China Must Pray That US Carries out Its Threat to Cut It off From the Dollar

[TaiShang]

China Must Pray That US Carries out Its Threat to Cut It off From the Dollar

Nothing could do more harm to the US and more good to China

Paul Craig Roberts
Fri, Sep 15, 2017 |


Is there anyone in Trump’s government who is not an imbecile?

After years of endless military threats against Russia—remember CIA deputy director Mike Morell saying on TV (Charlie Rose show) that the US should start killing Russians to give them a message, and Army Chief of Staff Mark Milley threatening “We’ll beat you harder than you have ever been beaten before”—now the US Treasury Secretary Steven Mnuchin threatens China. If China doesn’t abide by Washington’s new sanctions on North Korea, Mnuchin said the USb“will put additional sanctions on them [China] and prevent them from accessing the US and international dollar system.”

Here is the broke US government $20 trillion in public debt, having to print money with which to buy its own bonds, threatening the second largest economy in the world, an economy on purchasing power parity terms that is larger than the US economy.

Take a moment to think about Mnuchin’s threat to China. How many US firms are located in China? It is not only Apple and Nike. Would sanctions on China mean that the US firms could not sell their Chinese made products in the US or anywhere outside China? Do you think the global US corporations would stand for this?

What if China responded by nationalizing all US factories and all Western owned banks in China and Hong Kong?

Mnuchin is like the imbecile Nikki Haley. He doesn’t know who he is threatening.

Consider Mnuchin’s threat to exclude China from the international dollar system. Nothing could do more harm to the US and more good to China. A huge amount of economic transactions would simply exit the dollar system, reducing its scope and importance. Most importantly, it would finally dawn on the Chinese and Russian governments that being a part of the dollar system is a massive liability with no benefits. Russia and China should years ago have created their own system. Being part of Washington’s system simply lets Washington make threats and impose sanctions.

The reason Russia and China are blind to this is that they foolishly sent students to the US to study economics. These students returned completely brainwashed with neoliberal economics, “junk economics” in Michael Hudson’s term. This American economics makes Russian and Chinese economists de facto American stooges. They support policies that serve Washington instead of their own countries.

If China and Russia want to be sovereign countries, they must pray that the imbecile Mnuchin does cut them off from the dollar system that exploits them. Then Russia and China will have to put in place their own system and learn real economics instead of propaganda posing as economics that serves Washington’s interest.

Source: Paul Craig Roberts.org

 

[Tang_BJ]

China's Cross-Border Interbank Payment System (CIPS) was designed as an "expressway" to facilitate the yuan's use in international trade and investment.
The system, or CIPS, is a global clearing platform for real-time settlements in the currency.
Yuan is not a threaten to Dollar yet, but with CIPS, once USA closed dollar system, China will not collapse at once.
btw, it looks like CIPS is designed for OBOR, only support Asia, Europe,Africa and Australia， didn't include USA at all.

 

[jhungary]

It would be stupid to dump dollar any time now when the world is trading dollar as a commodity on a 68% scale. While RMB is in 1.6%

The problem is China is not able to use RMB to connect to world market and most importantly as a SWIFT payment. Simply because there are not enough foreign backing of RMB in foreign reserve to make any significant pegging. Until that day where RMB have surpassed Euro (which can be decades) RMB cannot put up a significant challenge to USD, in fact, the current scheme of introducing RMB as an international reserve have actually push up USD as a reserve because of the instability of RMB value.

China and Russia of course can do all they wanted, but well, to be honest, as long as the world settle in USD, there are not much China or Russia can do about the dominance.

And I actually laugh when I see the OP suggest nationalise US asset in China, when the OP did not realise there are a lot more Chinese Asset in US and US debt in China.

 

[AndrewJin]

When will Trump spend money on their weekly derailed railways and collapsing infra?
But always more money invested on immoral wars and broken-leg soldiers

 

[cloud4000]

It would be stupid to dump dollar any time now when the world is trading dollar as a commodity on a 68% scale. While RMB is in 1.6%

The problem is China is not able to use RMB to connect to world market and most importantly as a SWIFT payment. Simply because there are not enough foreign backing of RMB in foreign reserve to make any significant pegging. Until that day where RMB have surpassed Euro (which can be decades) RMB cannot put up a significant challenge to USD, in fact, the current scheme of introducing RMB as an international reserve have actually push up USD as a reserve because of the instability of RMB value.

China and Russia of course can do all they wanted, but well, to be honest, as long as the world settle in USD, there are not much China or Russia can do about the dominance.

And I actually laugh when I see the OP suggest nationalise US asset in China, when the OP did not realise there are a lot more Chinese Asset in US and US debt in China.

The article is written by a known conspiracy theorist. Just read his Wikipedia page to see why. You explanation is a good one. It clearly explains that US couldn't shut off dollars to China even if it wanted to: US dollar is still the de facto curreny for the world economic system.

 

[AndrewJin]

When will the dominant money printer print more money to fix their drug crisis and the collapsing railway system which is more dangerous than Supa Powa 2012?

 

[jhungary]

The article is written by a known conspiracy theorist. Just read his Wikipedia page to see why. You explanation is a good one. It clearly explains that US couldn't shut off dollars to China even if it wanted to: US dollar is still the de facto curreny for the world economic system.

People keep saying if Chinese control OPEC or if Chinese buy gold then the US Currency system is kaput. The Chinese have a strong trade base currency swap, but goods trading only surmount to less than 5% of daily USD trade as a commodity itself, SWIFT payment alone is a 5 trillions a day business, and USD have 87% in the SWIFT game.

Unless this is countered in a reasonable way, any country that purpose to drop USD is going to come to a bitter end, and USD will still be dominant, the only way is for the world to abandon USD together, but then which currency in the world is strong enough and most importantly readily enough to take USD place? Such currency does not exist.

 

[TaiShang]

When will Trump spend money on their weekly derailed railways and collapsing infra?
But always more money invested on immoral wars and broken-leg soldiers

Let them bleed off for a couple of years or at least by the end of Trump's (hopefully) second term.

By then, they will likely be pretty much ready for a rude awakening.

***

Russia and China Strike Back Against the Dollar Empire

As US throws around its military power, China is starting to throw around its economic might.

Manlio Dinucci




We are wrong to think that the armed conflicts occurring across the world are disconnected one from the other. The reality is that nearly all of them fall within a broader relationship between “the West’s American Empire” on the one hand and, the BRICS, an organization of states seeking to establish a countervailing “alternative international order”, on the other. This power struggle is played out using two power bases that are closely connected: the military and finance.

There is now a vast arc of tensions and conflicts that extends from Eastern Asia to Central Asia, from the Middle East to Europe, from Africa to Latin America. The “hot points” along this intercontinental arc– the Korean Peninsula, the South China Sea, Afghanistan, Iraq, Iran, Ukraine, Libya, Venezuela and others – have different histories and geopolitical features, but there is a thread that stitches them together: the strategy being deployed by “the American Western empire”, now in decline, to stamp out new states and social subjects before they can rise. The BRICS Summit (Brazil, Russia, India, China and South Africa) that took place from 3-5 September 2017, at Xiamen, China, has grasped what Washington’s fear is.

The Russian President, Putin, expressing “the BRIC 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”, stressed the need to “overcome the excessive domination of a limited number of reserve currencies”. This was clearly a reference to the US dollar, which constitutes almost two thirds of the global reserve currencies and the currency which determines the price of petrol, gold and other strategic raw materials.

This permits the U.S. to maintain its dominant position by printing dollars the value of which is not based on the US’s real economic capacity but on its use as a global currency. However, three significant events may eclipse the US’s dominance:

1. A year ago, the Chinese yuan entered into the basket of the IMF’s exchange currencies, (joining the dollar, the euro, the yen and the sterling).
2. Peking is on the verge of launching contracts in yuan to purchase oil, convertible to gold.
3. The BRICS are asking for the quotas, and thus the votes attributed to each country within the IMF, to be revised. This is because the US alone, has more than twice the total number of votes of the 24 countries of Latin America (including Mexico) and the G7 holds triple the votes of the BRICS countries.

Washington is eyeing the Russian – Chinese partnership with growing concern for the following reasons: • the exchange between the two countries is growing rapidly and should reach 80 billion dollars in 2017; • there has been a surge in the number of co-operation agreements between China and Russia in the following sectors: energy, agriculture, aeronautics, space and infrastructure; • it was announced that a Chinese company would purchase 14% of Rosneft (the Russian state oil company) and Russia would supply gas (38 billion m3 yearly) to China through the new gas pipe line, Sila Sibira, which will become operational in 2019. This will open to the Russian energy export, the path to the East, getting around the U.S.A.’s attempt to block its entrée to the West though Europe.

Since the U.S.A. is losing ground in economic terms, it is throwing on the balance the full weight of its ace: its military might and political influence. The U.S.’s military pressure in the South China Sea and in the Korean peninsular, the U.S./Nato wars in Afghanistan, the Middle East and Africa, the U.S.A./Nato “push” in Ukraine and the ensuing confrontation with Russia all form part of one strategy: global confrontation with the Russia/Chinese partnership. A clash of not only of economic wills but also geopolitical.

It also forms part of the plan to implode the BRICS, making the pendulum of political power swing wildly to the Right in Brazil and the whole of Latin America. Kurt Tidd, is the Commander of the U.S. Southern Command. He is preparing the military option that Trump threatened to apply against Venezuela: in a Senate Hearing, he accuses Russia and China of exerting an “evil influence” in Latin America, so that they can carry forward into this region “their vision of an alternative international order”.

Translated by Anoosha Boralessa

Source: Voltaire Network