Free Republic

The Bretton-Woods Agreement of 1944 established the framework for the rise of the U.S. dollar and its status as the global reserve currency which has its obvious benefits for the US, but there are also numerous costs involved, according to Brandon Smith, who writes “Think of world reserve status as a “deal with the devil. You get the fame, you get the fortune, you get trophy dates and a sweet car – for a while. Then one day the devil comes to collect, and when he does he’s going to take everything, including your soul.” “Unfortunately, I suspect collection time...

Are the BRICS a threat to the U.S.?The summit of the so-called BRICS (Brazil, Russia, India, China, and South Africa) has closed with an invitation to join the group extended to the Emirates, Egypt, Iran, Saudi Arabia, Argentina, and Ethiopia.The summit has generated a lot of headlines about the impact of this widespread group of nations, including speculation about the end of the U.S. dollar as a global reserve currency if this group is perceived as a threat to the United States or even the International Monetary Fund.Several things need to be clarified.Many political analysts believe that China lends, invests,...

Argentina's government on Tuesday accused the country's rightwing opposition of fueling a dramatic erosion of the peso against the dollar, and ordered an investigation Buenos Aires, Argentina: Argentina will pay for Chinese imports in yuan instead of US dollars in order to preserve its dwindling foreign reserves, Economy Minister Sergio Massa said on Wednesday. The South American country will be able to "program a volume of imports in yuan worth (the equivalent of) more than $1 billion from next month<" Massa said at a meeting in Buenos Aires with Chinese ambassador Zou Xiaoli. This would "replace" the use of Argentina's...

Part of the great devolution of American power is not just related to depletion of military stores and the lack of enlistments for the service, but also our economic power. The latest monetary threat is coming from both East and West and may be the coup de grâce for the U.S. dollar, which has long been the dominant global currency for international financial transactions.This initiative is a serious concern for American interests. The countries in the BRICS alliance have a combined population of 3.1 billion. That's about 40% of the world's population and 20% of the world gross domestic product...

Before we get started this week, I want to show you a chart:Now, if this chart showed the stock price of a company, would you want to invest in it?If it’s the price of a commodity, would you be a buyer?What if you were already heavily invested in this enterprise? Would you hold on and hope for better days ahead? Or would you look at that long downward slide and cut your losses, just walk away?Now, when I say “long downward slide,” I do mean long. Here’s a bit more information…The chart above includes data for over a century –...

It’s been rightly said that “he who holds the gold makes the rules.”After World War 2, the US had the largest gold reserves in the world, by far. Along with winning the war, this let the US reconstruct the global monetary system around the dollar.The new system, created at the Bretton Woods Conference in 1944, tied the currencies of virtually every country in the world to the US dollar through a fixed exchange rate. It also tied the US dollar to gold at a fixed rate of $35 per ounce.The dollar was said to be “as good as gold.”The Bretton...

On Tuesday, CEO of JPMorgan Chase Jamie Dimon warned the world that cutting Russia out of the SWIFT system would yield “unintended consequences.”That’s a monumental understatement.In short, SWIFT is a system banks use to securely and quickly communicate transfer instructions across international borders. Cutting off an entire nation and its people from this system will have steep consequences across the globe.We could be looking at the potential demise of the US dollar as the world’s reserve currency, another likely Lehman moment, and the acceleration of China’s progress from third-world nation to global power.Here’s how the US’s influence on this apolitical...

301 AD was a big year for the Roman Empire.That was the year that, amid spiraling inflation, Emperor Diocletian issued his Edict on Maximum Prices, essentially fixing prices of just about everything across the Roman Empire.The price of wheat, a day labor’s wages, a quart of olive oil, transportation rates– everything was established by the Emperor’s edict, and enforced under penalty of death.Diocletian’s edict infamously didn’t work, and the empire plunged into even more severe inflation.The other big event of 301 AD was the introduction of the solidus gold coin, roughly 4.5 grams of nearly pure gold.And while the Romans...

The Chinese regime is accelerating its efforts to challenge the U.S. dollar’s dominance in global markets and trade by taking advantage of the economic shifts caused by the pandemic, a Chinese professor recently revealed.In the post-pandemic world, China should be the “one who decides the benchmark of value,” Di Dongsheng, associate dean of the School of International Studies at Renmin University in Beijing said in a video posted on Chinese social media on Feb. 4. “The currency that fixes the price will eventually be the renminbi.”The professor last April described the pandemic as an opportunity “unseen in 100 years” for...

For years folks have debated the value of bitcoin. Warren Buffett has declared it a gigantic hoax. Economists have struggled to see if it fits in the convention of money. Is it a store of value or a medium of exchange? One theory argues its value tracks the number of users, a social network effect. Promoters of course see it as the future, giving rise to its own word, hodl, which means to hold for the long-term.Recently, major banks have belatedly begun to suggest there is a long-term value to bitcoin, first and foremost based on its substitution over time...

In the wake of the FedÂ’s promise of 23 March to print money without limit in order to rescue the covid-stricken US economy, China changed its policy of importing industrial materials to a more aggressive stance. In examining the rationale behind this move, this article concludes that while there are sound geopolitical reasons behind it the monetary effect will be to drive down the dollarÂ’s purchasing power, and that this is already happening. More recently, a veiled threat has emerged that China could dump all her US Treasury and agency bonds if the relationship with America deteriorates further. This appears...

But as the United States struggles with fresh Covid-19 outbreaks weighing on the economic recovery, the dollar has stumbled. Now, some on Wall Street warn it could fall further, due in part to President Donald Trump's handling of the crisis and isolationist policies.

With all eyes on Trump's Tuesday evening Rose Garden speech which unveiled that he'll sign new and punitive measures indirectly targeting China — namely the Hong Kong Autonomy Act, a bipartisan measure to penalize banks that work with Chinese officials found to be interfering in Hong Kong affairs — it remains that arguably the most important recent statements out of China came not from current government officials, but from Zhou Li, the 65-year-old former deputy head of the Chinese Communist Party's International Liaison Department. He's considered an important voice who echoes the outside the box thinking and general "talk"...

The eight-member countries of the Shanghai Cooperation Organization (SCO), including China, Russia, and Pakistan, have made the principle decision to conduct bilateral trade and investment and issue bonds in local and national currencies instead of US dollars.

So far as I can tell the only Bloomberg among all US MSM have published any news reports on the $135 billion of US bearer bonds being smuggled by two Japanese businessmen from Italy into Switzerland. This story has raised many interesting and important questions, to which there have been no answers yet. But there is another interesting and important question I haven't seen discussed. Why, when major European and Japanese media have reported it, have none of the US MSM done so? I can think of only two reasons: 1) the story is now known to be only an...

Three years ago today, the IMF added China’s yuan to the basket of currencies underpinning its Special Drawing Rights (SDR)—its proprietary reserve accounting unit and means of extending credit to countries in need. At the time, the IMF touted it as “an important milestone in the integration of the Chinese economy into the global financial system.” Many investors took a less benign view, seeing the IMF’s move as threatening to end the dollar’s status as the world’s leading reserve currency—sending interest rates spiking and rendering US debt unaffordable. That was always a false fear, in our view, as the...

The president is irked by the dollar’s persistent strength, but he shouldn’t blame China or the Fed. This month the Trump administration officially declared China a currency manipulator. This declaration, the latest salvo in the ongoing U.S.–China trade war, came after the Chinese government allowed its currency, the yuan, to fall to its lowest value in a decade. It is now trading at just over 7 yuan to a dollar. The currency-manipulation designation is one of the most unwarranted charges volleyed against China by the Trump administration. The depreciation of the yuan was largely caused by market forces and, by...

Mark Carney, the Bank of England governor, has said that the world’s reliance on the US dollar “won’t hold” and needs to be replaced by a new international monetary and financial system based on many more global currencies.

A cursory assessment might find the United States a less than ideal candidate for the job of managing the planet’s ultimate form of money. Its public debt is enormous — $22 trillion, and growing. Its politics recently delivered the longest government shutdown in American history. Its banking system is only a decade removed from the worst financial crisis since the Great Depression. Its proudly nationalist president provokes complaints from allies and foes alike that he breaches the norms of international relations, setting off talk that the American dollar has lost its aura as the indomitable safe haven. But money tells...

As the Trump administration tightens sanctions against Iran and Russia, and as the imposition of tariffs against China as a means of negotiating a more favorable trade arrangement continue, all three nations are moving away from the U.S. dollar primarily when it comes to oil sales, as a way of circumventing the punitive measures. “There is a common understanding that we need to move towards the use of national currencies in our settlements. There is a need for this, as well as the wish of the parties,” Russian Energy Minister Aleksandr Novak said earlier this month when discussing the move....