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Dark times lie ahead for the U.S. dollar as its future as the world's reserve currency looks to be in great jeopardy. For more than 50 years the U.S. dollar has been the chief monetary instrument used by the nations of the world to facilitate trade involving commodities such as petroleum, manufactured products, and gold. But the times are changing and many of these nations, with China at the forefront, are finalizing trade agreements that utilize only their own currencies.
So it appears that the reign of the U.S. dollar as the world's reserve currency will, quite likely, be coming to an end within the next ten years. It is certainly no surprise that China, widely considered to be the premier economic power of the future, is wasting no time in exerting its growing power and influence in these matters. China is actively working with nations in Asia, the Middle East and other regions of the world to bring dramatic changes to the way world commerce is conducted and money is exchanged.
Many of these countries who are moving away from the dollar no longer view America as a stable and reliable force on the world economic stage and they are seeking alternatives as a hedge against a severe future decline in the dollar's value.
That China is the main facilitator of these moves to do away with the dollar is without question; the evidence is everywhere. Here are some specific examples of the various agreements that have been between China and other nations in recent times:
*China and Iran are creating a barter system by which Iranian oil will be exchanged for Chinese imported products. This is, quite obviously, an agreement designed to counter U.S. sanctions against Iran since China has no intention of discontinuing the importation of Iranian oil. Besides the barter system the two countries will also conduct trade using the Chinese yuan, the Iranian rial and gold.
*China and Japan announced plans to bypass the dollar and use their own currencies in their trade relations. Discussions involving a partnership between South Korea and China to exchange their currencies also have taken place. This is a huge development as China, Japan and South Korea are the dominant economic powers in that Asian region.
*China and Russia have, for more than a year, been conducting trade using rubles and the yuan.
*China and the United Arab Emirates (UAE) have announced an agreement which will use the yuan for oil trades. The Chinese National Bank said that this agreement, worth around $5.5 billion, was made to "strengthen financial cooperation, to promote trade and investments, and to mutually assure regional financial stability."
*Russia and Iran have agreed to use rubles as a means of currency in their trades. Russia has joined China in opposing U.S. sanctions against Iran and fully intends to maintain a close relationship with Iran.
*China will pursue bilateral trades with Russia and Malaysia using the yuan, the ruble and the ringgit, respectively.
*The nations comprising the BRICS group (Brazil, Russia, India, China and South Africa) recently agreed at their summit meeting in Sanya, China, to establish mutual lines of credit in local currencies. This, again, is a very significant development since this group of nations represents a very powerful economic bloc going into the future.
*The United Nations Conference on Trade and Development has stated that "the current system of currencies and capital rules which binds the world economy is not working properly and was largely responsible for the financial and economic crises." Further that "the dollar should be replaced with a global currency."
*The International Monetary Fund (IMF) recently issued a statement about replacing the dollar as the world's reserve currency with a system of Special Drawing Rights called SDR's, an international type of currency created in 1969 which is, in effect, a "basket of national currencies" backed by the full faith and credit of the member countries' governments.
It seems like everyone is jumping on the bandwagon to do away with the dollar as the reserve currency. This could be termed as "payback time" as many countries that either have lost respect for America, or who fear its military outreach, have found a way to combat physical force with economic power. That may well be the case when we consider that this movement is being strongly promoted by China, Russia, and Iran, no real friends of the U.S.
When the dollar is no longer the world's reserve currency the effects on America will be very severe. It will have monumental negative effects on the economy and its ability to conduct trade with other nations. In many cases nations will simply stop using the dollar. In other cases they may use the dollar but only at heavily discounted rates. Such actions will cause the Fed to run the Treasury Dept. printing presses non-stop, creating massive inflation and making the dollar the modern-day version of Fiat Money.