THERE are stories that China and Russia, through their sponsored organizations, are once again trying to supplant the US dollar.
I heard the news shortly after the People’s Republic of China (PRC) made diplomatic overtures in certain parts of the Middle East, which elicited concerns among international relation types.
Of particular concern is the possibility that the Chinese will begin paying for Middle Eastern energy exports using the yuan.
Further, from what I hear, organizations, like the RCEP for example, are gathering oil and gold as a way to hedge against the dollar. This is nothing new. Countries have been trying to defeat the dollar for a long time, and with poor results. The reason is the US economy, which despite the dollar’s performance, acts as a safe haven for investors and their capital.
The dollar’s status is driven by belief in the US economy, and less by fiat. Investors put their capital in the US bonds and equities because they are considered “safe” investments, and that belief affects the US dollar.
In contrast, gold, despite its historical value, is largely treated as a hedge by traders and investors. Oil producers, on the other hand, have been pegged to the dollar, for various reasons which would take too long to explain on this article, and they’ve done this, not because they’ve been compelled to, but because, as far as they’re concerned, it’s in their economic (and political) interest.
The point is this. Oil or gold are not enough to make a reserve currency. The dollar is the way it is because the US acts as the primary wheel of the global economy and the global commons. The only way to change that is for the global economy to decentralize, which requires a more economically closed US
So basically, an America that is more inward looking, but that will lead to more than just changes in the global economy./PN
