The US Needs Global Conflicts: Russia and China Are Existential Threats to Dollar Dominance
China and Russia, along with the member nations of the SCO, EEU and BRICS are preparing to break free from the dollar. For Washington this is unacceptable
As we reported on March 30, China and Russia are taking steps to move away from their out of control “cousin”, the US dollar — and world reserve currency.
We learned in March 2016 that Kazakistan had been in formal talks with the Shanghai Gold Exchange regarding gold as currency along the New Silk Road (One Belt One Road) spearheaded by China. Kazakistan also smelts most of Russia’s gold and mines a small amount gold annually and is a member of both the Shanghai Cooperation Organization (SCO) and Eurasia Economic Union (EEU).
Then, in October of 2016 we continued covering how China had been working directly with the IMF to get the yuan/renminbi currency added to the SDR basket of currencies for global trade. That now appears to be a cover story for what lay ahead. With the renminbi now a global currency that changes how the renminbi functions within the currency markets and in global trade negotiations.
For the better part of the past year it has seemed as if the mainstream media, with talking points from the federal government, had been 100% obsessed with “Russia did it!!” “It” could be anything as the story has morphed so many times it’s hard to keep track. The “it” is not near as important as the cheerleading by the MSM to remind the public Russia is to blame!
China began working their CIPS system, global trade settlement system, in October 2016, the same time the renminbi joined the SDR basket, allowing China to conduct global trade outside the U.S. owned and operated SWIFT system. Both systems are used to settle global trade transactions and the SWIFT system has been geared to the Federal Reserve Note – U.S. dollar – while the CIPS system is geared to the Chinese renminbi.
China International Payment System (CIPS) was launched last October  and is now entering into the second phase of its implementation. Phase Two will allow for a further widening of the trading band between the RMB and USD, which will in turn give the Federal Reserve additional room to raise rates. I predicted almost two years ago that CIPS would not overthrow or compete with the USD dominated SWIFT. I suggested that both platforms would share a base code and would work together to transform the monetary framework. That is exactly what is happening.
China strategically stated their gold reserves for the first time in 6 years in the lead up to the SDR announcement last year. This exact strategic announcement by China was predicted here on POM. Source
Enter Russia and their global trade settlement system based in Russian rubbles. It is not quiet ready for prime time, but not to worry, they are working around the clock to put the final pieces in place. Within the past two weeks Russia announced to the world where the system is, specifically, along with what is already in place.
“There were threats that we can be disconnected from SWIFT. We have finished working on our own payment system, and if something happens, all operations in SWIFT format will work inside the country. We have created an alternative,” Nabiullina said at a meeting with President Vladimir Putin on Wednesday.
She also added that 90 percent of ATMs in Russia are ready to accept the Mir payment system, a domestic version of Visa and MasterCard. Source
One of the most significant measures under consideration is the previously reported push for joint organization of trade in gold. In recent years, China and Russia have been the world’s most active buyers of the precious metal. On a visit to China last year, the deputy head of the Russian Central Bank Sergey Shvetsov said that the two countries want to facilitate more transactions in gold between the two countries.
“We discussed the question of trade in gold. BRICS countries are large economies with large reserves of gold and an impressive volume of production and consumption of this precious metal. In China, the gold trade is conducted in Shanghai, in Russia it is in Moscow. Our idea is to create a link between the two cities in order to increase trade between the two markets,” First Deputy Governor of the Russian Central Bank Sergey Shvetsov told Russia’s TASS news agency. Source
Let’s take a look at the next step. Now that Russia and China have systems to conduct global trade outside of the Federal Reserve Note, U.S. dollar, both nations can make decisions that benefit their countries, and benefit their business interest, without fear their currencies will be disabled like what happened to Iran in March 2012. Iran was only reconnected to the SWIFT system in February 2017. Having another nation control your currency is a can be devastating. Iran learned the hard way and both Russia and China now have the capability to keep all currencies functioning both internally and globally, outside the SWIFT, U.S. dollar system.
Just last week we learned the BRICS nations are discussing the development of a “gold marketplace”.
Creating a BRICS “gold marketplace” would be an excellent way of bypassing the dollar while also using a “currency” that could be easily recycled for trade with other member nations.
And while trading in gold won’t happen overnight, BRICS states have already moved towards creating a “new financial architecture” that “tackles the dominance of the U.S. dollar in global finance”:
The initiatives taken by the member nations of BRICs (Brazil, Russia, India, China, and South Africa) to set up a new financial architecture at its eighth summit held in October 2016 in India have recently been under the spotlight. In order to avoid the International Monetary Fund (IMF) type of loan conditionalities and tackle the dominance of the United States (US) dollar in global finance, the new institutions set up by the BRICs are expected to provide a much needed change in the global financial architecture. These institutions include the New Development Bank (NDB), the BRICS-led Contingency Reserve Fund (CRF), and the Asian Infrastructure Investment Bank (AIIB). Source
China is already using a gold currency. $14.5 Million worth of gold currency was used in transactions during the 2017 Chinese Lunar New Year across the “we chat” platform. This is not a gold backed currency, this is a gold currency.
While these nations continue acquiring ton upon ton of gold the U.S. continues to acquire billions upon billions in debt. Which scenario is more sustainable? As these nations continue to build out their trading systems, to circumvent the world reserve currency, how will the U.S. contend with this new reality? The U.S. government is currently acting like the drunken cousin described above.
Why would BRICS nations, who are responsible for a significant portion of global GDP, continue to accept how the U.S. has treated them? The belligerence coming out of the White House and Pentagon, by way of NATO, has created a global divid. The U.S. is broke and can not pay back the owed debt. We can only bully other nations, steal their gold and bomb those that do not fall into line. Russia and China are large enough, wealthy enough and strong enough, militarily, to stand up to the U.S. They have been quietly going about their business – conducting business – while the U.S. has continually conducted war with anyone and everyone. The U.S. has now set its sights on these two power house nations. These nations are not Syria, Libya, Iraq or any of the other tiny nations these warmongers have bullied. This time it will be different and the golden rule still applies – he who has the gold makes the rules. China and Russia have the gold, the U.S. has debt.
Source: Gold Seek
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