The Dollar’s International Decline Is Becoming Really Obvious
The comments below are an edited and abridged synopsis of an article by Simon Black
For the past 80 years, the US dollar has been used for cross border trade, foreign reserves and international financial transactions. But this status is not written in stone, and it’s beginning to change rapidly.
One recent development is that, in China, the yuan has overtaken the dollar as the most widely used currency for international trade.
China has been the manufacturer to the world for decades and does business with nearly every country on the planet.
Until recently, most of China’s trade was conducted in dollars, but China has been gradually switching to using its own currency for trade. And other countries have been happy to go along.
This means that other countries will start holding more yuan to trade with China, and fewer US dollars.
This is not an accident. In 1944, the US pushed the rest of the world towards the dollar. China is doing the same—rallying other countries against the dollar and towards the yuan.
French President Macron has urged Europe to rely less on the dollar; China and France recently completed their first yuan-settled LNG trade. This is a shift from France solely using the dollar for foreign trade.
The UAE and Malaysia are moving in the same direction. Then there is BRICS—Brazil, Russia, India, China, South Africa—which account for about 40% of the global population and a quarter of the global economy. BRICS is scheduled to discuss creating a new currency, potentially pegged to gold, for trade.
Most importantly, Saudi Arabia is open to breaking the petrodollar and selling oil in yuan; on top of this, Saudi’s crown prince recently stated that he was “no longer interested in pleasing the US.”
The decline of the dollar is blatantly obvious. This is no longer a prediction, it’s happening in front of our eyes.