March 31, 2023 - 5:51pm
The end of the dollar is all the rage. In a piece yesterday for UnHerd, macroeconomic analyst Philip Pilkington argued for the acceleration of the de-dollarisation of international trade based on the recent news that Brazil and China will trade in their own currencies.
There’s one problem: the two countries have announced this arrangement multiple times — in 2009, in 2013 and now again in 2023. If history is any indicator, this is a routine talking point by the Brazilian and Chinese leadership that has so far lacked any substantial financial follow-through. Another example was an LNG trade in yuan between the China National Offshore Oil Corporation (CNOOC) and the French company TotalEnergies. But, as energy expert Anas Alhaji points out, the actual source of the LNG is the United Arab Emirates, which was paid neither in euros nor yuan but in USD, making the French-Chinese transaction symbolic at best.
In similar fashion, the claims that OPEC will de-dollarise have been around since 1975, and while the dollar has lost some ground, there is no alternative in sight. The USD share of the world’s official foreign exchange reserves is 60%; the Yuan’s is 2.76%. The dollar has been around the 60% mark since 1995, and — even more telling — a comparison of data from the Bank for International Settlements compiled by Brent Donnelly shows that since 1989 the USD share in international transactions has been steadily around 90%.
The spectre of a disappearing dollar even made it onto the cover page of the Economist in 2004, but if the last 19 years have shown anything, it is the resilience of the currency. While China certainly enjoys the media frenzy around the allegedly imminent decline of the US (think of it as a kind of diplomatic trolling), it is not clear if it or any other country would be willing to provide the world’s reserve currency even if they could.
Michael Pettis, a senior fellow at the Carnegie Endowment, has pointed out that China’s growth model benefits from the USD’s status as the global reserve currency. Replacing it would require the Chinese Government to give up control of its capital and trade account, while the People’s Bank of China would have to take over from the Federal Reserve.
This would also mean, however, that Chinese financial institutions need the same degree of transparency and global trust as their US counterparts. None of this seems likely, and it is not even clear if China trusts its own currency. A majority of its Belt and Road Initiative projects are funded and denominated in USD, demonstrating the unbroken dominance of Washington in the world of finance.
Another idea floated involves a BRICS+ currency backed by gold or commodities. Yet this assumes a level of political and institutional integration among BRICS member states that simply does not exist. Besides, the idea that India — both a regional & global competitor of China’s — will allow Beijing and Moscow to have a say in its fiscal and monetary policy is at this point political fiction.
For all the troubles of the West, the US and the EU are coherent actors with deeply embedded institutional structures that are difficult to replicate. The costs associated with the introduction of the euro were unequally distributed among member states, but the vision of a common currency as a unifying symbol was seen to be worth the sacrifice. There is no similar shared vision between India, Brazil, China, Iran, Russia, and those other states that would allow for the replication of a common currency. For now, and for some time to come, the dollar is here to stay.
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SubscribeThe discussion about the future of America and the dollar have become binary (to borrow a term from the gender activists): either America and the dollar will collapse or they will forever be the global hegemon.
My sense is the answer lies somewhere in between. I believe America’s strength is ebbing and it has overplayed its use of financial sanctions. Every other country must now hedge its bets between the dollar and other major economies. China presents a real threat, as do nascent alliances if they can pull together.
America will be a major player for the foreseeable future, but its culture is now rotting and other countries are actively exploiting its self-inflicted weakness. A greater distribution of power throughout the world is no bad thing, imo. Maybe if America postures less on the world stage it will spend more of its resources repairing its own decaying culture.
Look at how long it took England to lose its reserve currency status. It was a gradual 40-50 year process that resulted in the pound losing 70% of its value internationally. And that was when there already was a clear alternative currency available.
May I ask if you would care to very briefly outline the cause(s) of England’s humiliating decline?
I have a 90 year old dictionary that defines a Dollar(there was only one type of dollar then) as a unit of American currency worth approximately 2’6, ie 30 pence in a 240p £1 or 12½p in a 100p £1.
May I ask if you would care to very briefly outline the cause(s) of England’s humiliating decline?
I have a 90 year old dictionary that defines a Dollar(there was only one type of dollar then) as a unit of American currency worth approximately 2’6, ie 30 pence in a 240p £1 or 12½p in a 100p £1.
US culture maybe rotting, as you so charmingly put it, but at least they don’t eat DOGS, unlike some other unmentionables!
What a strange comment. We eat pigs. You either eat animals or you don’t. If you do then you have a responsibility to farm them as humanely as possible. Apologies if you were joking.
Try and eat my dog.
..Charlie never jokes! any chance he gets to display his white supremacy is irresistible to him!
He does not have to prove it: it is factually evident.
He does not have to prove it: it is factually evident.
yur, like, right on bruv… what utter woke nonsense!
Try and eat my dog.
..Charlie never jokes! any chance he gets to display his white supremacy is irresistible to him!
yur, like, right on bruv… what utter woke nonsense!
Whether I agree with you on an emotional level is not the point and completely irrelevant to the conversation.
I am saddened to say even the great authors who celebrated America would not recognise it today. I don’t and i’m talking since i was last there in 1993.
Americans need a wake up call urgently. Get rid of the Democrats who illiberally force their weird philosophies onto people who they want to control.
They have bastardised Liberalism. That goes for the loony left all across the world.
They have broken the English language to correct something that was never broken!
..and, presumably replace the Dems with the really sensible, lucid, rational, moral, reasonable GOP ..is that your recommendation Charlie? Surely they’re both even crazier than you are?
..and, presumably replace the Dems with the really sensible, lucid, rational, moral, reasonable GOP ..is that your recommendation Charlie? Surely they’re both even crazier than you are?
What a strange comment. We eat pigs. You either eat animals or you don’t. If you do then you have a responsibility to farm them as humanely as possible. Apologies if you were joking.
Whether I agree with you on an emotional level is not the point and completely irrelevant to the conversation.
I am saddened to say even the great authors who celebrated America would not recognise it today. I don’t and i’m talking since i was last there in 1993.
Americans need a wake up call urgently. Get rid of the Democrats who illiberally force their weird philosophies onto people who they want to control.
They have bastardised Liberalism. That goes for the loony left all across the world.
They have broken the English language to correct something that was never broken!
The author is both right and wrong. He’s right about some things, but only because things are just getting started. Chinese currency is only a path forward now, but it’s not the final goal. So everything he said about that is right to a degree for the next months or few years, but what about a 5 or 10 year trajectory? Where are things in 10 years? The fact remains that BRICS GDP just passed the G7 GDP, so change is happening. That’s the real story. So, the author is right for the next 6 months, or year, but less right as each day goes by.
..and infrastructure?
Look at how long it took England to lose its reserve currency status. It was a gradual 40-50 year process that resulted in the pound losing 70% of its value internationally. And that was when there already was a clear alternative currency available.
US culture maybe rotting, as you so charmingly put it, but at least they don’t eat DOGS, unlike some other unmentionables!
The author is both right and wrong. He’s right about some things, but only because things are just getting started. Chinese currency is only a path forward now, but it’s not the final goal. So everything he said about that is right to a degree for the next months or few years, but what about a 5 or 10 year trajectory? Where are things in 10 years? The fact remains that BRICS GDP just passed the G7 GDP, so change is happening. That’s the real story. So, the author is right for the next 6 months, or year, but less right as each day goes by.
..and infrastructure?
The discussion about the future of America and the dollar have become binary (to borrow a term from the gender activists): either America and the dollar will collapse or they will forever be the global hegemon.
My sense is the answer lies somewhere in between. I believe America’s strength is ebbing and it has overplayed its use of financial sanctions. Every other country must now hedge its bets between the dollar and other major economies. China presents a real threat, as do nascent alliances if they can pull together.
America will be a major player for the foreseeable future, but its culture is now rotting and other countries are actively exploiting its self-inflicted weakness. A greater distribution of power throughout the world is no bad thing, imo. Maybe if America postures less on the world stage it will spend more of its resources repairing its own decaying culture.
China, Russia, India, Iran, Venezuela, Saudi Arabia, all want to move away from the dollar to varying degrees. they make up a huge % of the Worlds population and a massive % of the global energy supply (I could add other countries to the list)
Is the dollar finished, of course not, but its clearly going to decline
Rhe whole point of the proposed multipolar order is just that.. the hint is in the name: MULTIpolar.. not one unipolar order replacing another. Duh..
Rhe whole point of the proposed multipolar order is just that.. the hint is in the name: MULTIpolar.. not one unipolar order replacing another. Duh..
China, Russia, India, Iran, Venezuela, Saudi Arabia, all want to move away from the dollar to varying degrees. they make up a huge % of the Worlds population and a massive % of the global energy supply (I could add other countries to the list)
Is the dollar finished, of course not, but its clearly going to decline
You are very correct, the $ by sheer Inertia will continue supreme for decades yet, but all the wile being gnawed at like a mooring rope on a rat infested ship. (the rats being the postmodern lefty-liberals exemplified by the Democrat Party, Education Industry, and Social Media, and The King Rat; the Biden Puppet)
The reason is the Bond Market. There is no where in the world which will ever be able to create one which can reproduce the American system. It just cannot be done for decades.
I am buying gold though – Fiat is in a death spiral of debt caused devaluation, with wages chasing inflation, and un-serviceable debt needing more debt to just service it as interest rises to pay token resistance to the Inflation which is created to tax the wealth from the Middle and Working classes…..
Spirals and spirals, a whirlpool the world is being sucked into to create the Great Reset, which is basically a return to Feudalism.
So, would you sell dollars to buy gold or gold etf?
So, would you sell dollars to buy gold or gold etf?
You are very correct, the $ by sheer Inertia will continue supreme for decades yet, but all the wile being gnawed at like a mooring rope on a rat infested ship. (the rats being the postmodern lefty-liberals exemplified by the Democrat Party, Education Industry, and Social Media, and The King Rat; the Biden Puppet)
The reason is the Bond Market. There is no where in the world which will ever be able to create one which can reproduce the American system. It just cannot be done for decades.
I am buying gold though – Fiat is in a death spiral of debt caused devaluation, with wages chasing inflation, and un-serviceable debt needing more debt to just service it as interest rises to pay token resistance to the Inflation which is created to tax the wealth from the Middle and Working classes…..
Spirals and spirals, a whirlpool the world is being sucked into to create the Great Reset, which is basically a return to Feudalism.
Being a reserve currency isn’t really about economics; it’s about political and military power and the resulting stability that brings. People hold the currencies of countries they have confidence in the political stability of. By that standard there is not currently, nor will there be anytime soon, a viable alternative to the US Dollar.
The United States is foolishly doing practically everything it can to undermine its own position, weaponizing its economic hegemony for short term political advantages on the world stage. Seizing the central bank reserves of Afghanistan or the dollar-denominated assets of wealthy Russians they didn’t like does not inspire international confidence. It may cause wealthy individuals, corporations, and governments to diversify their holdings a little. But to be blunt, if they really want to divest themselves of dollars, where would they go that is any more stable than we are?
But the USA has not “seized” the assets of wealthy Russians. Certainly not at this point. Several international institutions have frozen the assets of some sanctioned individuals. That is not the same as taking possession and use of these assets (I think its what we called “sequestration of assets” during the 1983 miners’ strike).
I personally have no sympathy for people who amassed vast assets by corruption and theft being sanctioned. Nor do I consider it to be damaging “international confidence”.
Semantics.
Semantics.
But the USA has not “seized” the assets of wealthy Russians. Certainly not at this point. Several international institutions have frozen the assets of some sanctioned individuals. That is not the same as taking possession and use of these assets (I think its what we called “sequestration of assets” during the 1983 miners’ strike).
I personally have no sympathy for people who amassed vast assets by corruption and theft being sanctioned. Nor do I consider it to be damaging “international confidence”.
Being a reserve currency isn’t really about economics; it’s about political and military power and the resulting stability that brings. People hold the currencies of countries they have confidence in the political stability of. By that standard there is not currently, nor will there be anytime soon, a viable alternative to the US Dollar.
The United States is foolishly doing practically everything it can to undermine its own position, weaponizing its economic hegemony for short term political advantages on the world stage. Seizing the central bank reserves of Afghanistan or the dollar-denominated assets of wealthy Russians they didn’t like does not inspire international confidence. It may cause wealthy individuals, corporations, and governments to diversify their holdings a little. But to be blunt, if they really want to divest themselves of dollars, where would they go that is any more stable than we are?
Has anybody ever wondered why Jewish Financial Institutions in Wall Street dictate global currency? This is not a random arbitrary decision but one that history has proved indispensable. One that Hitler disgustingly dealt as the answer to the question of the Jews and Europe was burdened with for the longest time. This was in the Middle Ages a puzzle for despite the Inquisition and the pogroms, the Jewish merchant continued to prosper. This was a promise to them by the Lord in Deut 15, “that they will lend to many nations but borrow from none. That they will rule but no one will rule over them.”
As I understand it Jews were forced out of other economic sectors by restrictive laws brought about in the hysteria after the First Crusade in the 11th century, and there was a void created by Christian (and Muslim) restrictions on financing and ‘usury’. The ‘Jew merchant’ stereotype comes from this. I understand that due to their importance for some countries in terms of tax take they were (theoretically at least) under the personal protection of the Crown. Disproportionate levels of Jewish influence in finance, the media etc. are not symbolic of some conspiracy, but because they were forced out of everywhere else.
Jews and now Indian Hindus are just better at it , and indeed most other things than me and everyone else: fact, and I admire and respect them for it.
Jews and now Indian Hindus are just better at it , and indeed most other things than me and everyone else: fact, and I admire and respect them for it.
Huh?
As I understand it Jews were forced out of other economic sectors by restrictive laws brought about in the hysteria after the First Crusade in the 11th century, and there was a void created by Christian (and Muslim) restrictions on financing and ‘usury’. The ‘Jew merchant’ stereotype comes from this. I understand that due to their importance for some countries in terms of tax take they were (theoretically at least) under the personal protection of the Crown. Disproportionate levels of Jewish influence in finance, the media etc. are not symbolic of some conspiracy, but because they were forced out of everywhere else.
Huh?
Has anybody ever wondered why Jewish Financial Institutions in Wall Street dictate global currency? This is not a random arbitrary decision but one that history has proved indispensable. One that Hitler disgustingly dealt as the answer to the question of the Jews and Europe was burdened with for the longest time. This was in the Middle Ages a puzzle for despite the Inquisition and the pogroms, the Jewish merchant continued to prosper. This was a promise to them by the Lord in Deut 15, “that they will lend to many nations but borrow from none. That they will rule but no one will rule over them.”
It’s difficult to imagine any currency competing as a world reserve currency unless the currency floats. For China to compete in that arena the CCP would have to let the yuan float freely. Today China doesn’t allow its own citizens to freely move funds abroad.
China is a tough adversary for the U.S., (economically and militarily), but not in the arena of foreign exchange. Allowing the Yuan to freely float directly contradicts China’s actions of the last 30 years.
What’s wrong with a floating currency ?
What’s wrong with a floating currency ?
It’s difficult to imagine any currency competing as a world reserve currency unless the currency floats. For China to compete in that arena the CCP would have to let the yuan float freely. Today China doesn’t allow its own citizens to freely move funds abroad.
China is a tough adversary for the U.S., (economically and militarily), but not in the arena of foreign exchange. Allowing the Yuan to freely float directly contradicts China’s actions of the last 30 years.
Bang on.
Bang on.
The title of the piece can be read two ways.. think about it!
The title of the piece can be read two ways.. think about it!
…the Dollar will be at risk when rich people from the developing world start stashing their money in Renminbi-denominated accounts and buying a bolt-hole in Beijing…rather than putting it into Western banks and European or North American real estate (all ultimately guaranteed by the primacy of the Dollar)…an event likely to occur in parallel with Hell freezing over…
…the Dollar will be at risk when rich people from the developing world start stashing their money in Renminbi-denominated accounts and buying a bolt-hole in Beijing…rather than putting it into Western banks and European or North American real estate (all ultimately guaranteed by the primacy of the Dollar)…an event likely to occur in parallel with Hell freezing over…
Are people still talking about BRICS? I thought that joke of an idea was forgotten long ago.For reference:BrazilRussiaIndiaChinaSouth AfricaOf those 5 countries, only India is secure and growing. The other 4 are troubled, in crisis, or in severe decline.
Wishful thinking on you part I’m afraid, or are you yet another propagandist?
Wishful thinking on you part I’m afraid, or are you yet another propagandist?
Are people still talking about BRICS? I thought that joke of an idea was forgotten long ago.For reference:BrazilRussiaIndiaChinaSouth AfricaOf those 5 countries, only India is secure and growing. The other 4 are troubled, in crisis, or in severe decline.
Yeah, yeah, yeah the hegemony of the USA will last forever and ever amen.
This is because of the unique brains of the AngloSaxons that founded the US. They’re inherently superior to ‘those slitty eyed’ and brown skinned Asians that can only copy stuff that the AngloSaxon/Americans have invented.
The entire ~96% of humanity should bow down and grovel for the crumbs that fall off the hegemon’s table.
Are you Irish by any chance Mr Branagan?
…maybe before he got a brain again?
An aspiring stage Irishman, I suspect.
You mean a “Plastic Paddy”?
Showing your overt racism again Stanhope-less. I believe the English police are very tough on racial crime. I’m going to give them a call from Oklahoma. Expect a knock on your door in the early hours.
Oh do grow up!
You ‘rise to easily to the bait’ Branagan to offer any decent sport!
Incidentally, what is Oklahoma?
Oh do grow up!
You ‘rise to easily to the bait’ Branagan to offer any decent sport!
Incidentally, what is Oklahoma?
You might need to look up the dictionary meaning of ‘plastic’ Charlie.. you might be surprised!
“Synthetic Paddy” just doesn’t sound right, as I’m sure you will agree Liam old chap?
“Synthetic Paddy” just doesn’t sound right, as I’m sure you will agree Liam old chap?
Showing your overt racism again Stanhope-less. I believe the English police are very tough on racial crime. I’m going to give them a call from Oklahoma. Expect a knock on your door in the early hours.
You might need to look up the dictionary meaning of ‘plastic’ Charlie.. you might be surprised!
You mean a “Plastic Paddy”?
Nope I’m from the great state of Oklahoma!
A ‘none of your business question’ from what I
presume is a ‘superior’ AngloSaxon brain?
..can’t be Anglo anyway with such disrespect for white supremacy!
…maybe before he got a brain again?
An aspiring stage Irishman, I suspect.
Nope I’m from the great state of Oklahoma!
A ‘none of your business question’ from what I
presume is a ‘superior’ AngloSaxon brain?
..can’t be Anglo anyway with such disrespect for white supremacy!
Why so many downvotes ? Did some people miss the irony of your comment ?
Are you Irish by any chance Mr Branagan?
Why so many downvotes ? Did some people miss the irony of your comment ?
Yeah, yeah, yeah the hegemony of the USA will last forever and ever amen.
This is because of the unique brains of the AngloSaxons that founded the US. They’re inherently superior to ‘those slitty eyed’ and brown skinned Asians that can only copy stuff that the AngloSaxon/Americans have invented.
The entire ~96% of humanity should bow down and grovel for the crumbs that fall off the hegemon’s table.