Posted on 04/11/2023 4:23:35 AM PDT by EBH
That’s creating new tensions with the U.S. and its Western allies
The ascendance of China in developing country finance threatens to add to the broader trend of “decoupling” that is unraveling trade and technology ties with the West. The debt China is owed by poor countries only consolidates its influence in Africa and other regions.
“We are moving to more of a bipolar system with a very significant creditor to a great many countries bent on doing things bilaterally with its own rules,” said Carmen Reinhart, who served as the World Bank’s chief economist until last year and has directly participated in debt-relief talks. “That rift is there. … The tension could be cut with a knife.”
The issue will come to a head on April 12 when the two institutions host the Global Sovereign Debt Roundtable, which is meant to address the broader terms of restructuring sovereign debt in distressed countries.
Those talks will affect country-specific efforts that have been largely deadlocked. One of those is in Zambia, where China is a significant creditor. The country defaulted on its public debt two years ago and has become a test case for dealing with a potential onslaught of defaults as the U.S. Federal Reserve and other major central banks are raising interest rates to tamp down inflation. That’s making it more expensive to pay off debt denominated in dollars and other key currencies.
Other countries like Sri Lanka, Ghana, Ethiopia and Pakistan, where China has lent heavily, have already defaulted or are on the cusp of doing so.
(Excerpt) Read more at msn.com ...
Now Treasury Secretary Janet Yellen and other officials are growing adamant that what they view as China’s hardline approach to lending is squeezing countries and threatening to deepen poverty in Africa and elsewhere.
Yet the conflict also highlights a new potential fault line in the global economic order: China is pursuing a parallel system of development finance that challenges the Western model of providing assistance and negotiating debt relief with borrowers, which has been dominant since the end of World War II.
Bkmk
The “fractures” are starting to become more evident.
Every day we are finally seeing what Yellen and Powell are trying to hide from us. There is a significant change afoot.
One faction moving to a gold standard...
The other towards another version of fiat...digital currencies.
Who wins in the end?
I’m not certain China will move to an actual gold standard, but they have been buying a lot of gold.
We are moving toward becoming Argentina with nukes, with hyperinflated digital-only govt-controlled CBDC Weimar Buck Pesos.
The big loser will be the American people, that’s certain.
It is my understanding that the BRICS are looking at a fractional gold standard.
I suspect we will rue the day Nixon took us off the gold standard and put us on a debt economy.
I don’t understand how a gold standard can be fractional.
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