When there are leaks in the dike, who are you going to call?
In the last section of our last posting, we noted an aspect of troubling news for the dollar. The grumpling is among trading nations at the US currency for its price due to actions of its central bank (Federal Reserve) has developed into action. We know that China is central to oppose the dollar because it is the foundation of world trade and especially, for commodities. China's ego wants that position and recognition. Even our allies complain. Many times this drama connects to foreign policy. Nevertheless, the waning of the power of King Dollar is happening.
BRICS
The alliance grounded by Russia and China also has India, Brazil and South Africa. They account for 40% of world trade. They are planning to introduce a common currency for their group and encourage other nations to trade with it.
It has started as China and Brazil trade each other's currency with each other. No dollars!
A new alliance is developing. At a conference called ASEAN. The group are seeking ways to detach from the dollar to trade among their region. They also opppose US allies and their currencies: Euro, Yen and British Pound. This is the Pacific Rim.
Saudi Arabia is seeking to trade more with the BRICS. They announced that they are open to join the Shanghai Cooperation Organization. This could be a death blow to the petrol dollar.
China pushes anyone who trades with it to trade with the yuan or China's money.
India has thrown its hat into the world trading market by offering to use its currency in world trade. (We see some conflict as China wants this status.) However, the annoncement is open opposition to the dollar.
Saudi Arabia is throwing more curve balls at the dollar. Recently, it agreed to accept an emerging nation currency (Kenya) for an oil trade.
These things are like an engineer's report on a dam. Areas are under stress. A leak could become a disaster. King $Dollar's position will not change overnight, but world action is in a trend that opposes the dollar as the world's reserve currency.
When our nation disregards the privilege of the dollar with excessive money printing that dances with debt, everyone holding dollars worries. At this time and in this space, we will not get into the dangers of the dollar being de-thrown. We all will be poore. In the meantime, we have the two world lending institutions: IMF and World Bank.
Ego's Everywhere
The International Monetary Fund's purpose is to lend money to stabilize currencies. Their ego wants more. They have developed a non-currency called Special Drawing Rights (SDR). It is a basket of currencies. The US has the highest value ratio at 43%, but China is in the mix with 12%. They seek to have the dollar replaced with their SDR (currency) basket of value.
World Bank lends money for projects like dams. Their record is terrible. Corruption steals millions with very little progress with their loans. China is big in this loan area. They take possession of a nation's collateral if that nation defaults. With corruption, this is a guarantee. China will eventually be hated for stealing valuable resources in nations around the world. A leopard cannot hide its markings. For now, this is another threat to the dollar.
The biggest threat to the dollar is our money printing and our national debt. When your debt is 120% of your GDP, you are in do-do land. It gets worse every minute. Both of our political parties are guilty. The biggest sinner is the Fed. This is why we say, End the Fed! Peace.
