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Russia and China: The Dawning of a New Monetary System?
By Peter Koenig
China, leading member of the BRICS, is lining up the bloc of the BRICS and that of the SCO and their currencies to support Russia in need. Currency swaps between Russia (ruble) and China (yuan) for an initial US$ 25 billion equivalent have already been implemented, to allow direct transactions between the two countries. Similar swaps are under way between China and Russia with other countries, primarily the BRICS and the SCO (Shanghai Cooperation Organization) members including the soon to become new members Iran, Pakistan, India (also a BRICS member) and Mongolia and possibly in some not too distant future also strategically located NATO member Turkey.
In other words, a large junk of hydrocarbons will as of immediately no longer be traded in US (petro) dollars, but in rubles and yuans and their partners respective local currencies. This will reduce worldwide demand for the petro dollar.
The US is able to maintain pressure on other currencies, currently the ruble, only as long as the petro dollar remains the major world reserve currency. This is the main reason why Washington gets away with a seven-fold indebted dollar (i.e. total outstanding and uncovered commitments are currently more than 7 times higher than the US GDP (US$ 17.6 trillion, 2014 est. vs. US$ 128 trillion of unmet obligations); making the US worldwide the most indebted country by far.
Once the demand for the (petro) dollar fades as hydrocarbons are no longer dealt in dollars the value of the dollar will decline and at worst may result in hyperinflation in the dollar economies, including those closely linked to the US economy.
In other words, a large junk of hydrocarbons will as of immediately no longer be traded in US (petro) dollars, but in rubles and yuans and their partners respective local currencies. This will reduce worldwide demand for the petro dollar.
The US is able to maintain pressure on other currencies, currently the ruble, only as long as the petro dollar remains the major world reserve currency. This is the main reason why Washington gets away with a seven-fold indebted dollar (i.e. total outstanding and uncovered commitments are currently more than 7 times higher than the US GDP (US$ 17.6 trillion, 2014 est. vs. US$ 128 trillion of unmet obligations); making the US worldwide the most indebted country by far.
Once the demand for the (petro) dollar fades as hydrocarbons are no longer dealt in dollars the value of the dollar will decline and at worst may result in hyperinflation in the dollar economies, including those closely linked to the US economy.
http://www.globalresearch.ca/russia-and-china-the-dawning-of-a-new-monetary-system/5423637
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Russia and China: The Dawning of a New Monetary System? (Original Post)
Mr_Jefferson_24
Jan 2015
OP
hedda_foil
(16,375 posts)1. Oh, but Mr Jefferson, no one could have foreseen that Russia and China would gang up on the petro $.
Mr_Jefferson_24
(8,559 posts)2. Exactly. It seems whoever actually runs the US...
... either wants to bring us economic mayhem if not complete collapse, or they're just clueless beyond belief.
Scary times.