An interesting interview with Janet Yellen was released by CNN earlier, where she’s asked not only about the Russian sanctions and their putative effect, but on the current hot-topic issue of the global de-dollarization as a consequence of those sanctions.
She is a ding who can't manage her own country's economy and fudges the numbers, and here she pretends to know something about another country's economy? God help us; cretins rule us.
Apr 18, 2023·edited Apr 18, 2023Liked by Simplicius
Looks like DC's hubris may finally be taking dollar hegemony down in which case we are all going to suffer as a consequence. Enormous distortions, many decades in the making, will be wrung from the monetary system. The Fed will be forced to respond with accelerating dollar debasement. Financial paper wealth will vaporize as a consequence. Physical assets offer refuge, particularly liquid assets (i.e. precious metals).
I wish that that famous coyote running in the air would finally fall.........but I think we are for a long haul in this dedollarisation process. Thank you for your informed article.
I come over here, to your superb sub-stack to learn from the bright bulbs. My bestie is one of those; thank goodness he is a paid subscriber🐈⬛ Meanwhile, back here at the North 40…Glory to Mother Russia; I dare say, I pray to live long enough to see the Great Work, take wings. I feel it, in my bones. 💙🇷🇺❤️
There is still a "moment" which has to pass, where a true alternate to USD is available. Or, more importantly. SWIFT.
Imagine you are a small or medium (or large) enterprise, non US or non EU. How do you buy and sell goods and services? To date - all bank transfers are conducted via SWIFT (which is just a bank messaging system, but runs through Brussels and is largely controlled by NY). The VAST majority of international commerce is conducted in USD. An Egyptian company buying plastics from China? USD. A Thai company buying textiles from India? USD. An Australian company selling machine goods to Angola? USD. Even the mighty Chinese, the world's largest exporter, conduct the vast majority of their exports in USD. And since the Chinese still have capital controls, a business has NO CHOICE; its not like you can ask them "hey, I want to pay you in Yuan". Its USD or nothing. Emmanuel Macron once quipped that when Air France wants to buy aircraft from Airbus, they have to buy them in USD.
Then you have the various diktats that DC (via the treasury department) orders various national central banks to do in terms of sanctions and US citizens. What winds up happening is that the central banks of other countries enforce US sanctions more enthusiastically than American banks do simply to remain in the good graces of DC, because all USD transactions (the backbone of international trade) clear through NY and are conducted via SWIFT. And so you wind up with the soup of banking acronyms: FATCA, KYC, PPP, PEP, UBO, RED, AML and so on and so forth which frankly exist entirely as bastard children of US compliance demands.
So, in practice, any attempt to set up a parallel structure is met with ire and sanction from DC/NY/Brussels (a major deterrence) and ordinary people living all over the world - businessmen, executives, staff, average joes - conduct their day to day lives under the implicit approval of the USD. Use a Visa or MC? Have a bank account? A mortgage? A business loan? If you somehow find yourself sanctioned by DC your life is OVER. Just think about the implications of that - imagine being sanctioned by, say, Japan. Or Brazil. Unless you live in those two countries or a neighbour, chances are you won't even notice. But the US - you're done.
I have known many people who lived as "unbankable" - Sudanese, Iranians, Iraqis, Syrians, and now Russians. If ever a WMD truly existed that needed to be purged from humanity, that is it.
What Yellen is freaked out about is the self-imposed "gap in the market". Nobody cares or notices when a country like Syria is sanctioned. But Russia; that creates a giant hole in the global market which MUST BE FILLED. And so necessity is the mother of all innovation and the sanctions have created the perfect incubator for an alternate to the USD & SWIFT
That is what she is losing sleep over. And rightly so.
The notion that Russia depends on China for its weapons systems is risible. Whatever components Russia buys from China are likely 1) easy to get and less important, thus why get them anywhere else, and 2) if they become harder to get, Russia will develop the technology itself, which it is quite capable of.
I suspect most of these statements about Russia weapons depending on China are the exact opposite of reality. As Andrei Martyanov continually points out, China is at the moment dependent on Russia for weapons technology (not the production of same, the actual technology.) China needs to up its game in hypersonic weapons and there is only one source for that: Russia.
This is why the Chinese Defense Minister arrived in Russia yesterday and directly met with Putin - which is almost unheard of. You can be sure the discussions revolved around Russian technology transfer to China to counter US superiority in submarines and the provision of Russian hypersonic technology to enable China to further counter the US Navy in the Pacific. These are the only real weaknesses China has vis-a-vis the US in any conflict over Taiwan.
Another excellent piece sir. Can definitely see the concern in her eyes. I hate these people with every fiber in my body. The mind fuckery they use on Western Citizens is horrible and it’s going to get worse and much faster now. The pressure is on big time. The elites can still taste victory but it now appears they’re moving backwards away from the finish line.
I am under no illusions as to what this will look like as the dollar looses relevancy. I suspect more inflation is on the way and we will see it in all the necessary items. There are plenty of circumstances out there now that could literally create a complete meltdown. Unfortunately not much we can do aside from preparation.
This is not fundamentally about the US. It is about the failing grand plan of the tribe which controls the US and to which she belongs. That tribe includes her 2 Fed predecessors, the controllers of US finance, media, big tech, Summers, Blinken, Nuland and a great swathe of Brandon's administration. Over many hundreds of years they have penetrated and exploited nations, leveraging success in one to move into control of another.
Having brought the US under their control and gained ownership of most of its people's assets, the next step was to be China, led by the investments they made there at the expense of the American and European people. But the stumbling block is the CCP which will allow no one, be they Chinese oligarch or foreign oligarch, to have political power, direct or indirect, that in any way rivals or threatens that of the CCP -- and the CCP understands well how that tribe has subverted and expropriated country after country.
So now the tribe finds that the greatest and latest country they have destroyed, is no longer a stepping stone to anywhere else but the end of the line. The destruction of US (and European) industrial capacity, cultural cohesion and military power, which they wrought for their own ends, is becoming an existential threat to them, because their vassal cannot go toe-to-toe with Russia (which they previously savaged and asset-stripped) and China, either militarily or industrially. And to rub salt into the wounds, their kleptocracy over Ukraine is being effectively wiped out.
Serious panic is starting to develop and, now, the actions of the tribe's cultural warriors threaten the interests of their oligarch members (who fund the cultural warriors), when there is no prospect of getting control of the rising world powers.
The dollar still has long ways to go, before a new global financial system can take its place, mainly because there is no alternative. The yuan will probably not replace it, since China doesn't like an open financial system, they want their capital to stay within China, they love their capital controls. So much so, that some of my Chinese friends here have to do creative deals with family and friends still in China to keep the money transfers "off the books" (I give your family in China a car, and you give me the money in cash). Getting even a couple thousand dollars out of China isn't very easy.
Russia, India, Brasil, and many of the other countries will not be a replacement either, since becoming the currency that will replace the dollar means doing similar things to what the US is currently doing, and suffering the similar consequences, like deindustrialisation, high trade deficit. Also, the currency has to be available in quantities that satisfies the global trade demands. Which means issuing lots and lots of bonds. Which country is going to start becoming indebted, and start printing massive amounts of money, just to replace the USD? No one will. The only way the dollar dies is if the US gov't is no longer trusted to service its debt, like complete economic devastation of the US.
Also, many countries may not use the dollar directly for trade, but those trades are still denominated in dollars. This is where a lot of private bank "issued" shadow dollars come from.
The most likely outcome is regionalisation of the financial system, but who knows.
I don't see the dollar going anywhere for a few more decades at least. We'll see.
Instinctively makes sense; if countries have a choice to be truly sovereign by using an alternative payment system why wouldn’t they if they can? It was always a question of reaching the tipping point which it looks like the world has. I’ve wondered why it’s assumed countries must move to a ‘single’ alternative currency; why not trade is a range of currencies, which spreads risks but also economically unites these sovereign partners, who, by virtual of their central bank gold holdings and their commodities should have some stability?
Thank you for another insightful analysis and write-up, including the graphics.
Just a note: Mir is not a Russian version of SWIFT. It's more analogous to Visa or MasterCard. The actual Russian version of SWIFT is called SPFS. I won't include any links here as it's easy enough to find more details on this.
Dr. Richard D. Wolff was her classmate at Harvard, notes she was a dim bulb, but very good at following orders.
I think that Summers meant to say that the US was on the far right side of history.
She is a ding who can't manage her own country's economy and fudges the numbers, and here she pretends to know something about another country's economy? God help us; cretins rule us.
Looks like DC's hubris may finally be taking dollar hegemony down in which case we are all going to suffer as a consequence. Enormous distortions, many decades in the making, will be wrung from the monetary system. The Fed will be forced to respond with accelerating dollar debasement. Financial paper wealth will vaporize as a consequence. Physical assets offer refuge, particularly liquid assets (i.e. precious metals).
I wish that that famous coyote running in the air would finally fall.........but I think we are for a long haul in this dedollarisation process. Thank you for your informed article.
Thanks once again, for pulling together the facts and producing a very readable snapshot of a very relevant topic.
You da man!
She always has that tremor in her voice.
I come over here, to your superb sub-stack to learn from the bright bulbs. My bestie is one of those; thank goodness he is a paid subscriber🐈⬛ Meanwhile, back here at the North 40…Glory to Mother Russia; I dare say, I pray to live long enough to see the Great Work, take wings. I feel it, in my bones. 💙🇷🇺❤️
There is still a "moment" which has to pass, where a true alternate to USD is available. Or, more importantly. SWIFT.
Imagine you are a small or medium (or large) enterprise, non US or non EU. How do you buy and sell goods and services? To date - all bank transfers are conducted via SWIFT (which is just a bank messaging system, but runs through Brussels and is largely controlled by NY). The VAST majority of international commerce is conducted in USD. An Egyptian company buying plastics from China? USD. A Thai company buying textiles from India? USD. An Australian company selling machine goods to Angola? USD. Even the mighty Chinese, the world's largest exporter, conduct the vast majority of their exports in USD. And since the Chinese still have capital controls, a business has NO CHOICE; its not like you can ask them "hey, I want to pay you in Yuan". Its USD or nothing. Emmanuel Macron once quipped that when Air France wants to buy aircraft from Airbus, they have to buy them in USD.
Then you have the various diktats that DC (via the treasury department) orders various national central banks to do in terms of sanctions and US citizens. What winds up happening is that the central banks of other countries enforce US sanctions more enthusiastically than American banks do simply to remain in the good graces of DC, because all USD transactions (the backbone of international trade) clear through NY and are conducted via SWIFT. And so you wind up with the soup of banking acronyms: FATCA, KYC, PPP, PEP, UBO, RED, AML and so on and so forth which frankly exist entirely as bastard children of US compliance demands.
So, in practice, any attempt to set up a parallel structure is met with ire and sanction from DC/NY/Brussels (a major deterrence) and ordinary people living all over the world - businessmen, executives, staff, average joes - conduct their day to day lives under the implicit approval of the USD. Use a Visa or MC? Have a bank account? A mortgage? A business loan? If you somehow find yourself sanctioned by DC your life is OVER. Just think about the implications of that - imagine being sanctioned by, say, Japan. Or Brazil. Unless you live in those two countries or a neighbour, chances are you won't even notice. But the US - you're done.
I have known many people who lived as "unbankable" - Sudanese, Iranians, Iraqis, Syrians, and now Russians. If ever a WMD truly existed that needed to be purged from humanity, that is it.
What Yellen is freaked out about is the self-imposed "gap in the market". Nobody cares or notices when a country like Syria is sanctioned. But Russia; that creates a giant hole in the global market which MUST BE FILLED. And so necessity is the mother of all innovation and the sanctions have created the perfect incubator for an alternate to the USD & SWIFT
That is what she is losing sleep over. And rightly so.
The notion that Russia depends on China for its weapons systems is risible. Whatever components Russia buys from China are likely 1) easy to get and less important, thus why get them anywhere else, and 2) if they become harder to get, Russia will develop the technology itself, which it is quite capable of.
I suspect most of these statements about Russia weapons depending on China are the exact opposite of reality. As Andrei Martyanov continually points out, China is at the moment dependent on Russia for weapons technology (not the production of same, the actual technology.) China needs to up its game in hypersonic weapons and there is only one source for that: Russia.
This is why the Chinese Defense Minister arrived in Russia yesterday and directly met with Putin - which is almost unheard of. You can be sure the discussions revolved around Russian technology transfer to China to counter US superiority in submarines and the provision of Russian hypersonic technology to enable China to further counter the US Navy in the Pacific. These are the only real weaknesses China has vis-a-vis the US in any conflict over Taiwan.
Another excellent piece sir. Can definitely see the concern in her eyes. I hate these people with every fiber in my body. The mind fuckery they use on Western Citizens is horrible and it’s going to get worse and much faster now. The pressure is on big time. The elites can still taste victory but it now appears they’re moving backwards away from the finish line.
I am under no illusions as to what this will look like as the dollar looses relevancy. I suspect more inflation is on the way and we will see it in all the necessary items. There are plenty of circumstances out there now that could literally create a complete meltdown. Unfortunately not much we can do aside from preparation.
This is not fundamentally about the US. It is about the failing grand plan of the tribe which controls the US and to which she belongs. That tribe includes her 2 Fed predecessors, the controllers of US finance, media, big tech, Summers, Blinken, Nuland and a great swathe of Brandon's administration. Over many hundreds of years they have penetrated and exploited nations, leveraging success in one to move into control of another.
Having brought the US under their control and gained ownership of most of its people's assets, the next step was to be China, led by the investments they made there at the expense of the American and European people. But the stumbling block is the CCP which will allow no one, be they Chinese oligarch or foreign oligarch, to have political power, direct or indirect, that in any way rivals or threatens that of the CCP -- and the CCP understands well how that tribe has subverted and expropriated country after country.
So now the tribe finds that the greatest and latest country they have destroyed, is no longer a stepping stone to anywhere else but the end of the line. The destruction of US (and European) industrial capacity, cultural cohesion and military power, which they wrought for their own ends, is becoming an existential threat to them, because their vassal cannot go toe-to-toe with Russia (which they previously savaged and asset-stripped) and China, either militarily or industrially. And to rub salt into the wounds, their kleptocracy over Ukraine is being effectively wiped out.
Serious panic is starting to develop and, now, the actions of the tribe's cultural warriors threaten the interests of their oligarch members (who fund the cultural warriors), when there is no prospect of getting control of the rising world powers.
The dollar still has long ways to go, before a new global financial system can take its place, mainly because there is no alternative. The yuan will probably not replace it, since China doesn't like an open financial system, they want their capital to stay within China, they love their capital controls. So much so, that some of my Chinese friends here have to do creative deals with family and friends still in China to keep the money transfers "off the books" (I give your family in China a car, and you give me the money in cash). Getting even a couple thousand dollars out of China isn't very easy.
Russia, India, Brasil, and many of the other countries will not be a replacement either, since becoming the currency that will replace the dollar means doing similar things to what the US is currently doing, and suffering the similar consequences, like deindustrialisation, high trade deficit. Also, the currency has to be available in quantities that satisfies the global trade demands. Which means issuing lots and lots of bonds. Which country is going to start becoming indebted, and start printing massive amounts of money, just to replace the USD? No one will. The only way the dollar dies is if the US gov't is no longer trusted to service its debt, like complete economic devastation of the US.
Also, many countries may not use the dollar directly for trade, but those trades are still denominated in dollars. This is where a lot of private bank "issued" shadow dollars come from.
The most likely outcome is regionalisation of the financial system, but who knows.
I don't see the dollar going anywhere for a few more decades at least. We'll see.
Instinctively makes sense; if countries have a choice to be truly sovereign by using an alternative payment system why wouldn’t they if they can? It was always a question of reaching the tipping point which it looks like the world has. I’ve wondered why it’s assumed countries must move to a ‘single’ alternative currency; why not trade is a range of currencies, which spreads risks but also economically unites these sovereign partners, who, by virtual of their central bank gold holdings and their commodities should have some stability?
Thank you for another insightful analysis and write-up, including the graphics.
Just a note: Mir is not a Russian version of SWIFT. It's more analogous to Visa or MasterCard. The actual Russian version of SWIFT is called SPFS. I won't include any links here as it's easy enough to find more details on this.