10 ms·

Interesting the pressure is increasing. More and more countries questioning why they need to base their foreign transaction on the US Dollar. Could this mounti

Interesting the pressure is increasing. More and more countries questioning why they need to base their foreign transaction on the US Dollar. Could this mounting unrest be as a result of the seeming inability of the US Federal bank in checking inflation of the US Dollar. Also, some of these Nations can no longer determine what benefit it is to them is using the US Dollar as their reserve currency and trading currency. Some nations might have alternative properties/currencies that would favour their external trade but yet they are stock with the Dollar and must defer to the US in all that concerns it. I would really love someone more knowledgeable to make a prediction as to where all these could be going. Do you see a country like Saudi going off the USD? Do you think the West-African countries relying on CFA will turn away from that any time soon? Is there a case to be made why these nations should maintain the status quo?

hdhdxkfchsk 4y ago
saudi? no. they are the only elites not tied to petrodollar by force but by financial incentives. all the others probably no as they will see the new gana embargo :( the terms first world and second world were originally coined to means country under petrodollar and countries under ussr. third world was a term that meant free for all to the to two powers.
qikInNdOutReply 4y ago
Could this lead to a chain reactions, were countries abandon the dollar and the dollar looses in value, in return leading to more countries abandon it? A world were the most stabilizing region and its currency become temporary hegemon?
- Isinlor 4y ago
  Ghana GDP is 77.59 billion USD. That's almost 2 Twitters :) . Ghana is not triggering any chain reactions.
  - speedylight 4y ago
    Lucky for them, otherwise the US would’ve sent some freedom and democracy their way.
    - hardlianotion 4y ago
      Seems unlikely.
  - nequo 4y ago
    Ghana's GDP is flow while Twitter's valuation is stock.[1] Given that Twitter's EBITDA was $211mn, it is more accurate to say that Ghana's GDP is 368 Twitters. (Which also sounds crazy nevertheless.) [1] https://en.wikipedia.org/wiki/Stock_and_flow https://en.wikipedia.org/wiki/Stock_and_flow
    - KptMarchewa 4y ago
      I agree that GDP-stock comparison is not good, but why compare to EBITDA rather than revenue or expenses?
      - nequo 4y ago
        I'm not going to say that I have strong views on this right now. But the reason I used EBITDA is that GDP is the total value added of the economy. EBITDA is the total value added of the company.
        Majromax 4y ago
        > EBITDA is the total value added of the company. I don't think that's quite the right interpretation. EBIDTA is the value added of the company net its employees (and I'd quibble over depreciation and taxes), whereas GDP includes the labour share. Imagine we had a single-company country, where every worker was also a customer, all costs were internalized, and capital did not depreciate. The GDP of the country would be equal to the profit of the company plus the wages of the employees. Using the EBITDA equivalence, however, the GDP of the one-company country would be more (possibly far more) than "the one company's earnings."
ur-whale 4y ago
>Do you see a country like Saudi going off the USD? Going off, certainly not (why would they?) But exchanging their oil for other currencies, absolutely. What will be interesting is how long the Sauds will remain in power once they agree to exchange their oil against other currencies. Historically, all regimes that made that decision were or are in the process of being taken down either directly by the US or a combo of their close allies (see: Khadafi, Saddam Hussein, Vlad Putin, etc...)
- pjc50 4y ago
  Russia's sanctions were as a result of their invasion of Ukraine and they'd still be a part of the normal financial system otherwise. It's nothing to do with petrodollars.
  - ur-whale 4y ago
    Apologies, but your reading of the situation is shallow. What do you think led Vlad to invade? The US has been mounting a proxy war against Russia in Ukraine for the past 20 years, one they're ready - barring political upheaval in the US - to fight down to the last European.
    - pjc50 4y ago
      Overconfidence and a need for an external enemy? Satanism? https://www.atlanticcouncil.org/blogs/ukrainealert/nato-nazis-satanists-putin-is-running-out-of-excuses-for-his-imperial-war/ https://www.atlanticcouncil.org/blogs/ukrainealert/nato-nazi... > proxy war against Russia in Ukraine To a certain extent this is true, but the Ukranians have been very keen on it as they've benefited from not being a puppet state run by a corrupt president who built himself a huge palace. And Russia has no right to be "in" Ukraine in the first place.
    - _kbh_ 4y ago
      > What do you think led Vlad to invade? There are vast natural resources in Ukraine which threatens Russias place as the gas station to the world. They also have imperialistic ambitions to try and restore what they see as the glory days of the USSR.
spaceman_2020 4y ago
If you look at the actual numbers, you'll find that USD dominance is still unchallenged. BUT, there is definitely way more chatter about alternative payment options, including from well-placed government sources and central banks in important non-west allied countries. It's now a matter of "when", not "if" when an alternative currency pops up, maybe a BRICS currency.
- UltraViolence 4y ago
  I believe the war in Ukraine has permanently damaged the USD's dominance in the medium to long term. The use of a supposedly neutral financial network (SWIFT) as a sanction weapon will make other nations who aren't on good terms with the U.S. and the West (and not just the "usual suspects" but many nations in Africa and South America too) seeking alternatives. As previously mentioned, Bitcoin is a viable alternative. But there may be others. In any case I see nations ganging up to create an alternative to the SWIFT network, potentially undermining its usefulness.
  - immibis 4y ago
    Why would countries that don't plan to commit genocide need to be bothered by SWIFT cutting off countries that commit genocide? In fact, this is a good thing for countries that don't want to be genocided as it provides an additional incentive against genocide.
    - ilammy 4y ago
      Because who knows what’s on the list of excommunicatable offenses. Today it’s war of aggression, 40 years later on not enough diversity and inclusion could qualify, or the eagle knows what else. Hope for the best prepare for the worst.
    - spaceman_2020 4y ago
      > "No one knows with certainty how many people have been killed and wounded in Iraq since the 2003 United States invasion. However, we know that between 184,382 and 207,156 civilians have died from direct war related violence caused by the U.S" [0] Is it only a genocide if a non-western ally does it? 0: https://watson.brown.edu/costsofwar/costs/human/civilians/iraqi https://watson.brown.edu/costsofwar/costs/human/civilians/ir...
ben_w 4y ago
I'm only at the level of guessing for topics like this, but my guess is that a chain reaction is more likely to see a switch from USD to Renminbi than a switch to gold (or Euros). China because of the potential assuming similar GDP/capita as the current USA. Not soon because I expect as a prerequisite for change being the new winner's GDP to be dominant rather than just joint top 3 in a ranking system that changes their ordering depending on what you value most. Not gold because the justifications given for why we all stopped using the gold standard in the fist place, still seem to apply.
- tcbawo 4y ago
  Do you think GDP is the critical factor for determining a global reserve currency? IMO, respect for property ownership rights, legal/judicial recourse, ubiquity of US banks, and political stability are large contributing factors that few other countries can compete with. China has a pretty checkered past regarding ownership rights for citizens who are critical of its leadership.
  - deleted 4y ago
    [deleted]
  - 988747 4y ago
    Property rights and such are secondary. The primary issue is: who has the power? Right now the answer to that question is "US", but since China is catching up on GDP, and, unlike US, actually manufactures things. If China decides that they want payments for all the goods that they export to be in RMB then there's nothing the rest of the world can do about it, except stop all the imports from China (which would take decades, because they have to learn to manufacture all those goods themselves). Once most of your imports come from China instead of the US it does make sense to use Chinese currency as the reserve currency, since you are going to need a lot of RMB to pay for your imports anyway.
    - matthewdgreen 4y ago
      Saudi Arabia (to pick a major oil exporter) imports about 20% of its goods from China. But it also imports vastly more from regional partners and the US and Europe, not to mention that it depends on the US to secure all of its oil exports to China across thousands of miles of vulnerable ocean routes.
edwnj 4y ago
Its definitely not a lack of confidence in USD or the feds. Relative to pretty much every noteworthy alternative, the feds have handled things a lot better. - EU royally f'd with their stimulus & rates. Mind you, they were in a very precarious position to start with. - China has proven themselves to be a house of cards with zero covid, massive public/corporate debt bubbles and Ji becoming god emperor. - Russia is a glorified gas station with an economy the size of florida. The reason for Ghana's action, Saudi looking to end petro dollar, China+Russia looking to form a block etc: US deep state ducking up big time. The weaponised the dollar.. They've been ramping this up big time during the past few decades but the Ukraine War was a UUUUGE reveal the cards moment. During the last 2 years, Russia was filling up their coffers with high oil prices. The US turned these foreign reserves into worthless numbers on a screen overnight with the press of a few buttons. Now pretty much every country is looking at each other like "oh shit".
rich_sasha 4y ago
I think this take is somewhat over-reacting. I'm pretty sure you'll find that the price they agreed is really in USD, and only the medium of exchange is gold (even if the paperwork or agreement doesn't even reference USD). So really they are paying X USD's worth of gold - with both oil and gold price being fixed in USD somewhere abroad. USD is so incredibly ubiquitous, it won't easily go away. Reserves are a little different, but even then, whenever something bad happens, the dollar strengthens as investors flock to it. When the 2008 crisis happened (and it was US-centric!) US and the dollar were still the safe haven everyone escaped to. Not the Rouble, not the Yuan, not so much EUR or CHF or, from memory, gold. So we'll see people avoid the USD as a medium of exchange, maybe, even if the prices are fixed on USD-denominated prices. But also remember, gold is not a great medium of exchange. Will Ghana ship physical gold around the world (risky and expensive)? Or will they sign a piece of paper saying "gold held by in a safe by someone else and owned by me is now owned by someone else" - in which case there is similar counterparty risk, except perhaps not against the US government. But if you think the US is an evil octopus with long tentacles, surely they could get their hands on this gold. Where will this haven safe from US interference be? If anything, I can more easily believe an alternative economy based on crypto. It's actually happening and working well, for all sorts of shady or illicit activity.
- kibwen 4y ago
  > Or will they sign a piece of paper saying "gold held by in a safe by someone else and owned by me is now owned by someone else" - in which case there is similar counterparty risk, except perhaps not against the US government. The US holds a quarter of all the known gold reserves in the world, and has more gold than the next three countries combined, so there's a decent chance that Ghana's gold is already in the US.
- bobthepanda 4y ago
  EUR is still not a great managed currency. The Euro crisis could, technically, happen again. RUB backing economy is pretty much one major export. JPY makes American debt look chaste in comparison CHF does not want the job, primarily because its use as a basket currency already makes it too strong CNY does not want the job, and their past history of capital controls make America look chaste
edwnj 4y ago
As for what happens next: de-globalisation I predict we'll see blocks forming up again, something like: - West (US+EU) - East (China+Russia) - India (India, Sri Lanka, Himalayan States, South China states) - Middle (Middle East+North Africa) - Latam (Central + South American States) One wild card IMO would be the rise of the Indian sphere of influence. I'll leave some room for India's remarkable ability to snatch defeat form the jaws of victory. If they don't f this up, they have UUUGE tailwinds going for them. Middle east is overrated IMO, its like an oasis with oil instead of water. When the oil money runs out, not gonna be fun any more. Latam is probs the biggest wildcard, even bigger than India. They don't need a lot of things to be right to wildly outperform as a block. Just like the US, they are protected by two oceans so they can choose to not involve themselves in stuff. Africa is highly overrated IMO, the entire continent is cursed in multiple ways. If u compare africa to another post colonial continent like Latam, africa is in a place where they need to get so many things right to just survive, let alone to catch up.
- thisiscorrect 4y ago
  I agree with the general premise of your comment, that this is a small sign of the deglobalization which is _already_ under way. But, what are the UUUGE tailwinds benefiting India? India, even more so than China, seems likely to "get old before it gets rich." Its TFR is already below replacement and falling rapidly.
  - KptMarchewa 4y ago
    China's official TFR figures are massively engineered: https://www.project-syndicate.org/commentary/chinese-population-smaller-than-stated-and-shrinking-fast-by-yi-fuxian-2022-07 https://www.project-syndicate.org/commentary/chinese-populat... India ones are still over replaceability.
    - thisiscorrect 4y ago
      https://www.google.com/search?q=india+total+fertility+rate https://www.google.com/search?q=india+total+fertility+rate tells me India's is 2.18, below the modern replacement TFR rate of 2.3 [1]. [1] https://en.wikipedia.org/wiki/Total_fertility_rate#Replacement_rates https://en.wikipedia.org/wiki/Total_fertility_rate#Replaceme...
sys_64738 4y ago
You ultimately need to pay in some common currency so which common currency do you trust to be secure from inflationary pressures or government interference? Do you trust the Euro to not implode? Do you trust the Chinese Communists with their Yen manipulation? The US dollar is the last currency standing after all others are disqualified.
Spooky23 4y ago
Unlikely. Ghana happens to be a gold producer; they may see this as a better deal for them, and may get some other benefit from a country like China for rattling the cage.
- colechristensen 4y ago
  What’s more likely is that Ghana is using monetary policy as a cover for acquiring locally produced gold at a lower price and selling it abroad for resources to make up for trade deficits.
norswap 4y ago
> Could this mounting unrest be as a result of the seeming inability of the US Federal bank in checking inflation of the US Dollar. This is completely backwards. The problem right now is that the dollar is too strong, meaning expensive wrt other currencies. In this context, inflation of the USD supply, leading to devaluation of the USD would actually help other countries that are suffering from the strong dollar. I'm not saying it would be good for the US, but it certainly would be good for pretty much everybody else.
- danielschonfeld 4y ago
  And there in lies the rub. To keep countries placated we need to create more debt, a metric ton of more debt and hence more broad currency. But doing so at the moment is political suicide as is proven by the left's efforts (deficit spending blah blah etc). Triffin paradox predicted in the 60s at it's full glory. It's also worth noting that at the moment both the Fed and the Treasury (obv) are mandated to be operating with an inward looking view only. Meaning we run a global reserve currency with no 'department' in charge of the global part.
  - kyboren 4y ago
    I don't think this should be downvoted. I believe this is all 100% correct. Maybe because of the "left's deficit spending" part, which is not wrong, but ignores the right's historical deficit spending (e.g. TCJA). Or perhaps the "political suicide" part is misinterpreted: It would be political suicide for a politician to interfere with Fed policy and undercut their blunt force effort to reduce domestic inflation. But any way you slice it, right now the Triffin dilemma is indeed exactly what we're experiencing.
  - jacooper 4y ago
    And this the entire problem. The dollar shouldn't be a global currency.
    - colechristensen 4y ago
      Why? The eurozone can’t hold itself together, China is a house of cards with bad planned economy failures, the uk isn’t worth mentioning any more, and everywhere else either has unstable economies or economies based on volatile or limited lifetime commodities. The dollar is the global reserve currency because the US has centuries of reasonable behavior and military and natural resources that guarantee long term stability. There isn’t a better option unless you’re playing temporary political games or if your macroeconomic situation is so bad you can’t play the game normally.
0x445442 4y ago
I think it’s more an issue of other countries seeing that the U.S. can just confiscate their dollar reserves if the US doesn’t agree with their sovereign actions. Those countries are choosing to divest from the mono world order which is crumbling. For a long but instructive discussion on current economic events check out this interview. https://youtu.be/cD_UcRtljDU https://youtu.be/cD_UcRtljDU
- KptMarchewa 4y ago
  US can confiscate your dollar reserves if you keep those dollars in the US, just as they can confiscate your gold reserves if you keep them in the Fort Knox. >sovereign actions Nice euphemism for genocidal, imperialist war.
  - 0x445442 4y ago
    > Nice euphemism for genocidal, imperialist war. You’re referring to the U.S. right?
    - KptMarchewa 4y ago
      >You’re referring to the U.S. right? You must claim to be very sarcastic! No, I'm refering to only country in XXI century that literally decided to annex other country's territory - two times. All that while losing war, and deciding to unleash hell on civilians they claim to be "their kin". At least we can cheer our hearts looking at fields littered with dead russian soldiers and see that there are countries of the world that won't leave those who need help alone. https://twitter.com/PaulJawin/status/1596033997334872064 https://twitter.com/PaulJawin/status/1596033997334872064
      - cauefcr 4y ago
        So the US policy on Latin America is just fine? Embargoes and CIA financed take-over of many states are all fine?
        4y ago
UltraViolence 4y ago
Saudi Arabia isn't going off the USD. That would seriously undermine their relation with the U.S. and could even have them branded an antagonistic nation. The dominance of the USD is EXTREMELY important to the U.S. and I can assure you that Washington is even willing to wage war over it. But I believe the ball has already started rolling with Bitcoin and Russia's demand for payment in Rubles.
- pirate787 4y ago
  LOL Bitcoin is a joke, its down 65% against the dollar this year
  - luciusdomitius 4y ago
    And it is going to fall more after the rug pull about to happen. Still, even in its worst, it is doing well against TRL, ARP, etc. And those are currencies used by many tens of millions.
  - UltraViolence 4y ago
    FTX's collapse has left its mark, but this will only be temporary. Bitcoin is already demonstrating its usefulness by helping countries evade economic sanctions. There are a truckload of nations who're fed up with the West's financial dominance and are actively seeking alternatives.
    - jen20 4y ago
      > FTX's collapse has left its mark, but this will only be temporary Bitcoin was down well in advance of the FTX collapse. The reason it is down is because it's a Ponzi scheme, and an unconscionable waste of resources so that cryptobros can LARP at being a libertarian.
      - andirk 4y ago
        > The reason it is down is because it's a Ponzi scheme Is the rest of the stonks also a ponzi scheme? Because if you didn't notice, those are also very down.
Zigurd 4y ago
The reason US$ denominate most trade is that without what is broadly referred to as "The West" global trade would not move. Trade would not be protected by a web of alliances among developed nations. If that goes away, ships would not be insured. Uninsured ships would be lost to pirates and rogue nations. Prices would jump sharply. Supply chains would have to go back to warehousing enough supply to withstand disruptions. Warehoused parts would become stranded assets when products change. Growth would be choked off. This is not an excuse for imperialism and crony capitalism that exploits developing nations. Especially in how multinational oil companies corrupt entire nations. Working toward the end of fossil fuels will hasten them losing their power. But the lesson of this year is that those dull bureaucratic things like NATO and the EU are what keeps fascistic autocrats contained and gives aggressor nations the thrashing they deserve. Even the Tories are realizing they got played by Putin's plan to divide the nations that could hold him back.
luciusdomitius 4y ago
The petrodollar is a really weird thing. According to its critics, it is a global monopoly on violence and pure extortion, to its implementors - merely a conspiracy theory. Please, before you clinge to the conspiracy theory label, check how many great people such as de Gaulle have whined against it and what is Privilege l'exorbitant in French political science. In reality, global trade is not in USD purely because it is backed by carriers and they can invade anyone, but because this navy also protects shipping lanes and offers international rule of law. Remember when the US took a break in the gulf of Aden and it took us Europeans (+Russia and token help from US!!) years to agree and secure it. So, things are not black and white. Anyway, this system is collapsing from within and will be replacing. The success of the S.Arabia pivot is going to merely decide if it happens in 10 or 20 years time. Btw does anyone know how did the MBS-Xi meating go?
- imtringued 4y ago
  The exorbitant privilege thing is kind of strange when countries voluntarily demand more dollars or even borrow dollars. The "privilege" is only exorbitant if you are the only survivor of a world war.
- eunos 4y ago
  > Petrodollar Is rather remnant of the past. FYI I think half of world forex reserve is held in the 5 entities in East Asia (CN, JP,KR,TW,HK). Whatever dollar the Petrostate get (sans Russia) they recycled it to various goods and services mostly sourced from East Asia. > Btw does anyone know how did the MBS-Xi meating go? Will commence in December, previously rumored didn't happen
jonnybgood 4y ago
Ghana isn’t questioning anything. They’re just running out of USD.
SuoDuanDao 4y ago
Somewhere in my comment history I made the prediction "It will be possible to buy large amounts of oil without USD by 2024" - so I think I've got a decent track record on this subject. I'm much less confident in these predictions than that one, but I'll predict Saudi Arabia won't go off the USD because they depend on US military support in a pretty warlike part of the world and the CFA will be replaced by 2027 as currently planned without any major interference from the European powers. As for a case for maintaining the status quo - The example made of Ghaddafi comes to mind.
- snovv_crash 4y ago
  CFA? What are you referring to here, not the financial certification institution I'm guessing?
  - SuoDuanDao 4y ago
    had to google it too: https://en.wikipedia.org/wiki/West_African_CFA_franc https://en.wikipedia.org/wiki/West_African_CFA_franc
- nivenkos 4y ago
  The US is exploiting it to the maximum with the Inflation Reduction Act, etc. The rest of the world will react eventually, the Zelenksy-Putin puppet show will only distract them for so long.
dehrmann 4y ago
> More and more countries questioning why they need to base their foreign transaction on the US Dollar. For spot transactions, it doesn't really matter beyond giving the buyer and seller a common language to negotiate in. For contracts sometime in the future, if you're Argentina, no one wants to bet on where the Peso will be in 6 months.
deleted 4y ago
[deleted]

hdhdxkfchsk 4y ago

saudi? no. they are the only elites not tied to petrodollar by force but by financial incentives. all the others probably no as they will see the new gana embargo :( the terms first world and second world were originally coined to means country under petrodollar and countries under ussr. third world was a term that meant free for all to the to two powers.

qikInNdOutReply 4y ago

Could this lead to a chain reactions, were countries abandon the dollar and the dollar looses in value, in return leading to more countries abandon it? A world were the most stabilizing region and its currency become temporary hegemon?

Isinlor 4y ago
Ghana GDP is 77.59 billion USD. That's almost 2 Twitters :) . Ghana is not triggering any chain reactions.
- speedylight 4y ago
  Lucky for them, otherwise the US would’ve sent some freedom and democracy their way.
  - hardlianotion 4y ago
    Seems unlikely.
- nequo 4y ago
  Ghana's GDP is flow while Twitter's valuation is stock.[1] Given that Twitter's EBITDA was $211mn, it is more accurate to say that Ghana's GDP is 368 Twitters. (Which also sounds crazy nevertheless.) [1] https://en.wikipedia.org/wiki/Stock_and_flow https://en.wikipedia.org/wiki/Stock_and_flow
  - KptMarchewa 4y ago
    I agree that GDP-stock comparison is not good, but why compare to EBITDA rather than revenue or expenses?
    - nequo 4y ago
      I'm not going to say that I have strong views on this right now. But the reason I used EBITDA is that GDP is the total value added of the economy. EBITDA is the total value added of the company.
      - Majromax 4y ago
        > EBITDA is the total value added of the company. I don't think that's quite the right interpretation. EBIDTA is the value added of the company net its employees (and I'd quibble over depreciation and taxes), whereas GDP includes the labour share. Imagine we had a single-company country, where every worker was also a customer, all costs were internalized, and capital did not depreciate. The GDP of the country would be equal to the profit of the company plus the wages of the employees. Using the EBITDA equivalence, however, the GDP of the one-company country would be more (possibly far more) than "the one company's earnings."

ur-whale 4y ago

>Do you see a country like Saudi going off the USD? Going off, certainly not (why would they?) But exchanging their oil for other currencies, absolutely. What will be interesting is how long the Sauds will remain in power once they agree to exchange their oil against other currencies. Historically, all regimes that made that decision were or are in the process of being taken down either directly by the US or a combo of their close allies (see: Khadafi, Saddam Hussein, Vlad Putin, etc...)

pjc50 4y ago
Russia's sanctions were as a result of their invasion of Ukraine and they'd still be a part of the normal financial system otherwise. It's nothing to do with petrodollars.
- ur-whale 4y ago
  Apologies, but your reading of the situation is shallow. What do you think led Vlad to invade? The US has been mounting a proxy war against Russia in Ukraine for the past 20 years, one they're ready - barring political upheaval in the US - to fight down to the last European.
  - pjc50 4y ago
    Overconfidence and a need for an external enemy? Satanism? https://www.atlanticcouncil.org/blogs/ukrainealert/nato-nazis-satanists-putin-is-running-out-of-excuses-for-his-imperial-war/ https://www.atlanticcouncil.org/blogs/ukrainealert/nato-nazi... > proxy war against Russia in Ukraine To a certain extent this is true, but the Ukranians have been very keen on it as they've benefited from not being a puppet state run by a corrupt president who built himself a huge palace. And Russia has no right to be "in" Ukraine in the first place.
  - _kbh_ 4y ago
    > What do you think led Vlad to invade? There are vast natural resources in Ukraine which threatens Russias place as the gas station to the world. They also have imperialistic ambitions to try and restore what they see as the glory days of the USSR.

spaceman_2020 4y ago

If you look at the actual numbers, you'll find that USD dominance is still unchallenged. BUT, there is definitely way more chatter about alternative payment options, including from well-placed government sources and central banks in important non-west allied countries. It's now a matter of "when", not "if" when an alternative currency pops up, maybe a BRICS currency.

UltraViolence 4y ago
I believe the war in Ukraine has permanently damaged the USD's dominance in the medium to long term. The use of a supposedly neutral financial network (SWIFT) as a sanction weapon will make other nations who aren't on good terms with the U.S. and the West (and not just the "usual suspects" but many nations in Africa and South America too) seeking alternatives. As previously mentioned, Bitcoin is a viable alternative. But there may be others. In any case I see nations ganging up to create an alternative to the SWIFT network, potentially undermining its usefulness.
- immibis 4y ago
  Why would countries that don't plan to commit genocide need to be bothered by SWIFT cutting off countries that commit genocide? In fact, this is a good thing for countries that don't want to be genocided as it provides an additional incentive against genocide.
  - ilammy 4y ago
    Because who knows what’s on the list of excommunicatable offenses. Today it’s war of aggression, 40 years later on not enough diversity and inclusion could qualify, or the eagle knows what else. Hope for the best prepare for the worst.
  - spaceman_2020 4y ago
    > "No one knows with certainty how many people have been killed and wounded in Iraq since the 2003 United States invasion. However, we know that between 184,382 and 207,156 civilians have died from direct war related violence caused by the U.S" [0] Is it only a genocide if a non-western ally does it? 0: https://watson.brown.edu/costsofwar/costs/human/civilians/iraqi https://watson.brown.edu/costsofwar/costs/human/civilians/ir...

ben_w 4y ago

I'm only at the level of guessing for topics like this, but my guess is that a chain reaction is more likely to see a switch from USD to Renminbi than a switch to gold (or Euros). China because of the potential assuming similar GDP/capita as the current USA. Not soon because I expect as a prerequisite for change being the new winner's GDP to be dominant rather than just joint top 3 in a ranking system that changes their ordering depending on what you value most. Not gold because the justifications given for why we all stopped using the gold standard in the fist place, still seem to apply.

tcbawo 4y ago
Do you think GDP is the critical factor for determining a global reserve currency? IMO, respect for property ownership rights, legal/judicial recourse, ubiquity of US banks, and political stability are large contributing factors that few other countries can compete with. China has a pretty checkered past regarding ownership rights for citizens who are critical of its leadership.
- deleted 4y ago
  [deleted]
- 988747 4y ago
  Property rights and such are secondary. The primary issue is: who has the power? Right now the answer to that question is "US", but since China is catching up on GDP, and, unlike US, actually manufactures things. If China decides that they want payments for all the goods that they export to be in RMB then there's nothing the rest of the world can do about it, except stop all the imports from China (which would take decades, because they have to learn to manufacture all those goods themselves). Once most of your imports come from China instead of the US it does make sense to use Chinese currency as the reserve currency, since you are going to need a lot of RMB to pay for your imports anyway.
  - matthewdgreen 4y ago
    Saudi Arabia (to pick a major oil exporter) imports about 20% of its goods from China. But it also imports vastly more from regional partners and the US and Europe, not to mention that it depends on the US to secure all of its oil exports to China across thousands of miles of vulnerable ocean routes.

edwnj 4y ago

Its definitely not a lack of confidence in USD or the feds. Relative to pretty much every noteworthy alternative, the feds have handled things a lot better. - EU royally f'd with their stimulus & rates. Mind you, they were in a very precarious position to start with. - China has proven themselves to be a house of cards with zero covid, massive public/corporate debt bubbles and Ji becoming god emperor. - Russia is a glorified gas station with an economy the size of florida. The reason for Ghana's action, Saudi looking to end petro dollar, China+Russia looking to form a block etc: US deep state ducking up big time. The weaponised the dollar.. They've been ramping this up big time during the past few decades but the Ukraine War was a UUUUGE reveal the cards moment. During the last 2 years, Russia was filling up their coffers with high oil prices. The US turned these foreign reserves into worthless numbers on a screen overnight with the press of a few buttons. Now pretty much every country is looking at each other like "oh shit".

rich_sasha 4y ago

I think this take is somewhat over-reacting. I'm pretty sure you'll find that the price they agreed is really in USD, and only the medium of exchange is gold (even if the paperwork or agreement doesn't even reference USD). So really they are paying X USD's worth of gold - with both oil and gold price being fixed in USD somewhere abroad. USD is so incredibly ubiquitous, it won't easily go away. Reserves are a little different, but even then, whenever something bad happens, the dollar strengthens as investors flock to it. When the 2008 crisis happened (and it was US-centric!) US and the dollar were still the safe haven everyone escaped to. Not the Rouble, not the Yuan, not so much EUR or CHF or, from memory, gold. So we'll see people avoid the USD as a medium of exchange, maybe, even if the prices are fixed on USD-denominated prices. But also remember, gold is not a great medium of exchange. Will Ghana ship physical gold around the world (risky and expensive)? Or will they sign a piece of paper saying "gold held by in a safe by someone else and owned by me is now owned by someone else" - in which case there is similar counterparty risk, except perhaps not against the US government. But if you think the US is an evil octopus with long tentacles, surely they could get their hands on this gold. Where will this haven safe from US interference be? If anything, I can more easily believe an alternative economy based on crypto. It's actually happening and working well, for all sorts of shady or illicit activity.

kibwen 4y ago
> Or will they sign a piece of paper saying "gold held by in a safe by someone else and owned by me is now owned by someone else" - in which case there is similar counterparty risk, except perhaps not against the US government. The US holds a quarter of all the known gold reserves in the world, and has more gold than the next three countries combined, so there's a decent chance that Ghana's gold is already in the US.
bobthepanda 4y ago
EUR is still not a great managed currency. The Euro crisis could, technically, happen again. RUB backing economy is pretty much one major export. JPY makes American debt look chaste in comparison CHF does not want the job, primarily because its use as a basket currency already makes it too strong CNY does not want the job, and their past history of capital controls make America look chaste

edwnj 4y ago

As for what happens next: de-globalisation I predict we'll see blocks forming up again, something like: - West (US+EU) - East (China+Russia) - India (India, Sri Lanka, Himalayan States, South China states) - Middle (Middle East+North Africa) - Latam (Central + South American States) One wild card IMO would be the rise of the Indian sphere of influence. I'll leave some room for India's remarkable ability to snatch defeat form the jaws of victory. If they don't f this up, they have UUUGE tailwinds going for them. Middle east is overrated IMO, its like an oasis with oil instead of water. When the oil money runs out, not gonna be fun any more. Latam is probs the biggest wildcard, even bigger than India. They don't need a lot of things to be right to wildly outperform as a block. Just like the US, they are protected by two oceans so they can choose to not involve themselves in stuff. Africa is highly overrated IMO, the entire continent is cursed in multiple ways. If u compare africa to another post colonial continent like Latam, africa is in a place where they need to get so many things right to just survive, let alone to catch up.

thisiscorrect 4y ago
I agree with the general premise of your comment, that this is a small sign of the deglobalization which is _already_ under way. But, what are the UUUGE tailwinds benefiting India? India, even more so than China, seems likely to "get old before it gets rich." Its TFR is already below replacement and falling rapidly.
- KptMarchewa 4y ago
  China's official TFR figures are massively engineered: https://www.project-syndicate.org/commentary/chinese-population-smaller-than-stated-and-shrinking-fast-by-yi-fuxian-2022-07 https://www.project-syndicate.org/commentary/chinese-populat... India ones are still over replaceability.
  - thisiscorrect 4y ago
    https://www.google.com/search?q=india+total+fertility+rate https://www.google.com/search?q=india+total+fertility+rate tells me India's is 2.18, below the modern replacement TFR rate of 2.3 [1]. [1] https://en.wikipedia.org/wiki/Total_fertility_rate#Replacement_rates https://en.wikipedia.org/wiki/Total_fertility_rate#Replaceme...

sys_64738 4y ago

You ultimately need to pay in some common currency so which common currency do you trust to be secure from inflationary pressures or government interference? Do you trust the Euro to not implode? Do you trust the Chinese Communists with their Yen manipulation? The US dollar is the last currency standing after all others are disqualified.

Spooky23 4y ago

Unlikely. Ghana happens to be a gold producer; they may see this as a better deal for them, and may get some other benefit from a country like China for rattling the cage.

colechristensen 4y ago
What’s more likely is that Ghana is using monetary policy as a cover for acquiring locally produced gold at a lower price and selling it abroad for resources to make up for trade deficits.

norswap 4y ago

> Could this mounting unrest be as a result of the seeming inability of the US Federal bank in checking inflation of the US Dollar. This is completely backwards. The problem right now is that the dollar is too strong, meaning expensive wrt other currencies. In this context, inflation of the USD supply, leading to devaluation of the USD would actually help other countries that are suffering from the strong dollar. I'm not saying it would be good for the US, but it certainly would be good for pretty much everybody else.

danielschonfeld 4y ago
And there in lies the rub. To keep countries placated we need to create more debt, a metric ton of more debt and hence more broad currency. But doing so at the moment is political suicide as is proven by the left's efforts (deficit spending blah blah etc). Triffin paradox predicted in the 60s at it's full glory. It's also worth noting that at the moment both the Fed and the Treasury (obv) are mandated to be operating with an inward looking view only. Meaning we run a global reserve currency with no 'department' in charge of the global part.
- kyboren 4y ago
  I don't think this should be downvoted. I believe this is all 100% correct. Maybe because of the "left's deficit spending" part, which is not wrong, but ignores the right's historical deficit spending (e.g. TCJA). Or perhaps the "political suicide" part is misinterpreted: It would be political suicide for a politician to interfere with Fed policy and undercut their blunt force effort to reduce domestic inflation. But any way you slice it, right now the Triffin dilemma is indeed exactly what we're experiencing.
- jacooper 4y ago
  And this the entire problem. The dollar shouldn't be a global currency.
  - colechristensen 4y ago
    Why? The eurozone can’t hold itself together, China is a house of cards with bad planned economy failures, the uk isn’t worth mentioning any more, and everywhere else either has unstable economies or economies based on volatile or limited lifetime commodities. The dollar is the global reserve currency because the US has centuries of reasonable behavior and military and natural resources that guarantee long term stability. There isn’t a better option unless you’re playing temporary political games or if your macroeconomic situation is so bad you can’t play the game normally.

0x445442 4y ago

I think it’s more an issue of other countries seeing that the U.S. can just confiscate their dollar reserves if the US doesn’t agree with their sovereign actions. Those countries are choosing to divest from the mono world order which is crumbling. For a long but instructive discussion on current economic events check out this interview. https://youtu.be/cD_UcRtljDU https://youtu.be/cD_UcRtljDU

KptMarchewa 4y ago
US can confiscate your dollar reserves if you keep those dollars in the US, just as they can confiscate your gold reserves if you keep them in the Fort Knox. >sovereign actions Nice euphemism for genocidal, imperialist war.
- 0x445442 4y ago
  > Nice euphemism for genocidal, imperialist war. You’re referring to the U.S. right?
  - KptMarchewa 4y ago
    >You’re referring to the U.S. right? You must claim to be very sarcastic! No, I'm refering to only country in XXI century that literally decided to annex other country's territory - two times. All that while losing war, and deciding to unleash hell on civilians they claim to be "their kin". At least we can cheer our hearts looking at fields littered with dead russian soldiers and see that there are countries of the world that won't leave those who need help alone. https://twitter.com/PaulJawin/status/1596033997334872064 https://twitter.com/PaulJawin/status/1596033997334872064
    - cauefcr 4y ago
      So the US policy on Latin America is just fine? Embargoes and CIA financed take-over of many states are all fine?
      - 4y ago

UltraViolence 4y ago

Saudi Arabia isn't going off the USD. That would seriously undermine their relation with the U.S. and could even have them branded an antagonistic nation. The dominance of the USD is EXTREMELY important to the U.S. and I can assure you that Washington is even willing to wage war over it. But I believe the ball has already started rolling with Bitcoin and Russia's demand for payment in Rubles.

pirate787 4y ago
LOL Bitcoin is a joke, its down 65% against the dollar this year
- luciusdomitius 4y ago
  And it is going to fall more after the rug pull about to happen. Still, even in its worst, it is doing well against TRL, ARP, etc. And those are currencies used by many tens of millions.
- UltraViolence 4y ago
  FTX's collapse has left its mark, but this will only be temporary. Bitcoin is already demonstrating its usefulness by helping countries evade economic sanctions. There are a truckload of nations who're fed up with the West's financial dominance and are actively seeking alternatives.
  - jen20 4y ago
    > FTX's collapse has left its mark, but this will only be temporary Bitcoin was down well in advance of the FTX collapse. The reason it is down is because it's a Ponzi scheme, and an unconscionable waste of resources so that cryptobros can LARP at being a libertarian.
    - andirk 4y ago
      > The reason it is down is because it's a Ponzi scheme Is the rest of the stonks also a ponzi scheme? Because if you didn't notice, those are also very down.

Zigurd 4y ago

The reason US$ denominate most trade is that without what is broadly referred to as "The West" global trade would not move. Trade would not be protected by a web of alliances among developed nations. If that goes away, ships would not be insured. Uninsured ships would be lost to pirates and rogue nations. Prices would jump sharply. Supply chains would have to go back to warehousing enough supply to withstand disruptions. Warehoused parts would become stranded assets when products change. Growth would be choked off. This is not an excuse for imperialism and crony capitalism that exploits developing nations. Especially in how multinational oil companies corrupt entire nations. Working toward the end of fossil fuels will hasten them losing their power. But the lesson of this year is that those dull bureaucratic things like NATO and the EU are what keeps fascistic autocrats contained and gives aggressor nations the thrashing they deserve. Even the Tories are realizing they got played by Putin's plan to divide the nations that could hold him back.

luciusdomitius 4y ago

The petrodollar is a really weird thing. According to its critics, it is a global monopoly on violence and pure extortion, to its implementors - merely a conspiracy theory. Please, before you clinge to the conspiracy theory label, check how many great people such as de Gaulle have whined against it and what is Privilege l'exorbitant in French political science. In reality, global trade is not in USD purely because it is backed by carriers and they can invade anyone, but because this navy also protects shipping lanes and offers international rule of law. Remember when the US took a break in the gulf of Aden and it took us Europeans (+Russia and token help from US!!) years to agree and secure it. So, things are not black and white. Anyway, this system is collapsing from within and will be replacing. The success of the S.Arabia pivot is going to merely decide if it happens in 10 or 20 years time. Btw does anyone know how did the MBS-Xi meating go?

imtringued 4y ago
The exorbitant privilege thing is kind of strange when countries voluntarily demand more dollars or even borrow dollars. The "privilege" is only exorbitant if you are the only survivor of a world war.
eunos 4y ago
> Petrodollar Is rather remnant of the past. FYI I think half of world forex reserve is held in the 5 entities in East Asia (CN, JP,KR,TW,HK). Whatever dollar the Petrostate get (sans Russia) they recycled it to various goods and services mostly sourced from East Asia. > Btw does anyone know how did the MBS-Xi meating go? Will commence in December, previously rumored didn't happen

jonnybgood 4y ago

Ghana isn’t questioning anything. They’re just running out of USD.

SuoDuanDao 4y ago

Somewhere in my comment history I made the prediction "It will be possible to buy large amounts of oil without USD by 2024" - so I think I've got a decent track record on this subject. I'm much less confident in these predictions than that one, but I'll predict Saudi Arabia won't go off the USD because they depend on US military support in a pretty warlike part of the world and the CFA will be replaced by 2027 as currently planned without any major interference from the European powers. As for a case for maintaining the status quo - The example made of Ghaddafi comes to mind.

snovv_crash 4y ago
CFA? What are you referring to here, not the financial certification institution I'm guessing?
- SuoDuanDao 4y ago
  had to google it too: https://en.wikipedia.org/wiki/West_African_CFA_franc https://en.wikipedia.org/wiki/West_African_CFA_franc
nivenkos 4y ago
The US is exploiting it to the maximum with the Inflation Reduction Act, etc. The rest of the world will react eventually, the Zelenksy-Putin puppet show will only distract them for so long.

dehrmann 4y ago

> More and more countries questioning why they need to base their foreign transaction on the US Dollar. For spot transactions, it doesn't really matter beyond giving the buyer and seller a common language to negotiate in. For contracts sometime in the future, if you're Argentina, no one wants to bet on where the Peso will be in 6 months.

deleted 4y ago

[deleted]