Analysis: As sanctions 'weaponize' U.S. dollar, some Treasury buyers could fall back

Let me point out that it's only going to accelerate and magnify the effect of inflation if other countries in the world begin dumping the U.S. dollar.

 

Ok, thanks. I don't start many threads. I was just trying to answer your understandable question about my comment.

 

They're buying from us, which is both good/bad(defense manufacturing will be up, but even NYT has reported what @AARguy has posted before anyone else caught up, a collapse in our weapons cache.). But the Eastern Axis has also unified and strengthened its bilateral ties. We tend to focus on the European nations trying to kind of live up to their end of the bargain and celebrate 'yay'! But the Eastern nations are doing the same now.)

So the ramifications of Russia's invasion, is that both sides have hunkered down. And the worst case scenario is either side blinking. If we want to restore the status quo, much like Kennedy and even Reagan was able to do, we have to give them an off-ramp. I don't wanna blink and I don't think they want to blink either. Diplomacy is still our strongest hand to achieve US objectives.

 

Maybe I have a military slanted view, but I don't see an off ramp. I don't believe Russia wants to actually "win"... or "lose". I believe that when the Russian-Chinese team estimates that western military stocks have been depleted enough to ensure an easy victory over Taiwan, Russia will simply withdraw, China will invade Taiwan and Step One of the Russia-China Plan will be complete. What next? Who knows? China swallowing South Korea? Japan? The Phillipines? Russian expansion? (I doubt this. NATO is a brick wall. And Finland is now a member.) Russian expansion into Africa with its new arm water ports in Aman? Perhaps.

 

https://www.msn.com/en-us/money/mar...oing-away-despite-brics-ambitions/ar-AA19tjtV

"The prospect of a new world currency has been gaining traction, with the BRICS alliance exploring the idea of an innovative currency. The group of nations plans to share proposals at a forthcoming summit in South Africa, which has led to discussions on the potential impact on the U.S. dollar as the dominant global currency.

New World Currency? Here Are 3 Reasons Why The US Dollar Isn't Going Away, Despite BRICS Ambitions© Provided by Benzinga

However, despite the buzz, there are a few reasons that would suggest the dollar is not giving up its position anytime soon.

The world's confidence in the U.S. and its currency is one significant factor that bolsters the position of the USD. The American financial markets are some of the world's deepest and most liquid, thanks to the size and strength of the U.S. economy, open trade and capital flows, and a strong rule of law.

This confidence has led to about 60% of global foreign currency reserves being held in USD, far ahead of other currencies such as the euro, yen, and Chinese renminbi.

Another key element supporting the U.S. dollar's dominance is the network effect it has in trade invoicing and international finance. The USD is the most popular medium of exchange for trade, with more than 70% of exports outside of Europe being invoiced in the currency.

The Dollar’s popularity as a medium of exchange has solidified its position as the dominant currency in international banking.

More than that, the U.S. has maintained massive trade deficits, which has led to an abundance of U.S. treasury securities and banknotes held by the rest of the world. While countries could potentially decide to trade in their own currencies instead of the USD, there are several issues that hinder this transition.

For instance, countries like China and Saudi Arabia would need to deal with the limitations of their own currencies and lack of viable investment options, as well as capital controls.

A shift away from the current economic model that relies heavily on exports to drive economies would be challenging for countries like China, Germany, Taiwan, and South Korea. Transitioning to a consumption-led model would require a significant redistribution of national income and would be a massive political undertaking.

The ongoing discussions within the BRICS alliance, comprising Brazil, Russia, India, China, and South Africa, regarding the establishment of a unified currency backed by assets such as gold and rare-earth elements, may seem like a potential threat to the USD.

However, the reality is that there is no practical alternative to the U.S. dollar at this time, and its dominance in the global financial landscape is likely to continue for the foreseeable future.

© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

 

I really do believe that the day is coming where currency will become worthless. So will precious metals. If we have a global war, or if the left throws our nation into total chaos... both of which I believe entirely possible, the economy will change completely. The man with $10,000 in cash will not be able to buy lunch from a farmer, but the guy with 20 shotgun shells will eat well. You can't eat gold. But you may be able to warm yourself at a dollar bill fire... for awhile. There may come a time when the only things of value will be things you can eat, drink, shoot or have sex with.

I know, I know... you've seen that movie. But with nukes on the table, riots and violence everywhere and the general decline of civilization... stock up on good barter items... ammo, booze, chocolate, tobacco, antibiotics... did I mention booze?

 

LOL.

 

No, it will piss off American travelers to Europe, Africa, Asia, Mexico, Central America, and South America because the US dollar will no longer be universally used. IT will not cause inflation, but it may cause an economic recession because our goods will now be more expensive through exports and the GOP will retaliate by placing huge tarriffs on those goods from those countries and try to get rid of international trade agreements.

Want to solve this, honor our trade agreements, get rid of tariffs, even with China, get the Trans-Pacific Agreement passed by the Senate, and increase the flow of trade thoguh the US ports and not worry about trade deficits or trade imbalances, which pretty much mean nothing.

 

I know digital global currency is something that has been talked about, but a global currency cannot exist unless there is a "global government." And I don't see that happening. True, there is no alternative. Euro tried but failed in the 1990s and 2000s. Now China is trying with its currency and will have a few countries, but it does have limitations. Enter cryptocurrency, but that cannot work unless it is regulated, which is something that Libertarians really, really, really don't want. Then we have diamonds, but that too is also limited. Prior to the Brenton Woods agreement, we had gold and silver, and there were harsh penalties, including death, if you trimmed the gold coins if you were caught doing it. So, now, they are using sci-fi from Star Trek to Babylon 5 to whatever in their arguments, but then again, movies are fantasies, aren't they?

 

Bingo.

 

As FDR said, "... if it happens in politics, you can bet it was planned that way".

The Establishment uses "crisis" to manipulate and herd the masses...

Buckle up kids, cuz the next 6-8 years are gonna be a crisis bonanza!!!

 

Well doomsday predictors.

https://www.investing.com/news/forex-news/dollar-edges-higher-on-safe-haven-flows-caution-ahead-of-payrolls-3050072

 

it's Russian propaganda, do not believe it

 

sure, wasn't it Trump that just raised the debt, in fact about 20% of the debt occurred under Trump

that said, the world is also hurting right now, if we fail, they fail

we do much foreign outsourcing and importing, they need us as much as we need them

 

4 more years of Trump could throw us into global chaos

 

US exports very little products since we no longer have a large manufacturing base. The US manages the money and that is all I'm gong to say about that because I have nothing good to say.

 

When US currency is dumped by other countries where does that money go?

 

yes, greedy Corporatism is destroying this Country and Capitalism

 

But hasn't that kind of always been the case? Don't you think there might be other factors that are responsible for this change?

 

Don't forget about how international "Free Trade" policies devastated an entire region of the country. Ohio still hasn't fully recovered.

(just between 1997 and 2021, Ohio's share of the total U.S. GDP went down 18.75%)

before 1969, Ohio used to be considered like America's economic heartland, a prosperous growing middle class place. Contrast that with now, the state has 12 giant shopping malls that have become abandoned, a sign of the times, finally could not continue to stay afloat in the wake of the 2007 Recession.

 

Oh, so you think the Biden Administration's weaponizing of the U.S. dollar is just wonderful and hasn't contributed to the chaos?

Who cares if other countries don't want to use the U.S. dollar anymore and want to dump it, huh?
Going to make it much more difficult for the U.S. to print money and not have that cause inflation, don't you think?

 

Greedy people exist in every economic system and they usually find a way to rig the system in their favor.

 

Ever see any of Putin's mansions? HUGE

 

advancements in internet speed from foreign countries to the USA, cloud based computing and soon AI

 

yep, Trump blew that by raising the debt and at the same time his Tariff wars with the entire world vs a targeted slow role