A Weaponization Of Money We’ve Never Seen Before. By Capitalist Exploits.
This is a turning point in monetary history.
When the US left American soldiers stranded in Afghanistan and rescinded all its promises to Afghans, it effectively told the rest of the world that it couldn’t be trusted as a military ally. …
Now, by canceling Russian banks and hence millions of Russian citizens and businesses from trading globally (via SWIFT) they just announced that the US monetary system could not be trusted.
Unless you abide by whatever it is the West wants you to abide by, you’re out. This paves the way to the end of USD hegemony and the acceleration towards a bipolar monetary order. …
By using SWIFT as a weapon they just accelerated the demise of the dollar based system. … This action HAS to bring everyone to heel and if it doesn’t you’ve set off something you can’t control or finish. You’re done if it fails. And guess what. It’s gonna fail. …
Since WWII, the quid pro quo is that the rest of the world (ROW) funds the US by using the USD as the world’s reserve currency, and in return the US acts as the world’s policeman.
(How does the USD as the world’s reserve currency make the US wealthier? Simple. US dollars are manufactured in the US — at zero cost. To obtain them, the ROW has to send real goods and services to the US. The ROW needs them to conduct trade, which was (well, was) nearly all conducted in USD. For example, when Australia buys Saudi oil, Australia pays for it in US dollars. Australia has to get those dollars from somewhere. The massive amount of US currency outside the US represents goods and services the ROW paid the US. The main export of the US since WWII is and has always been US dollars.)
The Bretton Woods monetary order which gave way to the post 1971 petrodollar system with the USD as the world’s reserve currency was based on the arrangement that the US military would police the global trade routes, principally shipping … and that the US government would run trade deficits in exchange for creditor nations reinvesting that capital back into US debt markets. Basically the ROW funded US growth.
That was early days until US growth became US consumption and manufacturing began being exported to EM [emerging markets]. Still, it provided them with the most liquid credit markets to both finance business but also sadly the deep state …. which ironically gets us into the shitshow we are now in today, where the deep state has grown into such a massive cancer.
US manufacturing is no longer competitive and their main export is dollars. In any event that’s been the status quo. The rest of the world is tired of the US using this privilege by running up debts and enforcing not democracy but deep state corruption on them. But for ROW there was no real alternative because … well the US military. But Afghanistan changed that. …
The US military is in retreat, a trend that started under Obama, accelerated with Trump but has continued under Biden with the catastrophically badly managed withdrawal of troops from Afghanistan. Question is. If the US military is in retreat, can the petrodollar monetary reserve system still be enforced? Why would countries voluntarily settle transactions in USD if they felt that the value of their goods being sold was continually being debased? Only if the military pose sufficient threat? That’s now being tested in Ukraine. …
Now with inflation running in the US, the appetite for sending military to far flung places such as Ukraine is pretty slim. So Biden etc. can’t enforce foreign policy any longer. They are increasingly neutered. …
The critical point is that by using SWIFT they just signaled that any country that isn’t friendly to the west MUST do. And that is to rapidly move away from SWIFT and the USD. And like YESTERDAY!”
Well China has got many African and South East Asia countries wrapped up. India? Also think about countries like Afghanistan which the Chinese have wrapped up….and those countries along the belt and road thing and Iran. …
This is way bigger than Russia and Swift.
Take a look at Chinese-Russian trade settlements over the last 5 years. In 2015, 90% of their bilateral transactions were conducted in dollars. By Q1 2020 only 46% of their bilateral transactions were conducted in dollars. This de-dollarization results in a de-facto alliance. …
[Putin] could turn to anyone that wants Russian wheat, gas, oil, coal, steel, lead, zinc, copper, nickel, aluminum, and yes, enriched uranium … and say, “Pay us with this shiny new ruble/yuan system.” He can legitimately say, “Sorry, we can’t use SWIFT, and we don’t want USD.” Now I’m not saying he’ll do it, but what is clear is that both China and Russia have been working towards alternatives aggressively since 2014. …
This is a currency war now going on. It has been in play for years, but now has burst out into the open.
It was inevitable that the post-WWII arrangements would end eventually, and, historically, paper currencies unmoored from gold have inevitably ended in an inflationary fire or in war. Now we are starting to glimpse how the current arrangements are going to end.
