EDITORIAL
THE ERA of the dollar may finally be coming to the end.
It’s been tipped for many years as the BRICS nations strengthened and the world economy started tilting towards China.
But the fallout from Russia’s invasion of Ukraine might just be the thing that pushes it over the edge – and potentially ushers the world into a new economic age.
For decades, the dollar has been the world’s reserve currency, through thick and thin.
But as Russia demands “unfriendly” nations pay for its gas in Rubles and as Saudi Arabia considers ditching the ‘petrodollar’ for Yuan, the momentum appears to be sharply shifting away from the US currency.
Sanctions on Russia have aimed to tighten the noose around the economy. At the minute, Western measures have effectively ensured no currency – whether crypto, dollar or any other major ones – can be pumped into the economy externally.
This week the Institute for the Analysis of Global Security, a Washington-based think tank, said the “extremely trigger-happy” sanctions would make foreign central banks ditch the dollar and diversify theiur foreign reserves.
“That has a cumulative effect and as a result, we see the dollar playing less and less of a role and portfolios of central banks,” Gal Luft of the think tank said.
He told CNBC: “It’s like a bunch of kids running around with guns shooting all over the place without realizing what they’re actually doing, without looking at the cumulative impact of all of this.
“On the one hand, you are sanctioning right and left. On the other hand, you want countries to buy your Treasurys and finance your debt. That’s not a sustainable scenario.”
If this happens, it not only spells trouble for the US economy, but their wider influence.
Redaction has previously covered how American imperialism and the prevalence of the dollar effectively means other nations pay for Washington’s jingoism.
Economist Michael Hudson said: “These dollars we have spent around the world, mainly for the 800 military bases and the other activities we have, these dollars would end up in foreign central banks.
“And foreign central banks, what are they going to do with them?
“They don’t buy companies; they buy Treasury bonds.
“So we run a monetary deficit; the dollars are spent abroad; the central banks lend them back to the Treasury, and that finances the budget deficit, but it also finances the balance of payments deficit.”
READ MORE: How the dominance of the dollar ensures foreign countries pay for American intervention
The fall of the dollar has been a long time coming – and welcome for many of American adversaries – but rather subversively, it could be responding to unwarranted Russian aggression that brings it about.
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