Weaponizing the Dollar Is Risky Business (Video)
SchiffGold’s own Mike Maharrey recently appeared on RT to talk about the potential consequences of US policies that effectively weaponize the dollar.
We’ve been reporting extensively on efforts by Russia, China and other countries to minimize their exposure to the dollar. Russia and China recently agreed to increase trade using their own national currencies. This is another in a series of moves globally to reduce dependence on the US dollar. Currently, about 10% of trade between Russia and China is conducted in yuan and rubbles. Under the new deal, it will increase to about 50%.
Russia has already developed an alternative payment system to compete with the dollar-based SWIFT system. The Russians are also reportedly considering the development of a gold-backed cryptocurrency. Last year, China launched its much anticipated yuan-denominated oil futures contract.
And it’s not just countries that have rocky relationships with the US that are looking for dollar alternatives. The EU recently announced an alternate payment system that will allow European countries to circumvent US sanctions on Iran is nearly ready.
Meanwhile, central banks have gone on a gold-buying spree. During an interview on RT Boom Bust, Peter Schiff called it a “global gold rush on the part of central banks” in preparation for a dollar crisis.
The days that the dollar is a reserve currency are numbered and the smart central banks are trying to buy as much gold as they can before the number is up.”
US policy is exacerbating the problem. It has effectively weaponized the dollar and used it as a tool of foreign policy. As Mike explained during his interview, this risks a further weakening of the dollar and potentially a collapse.
Highlights from the interview
The US has used the SWIFT system as kind of a billy club, as an instrument of foreign policy and I think it’s only natural that countries that are on the other end of that billy club are going to look for ways to pull themselves out of that type of situation.
We’re also seeing a number of central banks purchasing gold, which is internationally a stable, real money as opposed to the fiat currencies created by all of these central banks.
I think it could have a very negative effect on the US economy, and I think a lot of people don’t understand this. The dollar is already in a precarious situation because the US central bank has been essentially printing money over a decade in response to the economic crisis of 2008. This has created all kinds of economic bubbles … So, the dollar is already in a risky position. As more and more countries seek to eliminate their dependence on the dollar, it further weakens the currency. And eventually, many people believe the dollar will not be the reserve currency.
I think it’s important to understand that within the original US constitutional system – in the first place foreign policy was meant to be ‘harmony with all’ – that was the way George Washington put it. And the US has taken a more and more interventionist foreign policy and this is enabled by the central bank printing money out of thin air. This is a really problematic situation for the United States domestically.
Anything that is connected with a government is inherently political, whether it be a central bank, or a payment system or an international monetary fund. All of these things are political.
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