Jared Bernstein says China wants the US dollar to become less dominant among currencies. Jared Bernstein said that China wants the dollar’s dominance to end, and the US must act to defend it.
According to a research company, the greenback’s dominance fell by eight percentage points last year, and its share of international reserves has fallen from 66% to 47% over the past two decades.
The Treasury Department has warned that the federal government might no longer be able to meet its financial obligations as early as June 5, while the nonpartisan Congressional Budget Office has forecast that moment would come between July and September.
The dollar’s dominance is fading as the greenback’s importance slips in global trade while Western sanctions against Russia have exposed new risks to holding the currency, billionaire investor Ray Dalio said.
China has been promoting trading agreements that oblige non-dollar transactions. Most recently, it did so with Brazil, adding to similar arrangements with countries such as Kazakhstan and Pakistan.
Ever since Russia became ostracized by the Western world for its invasion of Ukraine, its economy has shifted toward the yuan. Those sanctions “increased the perceived risk that those debt assets can be frozen in the way that they’ve been frozen for Russia,” Dalio said.
“So for those reasons, there’s less desire to hold US dollar-denominated debt, which means yes, less US dollars,” he added.
“So the supply-demand picture is worsening particularly as we continue to have to sell them internationally to fund the deficit.”
France brings de-dollarization to Europe by trading in yuan. A French company charged the export of liquefied gas (LNG) to China National Offshore Oil Corporation in the Chinese yuan.
This is another sign that the inexorable process of de-dollarization has gained momentum and even spread to the European Union. Selling oil or gas to the Chinese for yuan removes the need to deal with US banks to receive dollars.
The accumulated yuan can then be used in China to buy nearly every product that the US can also supply. In this way, the French also bypass a middleman (the US) if they want to buy products from China.
The de-dollarization process started long before the Ukrainian and pandemic crises. German companies were buying Russian gas from the Moscow and St. Petersburg exchanges with rubles.
The exclusion of Russia from Western financial systems and institutions proved only to push forward the use of local currencies amongst states, notably India-Russia, Brazil-China, and now France-China.
Proverbs 22:7 The rich ruleth over the poor, and the borrower is servant to the lender.
Luke 16:11 If therefore ye have not been faithful in the unrighteous mammon, who will commit to your trust the true riches?
Proverbs 6:6 Go to the ant, thou sluggard; consider her ways, and be wise:
Proverbs 6:7 Which having no guide, overseer, or ruler,
Proverbs 6:8 Provideth her meat in the summer, and gathereth her food in the harvest.
Proverbs 6:9 How long wilt thou sleep, O sluggard? when wilt thou arise out of thy sleep?
Proverbs 6:10 Yet a little sleep, a little slumber, a little folding of the hands to sleep:
Proverbs 6:11 So shall thy poverty come as one that travelleth, and thy want as an armed man.
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