Trump and de dollarization 1
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Donald Trump and his Make America Great Again Agenda has one Achilles Heel. A weakness that will test the limits of US power and Trump’s ability to drive his America First Agenda: the rise of the South.
The BRICS countries: Brazil, Russia, India, China and South Africa together with new partners such as Turkey, Iran, and Saudi Arabia – are determined to create an alternative currency and financial infrastructure to rival the Dollar and Dollar based institutions. It will not happen any time soon, though it is clearly the direction of the Global South.
Now, from Bretton Woods in 1944 that enabled the US Dollar become the world’s reserve currency, to the present day, the American Dollar has ruled the world economically and logistically. All sustainable currency pegs to the Dollar that is at the top of a basket of western currencies from the Euro to the Yen.
The Dollar has a lock on the world economy. The Dollar has allowed the USA to control global inflation, and decide the value of metals, commodities and energy. The Dollar decides value and has become a hegemon beating up countries that ‘’fail to conform.’’
The USA controls global monetary policy and capital flows through the printing presses of the Federal Reserve, the sole producer of the dollar and dollar-based instruments aka debt, whether paper or digital. Additionally, SWIFT, the Society for Worldwide Interbank Financial Telecommunications is a logistics beast based in the EU linked with the Federal Reserve. SWIFT possesses hegemonic power in the transfer of cash and securities between jurisdictions. SWIFT, if withdrawn, can impede a country’s capital development, and stop the movement of cash from that country to elsewhere.
The Federal Reserve -US Central Bank- possesses the ability to create cash out of thin air by creating debt and enabling huge imbalances – deficits- with countries that trade with the USA, which is most nations. This power derived from history. The victor of Two World Wars, the USA emerged triumphant from the Second World War as the sole economic hegemon in full control of global debt and capital management. The USA also emerged from the war as the most powerful military and logistics power on earth.
The US Dollar is a monopoly currency and the face of US power. The Dollar essentially sucks up the world’s goods and services in exchange for Dollar Debt provided by the Federal Reserve: the US Central bank where the world’s major central banks place their reserves. US national debt is valued at over $34 Trillion. Mainly American investors and organizations own that debt, and some external countries, such as China and Japan. In terms of global cash management, the Federal Reserve is omnipotent
US Debt is an Alice in Wonderland type credit card, with limitless spending power, and sellers and creditors happy to receive that debt, with a promise that the USA will pay the credit card debt at some future date, a date that does not exist. The National debt infrastructure is an Aladdin’s Lamp with a genie that offers unlimited treasure to the USA from investors, and Dollar dependent economies, in return for Dollar payments from the Federal Reserve, but only as long as the world believes in magic: the trust factor. The world sends the USA its goods and services in return for a piece pf paper that is an IOU called the Dollar.
The Dollar is debt in paper form. It reflects an American culture of debt. Americans hold $18 trillion in credit card and loan debt – digital dollar debt- while savings are in serious decline- less than $1 trillion. It is all part of the debt culture. Most Americans live paycheck to paycheck while a handful of billionaires own the major corporations. It is in the interests of these multimillionaires and billionaires – the 1%- to sustain the debt status quo. That national debt narrative is becoming a fairy tale. The ending may not be a ‘happily ever after’ affair.
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