of the biggest economies and exporters in the world - over its military operation in Ukraine, which presuppose confiscation and/or freezing of Russian reserves. The US has been persistently striving to maintain the old world order that is beneficial only to Washington, Russian President Vladimir Putin underscored at the Eastern Economic Forum (EEF) in Vladivostok. According to Putin, "confidence in the dollar, euro and pound sterling as currencies to carry out payments, store reserves, nominate assets has been lost." The Russian leader pointed to how the world was gradually moving away from using such “unreliable, compromised currencies,” with even US allies are “cutting their dollar assets.”De-dollarization - the cessation of the use of the US dollar as world reserve currency and as the currency in which oil is priced and international transactions settled - is fraught with a dramatic reduction in the clout of the United States, US economist Dr. Paul Craig Roberts said.Having the dollar as the world reserve currency has put Washington in control over the international financial system, able to impose sanctions on other countries at a whim, and exclude their banks from the financial clearing system. Sanctions imposed by the US on Russia, Iran, and Cuba all serve to illustrate this, he added. This position also permits the “hegemon” to pay its bills by printing money, forcing countries that hold their reserves in dollars to “finance America's budget, trade deficits and wars,” the US economist explained.A multipolar world of sovereign countries is totally inconsistent with a hegemon, Dr. Paul Craig Roberts, ex-assistant secretary of the treasury under Ronald Reagan, emphasized.Accordingly, de-dollarization is inevitable, the expert stated, adding that the solution is “not to look for a different world reserve currency from a country that would not abuse the power, but to bring an end to the unipower world that a reserve currency creates.”
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Breaking Out of ‘Dollar Trap’ Could Bring an End to ‘Unipower’ World, Experts Tell Sputnik
14:48 GMT 16.09.2022 (Updated: 10:45 GMT 05.03.2023) “Tectonic” shifts in international ties are testimony to the waning global dominance of the US, Russia’s President Vladimir Putin stated at the EEF in Vladivostok earlier this month. He emphasized that confidence in “unreliable, compromised currencies” such as the US dollar had been lost, with even American allies cutting their dollar assets.
The new reserve currency
mooted by Russia and China as an alternative to the US dollar is a “tempting carrot” to countries around the world to wrest back control of their most valuable national assets, Alex Krainer, founder of Krainer Analytics, told Sputnik.
An alternative to the Western-controlled mechanisms of trade would allow developing nations to free themselves of their crushing debts, which are becoming more difficult to service as interest rates continue rising, triggered by soaring inflation, the creator of I-System Trend Following underscored.
Amid an already shrinking US dollar dominance, Russia announced in June that it was poised to develop a new global reserve currency
alongside China and other BRICS nations: Brazil, Russia, India, China, and South Africa.
"The matter of creating the international reserve currency based on the basket of currencies of our countries is under review. We are ready to openly work with all fair partners," Russian President Vladimir Putin told the BRICS Business Forum.
There are two highly significant aspects to the plan being mulled by Russia and China, Alex Krainer underscored. The two countries have signaled that the system to be used for settling foreign trade and backed by participating nations' commodities, firstly, "would not penalize participating nations if they defaulted on their debt obligations to Western financial institutions," and secondly, "they would not penalize them if they nationalized their resources and industries," he said.
Despite the dollar rallying this year by 9% against a basket of six major currencies, central banks have been increasingly looking to diversify their holdings into currencies like the Chinese yuan or non-traditional reserve currencies, International Monetary Fund (IMF) economists said in June. As nations try to raise the value of their own currencies to tame skyrocketing inflation, the trend has gradually resulted in a chipping away at the US dollar's dominance in global payments.
“The policy of the US Federal Reserve bank is exacerbating the pressure to de-dollarize by effectively exporting US inflation to their trading partners. With interest rates rising, tightening credit standards are making it more difficult to obtain loans, with the strengthening US dollar hurting developing nations' trade balances,” Alex Krainer said.
Breaking out of the “dollar trap” will be viewed by nations as increasingly tempting if a credible alternative is available, Krainer stated.
The finance analyst explained that for decades, developing nations had no alternative to the Western dollar-based system. Accordingly, they were forced to submit to a “monopolistic" control of their trade and finances, including the IMF's cruel "structural adjustments" that resulted in chronic poverty for their populations.
To defend its hegemony, the West has relied on force of arms since the beginning of the colonization process, Krainer recalled, but now this dominance is being lost. The analyst suggested that Western leaders are now confronted with a scenario once speculated on by Zbigniew Brzezinski, who wrote that, "The most dangerous scenario would be a grand coalition of China, Russia and perhaps Iran - an 'antihegemonic' coalition."
“The changes that are now taking place irreversibly will prove to be one of the most significant turning points in modern history - potentially truly a liberation for a large segment of humanity worldwide,” Krainer told Sputnik.
Ditching dollar dominance has gained particular urgency amid sweeping sanctions targeting Russia - one of the biggest economies and exporters in the world - over its military operation in Ukraine, which presuppose confiscation and/or freezing of Russian reserves.
The US has been persistently striving to maintain the old world order that is beneficial only to Washington, Russian President Vladimir Putin
underscored at the Eastern Economic Forum (EEF) in Vladivostok. According to Putin, "confidence in the dollar, euro and pound sterling as currencies to carry out payments, store reserves, nominate assets has been lost." The Russian leader pointed to how the world was gradually moving away from using such “unreliable, compromised currencies,” with even US allies are “cutting their dollar assets.”
De-dollarization - the cessation of the use of the US dollar as world reserve currency and as the currency in which oil is priced and international transactions settled - is fraught with a dramatic reduction in the clout of the United States, US economist Dr. Paul Craig Roberts said.
Having the dollar as the world reserve currency has put Washington in control over the international financial system, able to impose sanctions on other countries at a whim, and exclude their banks from the financial clearing system. Sanctions imposed by the US on Russia, Iran, and Cuba all serve to illustrate this, he added. This position also permits the “hegemon” to pay its bills by printing money, forcing countries that hold their reserves in dollars to “finance America's budget, trade deficits and wars,” the US economist explained.
A multipolar world of sovereign countries is totally inconsistent with a hegemon, Dr. Paul Craig Roberts, ex-assistant secretary of the treasury under Ronald Reagan, emphasized.
Accordingly, de-dollarization is inevitable, the expert stated, adding that the solution is “not to look for a different world reserve currency from a country that would not abuse the power, but to bring an end to the unipower world that a reserve currency creates.”
7 September 2022, 10:00 GMT
