The BRICs Are Morphing Into An Anti-Dollar Alliance (Obama/Putin working together to kill US dollar)

While numerous massively indebted administrations around the world hope to divert the attention of what's left of their struggling middle class away from its daily impoverished existence and distract it with flashing lights and glitzy animations showing another all time market high on a daily basis, a significantly more important shift taking place behind the scenes is appreciated by very few: the ongoing de-dollarization of the world. For the latest example of how increasingly more countries are setting the stage for the final currency war, we go again to Russia where VOR's Valentin Mândr??escu explains that slowly but surely the BRICS - that proud Goldman acronym which was conceived to perpetuate the great American way of life by releasing trillions in US-denominated debt in heretofore untapped markets - are morphing into an anti-dollar alliance.

BRICS is morphing into an anti-dollar alliance, From VOR

Before the crucial visit to Beijing next week, the governor of the Russian Central Bank, Elvira Nabiullina met Vladimir Putin to report on the progress of the upcoming ruble-yuan swap deal with the People's Bank of China and Kremlin used the meeting to let the world know about the technical details of its international anti-dollar alliance.

On June 10th, Sergey Glaziev, Putin's economy advisor published an article outlining the need to establish an international alliance of countries willing to get rid of the dollar in international trade and refrain from using dollars in their currency reserves. The ultimate goal would be to break the Washington's money printing machine that is feeding its military-industrial complex and giving the US ample possibilities to spread chaos across the globe, fueling the civil wars in Libya, Iraq, Syria and Ukraine. Glaziev's critics believe that such an alliance would be difficult to establish and that creating a non-dollar-based global financial system would be extremely challenging from a technical point of view. However, in her discussion with Vladimir Putin, the head of the Russian central bank unveiled an elegant technical solution for this problem and left a clear hint regarding the members of the anti-dollar alliance that is being created by the efforts of Moscow and Beijing:

“We've done a lot of work on the ruble-yuan swap deal in order to facilitate trade financing. I have a meeting next week in Beijing”, she said casually and then dropped the bomb: “We are discussing with China and our BRICS parters the establishment of a system of multilateral swaps that will allow to transfer resources to one or another country, if needed. A part of the currency reserves can be directed to [the new system].” (Prime news agency)

It seems that Kremlin chose the all-in-one approach for establishing its anti-dollar alliance. Currency swaps between the BRICS central banks will facilitate trade financing while completely bypassing the dollar. At the same time, the new system will also act as a de facto replacement of the IMF, because it will allow the members of the alliance to direct resources to finance the weaker countries. As an important bonus, derived from this “quasi-IMF” system, the BRICS will use a part (most likely the “dollar part”) of their currency reserves to support it, thus drastically reducing the amount of dollar-based instruments bought by some of the biggest foreign creditors of the US.

Skeptics will surely claim that a BRICS-based anti-dollar alliance will not manage to deprive the dollar of its global reserve currency status. Instead of arguing against this line of thought, it is easier to point out that Washington is doing its best to enlarge the ranks of the enemies of the dollar. Asked by the Russia 24 channel to comment on Nabiullina statements, Sergey Kostin, the president of the state-owned VTB bank and one of the staunchest supporters of anti-dollar policies, offered an interesting perspective on the situation in Europe:

“I think the work on ruble-yuan swap line will finalized in the nearest future and the way for ruble-yuan settlement will be open. Moreover, we are not the only ones with such initiatives. We know about the statements made by Mr. Noyer, chairman of the Bank of France. As a retaliation for what Americans have done to BNP Paribas, he opined that the trade with China must be done in yuan or euro.”

If the current trend continues, soon the dollar will be abandoned by most of the significant global economies and it will be kicked out of the global trade finance. Washington's bullying will make even former American allies choose the anti-dollar alliance instead of the existing dollar-based monetary system. The point of no return for the dollar may be much closer than it is generally thought. In fact, the greenback may have already past its point of no return on its way to irrelevance.

I'm not sure who translated bits and pieces for this article; they even managed to mix up the people that they refer to:


Sergey Glazyev Politician and economist	Elvira Nabiullina Governor of the Bank of Russia

Just them beating their drums.

They might as well throw Hail Mary’s.

The world depends on us....for everything...

This is not new, but is seeming to be gaining much wider support.

Iran has been trying for a number of years to establish an oil trading exchange that is not based on the US Dollar. The oil producers are currently receiving US Dollars and as its value has declined they in turn are losing purchasing power around the world. Therefore, in an effort to maintain their purchasing power, and wealth, the price of oil must go up to offset the US Dollars decline.

I’m not entirely certain that if oil were traded in a newly proposed “currency” it would destroy our Dollar.

Since we left the gold standard, it’s my belief that we are on a de-facto “oil standard”. Gold was always thought to be a “store of wealth” but it never, in modern times, had any connection to economic activity or any real value other than its historically perceived value. Oil, on the other hand, is energy, it’s a pure play on what is necessary and its use and production is a measure of both economic strength and weakness.

I think this “Currency War” may actually backfire as the US is still the largest economy in the world and a growing producer of energy.

Saudi oil sales are tied to US currency. Obama policies continue to hurt US currency as the reserve currency in the global market place.

Putin and the Chinese govt as well as Iran and North Korea are all working to replace US dollar as world reserve currency. Add to that the Jihadists and Venezuela, and there is a serious ongoing threat to US currency being used for world trade. The Chinese depend on US consumers and will move cautiously to not damage that.

I suggest that the US Dollar is the “World reserve currency” for only two very important reasons.

1. We are the largest exporter in the world.

2. Oil is traded in US Dollars.

The “Currency war” that is being undertaken in this current environment is a “race to the bottom” or an attempt to devalue, so to increase exports to keep people working.

They have a plan to create “SDR’s” or some alternative to the US Dollar for their oil trades etc.. It really doesn’t matter what they call them but what they do with them.

So are the Saudi’s are going to start buying more crap from China ? Russia ? Iran ? North Korea ?

The Chinese depend on US consumers and will move cautiously to not damage that.

Here is the table from Wikipedia, in billions of US Dollars for 2011:

Region	Exports	Imports	Total trade	Trade balance
European Union	356.0	211.2	567.2	+144.8
United States	324.5	122.2	446.7	+202.3
Hong Kong	268.0	15.5	283.5	+252.5
ASEAN	170.1	192.8	362.9	-22.7
Japan	148.3	194.6	342.9	-46.3
South Korea	82.9	162.7	245.6	-79.8
Brazil	31.8	52.4	84.2	-20.6
India	50.5	23.4	73.9	+27.1
Russia	38.9	40.3	79.2	-1.4
Taiwan	35.1	124.9	160.0	-89.8

As you can see, the total export of China is 1506.1 billion. The US share of that is 324.5 billion, or 21.5%. This is not a significant number on the global scale. As soon as the alternative set of currencies is established, China *will* pull the plug on the USD. Naturally, by that time China will have hardly any US paper - they went on a buying spree at least a decade ago. They buy mines and land and everything that is not nailed down, and they pay for that with US debt.

The biggest problem with China is that they don’t give a crap about their citizens.

Fundamentally, they don’t NEED anything from anybody.

If their world economic desires result in the death of a million citizens, they can manage that.

This, if fully exercised, would be a game changer.

horse puckey -- india would never join in a currency alliance with it's arch enemy China

And Brazil may like to knock the US off, but it has no resources to do so

Finally, the Russians and Chinese each have different ideas about who should rule Siberia