Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Is the Biden Administration Trying To Destroy the Dollar?

Currencies / US Dollar Apr 18, 2024 - 10:39 PM GMT

By: MoneyMetals

Currencies

Confidence in Western financial markets has already been shaken enough by the 20% devaluation of the dollar over the last few years. But now the European Commission wants to hand Ukraine $300 billion seized from Russia. Doing so likely would sound the death knell for the dollar and eventually the euro.

Treasury Secretary Janet Yellen, who has worked for literally decades to undermine the strength of the dollar, recently urged world leaders to take this disastrous step of outright theft.



But financial leaders worldwide, including those who adamantly support Ukraine, are sounding the alarm, citing the unprecedented fallout that would stem from further violating the sacrosanct nature of the dollar.

When Russia invaded Ukraine two years ago, the U.S. and its European allies seized $300 billion in Russian Central Bank assets. Relative to the size of the Russian economy, that’s the equivalent of $4 trillion in U.S. financial holdings.

The goal was to instigate panic in Russian markets, culminating in bank runs and general unrest, perhaps even leading to the ouster of President Vladimir Putin himself. It didn’t work.

Instead, American banks had a cliffhanging spring last year that included the collapse of Silicon Valley, Signature and Silvergate banks, while countless regional banks held on thanks to emergency loans from the Federal Reserve.

Apparently not content with sowing chaos in domestic financial markets, the federal government’s push to steal Russian financial assets would plant the seeds of pandemonium abroad.

The European Union is in lockstep with the Biden administration’s plan to transfer the frozen Russian assets to Ukraine to buy weapons—which, of course, would be sold by the EU and the U.S.

Some member states of the EU want to just hand over all $300 billion instantly to the corrupt oligarchs in Ukraine. Others want to start with just the interest payments accruing on these financial assets. (Of course, the frozen assets aren’t actually accruing interest now, so any payments to Ukraine would actually be more deficit spending by Western governments.)

Just sending the interest payments would be crossing a terrible threshold, further violating financial custodial agreements of dollar- and euro-denominated assets.

The message from the EU and the Biden administration is crystal clear: Western financial markets are now a dangerous place to park your money. This could fatally undermine global confidence in American and European financial management because the safety of your assets will have become dependent upon your standing in Washington and Brussels.

That’s a concern for corporations, but it could be an existential threat to countries that own a large share of international financial assets. The ever-present threat of theft, couched as financial sanctions, means nations effectively lose their autonomy, forced to kowtow to the whims of American and European bureaucrats.

The Biden administration has already threatened sanctions on Uganda over its LGBTQ policy, but that’s just the beginning. Similarly punitive financial ideas have been floated regarding abortion and environmental policies.

Now sanctions are becoming just the first step to seizing all of a country’s financial assets, and the rest of the world is waking up to the racket.

A few months ago, the Indonesian president gave a speech saying his country needed to diversify its dollar holdings and dollar-denominated assets, ominously citing, “Look what happened to Russia.” The Federal Reserve recently refused to disclose how much foreign exchange reserves and gold have been withdrawn from the United States since the Russian asset seizure.

The de-dollarization trend is decades old, a result of dysfunctional government crippling economic growth while inflation erodes the currency’s value. The dollar fell from 73% of currency reserves to 55% in 2021, but the seizure of Russian financial assets gave this trend a shove into overdrive.

The dollar’s share of currency reserve plummeted another 8 percentage points in just two years, falling to 47% in 2023.

It’s not just reserves, but international trade, too. Brazil has begun conducting some of its trade in Chinese yuan, and projections are for China’s share of trade to triple in the next decade. Other countries, including their central banks, are divesting their dollar holdings, preferring gold or other real assets.

The Fed’s interest rate increases have buoyed the dollar, but that is poised to reverse as the central bank readies a pivot to interest rate cuts in this election year.

Similarly, the turmoil around the globe has prompted a “flight to safety” where investors buy assets perceived to be safe, such as U.S. Treasuries. But the talk of seizing foreigners’ assets is exposing these dollar-denominated loans as less than safe. Indeed, they’re more of a liability.

If the people running our country were intentionally trying to destroy the dollar, it’s not clear what they would be doing differently.

Peter St. Onge writes articles about Economics and Freedom. He's an economist at the Heritage Foundation, a Fellow at the Mises Institute, and a former professor at Taiwan’s Feng Chia University. His website is www.ProfStOnge.com.

© 2024 Copyright Peter St. Onge - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in