Back in the ancient times, if you wished to buy product from someone you arrived at their location with money, or they arrived at your location with product. The product was inspected, and the money was inspected. Once both sides were satisfied, the exchange was made, and the deal was done. It did not take long for a class of middlemen to turn up who brokered such deals. They inspected the goods, arranged transportation and safeguarded the product and the money.
World trade has not changed much since the ancient times. Middlemen still facilitate most of the trade. They are called banks, insurance companies, freight brokers, shipping companies and so forth, but they are all part of this vast and essential middleman economy that makes it possible for the local Walmart to have shelves stuffed with goods from Asia. It is what makes it possible for the Chinese company selling dog food to get paid by Walmart.
One thing to note about this setup is the two greatest seafaring nations in the history of the planet, the United States and Britain, do very little shipping. Instead, they control the flow of goods around the world through control of the insurance markets and the financial system used in global trade. If you are involved in global trade, you are certainly using the American financial system and either directly or indirectly the British maritime insurance system.
The dollar being the world’s reserve currency has been to this point the main driver of the explosion in global trade. The buyer in South America can do business with a seller in China, because his bank is connected to the American financial system through his country’s central bank. He does not have to get RMB from his bank to pay the Chinese vendors, because the exchange is done automatically through the dollar dominated global financial system.
This is about to change with the launch of an alternative payment system that was announced at the BRICS summit in Kazan Russia. The Russians and the Chinese have been working on creating an alternative to SWIFT, which stands for Society for Worldwide Interbank Financial Telecommunications. It is the platform that networks the world’s banks to facilitate the flow of money around the world. The new system seeks to replace SWIFT for trade among the BRICS countries.
For most people this is an eye-glazing topic, but in the fullness of time it could be an event that generations of historians study as an inflection point. What the BRICS countries are seeking to do is wrest control of the global financial system from the West, specifically the English-speaking countries, at least for the members of BRICS and those countries willing to trade with BRICS. By extension, it is an effort to reduce the power of the dollar and thus the power of the American empire.
What this new system proposes to do is make it easier for participating countries to conduct business in the currency of other participating countries. Instead of China needing dollars to buy oil from the Saudis and therefore preferring dollars from other countries for Chinese goods, the Chinese will be able to buy oil in RMB and the Saudis will be able to buy Chinese goods in whatever currency they possess. The new system would handle the conversion and exchange rates instantly.
As an aside, that last part is interesting. In the United States, a business does not get paid by the credit card company for a few days. Often, the delay is longer. Of course, there are fees for taking credit card payments. In Russia and China, the movement of money is instant. The system is treated as a public utility, so fees are relatively small compared to what we see in the West. This is owing to much better and newer technology and a different attitude toward banking.
That aside, the significance of this proposal is enormous. The BRICS countries represent half the world’s population. The Arab oil countries, particularly Saudi Arabia, are onboard for this new system. The Saudis let expire the fifty-year-old deal with Washington that established the petrodollar. China, India and Russia are the driving force behind this new arrangement and represent three of the most important economic powerhouses in the world at the moment.
What this means for the West is far less influence over the rest of the world through the control of the financial system. The main reason China, Russia and India have pushed for this new system is they have grown weary of Washington abusing its position to bully the rest of the world. The sanctions war unleashed by Washington against Russia in 2022 was the final straw. If Washington would use the dollar to try regime change in Russia, it would do it to anyone, especially China.
What the BRICS summit in Kazan represents is decades of belligerently incompetent foreign policy in Washington. Ten years ago, it was inconceivable that these important countries would come together to create a parallel financial system, as all of them were committed to the dollar and the Western system. They were committed to the “rules-based order” because they assumed it served their interests, but decades of abuse by Washington has convinced them otherwise.
What this means for the West is clear. What we see forming up is a trading and cooperation block that includes all the countries outside the West, representing the bulk of the world’s population and the majority of economic activity. Add in the fact that the West has let its manufacturing base shrivel and seems to be at war with its agricultural base and you can see the problem. Economies based in providing services tied to the financial system are facing a cliff now.
For the United States, this could not come at a worse time. Debt is already at staggering levels and is accelerating. The productive and innovative portion of the population is aging, while the unproductive portion is exploding. Add in decades of infrastructure neglect, the demographic and cultural catastrophes, and now is not a good time for a decline in the dollar. America is an empire that debased its currency via the perfidious subversion of its own rules.
Contrary to some claims, the dollar is not about to collapse, but what Kazan signals is the steady decline in the dollar. As the rest of the world begins to trade outside the dollar, it means dollars and instruments denominated in dollars, like debt, will lose value on the global market. This means the American banking system must slow the creation of dollars to prevent inflation. This means the cost of borrowing dollars must go up and stay up in anticipation of declining dollar demand
The steady decline of the dollar means a steady decline in the American standard of living, baring a revolution in Washington. Being the world’s mint and banker only works if the world accepts what you are minting. A rentier economy reliant on skimming from every transaction is only possible if you control the currency. The parasitism that has become a feature of our economy is going to become more obvious. That will bring political consequences as well.
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This will be Biden’s lasting legacy. Weaponizing the dollar and letting neo-cons use it against the world was a terrible mistake.
Stolen elections have consequences, especially when they install lunatic ideologues who are largely detached from reality.
“Money printer go brrrrr” and weaponized sanctions started well before Biden.
The whole world is sick of it.
I remember a talk given by a former Air Force colonel discussing sanctions. Essentially: “They don’t work quickly, but are designed to destroy your country over generations.”
Cuba an excellent example of this. The Cold War ended a long, long time ago. We’re still punishing Cuba.
I would place the start of it with Bush. They sanctioned a group of banks that had been doing business with North Korea. The point was to cut off the NORKS from the global financial system and starve them of hard currency. It almost worked as they were just recovering from the famine. From that point the use of the dollar as a weapon went out of control. Dollar diplomacy has always been part of the toolkit, but never to the point where the world saw it as a weapon and certainly not as part of a regime change program.… Read more »
I’m sure that sanctioning North Korea looked great on paper.
The real-world problem with doing that is the reality that NK has two powerful backing nations – China and Russia.
Both of those countries do not have an issue trading with NK. They are happy to do it directly or help the Norks set up all manner of cut-outs/fronts/shell companies, etc.
Again, this is what happens when there is a ruling class of bubble people that do not interface with actual reality.
I wonder what will happen when the decades-long blackout on available information, goods and services is beheld by the North Korean soldiers being transferred to fight against Ukraine. Will their heads explode?
I have no doubt they will rend their clothing and gnash their teeth at missing out on drag Queen story hour.
Looks like you are at the wrong rally Red.
RO-
You are not wrong to point out the reality that a great deal of North Korea’s austerity is self-imposed by the ruling family.
Yep. A lot of damage in general started with Dubya. Obama was supposed to stop and reverse some of this. But he was both too weak and corrupt to do so. You can find graphs and charts that show the steady decline of the American share of global world trade. Most of this is due to the economic rise of China. Unlike our idiots who considered manufacturing, and particularly tech manufacturing, to be a “back room” low value added activity, the Chinese have always considered the primary industries, particularly manufacturing, to be the basis of an economy. Americans started consuming… Read more »
In the 90s there were actual debates on free trade, and everyone remembers Perot and the “giant sucking sound.” Not everyone was stupid then, but the international money men got their way and here we are.
Zman, we put Iran under sanctions as soon as they kicked out the CIA backed Sha. That was probably the first very publicized instance. When people won’t follow you due to your virtue, well ya gotta use fraud, and when that fails, force!
Oh, you can go back a lot further. In 1941, the United States placed Japan under an oil embargo, seized its assets, and more or less did what was then the equivalent of kicking it off what became SWIFT (basically cutting most access to rudimentary TELEX). It did not end well.
Yup. PS please consider approving my comment. It’s hard enough talking into a howling void. I can certainly leave if you wish.
Yeah there was a significant faction of the dissident right that was gidddy at all the COVID money-printing in Trumps last year.
Richard Spencer, Keith Woods, and Hunter Wallace I remember in particular.
Now Hunter Wallace has spent the last 4 years crying like a baby over inflation.
How I absolutely detest right wingers who use the term “Bidenflation”
Trumpbucks were a great lesson. Those envelopes with his signature in them were the nearest any normal person ever got to being the first spender of inflated currency, benefiting from inflation as bankers et al do. Of course that’s not quite what happened. The system works, and benefiting the citizenry isn’t part of it. The numbers were negligible except symbolically—and except to non-welfare broke guys, all of whose lives were briefly materially improved by the government for the first and only time (unless they stupidly “saved” the money). What we learned was who’s who(m). Who gets really fucking angry at… Read more »
Mitch McConnell, the man who has helped send half a trillion to “Ukraine” via his generous friends at NGO’s and the MIC, referred to the Trumpbucks as “welfare for the wealthy.” You couldn’t make that up.
Yes. Although Tater Joe Biden is not making any of these decisions whatsoever. Tater Joe is just a front-man … the carnival barker outside the tent. He doesn’t own the circus and he certainly doesn’t decide upon carnival policy.
I think this is another aspect of The Great Replacement. The imported helot/voting-machines get paid in dollars and send them back out to the country of origin. This keeps dollars sloshing around. Those who work above ground are taxed on payday – feeding the empire’s coffers. Then, they all pay large fees sending the money overseas and the banks gorge themselves on the fees. Then their family and folk spend the money back home on consumer goods branded by the empire’s merchant corps. Then those governments tax that and keep their loans to the empire’s real rulers – the banks,… Read more »
“The steady decline of the dollar means a steady decline in the American standard of living, barring a revolution in Washington.”
It’s inevitable, period. With or without revolution. The tides of history and all that. It was good while it lasted but all good things come to an end. North America and western Europe are going to see — correction, are already seeing — irreversible declines in the standard of living. I expect the decline to pick up momentum over the years.
Silver lining – hopefully the decline in standard of living will cause all the goat fuckers, street shitters, and other savages to repatriate.
Many like to think so, but I doubt it. For reference see the tweet I added a link to yesterday. And Sailer, civnat to his core, even had a post about Indian Suketu Meta’s book “This Land is Our Land: An Immigrant’s Manifesto.” All those born here travel back and forth constantly to visit family, and have never known a White America (just like Whites under 30). They will stay and AINO will continue to become indistinguishable from the rest of the sh*tty non-White world. Only thing left is try to build your progeny a solid financial and White social… Read more »
I suspect the replacement population was selected precisely due to its familiarity with poverty and its low financial expectations.
“They will stay”
They’ll look for other options, if they’re there. It will be a rational calculation. In the case of white Americans, what frequently holds them back from emigrating is friends and family here, long familiarity with the country, no fluency in any other language, and having been brainwashed into reflexively thinking it’s a dangerous world out there.
The goat lovers wont be able to repatriate if those promised lands are occupied by your Greatest Ally and their golem.
Maybe Trump, Musk etc. will staple some green cards for them?
It will. But also white people with means and skills will be emigrating as well. In fact are emigrating. The grass really is greener on the other side. Just as the great-great-grandparents of today’s white Americans moved from Europe to North America because they were literally starving (Ireland, Germany, Norway) so also will today’s white Americans seek to leave the USA. There’s an interesting essay by the late Prof. Wallerstein written eight years back:
https://iwallerstein.com/the-increasingly-unstable-united-states/
Patriotism is there when times are good. Otherwise people start looking for exit options.
Europe is in bad shape, they have no oil, not really much of anything. I think a lot of the Green BS comes from Europe. I think the Democrats are the Europeans franchise store in the US.
As my European colleagues say frequently in private, “America is too important to allow Americans to make its decisions.” I represent a European country. This view is commonly held throughout its trade ministry. The world tends to view the American PEOPLE as an afterthought. If.
In WWII the Japanese attacked Pearl Harbor to start the war in the Pacific because we cut off their oil supply. They surmised they had no other option. The West will start a major war to try and prevent all of this.
A war our depleted and too-PC military can’t win. We have barely 150 (187 if you count the non-combat coded jets) F-22s, while the Chinese are turning out hundreds of their equivalent jets. The F-35 is a world-beating jet, but it is expensive and is too dependent on vulnerable tankers and runways. We’ve fallen behind on UAVs. The ChiComs are putting hulls in the water and our corrupt military industrial complex is just a vast grifting scheme. We are still building littoral combat ships that are supposed to be modular warships able to do tasks with “mission modules,” but we… Read more »
Kind of says it all right there
The United States also seized Japan’s assets that were within reach and interfered with its use of TELEX services that were used to conduct trade prior to SWIFT. None of this is new except there are other big guys in the picture now.
Splitting the world into two competing trade blocs will not be easy but I predict things will turn out for the best. The two sides will settle down peacefully to trade exclusively within their own trade blocs. Europe will accept its status as the New Africa of the world, a land of rising hope and opportunity. Our own new American citizens will inject a jolt of energy we have recently been sorely lacking in our economy. GDP will skyrocket from the diversity dividend. Women make the better decision-makers overall so the West has the edge there as well especially with… Read more »
When they aren’t busy flying Navy jets into mountain peaks. Or on the abortion table. Because progress ^tm.
Hultgreen-Curie Syndrome strikes again.
Or the female deck officer allowing a destroyer to collide with a container ship because she was in a bit of a tiff with the female officer in the CIC and the two were not speaking.
That’s what I call progress.
Now that it’s ragging on women in the navy day, the story whose dire implications still seem underappreciated is the one where the senior enlisted (female) on the ship had the secret internet connection antenna set up and lied to superiors about it for a good long while. But the worst part was she had the complicity and participation of the entire chief’s mess, male and female. The chief’s mess is supposed to be the backbone of the ship, the enforcer of order and discipline. Her punishment was demotion from E8 to E7 and there was almost no punishment for… Read more »
With a capital ‘P’.
Ha, this is satire right?
This is generally correct. However, there is one limitation with BRICS. None of the major countries that comprise it have a fully convertible currency. Neither the Russians nor the Chinese are willing to take this last step to make their currency fully convertible. I think this hesitancy is due to politics. This is why the Dollar will still remain the top currency used in trade. But its usage will decline over time. Currently 90% of world trade is in Dollars. This could decline to, say, 60% over the next 10 years if BRICS is successful. The lack of a fully… Read more »
Very good points. But call me when the first multi-billion BRICS SDR-denominated bond financing occurs. We may not live to see it.
Also throw into the fact that the American-led financial empire is, at least traditionally, a fairly united bloc of like-minded white people. Yes yes, we have our interlopers and wannabes who try and plug into the Euro-American system, but the system and the rules are a product of the native peoples of the Anglosphere and of northern Europe. Yes yes, the rules have been subverted by bad actors and a certain avaricious ethny, but I would assert that your average white Iowan has more in common culturally and morally with a German or a Frenchman or an Ashkenazi than an… Read more »
Bingo. Until the BRICS can figure out a reserve asset – besides T-bills – they won’t get far.
A Chinese businessman who sells $10 million worth of electronics to an Indian company will get a bunch of rupees that he doesn’t need. What does he do with them? He doesn’t want Indian bonds or other assets. By far, the best option is T-bills, so he converts the rupees to dollars and buys T-bills.
It’s not just about the dollar as the GRC. It’s about T-bills as the global reserve asset.
This is the end of the Global American Empire. The dollar and the banking system was the ultimate power, the idiots in charge overused this weapon and now it’s being taken away from them.
With our ridiculous, never to be repaid national debt, we are hosed. The inflation now will be seen as salad days in a decade if things continue.
It could always get worse.
Our idiots in charge may decide to go nuclear if they ever realize how they frittered away the power of the USD for nothing.
I worry about that. I also worry about the world that my five children will inherit even if the ICBMs aren’t flying. The people in charge have frittered away decades of the Pax Americana as if they meant to destroy it, which might be the case.
Of course they mean to destroy it (and us). They’ve been openly preaching that for years. Build Back Better, DEI, open borders. What is this but self-destruction, suicide?
All I can say is GOOD. It’s too bad that the American people are going to suffer as a result, but anything that can rid us of this nightmare government is a big plus in the end.
This happened because the US & West “elites” were bloodsucking the system. The final straw was Biden with his openly taking bribes and kickbacks using Ukraine as the vehicle. And then putting sanctions on Russia because they have some kind of hate fetish for Russia. We visited Moscow & St Petersburg in the early 2010’s. I commented to my wife, “There is no reason anymore for us to not be friends with Russia.” Anybody with a lick of sense would have seen that since the 1st sanction didn’t work, that we should not have been piling one more and more… Read more »
“it means dollars and instruments denominated in dollars, like debt, will lose value on the global market.” Relative to what? Relative to gold and hard assets, maybe. Relative to other currencies, this is unlikely. I don’t have enough space here for an essay on the multi-trillion Eurodollar system. Suffice it to say that all these BRICS countries have debt denominated in dollars, reserves denominated in dollars, currencies which are either pegged to the dollar (China), or are so volatile (Brazil) or in a state of constant depreciation versus the dollar (India) that they are unsuitable for central-bank reserves. Our country… Read more »
Our country will probably collapse before the dollar does
Indeed. The dollar is the most stable component of the flailing United States. Can a fiat currency outlast its issuer?
It will be interesting to see if Washington attempts to sabotage the BRICs somehow. Perhaps they’ll start experiencing an unknown series of computer glitches in the months to come. The NSA — the Puzzle Palace — probably has access to some pretty good hackers, if not in-house then in the nether reaches of American society. A computer Lord may find himself with a pretty good deal: wreck this platform and we’ll drop the charges against you. If that oil pipeline in Europe was sabotaged by America, I wouldn’t put it past them to do the same but only to computers.… Read more »
You don’t remember the Hong Kong protests in 2019? We are always and everywhere sticking our nose where it doesn’t belong. Why do you think Putin is very aggressive against the LGBTQ shit? He knows they use that crap as a way to create wedges and force themselves in where they aren’t wanted. Read up on color revolutions, we had one here in 2020.
This may be the most important reason for Trump’s election. Harris and her handlers will do everything wrong correcting this if they are inclined to do anything at all. But hey, abortion and all that.
Our rulers’ frittering away the reserve status of the U.S. dollar has much in common with their people trafficking. They bring in a few million impoverished third-world migrants overnight. Life goes on almost as if nothing has changed, since their productive first-world population still returns to work the next day. And they get to feel all virtuous. That is, until the latter retire or are replaced through affirmative action, whereupon they could find themselves living in another South Africa with no managerial slots reserved for folks of their skin color. Likewise, sacrificing the dollar’s global trade status on the altar… Read more »
This is unintentionally hilarious: Israel and the BRICS: A tightrope to walk | Allia Bukhari | The Blogs Excerpt: Most of the current BRICS members do not share the same loyalties to Israel the way many Western countries do, and it allows them to embrace a harsher stance concerning Israel’s actions. Despite a divided Global South, post-colonial grievances with the western world unite these countries in seeing Israel through a critical lens. The BRICS is also emerging as a counterbalance to the “pro-Zionist stance” of the West and its expansion does affect Israel in its efforts to normalize ties with… Read more »
The Issys have certainly burned their bridges with Russia. Mossad in Ukraine looked like it was the last straw for Putin.
“He does not have to get RMB from his bank to pay the Chinese vendors, because the exchange is done automatically through the dollar dominated global financial system.”
Don’t forget Hong Kong. All of the trade through China goes through HK. It is Hong Kong who handles all the currency stuff for Chinese trade. This is one of the things that made Hong Kong so wealthy.
So have any of you financial wizzes got a way for me to try and make money out of this development?
I can’t see a simple solution like buying some new type of crypto currency, and that’s about the extent of my expertise in this area.
Big topic. Speaking of the steady decline of the dollar, I continue to marvel that they were able to sell 2% annual inflation as normal and even desirable. In an honest, healthy system, 0% would be the target. The population explosion of the Global South was a direct result of the globalized USD trading system. Just today I saw an article about Zimbabwe’s new gold backed currency failing, but what struck me about it was a picture of a young Zimbabwean boy going to a food aid station. I’m sure that food aid didn’t come from inside Zimbabwe. I am… Read more »
This post is yet another excellent exposition of the core problem. We have the diagnosis, now what is the remedy? Can voting harder save us? Can a messiah save us? Can a magic incantation rouse the masses into what (protest marches, riots, civil unrest, revolution)? The Soviet Union died a lingering death in 1991 and a new Russia was born from the ashes a decade later. A well-orchestrated purge can accomplish same in a much shorter time frame.
Oh my. It does appear I am now being moderated and my comment is awaiting approval.
Is it something I said? :O)
Yes, spot-on there. As I mentioned in a recent thread, the dollar in my adopted country — my birth-nation having betrayed me and criminalized me — has been constantly de-valued during the past three years or so. This, simply, is because the (relatively) small banks and economy in this lat-am nation recognize that America no longer is a serious country, and what’s more, is intentionally destroying its own culture and economy in order to ‘Build Back Better’ which, of course, ain’t a-gonna happen. Nobody else wishes to ride-along with America’s national suicide. Modern Western-based banking and the checking system originated… Read more »