Rise of Alternatives as the US-Led Global Order Falters
International Man: Since the invasion of Ukraine, we’ve seen the US and its European allies institute unprecedented sanctions on Russia. In a bold move, the US government also froze the US dollar reserves of the Russian central bank.
In response, Russia demanded payment in rubles in exchange for its energy.
What’s your take on this new phase of economic warfare?
Doug Casey: It’s a massively stupid and destructive move on the part of the US. There’s no upside to what the US is doing in fighting this economic war against Russia—or, for that matter, in backing the Zelensky regime in the Ukraine—but huge downside from every point of view.
Essentially the US and Western powers have confiscated hundreds of billions of dollars of assets from the Russian government, as well as individual Russians. It’s theft, pure and simple. It acts as a warning shot to everybody in the world: Your assets are not safe in Western countries. It’s a reason to get out of the US dollar and use something else.
It’s backfired on the US. It’s helping devastate Western economies by cutting off the flow of Russian oil, and especially natural gas, to Europe. Further, the Russians now demand payment in rubles. The ruble is now a much stronger currency because, in order to pay the Russians, the world has to buy rubles. The Russians have taken a page from the US playbook. Decades ago, the Saudis said they would only accept US dollars in payment for oil. And so, people had to buy dollars if they wanted Saudi oil.
The US is acting to destroy confidence in its currency, as well as the stability and perceived honesty of the dollar-based system. That’s extremely dangerous for a currency that rests on nothing but confidence. Something like this can cause confidence to blow away like a pile of feathers in a hurricane.
The issuer of the dollar, the bankrupt US Government (or its facilitator, the Fed), will give you nothing specific in exchange for them. But they can issue unlimited numbers of them. The dollar has been an IOU nothing for many years. But the charade is approaching an end. The US Government is now like a poker player “on tilt.”
International Man: Recently, Vladimir Putin traveled to Iran. As a result, Iran’s National Oil Company announced a $40 billion energy deal with Russia’s Gazprom. It’s safe to say they won’t be using the US dollar in their transactions.
What does this mean for future geopolitical alliances and economic dealings that undermine US dominance?
Doug Casey: The US is in serious decline—financially, economically, and sociologically—and the world knows it. Only a fool wants to hold the unsecured liability of a bankrupt government, especially one that’s so arrogant as to believe it can confiscate assets arbitrarily.
The major export of the US now, as it’s been for the last 40 years, is US dollars. We don’t really produce that much anymore. We ship people dollars. In return, they ship us vast amounts of material goods. Ships arrive in US ports full of products; they “dead head” on the return trip, mostly empty. The US has transformed itself from a nation of producers and creditors into a nation of consumers and debtors.
Our major export is dollars, not wheat and Boeings. Meanwhile, the US government is creating more dollars by the trillions in order to prop up the domestic economy. This is going to end very
Article from LewRockwell