News Ticker

De-Dollarization Spells US Runaway Inflation

The primary causa proxima for runaway inflation in America would be the repatriation of U.S. dollars from abroad. In particular, this would involve the discontinuance of petrodollars as a reserve currency. This would also involve direct goods trade as well. Russia, China and other dollar-bond holders in truth financed the U.S. wars that were aimed at them by buying U.S. debt. When the foreign reserve status of the U.S. dollar erodes, those dollars flow back into the domestic United States and incinerate price stability, causing substantial bursts of inflation.

Therefore, the following question needs to be asked: What indications are there that the world, or at least a large part of the world, is turning its back on the U.S. dollar?

The arrival of Trump’s wild men and the overuse and abuse of sanctions and aggressive warfare has spurred critical steps and reactions.

Just last week and as relations between the U.S. and Russia continue to melt, Putin ordered an end to trade in U.S. dollars at Russian seaports.

China, Russia and India have cut deals in which they’ve agreed to accept each others’ currencies for bi-lateral trade.

At the Sept. 5 annual BRICS Summit in Xiamen, China, Russian President Putin made a simple and very clear statement of the Russian view of the present economic world. He stated:

“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”

The Shanghai Cooperation Organization (SCO) is completing the working architecture of a new monetary alternative to a dollar world. In addition to founding members China and Russia, the SCO full members include Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and, most recently, India and Pakistan. This is a population of well over 3 billion people, some 42% of the entire world population, coming together in a coherent, planned de-dollarization

China is the world’s largest oil importer. That country is now preparing to launch a crude oil futures contract denominated in Chinese yuan and convertible into goldpotentially creating the most important Asian oil benchmark and allowing oil exporters to bypass U.S.-dollar denominated benchmarks by trading in yuan.

Trump on his end on Sept. 3 threatened to “cut off trade with China, if that country maintained trade with North Korea.” Just this threat alone should engender a flood of dollars back into the U.S. Note that Russia and China’s response immediately following this threat was, in essence, “bastante.”

Iran and South Korea just signed banking cooperation to bypass the dollar.

Switching to another petrodollar trade partner, Venezuela is going to implement a new system of international payments and will create a basket of currencies to free them from the dollar, Maduro said. He hinted further that the South American country would look to using the yuan instead, among other currencies.

 “If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro also said.

A clear signal that something deadly serious is afoot would be the abolition of the Saudi riyal’s peg to the U.S. dollar.

The Federal Reserve Cry-Wolf Hacks Are a Sight to Behold

Meanwhile, back on the Yellen “Cry Wolf” farm, the Fed heads are all over the map about inflation. Clearly there is no discussion about excess dollar repatriation at all. If this came on their radar screen soon enough, they would have to act decisively to drain dollars from the U.S. domestic economy.

What appears to be unfolding is an attempt to sound credible and tough without doing much. To that end, hawk Dudley stated, “Inflation’s coming soon.”

Then Janet “Cry Wolf” Yellen openly admitted that the Fed does not “fully understand” inflation. Just yesterday she admitted that the Fed was “wrong” about employment and inflation, stating, “The FOMC’s understanding of the forces driving inflation is imperfect.” Trying to sound credible, she then suggested, “The Fed “should also be wary of moving too gradually (on monetary policy).”

And now the Cleveland Fed’s Median CPI measure has broken above 3.0%. Yellen chimes in, “It would be imprudent to keep monetary policy on hold until inflation is back to 2 percent.” I have no idea what planet she is even talking about?

QE unwind begins October 1. The vote was unanimous. Even cannot-spot-bubbles Neel Kashkari voted for it.

Here’s the schedule:

  • Oct – Dec 2017: $10 billion a month.
  • Jan – Mar 2018: $20 billion a month.
  • Apr – Jun 2018: $30 billion a month.
  • Jul – Sep 2018: $40 billion a month.
  • From Oct 2018 forward $50 billion a month.

So $300 billion over the next 12 months- then $600 billion the year following.

As of this morning the “market” is pricing the odds at 78% for a measly interest rate increase way out on Dec. 13. Meanwhile, it is uncertain who Trump will pick to replace Yellen in January. A lot can happen on the de-dollarization front between now and then.

The Fed has let the inflation genie out of the bottle even before the impact of de-dollarization. Yellen and her cohorts are now frantically trying to invent excuses for when inflation rips through the financial system.

Be Sociable, Share!
  • Brabantian

    The impact of trade currency de-dollarisation directly, is partly limited, because of how so many tens of trillions of international debt are currently denominated in dollars, forcing global actors to get & hold dollars to make payments; this ‘eurodollar’ aspect (i.e., dollar & other major currencies outside their home country borders) might be the bigger one

    But there’s no doubt the international trade / reserve currency system must be re-set – the old one cannot continue, with the eurodollar credit pyramid having gone into irreversible decline a decade ago, as Jeffrey Snider has illuminated. Snider brilliantly points out how the decline of that credit pyramid – tens of trillions of credit evapourating – quite dwarfs all the central bank money-printing, hence global economy stagnation, we are in fact starved for ‘money’, as paradoxical as that seems at first glance.

    Seems the two choices for a new over-arching reserve currency are gold, or the IMF’s SDRs, its Special Drawing Rights, a unit in theory based on a basket of currencies … there are already bonds issued in SDRs. For central banks & the cabal, SDRs are preferable of course because an SDR system is more easily manipulated by them.

    Per Jim Rickards, the IMF is moving after 1 Jan 2018 to re-cast the whole international system in SDRs. A few years back, Ambrose Evans-Pritchard made quite a stir pointing out that the IMF already has authority to print SDRs … meaning that the international financial goons can dish out ‘money’ to whatever countries are towing the party line, choking off the disobedient … we’ve seen this tactic in the eurozone, with the European Central Bank toppling governments in Italy and Greece by withdrawing support in crucial moments.

    Rickards also says the IMF will combine the expanded SDR rollout, with a version of bitcoin-type blockchain tech which they call Distributed Ledger Technology. As the USA tax service the IRS recently admitted it can track the supposedly ‘anonymous’ blockchains like bitcoin, it seems global financial surveillance is high on the agenda. Combined with cashless regimes, soon perhaps, every time you buy a pizza, the IMF and BIS and your country’s tax service will know about it forever.

    Jim Willie has long made the quite effective point that the USA lifestyle is dependent on its exporting of ‘dollars’ to finance its half-trillion-per-year trade deficit, which in turn is dependent on the ‘dollar’ as reserve currency. When that blows up, & the US needs to pay in real value for imports, the USA seems destined for great hardship … Europe on the other hand, has an even trade balance with the rest of the world, hence global currency re-cast is less important for Europe, where it is internal imbalance stresses that may break up the euro-zone.

    • Brabantian

      Reggae star Peter Tosh saw it all in 1979, great song, ‘The Day the Dollar Die’https://www.youtube.com/watch?v=CbsRWW4Mfu0

    • Черный и желтый флаг

      Time to start hoarding rolls of nickels

    • Douteux55

      Is Rickards reliable? I have read that he is ex-CIA and therefore suspected of pushing disinfo for the Cabal as they say. I read that China and Russia were looking at gold-backed crypto but have abandoned it because it is subject to hacking and manipulation. It seems that any new currency needs to be based on something tangible in order to avoid creating money by just printing it which is clearly helping to sink the dollar. A fellow on the Fulford site keeps insisting that the government can just keep adding digits to the ledgers of the banks or the Fed and we’ll all just go swimming along. Insanity. Massive gold buying not so long ago leads me to believe that gold will be a factor no matter what financial spies tell us. The devil will be in the details. It’s also curious that the IMF, European center for debt slavery, would have control over any currency whatsoever, but perhaps there are no good guys in all of this.

      • I think Rickards has a good idea of what’s transpiring. I doubt if he gets the precise memos however.

  • Черный и желтый флаг

    All wars are bankers wars

  • Черный и желтый флаг
  • Hapa

    Though I would like for it to happen sooner than later, de-dollarization will take some time. None of the world powers want it to happen overnight, but they do want it to unfold without catastrophic effect. We often think players like China and Russia want us to crash, but truth be told they don’t want their job to be harder and for their people to suffer from the changed regime. They want us down on our knees, but gradually so, and for the changes to be negotiated. They would like us to eat humble pie, tasting each bite, and to return to the corner of our room where we might contemplate our previous errors.

    • It won’t take that much dollar flow back into the US from the de-dollarizations being implemented to cause a nasty inflation, especially if the Fed sits on it’s hands. There likely will be supply shocks given how much the US imports. Big inflations are sparked by investors losing faith.

      • Hapa

        I’ve been waiting for TSHTF for years now, and have had to adjust my thinking this past year. All the black swans will land in due time, but there’s a lot of inertia to people’s confidence in the US and the dollar. It’s eroding for sure, but most of the people I know are ignorant of our current situation. There’s a lot of trust left in them, in the world of finance, the military and all that backs our empire. It will take some sort of super major market correction or war before they might wake up.