We are currently witnessing some of the separation anxieties and growing pains the global community is feeling as it finally attempts to create a true "multipolar" financial and political system by gradually abandoning the modern world's US dominated Anglo-American-Zionist global order.
As the superficially imposed Dollar commodity is gradually forced to relinquish its global clout, other currencies and traditional commodities such as gold and silver are making a strong come back. International calls to abandon the US Dollar continues unabated and the effort seems to be pulling together the top three Eurasian powers - Russia, China and Germany. Vladimir Putin spearheaded the move late last November when he met with German and Chinese leaders. Considering how deeply the Dollar is entrenched in global commerce, however, such highly volatile actions are easier said than done. Nevertheless, merely discussing the matter is in itself a very crucial and courageous first step. And many nations around the world have begun doing just that. Such a thing would have been unheard of just several years ago. The writing is now clearly on the wall and the Dollar's global death-grip may be finally coming to an end.
On a related note, some financial analysts argue that the recent weakening of the Euro via the financial debacle in Greece was orchestrated by Wall Street as a means to undermine the growing clout of the Euro. Although somewhat whitewashed, the New York Times article on this page discusses the matter, and Ron Paul, perhaps last of America's patriot-politicians, has again publicly criticized the Federal Reserve (see corresponding articles posted below).
US dollar to die out in oil deals? http://www.youtube.com/watch?v=mezD3f9QjD0
Robert Fisk on the Gulf 'ditching the dollar' in oil trade: http://www.youtube.com/watch?v=CBDPGkW6SCU&NR=1
Nor is the change in exchange currencies the only sign of the growing Sino-Russian friendship. The St. Petersburg summit produced 12 different agreements ranging from intellectual property protection to energy production. China has agreed to purchase two advanced nuclear reactors from Russia, while Russia is working to negotiate a price for sale of more natural gas to the Chinese. Wen expressed satisfaction with the outcome of the latest summit, which followed a September visit by Russian President Dmitri Medvedev to China. At the press conference, Wen praised the “unprecedented level” of Sino-Russian cooperation and promised that the two countries will “never become each other's enemy.” He also stated that “China will firmly follow the path of peaceful development and support the renaissance of Russia as a great power. The modernization of China will not affect other countries' interests, while a solid and strong Sino-Russian relationship is in line with the fundamental interests of both countries.”
While no one should begrudge the Chinese and Russians their mutual admiration society, the unspoken subtext of such announcements is the determination to diminish the influence of the United States in global affairs. For the nonce, China and Russia are content with newly-allied currencies. In the longer run, however, stronger military ties are a likelihood, given the military rivalry between both countries and the American superpower: Russia, over NATO’s eastward expansion, and China, over Taiwan, the Korean peninsula, and naval dominance in the Pacific region in general. For now, it is enough that the U.S. dollar is losing ground across the world, and that China and Russia in concert are the first major powers to openly repudiate it.
For example, when Malaysia and Germany exchange goods, the transaction is often denominated in dollars. In particular, oil -- something that all modern economies need -- is denominated in U.S. dollars, so the currency is almost as indispensable as oil itself. The dollar reserve currency status allows the U.S. to run up high deficits and have its debt be denominated in the U.S. dollar, which in turn enables it to print unlimited dollars and inflate its way out of debt. America, understandably, wants to protect these privileges. In fact, some allege that the U.S. wants to protect this status so badly that it invaded Iraq because the country began selling oil in euros instead of dollars. Now, the U.S. is allegedly threatening Iran because of the country's desire to use euros or Russian rubles in oil transactions.
Meanwhile, China and Russia are gradually revolting against the U.S. dollar. This latest move to shift bilateral trade away from it is significant in itself because China-Russian trade -- previously denominated in dollars -- is currently around $40 billion per year. For Russia, trade with China is larger than trade with the U.S. Moreover, as this policy extends to Russian exports of oil and natural gas to China, it threatens the global "petro-currency" status of the U.S. dollar. According to the International Energy Agency, China is already the largest consumer of energy, although the U.S. is still the largest consumer of oil. However, China, now the largest automobile market in the world, is expected to rapidly increase oil consumption.
Russia is already the second biggest oil exporter and the biggest natural gas exporter in the world. In other words, the growing importance of Russia and China in the global energy picture -- and their phasing out of dollar usage for trading energy commodities -- would marginalize the status of the dollar. Russian ambitions against the dollar for energy exports go back to 2006. That year, former President Vladimir Putin made plans to set up a ruble-denominated oil and natural gas stock exchange in Russia. "The ruble must become a more widespread means of international transactions. To this end, we need to open a stock exchange in Russia to trade in oil, gas, and other goods to be paid for with rubles…Our goods are traded on global markets. Why are they not traded in Russia," said Putin, according to RIA Novosti.
For China, it is promoting the use of yuan as a trade settlement currency in Asia. Recently, it allowed its currency to trade against the Malaysian ringgit. Just like the deal with Russia, the purpose of that agreement was to "promote bilateral trade between China and Malaysia and facilitate using the yuan to settle cross-border trade." Trade is the major reason for the demand of foreign currencies in the first place. So as countries like China and Russia phase out the usage of U.S. dollars for international trade -- including but not limited to oil trade -- its status as the world's reserve currency will continue to slide.
Vladimir Putin said it is "quite possible" that Russia will one day join the eurozone and create a currency that would eclipse the US dollar as the global reserve standard. Speaking at a conference in Germany the Russian prime minister, who is in the country for talks with Chancellor Angela Merkel, said he was convinced the euro would stabilise and strengthen despite the current sovereign debt crisis. He said: "Yes, there are problems. But the economic policy of the European Central Bank and of the governments of leading European economies ... convinces me that the stability of the euro will be ensured." He added: "We know there are problems in Portugal, Greece, Ireland and the euro is wobbling a bit. On the whole it is a solid, good currency and it should take its place, its role as a reserve currency."
Mr Putin said: "We often hear from our partners in Europe and North America: 'If you want to be members of a global family of civilised nations, you should behave in a civilised way.' What is this then? Have our colleagues forgotten the basic principles?" Meanwhile, Russia's finance minister, Alexei Kudrin, has said the country's banks may buy stakes in the UK's "large" financial companies. He claimed that VTB Group, Russia’s second-biggest lender, is among the banks interested in acquisitions in the UK. During Vince Cable's trade mission to Moscow, the Business Secretary said he would “welcome” Russian investors.
Putin in Germany to Talk Up Free Trade