We have been loudly warning that the dollar is under attack. We've warned, for example, that an anti-dollar alliance was forming. We've warned that Putin has been leading a charge to unseat the dollar. We've warned that China has turned against the dollar. We've warned that al Qaeda has planned to destroy the dollar. We've warned that Iran has targeted the dollar. We've warned that the BRICS nations (Brazil, Russia, India, China, and South Africa) have turned on the dollar…as has the IMF…as have the UN and World Bank.
But things are unraveling at a dizzying speed. The latest to turn on the dollar is our ally France. This is undeniably significant and comes in the wake of economic sanctions imposed by the United States on BNP Paribas, the French mega-bank. This is reported in Financial Times today. Check out the link for the full story (registration may be required):
July 6, 2014 6:50 pm
Basically, the article explains that the French see no reason to continue trading in dollars for oil and other goods. In fact, they see dollar trading as a serious negative because of all the rules, regulations, and fines. It is one thing to have enemies reject the dollar. It's really bad when allies agree.
By the way, even the country we liberated in the first Gulf War, Kuwait, is looking at dumping the dollar. While one group is calling for bitcoin to replace the dollar, another is arguing for the Chinese Yuan. Either way, the dollar is losing fans. Excerpted from Gulf Times:
July 1, 2014 By Arno Maierbrugger/Gulf Times Correspondent/Bangkok
There have been a number of proposals in the past to trade oil and gas in another currency than the US dollar, for political as well as for monetary reasons. Some OPEC member states not particularly friendly to the US, whenever there was a crisis of some sort, have been making repeated noise about denominating their price for hydrocarbons in another than the US currency, but have never quite managed to agree on an alternative.
The most active countries today that pursue a no-dollars-for-oil policy are Iran, which encourages all trading partners to pay for oil in a currency other than the US dollar, and Russia, whose flagship company Gazprom, the largest extractor of natural gas in the world, recently told oil importers from China and Japan that they should pay their bills not with greenbacks, but preferably with yen, yuan or even ruble.
But a new report (Disruptive Technology: Bitcoins, Currency Reinvented?) recently issued by Kuwait-based investment banking and asset management firm Kuwait Financial Centre, also known as Markaz, even goes a step further: Oil producing countries, particularly in the GCC, could benefit if they would use bitcoin in oil trading, Markaz' research department argues…
Before any barrel will ever be paid for in bitcoins, it will be the Chinese yuan that has taken on the role as the dollar's challenger. China already pays Russia's and Iran's oil in yuan and is busy setting up yuan clearing houses in major financial centres all over the world to facilitate the global money flow of its currency. This is, for now, probably a much better solution until the world knows what will rally happen to bitcoin.
If the dollar is abandoned globally, we will have serious problems. To learn how bad it could get, please check out something we shared in 2012: