When the the G20 aka Group of 20 was created in 1999, the United States was the big dog at the table and saw this new entity as another forum/tool giving Washington more de facto control over the international financial system — created in the aftermath of World War II in order to coordinate international economic policy with the the U.S. dollar as the reserve currency — via the International Monetary Fund and the World Bank, and the World Trade Organization. It is no coincidence that the G20 meeting in India comes on the heels of the successful BRICS summit two weeks ago in South Africa. What a contrast! BRICS is growing and has a long list of countries from the Global South clamoring for membership while the G20 is losing its luster and clout.
The current members of the G20 consist of:
Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the U.K. and the U.S..
It also includes two other regional organizations — the European Union and the African Union (just added) — who are allowed to attend and contribute to the discussion.
By this time tomorrow we will have the final communique from the G20 confab, but early reports indicate there is no agreement to condemn Russia’s military operation in Ukraine despite pressure from the United States and Europe. This is a key indicator that the U.S. effort to isolate and punish Russia is backfiring.
Two years ago Russia and China were chafing at being held hostage to the U.S. dollar in order to conduct international trade and did not have any viable alternative. That reality is now changing, and changing rapidly. At least 6 of the G20 members are working intensely to set up trade regimens that operate independent of the dollar. The United States and Europe’s egregious use of sanctions against Russia and China has fractured the foundation of the G20 and created a growing movement among the largest countries (in terms of population) who no longer are willing to submit to the U.S. using the dollar to punish them.
I do not think that the majority of the West’s financial gurus are comprehending the significance of the BRICS countries earnest effort to create an alternative to the dollar. They are calculating that the BRICS countries will fail and will be compelled to be under the thumb of the U.S.-led international financial order. I think they are making a grave mistake.
The status of the U.S. dollar as the reserve currency is based primarily on belief. As long as foreign countries believe they have no choice but to submit to using the dollar for international trade the system remains intact. But that belief is being seriously challenged. I do not think the system will crumble over night, but the moves by China, India, Saudi Arabia, Brazil, South Africa, Iran and Argentina to make payments for oil and other commodities without using the dollar is accelerating.
There is only one situation where sanctions can be used effectively to coerce changes in the policy or behavior of another country — the country imposing the sanctions must have monopoly control over the currency or commodity that the other country or countries need. While U.S. dollars and treasury bills continue to be scooped up by some foreign investors, China and Saudi Arabia have been divesting themselves of dollar-based assets. We are living through a watershed moment in history where the international financial order created under U.S. leadership at the end of World War II is being challenged with viable, powerful alternatives.
It is not just the West’s animosity towards Russia that is fueling discontent. China, Iran and Saudi Arabia are three large economies that have been regularly targeted by U.S. sanctions. And there are a host of other nations, especially in Africa, that see themselves as victims of U.S. economic imperialism. I believe the world has reached critical mass where a combination of countries rich in natural resources and commodities are now quite willing to follow the lead of Russia and China in circumventing Washington’s bullying.
Just check out this video of the Huawei phone/computer store in China, a direct competitor of Apple. After years of being sanctioned by the United States, Huawei decide — enough. It is now making its own chips and using the same nationalist rhetoric that the U.S. has spouted in the past to justify its actions. I suspect this is not a good sign for Apple and its future earnings.
You should not look at the war in Ukraine as an isolated phenomena with no bearing on the global economic order. The war in Ukraine is a symptom of the breakdown in the Western dominated “rules based” international order and this disruption is reverberating around the world. The recent coups in Africa, for example, are another sign that the vassals of the Western feudal lords are no longer willing to be de facto colonial subjects. They want some measure of independence and are turning to Russia and China to find a way out.
America also sanctioned India after the nuclear tests in 1998 and sanctioned Modi personally in the 2000s. You can be sure Modi has not forgotten it.
Can you feel the love? Too bad Modi didn’t punch Biden in the snout.
Biden….Biden, huh. Somehow rings a bell. Can’t quite put my finger on it.
Biden, isn’t he the front man for Obama? The performing dementia case who gets an ice-cream if he doesn’t fluff his lines too much.
The geritocracy running the US looks like the politburo of the Soviet Union.
Brezhnev died in office aged 75
Succeeded by Andropov who died aged 69
then Chernyenko died aged 73.
A rather youthful gerontocracy by today’s standards
Soviet spring chickens, they were.
But hey, what’s with the Russian flag? I thought Biden was supposed to turn to stone if he accidentally gazed upon one.
Then again, could anybody ever tell?
Just wait until they all start croaking in quick succession and leave us with a multitude of office vacancies and special elections everywhere. If they were any way methodical and responsible they would have groomed in several potential successors by the time they hit 70 to avoid confusion and disruption but they think they are 17 forever.
Modi is another attention whore. As long as he gets a nice reception and is made to feel important he will go along with whatever is asked of him. This supposedly nationalist bjp govt had 3 days of mourning for the Queen. He reminds me of the gun salute princes during the Raj.
India is a member of the Commonwealth; Queen Elizabeth II was head of the Commonwealth. Modi seemed to be behaving correctly though 3 days seems a bit excessive.
Shouldn’t that be called the Commondearth by now? No wonder Bharat headed for the BRICS.
You are such a degenerated paki-chinese polluter using Larry’s blog to spread lie and hate.
The facts are:
1. There was a one day state morning announced (but no one cared)
2. Modi didn’t even attend the funeral
3. NPR reporter LAUREN FRAYER’s BYLINE: “On the day Queen Elizabeth died, India’s leader, Narendra Modi, happened to be giving a fiery anti-colonial speech, renaming a road in New Delhi that used to be known as Rajpath or Kings Way after the queen’s grandfather, King George V.”
(Source: “https://www.npr.org/2022/09/17/1123629641/india-holds-day-of-mourning-for-queen-but-many-indifferent-in-the-formerly-colon”)
still some time left for that, seems there is a queue for the privilege now, Trump should get first go in my opinion, given the crap the Joebama mobsters have put him thro, hope he makes it a good one.
Joebama says “time for you Ukies to conscript Yo’mama.”
💯
That last video is a dire omen. Chinese and Indias will support domestic products. I remember some Indians even telling me way back that India had national campaigns to promote domestic companies.
He didn’t punch Biden but he didn’t allow old Joe a press conference.
Larry leads the way. The real war is in the most important thing in the world. Money. If you don’t believe that, you don’t understand how cheap life is. I’ve seen men killed for a cash register with 50 dollars in it.
But I slightly differ from our esteemed host. Like the war in Ukraine? Will the BRICS take over? Will the dollar be dethroned? Who knows, but in any case, the Brics, the dollar, and Ukraine will all take vastly longer than most think.
Ukraine will go on for years. The BRICS and the dollar death will take at least a decade if not two.
And here is the thing. Ukraine is not hurting the US. It is the cheapest war we have ever fought. And we are losing only a handful of carefully concealed troop deaths. As a matter of fact, since the Europeans cannot even manufacture weapons, you will notice they are lining up to replace their spent armories with US weapons. Which is KaChing for Raytheon. And with the destruction of the NordStream? The EuroCucks have to buy our LNG! Oh, and with the deindustrialization of Germany? The only country in Europe that can make working products? Huge exports to our new slave colony of Europe. AND. As Europe fails, their capital (THE MONEY) will come here. Because as fucked as the US is? Answer me a question? Whose Treasury Bonds do you buy? The UK’s? Germany’s? China’s?
Do not underestimate the craft of the Evil Empire. They are failing to topple Russia and rape its assets. Oh well. Rape Europe.
The US has NO interest or profit in ending the Ukraine war. And at the end? Europe will be a blood donor. The US has slave labor from South America. Actually, if they had the sense to leave China the fuck alone to die under its own weight, it would be a bloodsoaked but masterful strategy.
Man you really got some beef with China. China is doing fine and will continue to do fine. It is American hubris and arrogance of underestimating others which partly led to America’s current predicament.
The Chinese are watching the US commit slow suicide like a heroin addict who eventually overdoses in a business station bathroom.
If the US was willing to be humble and learn to live and share with others things could have turned out different.
The idea of things to come “way” into the future is the usual excuse that comes from minimalist minds, but always belie the details in between, like the two “tiny” details you left out:
First, unless you think it is OK for Ukraine to turn into another hotbed of intl. terrorism, the US will have to keep propping up its economy, now that we helped destroy it… for ever, but with what money?
Second, even if it takes decades for the dollar to be replaced, its slow, painful death will be felt for years and years, by everyone that holds it as reserves, including the population of the US, having to carry ever increasing amounts of it to buy the same thing, till they have to fill a wheelbarrow full, in order to buy a loaf of bread, like they did in Nazi Germany.
Not a pretty picture for the world to contemplate, as they flee American influence, like the plague!
The ‘wheelbarrow of full of money for a loaf of bread’ was in 1923 – ten years before the Nazis got to rule Germany.
Yeah and Hitler and his pac man war machine did wonders to the German economy, right? If it were not for the systematic theft of gold, diamonds, art pieces, real estate and everything else they could lay their hands on, they would have had to drive a dump truck full of Deutsche Marks to buy a loaf of bread, ha!
Actually it was resolved in 1924 with Rentenmark
Germany should have issued War Bonds instead of deficit financing WW1
Hyperinflation resulted from France and Belgium invading Ruhr in 1923 and General Strike
Hitler was in prison until 1925
He was funded by Americans and Jewish bankers
But it certainly paid a huge role in the COMING of Nazi Germany. And lets day you believed that Jews had an outsized influence in financial circles, as everyone at the time did. Then its a small step into believing that the Jews were behind the whole nightmare. And the next step would be to believe that Jews could do this behind the scenes anytime they wished, which made them a menace to the entire world
Sounds insane now, but consider how crazy the hyperinflation was and how it destroyed one’s faith in rationality itself. The Deuschtmark had never lost a smidgeon of value prior to 1920. A thousand DM note was an awe inspiring unit of value in 1920. Three years later, you’d need a million of them to buy a roll of toilet paper.
If any here follows Alexander Mercouris, he highly recommended this book (numerous times) for anyone who wants a detailed analysis and understanding of the NAZI economy:
The Wages of Destruction: The Making and Breaking of the Nazi Economy by Adam Tooze
“The idea that Nazi Germany was an unstoppable juggernaut, backed by an efficient, highly industrialized economy, has been central to all accounts of World War II. But what if this was not the case? What if the war had its roots in Germany’s weakness, not its strength? This is the radical argument in this pathbreaking book, the first account of the Nazi era for the twenty-first century and our globalized world.”
“There was no aspect of Nazi power untouched by economics, yet Adam Tooze is the first to place economics alongside race and politics at the heart of the story of the Third Reich. And America, in Tooze’s view, is the true pivot for Hitler’s epic challenge to a shift in the world order. Hitler intuitively understood how Germany’s relative poverty in the 1930s was the result not just of global depression, but also of Germany’s limited resources. He predicted the dawning of a globalized world in which Europe would be crushed by America’s overwhelming power, against which he saw only one last chance: a German super-state dominating Europe. Doing what Europeans had done for three centuries, he sought to carve out an imperial hinterland through one last land grab to the east, to give him the self-sufficiency to prevail in the coming superpower competition. With the odds stacked against him, he launched his underresourced armies on their unprecedented and ultimately futile rampage across Europe.”
https://www.goodreads.com/book/show/711592.The_Wages_of_Destruction
I regard the book as highly as Mercouris. And one interesting fact, because of the way the NAZIs financed the war, apart from theft and forced labor, had the War ended in German victory, most of Germany and its industries would have been own by foreigners (in other words, by the people they conquered). Lots and lots of similarities in the book about the way the United States and the Europe Union are currently financing themselves. They develop a lot of ingenious, jaw dropping, short-term economics “schemes” to keep the whole thing going, not unlike today.
And actually helped the nazis to come into power. And let’s not forget that most of Europe AND the US created the situation which they contemplated would lead to another war. An interesting series of books, by Upton Sinclair (the Lanny Budd series) supplies some insight (although somewhat skewed) into this and enjoyable reading to boot.
Wall Street and the Rise of Hitler
Wall Street and the Bolshevik Revolution
both by Antony Sutton
That was thanks to our banksters, wasn’t it? Can’t we really blame WWII on WWI, then Wall Street and then Herr Moustache?
“Whose Treasury Bonds do you buy? The UK’s? Germany’s? China’s?” you ask.
I have worked in Asia for half a century and am now retired in Asia. Every German expatriate I have come across in Asia these couple of years have no desire of returning back to Germany, the same goes for the French. To this extent, your prediction regarding Europe may be correct.
Since the 1990s, I have seen headlines in the Economist, the Financial Times and other western publications predicting the “death of China” (if I may paraphrase your own words). It has not happened, and it may not happen as you predict. China has been a civilizational state for 4,000 years and if your only source of information is the western media, then one is living in an echo chamber. And I have noticed your vitriol towards China in your numerous comments in the past.
Nonetheless, many readers of this blog and on others and other commentators in other channels and/or blogs do not understand the difference between a reserve currency and a trade currency.
A currency can be a trade currency without being a reserve currency but not vice versa. Oil is the most traded commodity in the world and by reason of the petrodollar system created in 1973, all countries have to buy US treasuries (“UST”) to “park” their USD. The said system was created to stabilize the dollar after the default of the US Govt in 1971 to unpeg the greenback from gold which caused the freefall of the greenback and in turn, serious inflation. Thus, to some extent, the greenback is not really a pure fiat currency but underpinned by oil.
The latest data from the Federal Reserve shows that China and Saudi Arabia are holding the lowest amount of UST since 2009. Why is that? Because there are less oil transactions conducted in USD and for that matter, in other economic transactions as well.
The high end forecast of tax receipts of the US Govt for the current financial year is around $4.5T (barring no recession). Interest payments on the debt alone will be between $800B to 900B. However, next year interest payment for the debt is projected to be $1.6B. This is because the average maturity of all UST is 5 years and they are front end loaded and with the current Fed Funds rate at 5.33%, the US Govt can no longer borrow cheaply. In the second half of this year, the Treasury has to sell $1.7T of UST to fund federal spending. China and Saudi Arabia are not buying them. Japan holds $1.1T worth of UST and they will have to start selling to buy oil due the fact that Brent is now above $90/b. So who is going to buy all this junk coming from Uncle Sam? Mostly the Fed and US banks. In particular when the need for USD decreases worldwide due decrease in demand by reason of more trade conducted not in USD. Look at ASEAN, they have started trading in their own national currencies as well. And yet the need to issue debt by Uncle Same continues to grow. And this vicious cycle goes on. Next year, half of US Govt’s tax receipts have to go to financing the debt and “entitlements”.
The point is obvious, even to ones not versed in financial/economic matters. Finally, for your information, 97% of China’s public debt is owned by China just like Japanese govt debt is owned by the Japanese.
Addendum : “However, next year interest payment for the debt is projected to be $1.6B” should be $1.6T
LOL, I looked at that twice, and decided that you meant Trillion, not Billion. Thanks for a great post!
Thank you for a concise explanation. Is this what leads, eventually, to hyperinflation?
If you are thinking about hyperinflation in terms of the Weimar Republic, I do not think this scenario will happen. The cause of hyperinflation then was due to several factors that are not present now e.g. payment of huge war reparations under the Treaty of Versailles which Germany could simply not afford.
There will be inflation, maybe similar to the Volcker years which was close to 20%. There are still many tools in the tool box of the US Govt to prevent serious inflation provided they do the right thing and that does not mean just interest rates which is a blunt tool. They include (1) cut the budget (including military spending by at least 40% (2) entitlements are a tricky area and I do not think either party dare to touch that (3) increase taxes. And there are others but the aforesaid are the must do things. However, given the state of the country and its politics (or the lack thereof), the future is uncertain and not promising unless a visionary is elected. I do not see any on the horizon at the moment.
Germany never paid reparations see Young Plan and Dawes Plan
Germany was a serial defaulter
France paid reparations 1871 to Germany which funded industrial expansion and they paid in gold
Germany was simply a deadbeat debtor
Hyperinflation is caused by supply shocks, spending must always be equal to sales (production)…
would be possible to use scientific notation, 1 million=10 exp 6, 1billion =10 exp 12, 1 trillion = 10 exp 18, please
Juan, 1 billion = 10 exp 9, 1 trillion = 10 exp 12. Just saying.
Or….10^9 and 10^12, not to be confused with 10>9 and 10<12 unless you're Annie Bareback.
Unfortunately most Americans, and probably most people in general, are not math or science literate enough to understand scientific notation. Anyone trying intending to be understood would have to constantly post your explanation as part of their comment.
Most PhDs in gender studies do learn a lot about the proper use of the period though.
If you make a suggestion like that, at least get it right.
1 Million= 1×10^6
1 Billion= 1×10^9
1 Trillion= 1×10^12
YeS!
One cannot also discount a black swan event, that makes a gradual transition out of dollars to panic – and there are lots of black swans on the horizon.
-US boots on the ground in Ukraine and a troop transport plane shot down (or Mansteim base turned into rubble). – A US destroyer crashes a Chinese military boat (they regularly hit shipping vessels), and China says enough and sinks a US aircraft carrier. China places an embargo on Taiwan and also stops all rare earth deliveries to the West. Something with Iran… The list is looong and not low-probability given the West’s current leadership. Heck – a really cold winter that kills a million Europeans, NATO and the EU collapses, and the US is kicked out of Europe, sues for peace with Russia, and joins the other side’s block. -US base in Niger overrun by Wagner with thousands of high-tech hostages (oh, and DoD persons).
These black swans tank the market destroying already wobbly bank balance sheets, so the Fed prints 20 trillion and buys the “free market” (for Blackrock), inflation hits 20-30%, the Fed raises interest rates the same, and zombie corps and bond funds (and all those shale drillers) fold leading to trillions of insolvent banks – so the fed prints another 20 trillion. But you can’t print oil, so the Fed prints trillions more. At some tipping point, the dollar loses any expectation in the dollar orbit (which makes little) and refuses to be paid in dollars, and we see if Fort Knox is empty, and the trade balance equalizes as prices rise and the economy collapses until equilibrium is reached. Given the US treatment of its friends – expect the world to kick (economically) the US in the *&%*^ until it breaks into multiple statelets with no pretentions of hegemony (the irony – it’s the plan the US has for Russia and China).
Another, not really “black swan” is the US debt bubble. It needs the reserve currency status to finance (and refinance) all those trillions, plus the unfunded liabilities in social security, medicare and medicaid. Trade in the US dollar forces everybody to buy and hold dollars and dollar denominated assets like bonds and T-bills. Even slowing this down via the small reductions in use of dollars is enough to collapse this. It won’t take a switch to blow it all up, just a trend change to flat to down in dollar trade.
The whole system is a Ponzi scheme, and you can’t taper a Ponzi scheme. Anything but constant expansion blows it up, and we are now seeing it not only not expand, but shrink. We’re seeing the effects in the US credit markets already where the Fed is starting to lose control and is faced with letting the market drive rates higher, or hyper-inflate.
The concept is “leverage.” The relatively small drop in foreign holdings plus a minor increase in non-dollar trade is already sending ripples. The tsunami is not far behind.
Isn’t the US debt up to something like 1×10^45 now?
“Germany? The only country in Europe that can make working products? “…….The largest country in Europe is Russia and it can make anything it wants! Your viceral hatred of China and wishful thinking will not make it collapse, but on the other hand if China stopped supplying the US, the US would be toast in a week, you comprise a mere 4.3% of the world’s population, a mere drop in the ocean for China.
Joker.
How is your German camera ?
You like your German binoculars ?
How is your Audi Q7/Porsche Taycan from its Slovakian factory ?
Do you like your Audi engines from Hungary ?
What do you think of the Nissan engines in some of the Mercedes diesel vans ?
Hahaha, I always sayy that if China stops delivering product to the US, Walmart would close overnight. Granted not exactly correct, but a lot of companies would have to close down due to lack of product.
Well, it does seem a masterful plan the way you lay it out. Which is probably the same simplistic view the US “had”, until reality bit it in the ass.
When the EU “slaves” (your words) revolt, the EU will fracture, become mini blocks, knocking on Russia, China & Indias door.
The US does not have enough LNG to supply EU and never did.
Raytheon et el may have “orders” till doomsday, but will have difficulty filling them in a timely manner due to both manufacturing capacity & raw materials.
The trade wars haven’t even started.
I agree regarding Ukraine “profitability”, especially with the grand theft of Russian sovereign wealth fund & assets, however, the idea of it turning into a low intensity warfare conflict like Syria or Israel/Palestine will never happen, that was the “Minsk” years, those are over.
The US does not have near the “slave labor” in South America they once had, and labor is one thing, but raw materials and manufacturing is another. Which is why all of that is on the Asian continent. It would take decades to build “South America” to that capacity, if possible.
The EU has a few industries that the US can import and profit from,
But what exactly besides debt & limited tech items can the US “export” to the EU ? EV cars? With a bankrupt economy (all that “slave labor”) whose buying this stuff we supposedly will be “exporting”? In order to “consume” you need ability to buy. So, more IMF loans? Sure.
The EU can and will manufacture their own weapons. They were doing it for centuries before the US came along, they have seen the overpriced pieces of garbage laying on the Ukraine landscape, and are definitely recalibrating their future investments. Again, a huge split in EU is coming. They have their millionaires and billionaire oligarchs as well, and out of self interest & preservation, they see this project going south and will bail and take entire countries in the EU with them.
As for a “country dying under its own weight”… it’ll be awhile before that happens in China… we’ve got a head start, this is the way of Empires.
I agree about the decade or 2 for the BRICS or SCO overtaking the US in “currency” war.. but a decade or 2 is not long at all, and our “domestic” banking system is already weeding out all small banks to consolidate to Federal Reserve owning it all and flipping to CBDCS which they’ll be unable to drag the global currency under that control like they have with “fiat dollar debt”.
Hopefully the US will stop “outsmarting” itself and get to the reality of a solid long term strategy of survival.
Sadly my friend, any such “strategy of long term survival” necessitates the destruction of America’s oligarch class. And this is what it’s really all about. This American oligarch class cares as much for a “Ridge-Runner” from West Virginia as it does for a 16 year old Ukrainian kid blown to smithereens in Rabotino.
So, until we Americans are ready to see guys like Bill Gates swinging from the nearest lamppost, ain’t nuthin’ gonna change in the USA.
We’ll have to do it ourselves, cause we don’t have enough $$ to pay a private army like those MF’s do. Why do you think their politician slaves keep going after the 2nd Amendment?
God, Guns, and Guts made America…. Let’s keep all 3!
And not just the destruction of the US oligarch class. The Rothschild Class operate internationally, control too many Central Banks to be ignored.
The WEF was supposed to be the public-facing image of the Rothschild Class, painting the standard beneficient narrative to hide the generational, venal rapaciousness that has served them since the late 1700s. It is a cult in business suits, run by a small group of interconnected families, and needs to be viewed as such. The rub comes when a sub-group of, say Soros-backed US NeoCons, decides to break away from the pack and tries to seize power by using the US-MIC/Surveillance/Economic power without actual Congressional Authorization. All it takes is to have a deluded old Cold Warrior who THINKS he is in charge to occupy the Oval Office. The means to do this was hidden in the Patriot Act and the US President being able to side-step the “only Congress can declare war” requirement to be able to instigate/fund wars without explicitly VOTED Congressional Approval and a Declaration of War.
In direct contravention of the US Constitution. But somehow the courts and Congress seem not to understand this “detail”.
Called TREASON. Why are Nuland and Company walking around free, let alone controlling “US foreign policy” from the unelected bureaucratic back seat?
The US/EU/NATO had to be destroyed militarily, economically and socially so the Rothschild Class/WEF could benignly ride to the rescue… y’know, “you will own nothing and be happy”. But that power had to be used to crush Russia and China first. OOPS!
Putin and Xi saw the latest version of the Great Game and decided to not play along. So they are joint #1 Enemies. And now the BRICS must be denigrated and attacked, collectively and individually, by all means at the NeoCon Cabal’s disposal… the US/ZATO/Central Bank/Military Combine.
But the Nuland Cabal (I don’t think the Clinton/Obama/Biden Deep State or even the Rothschild Class actually controls them anymore) realized that while technically they reported to the Rothschild-captured President/Congress, they could do as they pleased as there is no enforcement of the Constitution or laws anymore. And the Rothschilds control no armies, just puppet political hacks and weak-kneed bankers. (Macron is the embodiment of this.) Soros controls much of the courts/prosecutors in the US, having paid for their elections.
Remember this little intellectual gem?
“We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality — judiciously, as you will — we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors . . . and you, all of you, will be left to just study what we do.”
― Karl Rove
All this was all supposed to happen at a speed that prevented examination of such “crises” as the 2008 Crash, 9/11, Climate Change ™, Covid, and the crowning achievement, WW3 via the Ukraine War (that isn’t a war). By their own words, 2025 for this, 2035 for that, 2050 for the finishing touches.
Hence the push to “freeze” or infinitely extend the Ukraine Debacle into another Korea, Afghanistan, Syria, Libya, but on Russia’s doorstep. Waiting in the wings, to similarly goad China into invading Taiwan. That keeps the Great Reset timeline intact while obscuring the real objective.
Pinky and the Brain come to mind.
“Whose Treasury Bonds do you buy? The UK’s? Germany’s? China’s?”
Why not gold? Why does the store of value have to be bonds denominated in fiat?
Well done! You’re one of the few who has understood the geopolitical situation correctly.
Curt Nichols says
“The Brics, the dollar, and Ukraine will all take vastly longer than most think. It will take at least a decade if not two”.
My comment:
You are promoting the assumption most people has before they go broke.
Afterword’s they will claim It happened suddenly and by unforeseen consequences.
So keep fooling yourself.
Funny to see the founding BRICS members making up 5 of the G20 with other G20 members just added to BRICS+. I guess for now the countries in question are playing both sides.
That is the point of a multipolar world. Countries have more opportunities and flexibility instead of the current “my way or the highway” system dominated by the US. A multipolar world is the truest form of global freedom.
It really happens that those countries practice the words of:
2:10 BIDEN: “the nations have a right to sovereignty and territorial integrity, they have the freedom to set their own course and choose with whom they will associate (…)”
https://m.youtube.com/watch?v=YmaRStA8Qlc&t=2m10s
(sarcasm, mockery, laughter, wink of the eye)
Just like shrub, you’re either with us or your with the terrorists, black and white, take a side. The US shot itself in the foot taking Russia and others financial assets. The world took note. Any reasonable person or country would want options. BRICS+ is just that an option. The thievery of the US rules based order is long overdue death. As Russia continues to thrive relative to the EU and US the process will accelerate. Countries that tried to conduct business outside of the authoritarian manipulation of the US and UK has usually resulted in a leaders death, color revolution and coup, all wrapped up in the flag of democracy – rah rah go USA. This is a very deadly game we have been engaged in. Like the above post about murdering someone for $50 in the cash register, only mind boggling bigger.
“You should not look at the war in Ukraine as an isolated phenomena with no bearing on the global economic order.”
Exactly! We are in WWIII, which is the continuation of WWII, which was the continuation of WWI. A newer 100 yrs war, which was a 116 yrs war, from1337 to 1453. That ‘first’ 100 yrs war was also about control of resources, France the most powerful, richest, and populous state in Europa. The scale has changed in the interveneing centuries. The ‘second’ 100 yrs war is about control of global resources.
Must take issue with “symptom” in “The war in Ukraine is a symptom of the breakdown in the Western dominated “rules based” international order and this disruption is reverberating around the world. ” the SMO is not a symptom, but an overeach in implementaion of the “Heartland” strategy. OTAN really believed that the ‘dreaded sanctions wunderwaffen’ (which have a 100% failure rate over the 75 years) would collapse the RF state in short order and allow a rerturn to rape and pillage of the Eltsin comprador regime and dismantling of the RF into easier exploitable parcels. Then on to China!
Think that a serious consideration of the issues raised and discussed at reasonable length yesterday on The Duran between Alastair Crooke, Alexander Mercouris and Glenn Diesen, titled “Hotel Ukraine – You Can Never Leave” aabter Alastair Crooke’s 04 Sept article on Strategic Culture “Hotel Ukraine: ‘Sure, Check-Out Any Time, but You Can Never Leave” will provide further explanation. Link to the article:
https://strategic-culture.su/news/2023/09/04/hotel-ukraine-sure-check-out-any-time-but-you-can-never-leave/
Obviously, OTAN seriously miscalculated …
You make a very good point. WW3 has been going on since WW2 which was a 2nd/3rd Generation War. WW2 is a continuation of WW1. WW2 wouldn’t have happened if Wilson hadn’t lied the USA into WW1. WW3 is a combination 2nd/3rd and 4th Generation War.
It’s all about the money. War is a Racket — Smedley Butler.
There was a Cold War in between WWII and WWIII.
BRICS founders and (+) nations are over half the G20. They’re playing both sides, maintaining dialogue. Interesting.
Of course they are. It takes time & work to set up an entirely new financial & economic system. They can’t just flip a switch. They play both sides to keep their countries running while concurrently building a new, parallel system. Playing both sides is really just playing for time.
You’re so right, Mary.
Great article. I agree with a Russian comment I saw (I forget who by) that the G20 will gradually lose its non-Western dependent members in favour of the more attractive emerging BRICS mechanisms. That said, I can see the US and its die-hard vassal states clinging on to the G20 for a few more decades yet.
The G20 doesn’t do anything. Name one thing it does. It is a political forum for the US to line up vassals for it’s own agenda. The G20 does nothing compared to the BRICS.
On this issue, can anyone think of a single signature US development project anywhere in the world? I can’t. It’s just bases and weapons and bullied compliance with US interests.
It’s obvious why countries are aligning with China and BRICs. There are material gains to be had. Real projects that serve the nation. Win-Win. China is not the new US on the block. It is doing something different.
The stupid subway system doesn’t even work in my city of Boston. 25 percent of the lines are crumbling and trains are forced to crawl at a snail’s pace under the city. We can’t do anything anymore.
The whole world sees it.
The biggest political test of the next decade is to deter and disarm the fading yet very dangerous US empire.
The G20 will always be attractive in future for those who like to watch the Americans run around flailing their arms throwing tantrums like chimpanzees at the circus.
Even putting it in inverted commas does not make the description of our self styled international community as a “rules based” order, any easier to stomach.
The rules only ever apply as, when and how the US wants them to, and never to itself. The rest of the world has finally woken up to that.
What the US-UK, dragging the EU along, has done to Ukraine and Russia, is an offence to humanity, going way beyond infringing whatever rules (sic) suit this unholy alliance at the time. To blame what we now have on Russia, is so egregious an abuse of any moral code, such a jaw dropping obliteration of history, the US should have lost all international standing in one fell swoop. Of course Russia took action and invaded Ukraine. It could no longer stand back and ignore what was being done to Russian citizens in the east and the flagrant disregard of the Minsk Accords. Nor did the US expect it to. The invasion was just what the US intended to provoke. And then it let fly, all faux outrage, which is one thing Biden can still do.
The G7/G20 are simply a gathering of Major+Mid-Sized Economies.
The Trans-Atlantic Hegemony and their Vassal-States led by Murica sit – leveraging the sizes if their Economies – together at those venues to discuss issues of mutual and self-interests.
CHN+RUS declined to send over their Heads of State knowing that Brandon, ZATOCeania (Orwellian Reference – ALWAYS at War against EastAsia(in reality, Present Day CHN since JPN+KOR were conquered and presently occupied), and the Themepark €URoGarden were engaged in Publicity Stunts:
A) ZATO trying to join in on the AUKUS-CHN Theater by trying to establish Liaison Offices in Asia – namely JPN(Murican Fanboi Kishida was probably scolded by the Traditional Great Houses that he’s going too far); and
B) Themepark €URoGarden inviting the former Colonies of the African Union a Collective Seat in the G20 after Brussels plundered UKRaine’s Grain Deal Shipments and former+present Monetary (CFA/XOF+XAF) Colonies of FRA starting to overthrow their Yoke – with Niger raising their FRA Colonial Pricing of Uranium from 0.80U$D a Pound to match the Global Market Canadian Pricing of 200.00U$D a Pound…
…reminding the World that 1) The French Govt were “Exploitative Explicatives” and 2) It’s really a Jungle out there thanks to the French and Borrell the €URGarden Gnome.
*****
CHN+RUS have better venues in mind – actual Mutually Supporting Trade Blocks like the SCO+SilkRoad and BRICS+6 – Actual Resource Exporters and Industrial Producers – WITHOUT the Masonic-Zionist and Vassal Antagonists of Murica, GBRittania, FRA, DEU, €URoGarden, and their Banks spoiling those Scenes…
Top Down Murican PetroU$D/MICC Social Club with FEDSRV Plundered+Obligated Gold Hordes vs Proactive Trade Blocks with their own Development Bank, Energy Trading Schemes, and Gold-Barter/Settlement_Drawing_Credits.
Whose System looks more attractive?
ΟΕΔ
Hallo Larry,
a very good, holistic analysis with essential facts that have far-reaching
significance. 👍
Do svidaniya Windows: Russian military and higher officials already use Astra Linux – Putin has given a clear direction here!!!
Russian-developed Debian-based Astra Linux meets the highest security standards for Russian military and administration and could soon replace Windows across the board.
https://www.heise.de/news/Do-svidaniya-Windows-Russisches-Militaer-kann-komplett-auf-Astra-Linux-umsteigen-4435760.html
Majority of western financial gurus = trained click monkeys
For Google, Microsoft etc. it’s going to come thick and fast. The BRICS will use their own software systems. This will also affect stock exchanges and gold trading.
Russia is also developing its own chip industry.
The current G20 meeting was the first successful test for the BRICS.
There will be many more to come.
I think you are right: the Ukraine war is only part of a huge conflict that is taking place between the emerging multi-polar world and the West. I provide a free Ukraine Weekly Update that reflects this: https://robcampbell.substack.com/p/ukraine-weekly-update-824. There are tensions between some of the BRICS nations which I hope can be sorted out.
“They want some measure of independence”
LOL what independence? They just became vassals of military dictators.
TASS News:
“Brazilian President Luiz Inacio Lula da Silva will travel to Russia next year to attend the BRICS (Brazil, Russia, India, China and South Africa) summit and expects a return visit by Russian leader Vladimir Putin to the G20 summit in Brazil. He said this in a Sept. 9 interview with India’s Firstpost television channel.
The West cheats in global university rankings, poaches talented young people from Asian and African countries, and hinders the development of their education systems. This was stated by Sergei Naryshkin, director of Russia’s Foreign Intelligence Service, in his speech to participants of the Eastern Economic Forum.”
The BRICS will also develop their own education systems as chasms open up here in the West.
There is no Ukraine without UK, BRICS11 and the SCO, movement from the Petrodollar and the so-called “rules-based-order” have the London Economist, WSJ, FT all in a quandary – their world is unraveling yet they are stuck! Trouble is, those in the move to a new Paradigm also are in a quandary.
What is going on, even when we seem to be driving it?. There is something going on almost unnoticed – Multipolarity is a shadow of it. Vernadsky put it thus : it is The Transition From the Biosphere To the Noösphere.
Noös, Greek for mind, with the same root as Poet.
To quote two famous Ukrainian scientists, Vernadsky of St. Petersberg (parents Kiev Cossacks) and Alfred Lotka of Lvov.
Vernadsky wrote that at the WWII time, the Noösphere was asserting itself, almost unnoticed, and Lotka posed the riddle : Thought is not a form of energy. How then can it change material processes? Lotka could not solve it.
Planetary-wide Noösphere is after all the realm of economics, the subsumed biosphere being the realm of ecology.
So again the riddle – how can thought change material and biosphere processes (agriculture, energy generation, economics, society, and of course war)? And that planetary-wide?
From Vernadsky’s Biosfera, in English : The Transition From the Biosphere To the Noösphere by Vladimir Vernadsky , see Excerpt from “Scientific Thought As a Planetary Phenomenon”.
It looks like some in Russia have noted this – Putin appointed Anton Vaino chief of staff, a known noösphere proponent.
That is why NATOstan looks mindless, behaves mindlessly (as Macron said brain-dead), is savagely mindless to citizens – we look upon it from the Noösphere point of view already! And notice NATO spokespersons have mindless eyes as someone here recently commented. The Greens cannot accept that the Noösphere subsumes their ancient Biosphere, cannot reverse this natural development process, no matter how destructively they prance about.
Vernadsky notes this transition to the Noösphere is not reversible, even with interruptions, and has the character of a ruthless struggle.
” those in the move to a new Paradigm also are in a quandary”
To be expected since paradigms are closed systems within “reasonable tolerances” which are not only restricted to “The Strategy of The United States of America.”, although Mr. Thomas S. Kuhn in his first edition of his book “Structure of Scientific Revolutions” was initially placed in a quandry, but being a scientist understood that a quandry was not a closed system/paradigm except by choice/facility, but a potential catalyst of lateral transcendence, thereby underming the initial framing of “Structure of Scientific Revolutions” and requiring a restructured second edition of “Structure of Scientific Revolutions” but not around a fixed point.
Consequently “The United States of America” were/are in such a quandry they lost The People’s Republic of China not once, but apparently twice leading some in the audience to remember:
“Those silly kittens
They’ve lost their mittens
And don’t know where to find them
Leave them alone
They’ll come home
Wagging their tales behind them
Unless of course they get lost again.”
The main reason this irreversible, ruthless struggle goes unnoticed is the Mesmer’s trick – MONEY, a swinging coin, especially if golden.
Every now and then the mesmerized victim wakes up, has a lucid moment, notices the world has moved on, then back to the dream, mindless.
Monetarism since the Phoenicians held sway until modern physical economics, Vernadsky’s insights. Monetarism is Ptolemaic, not scientific :
The difference between the scientific method and the Ptolemaic method is the difference between an airline that correctly predicts that its planes will safely cross the ocean and one whose planes crash every time but which gives you an explanation for each crash after it happens. (to quote Eric Lerner of LPPFusion).
Ptolemaic monetarist economics will explain every crash after they happen. This is rear-view-mirror economics, hardly the best way to drive a car?
Why on earth is the EU allowed to attend events like G20, G7, UN, etc. The EU is NOT a country. Somebody needs to put them in their place.
If the EU were a country, one might ask ‘How many divisions do they have?’ Answer: zero, which is also the collective IQ of the EU Commission, the number of votes Ursula
Fondoflying needed to get the top job and the credibility of Jungle Josep Borrel.
The EU is a group of sates with an overall governance system.
The USA is a group of states with an overall governance system.
Of course these two governance systems are different in the degree of sovereignty, history and devolved competences, but both are in rough theory reasonably similar institutions, so why differentiate?
“so why differentiate?”
Because the EU has no legitimacy, because the Lisbon Treaty was not approved by the citizens. There were supposed to be referendums in each EU nation, to accept this foundational treaty. That didn’t happen in most states. As I recall, in France it never came up for a popular vote as promised and a room-full of legislators gave its approval instead. Ireland rejected the Treaty the first time around. Then the EU gave a ton of preferential deals to Ireland, such as no corporate taxes, etc. and of course the Irish were greedy and unprincipled enough to reverse themselves in a second vote. Bottom line is that very few nations actually had a referendum to decide the big big question of the extinction of their national sovereignty.
If yo look at the workings of the “European Commission” in detail, you will quickly see that this is a sham dictatorship, with elected officials going to the annual meetings through the front door, and bankers coming in the back door. The meetings are held in secret, with no records of even who is in attendance. And then there is no chance for the “decisions arrived at” to be put to a vote. It’s a pure sham.
USA is dying – post WW2 infrastructure crumbling, 2+2=5 and trans miseducation, cities criminal war zones, no reliable rule of law etc so why anyone would hitch it’s wagon to USA is questionable to begin with added to that stealing assets of those who cross the State Department makes it impossible unless you wish to be a 100% vassal. USA brought BRICS in which is crazy since we had such a good deal going offshoring all inflation and getting free shit for printing money. Truly the worst Administration ever.
Well obviously US has been replaced as hegemon by China already, but the argument about money is more complex. Roman coinage was used as late as 1000 AD well after the fall of Rome.
Economists talk about 3 Functions of Money (the 4th is usually skipped)
https://en.wikipedia.org/wiki/Money#Functions
Medium of Exchange
Measure of Value
Store of Value
Dollar is still dominant for roles 2&3.
The dollar is no longer the sole Medium of Exchange. Transactions can be done in many other currencies and there need be no record of any transaction appearing in NY or other western money centre.
But the Dollar remains the core Measure of Value. Even if Russia sells oil to China the contract is likely to be long term that is cover regular deliveries dated up to 2 years or more. Imagine a Chinese company taking Rouble risk for the next 2 years when the Rouble has halved, doubled and halved again in value since Feb 2022. It ain’t happening.
The Price negotiation will be in dollars. Actual pricing may well be in dollars and the Chinese partner, perhaps both, may choose to hedge that dollar price into local currency at the bank. Alternatively the price may be in Yuan or Rouble in which the other side will make two sets of currency hedgies, one for transaction currency to Dollar, the other from Dollar to dometic currency.
(Technical point – Some Economists talk of a 4th function Standard of Deferrred Payment. Most wrap it up inside Measure of Value as I have done here).
Store of Value. This is the big one – this is the magic trick that has allowed USA to get away with massive twin deficts for decades, having the dollar used as store of value for all those that generated surpluses with it.
First Larry mentions the declining US savings held by China and Saudi. Important to recognise that this is NOT China or Saudi moving their savings away to other places – those other places just don’t exist in that size. This is China investing very very heavily around the world in its Belt and Road project and other infrastructure products ( mostly very wise investments – think high speed rail and ports). And Saudi investing heavily – though perhaps not as wisely.
Personally I can place all my ready cash in any currency of the world. But if I had $1bn worth and wanted to place it in a single hit I’d have very few choices and almost all would be USD. If i wanted to place it somewhere which was both high credit rating and I could withdraw it in single telephone call, that limits me even further. $20bn which I want to place in minimum trades of $1bn and 90% of it will go to US.
That is not changing for a long time. The combination of massive debts plus the ability to smash any nation in the world overnight has left the US as the only place with that liquidity and finding alternatives will take a long time. It won’t be Russia or China – they have no trade deficits to fund.
Let me know when you can place a $ billion’s worth in another currency and it is safe and liquid.
China – became the dominant economic power in the world around 2015/16 when GDP at PPP overtook USA (and remember that the make up of China GDP is much more useful for growth than the financalised US GDP).
China and Russia together became the dominant Military powers about 2020 (hypersonics replaced Carriers as the key tech, plus incremental size and quality progress / US regression)
China became the dominant Diplomatic power in the world in 2022/23 (the Saudi Iran deal is one proof).
But people will carry on using dollars for a long time.
“Let me know when you can place a $ billion’s worth in another currency and it is safe and liquid.”
Russia’s Central Bank made the fateful error of parking $300 billion , warned about by economist Glazyev, which was then seized. To add injury on insult that RCB run by Nabiullina payed out $80 billion DOLLARS to foreign banks, instead of simply saying you have stolen it already! So much for safe and liquid!!!
The people have noticed this , and a brawl has broken out :
Finance Ministry Siluanov argues for tighter currency controls, in discussions with Central Bank
https://tass.com/economy/1668621
Bank of Russia’s Nabiullina does not rule out raising key rate at September meeting
https://tass.com/economy/1668745
“Russia’s Central Bank made the fateful error of parking $300 billion , warned about by economist Glazyev, which was then seized.”
Mr. Glazyev like many did not and continues not to understand, and that was/is as it should be since war is not restricted to things that go bang.
The Security Council of The Russian Federation decided to make an investment that they understood their opponents would interpret akin to sanctioning opportunities of circa $300 billion.
Since their decision and the conditioned response by their opponents, The Security Council of The Russian Federation have enjoyed significant returns on investment in multiple interacting presentations, including everytime a person looks at the back face of a $100 bill, they are reminded that “In God We Trust” and some extend this by adding “and the rest of you dumb b*stards can go f*ck yourselves”; a component of why a chosen agent for propaganda for The Russian Federation was/is “The United States of America” to avoid unpleasant bending.
Perhaps you also believe that “The United States of America” won the Cold War?
What do you not understand about $300 billion stolen?
Sounds like you represent Kudrin and Chubais?
“What do you not understand about $300 billion stolen?”
That it was not, and is still not, stolen.
It continues to be a poison pill in an attempted “hostile takeover” – not a succulent bonbon fashioned by a chocolatier of “perfection” such as Maitre Leonidas of Brussels as expected by some – which some continue to believe was stolen in hope of limiting indigestion of illusions – , whilst the implementers assess increasing returns on investment, including but not limited to the increasing scope and velocities of “de-dollarisation”, facilitated by the illusion of some that “Stolen apples taste sweeter.” by forgetting too many apples can cause upsets not limited to stomachs.
“Sounds like …..”, “Tastes like ….”, “Feels like…”, “Looks like…”, “Quacks like …”
That is always a welcome addition in maintaining illusions, akin to Mr. Poroshenko’s resort in Roshan using large colourful boxes to hold small numbers of chocolates containing limited amounts of cocoa butter, unlike Svitoch, or even Wedel in Warsaw.
“The Security Council of The Russian Federation decided to make an investment that they understood their opponents would interpret akin to sanctioning opportunities of circa $300 billion.
Since their decision and the conditioned response by their opponents, The Security Council of The Russian Federation have enjoyed significant returns on investment in multiple interacting presentations.”
https://www.rt.com/business/582823-russia-frozen-assets-putin/
Mirror gazing is often best avoided.
This is what I can never understand about the Russians. It’s almost as if they want to get screwed. They still want to play by their enemies’ rules even when the enemies don’t keep their own rules. It’s just utterly bizarre. Keeping your word is a good thing but if the other party breaks the agreement first, surely you regard yourself as no longer bound by it?
As Glazyev points out repeatedly, it is the IMF programming, exactly like Argentina’s case. BRICS11 are watching this, especially the NDB chief Rousseff.
For example (Russian)
Sergei Glazyev: Sullivan praises the leadership of the Bank of Russia 07.06.2022
https://glazev.ru/articles/10-vlast-i-obshhestvo/102513-sergey-glaz-ev-sallivan-khvalit-rukovodstvo-banka-rossii
When WH Sullivan praises the RCB policy, alarms should go off everywhere. 04 September 2023
The Washington Consensus Continues to Shape Russia’s Economy – Interview with Sergei Glazyev
Russia’s economic breakthroughs at any time in history were preceded by cheap loans – and now they are not.
https://sevastopol.su/news/vashingtonskiy-konsensus-prodolzhaet-formirovat-ekonomiku-rossii-intervyu-s-sergeem-glazevym
(run these thru Edge or Yandex, full of Russian info).
Glazyev is EurAsianEconomicUnion EAEU chief economist. Is the RCB trying to collapse the Russian economy?
Well sure, but being a depositor carries its own risks.
If you are likely to be seen as hostile to the bank or the country the bank is registered in, sure then placing money there is not safe.
Not that gives Russia manly other choices. Money in Europe was stolen just as easily. And you just can’t place $300 bn worth in China in a year or two years, let alone a fortnight which is what it might take in USD.
Dollar wins out for a long time yet as a store of value.
Given inflation, it is a store of ever declining value. A debt-based monetary system is doomed to decline in value. Add massive government deficits and negative trade balances destroy the wealth of a nation and the ‘value’ of its currency.
The writing’s on the wall for the USD, GBP and EUR, along with many others.
The only reason the US hasn’t technicallly defaulted is because the primary dealers by law have to ‘take up’ the unsold debt at every auction. The ROW will (and is presently) catching on to this corrupt system of PD’s printing their own money (expanding their balance sheets freely as UST is Tier 1 for their books) to take up the unsold portions. Every printed USD to ‘take up’ is inflation, as in monetary inflation aka Milton Friedman. As the ROW further catches on, the risk of rapid hyperinflation increases every day. It really is about ‘trust’ and who can trust a system that is built around hiding the obvious monetary inflation that the PD underwriter system incompasses?
The ROW WILL figure this whole scam out, and it is. The UST that you so confidently proclaim is an exclusive club is a paper tiger that will be exposed as another shell game by the Western bankster club. BRICS IS out to replace that with a more open and trustable system of Stored Value.
And it will. And it will happen much sooner that you believe.
Insightful comments and I could not help but agree with many of them.
However, I am perplexed by why the sale of oil from Russia to China as per your example would be priced in USD and converted back to Yuan or Roubles. That is not my understanding of how long term energy contracts between Russia and China works. The reason you gave was currency risk. Forgive me, I fail to understand the reason and the logic: –
1. Why would Russia, whose input costs are entirely in Roubles minimise currency risk by pricing its oil/gas in USD and have price per barrel or per cubic metre (for gas) converted into Yuan or Roubles?
2. Average price of Brent (admittedly not Urals crude) was $82.50 in Jan 2023. Closing price on Friday was a tad over $90. The USD has depreciated against Brent by 9% in 9 months. Where is the mitigation of currency risk?
The 2 countries have a very simple solution, since Sept. 2022, Gazprom’s sale of gas to China through the Power of Siberia pipelines have been priced half in Roubles and half in Yuan. The whole point of valuing and trading in national currencies (in this case a 50/50 split) instead of 3rd party currencies is one does not need to hedge.
1. First we are talking about trades meant to be completed 1 to 24 months ahead – say a year. So Russia’s production costs are not in current roubles. If Russia has high inflation, then the producer would expect more roubles and a dollar price is more likely to give that to them. Transport and insurance costs will not be in roubles. This is a partial explanation.
Secondly Producers produce every day. But make long term deliver deals only a few times a year. They want to sell consistently over a period of time. To do that they will sell or buy in futures or liquid forward markets and undo those trades as they sign actual delivery contracts. The forward markets are in dollars. Unwinding them must also be in dollars. So whether the delivery deal is in dollars or Yuan or Rouble, either the deal or the unwound part of the hedge needs to be unwound in dollars.
More – there may be a few buyers who buy for their own use and can plan the price they are willing to pay for 2025 oil. But most buyers will be traders or refineries whose goal is to sell the same or refined products into the market over the next 2 years. A few (Enron) might be happy to base its business model on predicting future prices so it buys low and sells high (never simple). But most will simply hope to refine or store products as cheaply cheaper than rivals and sell to end users at the price existing when they sell it. That requires hedging the price of the bought oil, and that in turn means entering the Dollar based hedge market (or buying over the counter hedges from banks that lay off the risk in dollar markets).
Then we have already seen the Rouble halve, double and halve again since Feb 2022. Chinese buyers do not want that risk. China Yuan risk appears to be much more stable, but there are more buyers than just China. And there are other buyers who currency is neither Yuan nor Rouble.
You simply can’t get away from dollars.
2. First the long term price of oil is much more stable than the spot price. Last time I looked WTI a year forward was $10 cheaper than for spot.
I’d guess that 95% of International oil purchases and 95% of sales are made for periods beyond 2 months. So the spot oil price is not the Oil market, but just the market for the 5% or less of oil that is not sold long term. Short term squeezes and shortages affect spot prices enormously, often moving spot a long way out of line with long term expectations. (last week I noted 1 year forward oil was $10 cheaper than spot.)
Now Crude oil Buyers WANT to be exposed to future prices movements.
They are buying crude oil today for delivery in Sept 2024 which they will convert into Petrol and other products and sell in October 2024. They will sell the petrol and other products at October 2024 prices. They are trading the margin, not the absolute price. The only way they can hedge that risk is in the oil hedging market which is in dollars.
I don’t know the details of the Sept 2022 deal you mention. But I strongly suspect that the currencies are the settlement currencies, not the pricing currencies.
In other words take the dollar price set, use the dollar fixing rates on the day of settlement for both yuan and rouble, and make the equivalent payments. That after all is how a great deal of international business has always been done.
Too many people are trying to write off the dollar too quickly. We shall have to wait a long time – sorry.
I’ll repeat myself again: $ = Ponzi + racket, with the Ponzi part made possible by the racket part. Such things just can’t last forever. They force permanent risk assessment on the victims. What do I risk if refuse the racket, what do I gain if I accept the racket? At one moment or the other, inevitably, victims emerge that are strong enough to refuse the racket. Such a moment triggers a “what the hell” one among the most victimised who become inclined to rally around the stronger rebel. Ukraine is such a moment. Only completely delusional morons could think that launching an aggression against Russia with Ukraine as proxy would yield the desired results. Whether they were driven by rabid hatred or blinded by hubris doesn’t matter. The course is irreversible, not b/c it is what the rest of the world wanted, after all the dollar was a very convenient tool to use in international trade, but b/c the issuer of the dollar became totally unhinged and can never be trusted again. So there is no possible choice other than de-dollarisation
“… early reports indicate there is no agreement to condemn Russia’s military operation in Ukraine despite pressure from the United States and Europe.”
Blinken must be shocked that Russia won’t agree on condemning Russia, in spite of pressure from the United States and Europe.
It seems like the reaction by the democrats and media to Khashoggi’s murder flipped a
switch for Saudi.leadership. I guess Khashoggi was an insider in DC social circles and the visceral reaction to his death must have pissed off the Prince. Heck, the Clintons and Obama deep sixed problems.
If Saudi Arabia wants to screw the US they will.
Lavrov press conference:
Western countries did not succeed in imposing the Ukrainian agenda on G20 participants; the relevant paragraph of the G20 summit declaration is related to the need to resolve all global conflicts.
This was stated by Russian Foreign Minister Sergey Lavrov at a press conference on the results of the G20 summit.
Russian Foreign Minister Sergey Lavrov said that it is important for the West to properly understand the results of the G20 summit, taking into account the positions and approaches of developing countries presented at the summit.
Lavrov noted that the approaches announced by the Indian host of the summit marked “the beginning of a very important trend.”
For Blinken and von der Leyen, this must be staggering.
Their structures are slowly unraveling.
Terrific piece. As many readers are aware, the US emerged from WWII as the dominant global power, which relied on: 1) unchallenged military power, 2) the role of dollar as world reserve currency and 3) control of the world’s energy reserves (primarily in the Middle East/West Asia), a situation that continued for circa 3 decades. Beginning in the mid-1970s, US corporate profits began to stagnate/decline, the proximate cause being the recession of 1973-1975, and a consequence of increased competition from rebuilt economies in Europe- primarily Germany (Marshall Plan), Japan/South Korea (Korean war) and more recently China. The US ruling elite responded to this economic challenge by pursuing neoliberal economic policies, which included: 1) multiple tax cuts for the wealthy, 2) financial deregulation, including repeal of the depression-era Glass–Steagall legislation (1933 Banking Act) which separated commercial and investment banking, 3) Attacks on labor and the poor combined with job outsourcing to Mexico, China, and other low-wage platforms, 4) privatization of public assets and 5) spending vast amounts of taxpayer money on the military (US taxpayers have spent >$21 trillion on post-911 militarization). Collectively these policies have progressive undermined US national and economic security and now threatening the dollars status a world reserve currency, a key pillar of post-WWII US power.
It should also be noted that the historical lifespan for a world reserve currency is circa a century (100 yrs.).
World reserve currencies since 1450-
Portugal (1450–1530)
Spain (1530–1640)
Netherlands (1640–1720)
France (1720–1815)
Great Britain (1815–1920)
United States (1921- present)
Notes
1. US economic decline and global instability Part 2: Rise of BRICS Sept 1, 2022; https://thesaker.is/us-economic-decline-and-global-instability-part-2-rise-of-brics/
2. The History Of World Reserve Currencies Since 1450 By Olukayode Olayemi Thrive Financial Advisors Apr 10, 2023; https://www.thriveng.co/the-history-of-world-reserve-currencies-since-1450
Terrific piece. It should also be noted that the historical lifespan for a world reserve currency is circa a century (100 yrs.).
World reserve currencies since 1450-
Portugal (1450–1530)
Spain (1530–1640)
Netherlands (1640–1720)
France (1720–1815)
Great Britain (1815–1920)
United States (1921- present)
Notes
1. US economic decline and global instability Part 2: Rise of BRICS Sept 1, 2022; https://thesaker.is/us-economic-decline-and-global-instability-part-2-rise-of-brics/
2. The History Of World Reserve Currencies Since 1450 By Olukayode Olayemi | Thrive Financial Advisors Apr 10, 2023; https://www.thriveng.co/the-history-of-world-reserve-currencies-since-1450
https://t.me/banksta/41501 – see graphic there.
More than 80% of all U.S. money created (printed) was issued between 2020 and 2023
Source FED Board of Governors.
Anyone looking at FED reports will see a horrible disaster right ahead, unless radical policy changes are immediately implemented.
What’s happening in Africa needs a much closer look than what we’re getting, ie an anti-French movement. The US still has its own troops in Niger – remember that ambush that killed a couple special forces types during the Trump Administration? – and continues to operate an important air and drone base in northern Niger. Other coups are also a bit weird with leaders having US training and connections, almost like America is taking over France’s role in Africa. It certainly needs much closer scrutiny.
Regarding the current US alternative to the BRI at G20… the Big Rail project that’s supposed to supplant BRI… even Israel is soooo excited!!
Here’s US “infrastructure” results…
I was living in California during Obama days… CA was granted all these Federal subsidies… billions and billions for a “high speed rail” from SF to San Diego (originally)… planning and years later, and more billions later, it was shaved to SF to San Jose, something “doable”… after the billions Federal subsidies ran out, and CA matches of billions, CA need to raise 6 billion more to keep project going… yup! It was ditched, not a track laid, billions later… all trashed…zero zilch
So anyone actually believes China is in any way concerned about this “proposal”… forget it. Any nation going in on the “proposal”, that isn’t part of a totally grift & corrupt endeavor to glean and sift billions in “investment” money fraud, knows that not a single track will be laid, multibillions & years later…
BRI is laughing its head off.
International rail… US can’t even get one built in one state.
Anyone remember “The Wall”?… yeah?
How far did that get billions later go?, well I heard of one guy named Steve that took off with embezzled millions from it…
Yeah US “infrastructure” days left by the late 70s, and never returned.
BRI has zilch to fear.
Could not agree more!
Remember Build Back Better? No one talks about it anymore. Re this new rail project, there is already the Suez Canal. It’s quicker and cheaper just to use the Suez Canal.
Cali high speed rail project started 15 years ago and $9.8B already spent and not an inch of track has been laid.
As a monetarist, mesmerized by the swinging coin on a rocking tidal wave, you miss completely the difference between rail and boat.
Who ever saw a giant ship carrier, even 370,000 tons, ever produce anything when underway for 45 days over the Suez, and Malacca?
Rail has factories and assembly along the way, – in other words rail actually generates capital value. Now look at the new BRI rail transport carrier routes all over Eurasia, well documented by Pepe Escobar.
This is what a maritime empire fears most – Germany built the Berlin-Baghdad Railway, irrespective of the huge political differences. WWI was declared.
NordStream linking Germant to Russia – bombed by today’s NATO T.E. Lawrence.
One final thought…
I don’t believe it is in Russia’s, or China’s, Iran’s, etc., interests that the United States completely collapse into a Mad Max world. The downside risk of US nuclear arsenal falling into the hands of many disparate actors with different axes to grind would create an untenable security risk (too many variables) for these countries. What do you think US adversaries will do to prevent such an unpredictable outcome?
Please comment. Thanks!
The question is what will you do to prevent such a mess?
https://laroucheorganization.com/article/2023/09/08/friday-questions-can-us-return-its-anti-colonial-roots
Friday Questions — Can the U.S. Return to Its Anti-Colonial Roots?
That is the $64,000 question!
Bonbon,
There is NO WAY I’d ever get elected to anything in today’s America.
I’m a retired engineer, from the manufacturing world. You don’t build cars by attending sensitivity workshops. It’s F-you, get your a$$ back on the line, and start putting those dashboards in, you useless. ** Expletive Deleted **
That my friend, is the real world. So what can I do except raise my food and keep my AK at the ready. And no, I’d never want an AR-based Mattel Toy.
The question I asked you, which you declined to answer by throwing it back at me, is this: What are YOUR views of the likelihood of foreign military interventions to “neuter” America’s nuclear arsenal should American Society completely collapse?
It would be worthwhile for you to share your views on this subject. Best Regards
No white hats will roll in – it is up to Americans themselves, and it always was. And the US did handle even worse.
Will they assassinate Trump like JFK, as London’s Economist, RIIA are having conniptions that the US electorate are , horror of horrors, changing. The American Reflex is driving London nuts. Do not listen to MSM.
Thanks dude. That’s why I asked
How to dispose of USA nuclear arsenal? A very interesting question. A possible precedent would be the dismantling of much of the USSR ICBM fleet after the demise of the USSR. Warheads ended up being converted to fuel for nuclear power plants. Maybe with the world’s knee on Uncle Sam’s neck just before he gets dismembered, a similar arrangement could be made. Perhaps “hand over the warheads, and we will build you nuclear generating plants and sell you the fuel to operate them. Knee on neck first is an essential part. Perhaps after destruction of the USD and increasing international isolation.
“Western dominated “rules based” international order”
Correction: The Anglosphere and whatever “allies” they “invite” to be on their side. There is no international order, or even a G20. There’s just the Washington/ London wannabe one world government, their satraps, and everybody else.
Take the five countries that make up the Anglosphere, out of the equation, and most of the current wars, political unrest, and economic upheavals will stop within a year or two.
NATO, the EU, and the G20 are just tools for Washington/London to control Europe and Japan. The Anglos are still at war with Germany and Russia in Europe, and with Japan in Asia, because those are the only countries that could/can effectively resist, as well as inspire and lead others to resist, their “New World Order.” Which is now doomed to failure.
Eventually, Germany and Japan are gonna figure out that they’ve been hoodwinked by the Anglo’s false morality, guilt tripping, scapegoating, lies and labels. Hungary has figured it out. Russia never fell for any of it in the first place. Nor has China. Neither of them believe that they are morally reprehensible, evil, or criminals, for defending their nations and peoples, and their national interests.
The age of Anglo Lawfare, hypocrisy, double standards and lies is coming to its well deserved end.
German is fully aware, no matter what MSM scribbles.
Russia DID fall for the Washington Consensus, still!
The Washington Consensus Continues to Shape Russia’s Economy – Interview with Sergei Glazyev
Russia’s economic breakthroughs at any time in history were preceded by cheap loans – and now they are not.
https://sevastopol.su/news/vashingtonskiy-konsensus-prodolzhaet-formirovat-ekonomiku-rossii-intervyu-s-sergeem-glazevym
(run these thru Edge or Yandex, full of Russian info).
Glazyev is EurAsianEconomicUnion EAEU chief economist. Is the RCB trying to collapse the Russian economy?
“Russia DID fall for the Washington Consensus, still!”
Appearances can be deceptive particularly when “interpreted” by those with limited facilitity in “implemented strategies”.
“Glazyev is EurAsianEconomicUnion EAEU chief economist.”
As Mr. Stalin observed in respect of Mr. Mikhail Kalinin:
“You don’t need to wear a badge to be the sheriff”.
Pandora is not boxing at Madison Square Garden.
Thank you for your service.
US perfected the art of spending other countries’ trade surpluses
Britain on Gold Standard could never achieve this feat but US has gone off gold to use its own currency to steal from every surplus nation as it increases its own trade and budget deficits
Britain’s Gold Standard was rejected by FDR in 1934, and again at the Bretton Woods Conf. Lord Maynard Keynes of the London School of Economics proposed Bancor, a world currency, also rejected.
The Gold Reserve standard held until 1971 when Nixon killed it under gold pressure from London – i.e. London is the reason for the Petrodollar, and all subsequent boom-bust shenanigans.
Larry,
I think you have enough material here for a white paper, in Foreign Policy or some other such erudite foreign policy journal.
For every country the State Department/MICIMATT brings into the EU/NATO, “X” number of countries join the BRICS.
We won’t know whether the “law” is linear or exponential until they attempt to get Belarus or Georgia to join, but right now the ratio is 1:6 …it could be higher if the relation is exponential.
We could call it “Larry’s Law” or the “Johnson Curve” (no pun intended). 🙂
If the boffins at Foreign Policy or RAND won’t take it, then maybe VIPS can explain it to the State Department ???
hehehehehehe
I did some consulting for an international telecommunications company. The Pentagon had no interest in their product, but they were also upset that the company was willing to work with China. A company cannot call itself international if it is unwilling to do business in China.
https://www.msn.com/en-us/money/markets/the-us-just-imported-its-smallest-share-of-chinese-goods-in-17-years-and-the-big-winners-are-mexico-and-vietnam/ar-AA1gmh1a#image=1
I know. I know. If I do not lick Xi’s ass, I hate China. Facts are not hate. They are reality.
This is why the Chinese economy is not improving. Washington DC has decided to destroy China. And they are urging/forcing/bribing companies to quit doing business with China. And if you are going to do it? This is the way instead of an insane war over Taiwan that we will lose.
China has no large domestic market. They bring parts and fuel in, do second level assembly and ship it out. And the US buys most of their goods. And that will dry up to a trickle via US policy. And their own internal demand is drying up due to their demographic doom loop. When they killed all those baby girls that left a mark.
This also ties into construction spending in the US. They are trying to build back our factory space. Whose failure is shown in the fact that we can’t even keep up with Russia on artillery shells.
Where the problem is? Who is going to work in those factories. Look at most of the kids under 30 and ask yourself about their work ethic. And the Hispanic slave labor without paper cannot do a lot of higher level work.
But since we get to print money, it will happen. Sales to China will continue to die from the US. And then China gets to sell to who? India? Their hated enemy with the rupee? You want to talk useless currencies. Africa? Just not much money there compared to the US. The rest of Asia? They have large working populations that can make their own products.
And I have no idea why the lunatics in Washington are committed to destroying China. I do not advocate it. I like to buy cheaper goods. I want China to trade with us. It makes my money go further. And this is why we now have structural inflation.
China’s exports dropped 8.8% in AUGUST alone. Facts are not hate. They are a summation of reality.
Hi Curt. Could you explain why you think China doesn’t have a large domestic market? Maybe I’m seeing the wrong pictures from over there; maybe the wrong statistics. I don’t know. Have never been there, and not really interested in visiting. Just want to understand
Thanks!
BTW. Spot on with that comment on our under-30’s. 😢
Surrender is the best solution to leave their NATO rat extinguishers.
4 Russian Airborne Forces soldiers captured 11 Ukrainian Armed Forces soldiers who were hiding in a dugout.
https://t.me/intelslava/51118
Oh wait, it looks like they called the Russians to come for them to surrender…
The last guys, just open the curtain and appear as if their cousin from Rostov would had arrived for lunch, quietly, standing up, hands to the hip…
They do the right thing, after all they are dying for this guy cheering with French wine in his yatch…( look where your taxes have gone….) and other of the same fur in Bankova, and for leaving their country to BlackRock to be exploited and squeezed….
https://t.me/elespiadigital/15553
Appreciatethis level of analysis Larry.
Thanks
Miller’s Crossing (1990)
Leo -“Son of a bitch. No chief.
Who’s minding’ the goddamn store?
Tom- “Can’t raise O’Doole?
Leo- “No, nor the mayor either.”
Tom-“I don’t know, Leo. I warned you not to
hit Caspar’s club.
Leo-“I’m still here, ain’t I?
Tom-” Caspar’s play hurt you anyway.”
Leo- “That sorry son of a bitch just slit his own throat.”
Tom- “Listen to me, Leo. Last night made you
look vulnerable. You don’t hold elected office
in this town. You run it, because people think you run it.
Once they stop thinking it, you stop running it.”
It isn’t Apple that Huawei will take down; Apple is the LVMH of tech and succeeds on brand more than anything else.
It is going to be Samsung and the rest of the consumer electronics market that isn’t selling to the 1%/5%.