US Treasury Secretary Announces Dollar Will Decline as Global Reserve Currency
Now we are finally hearing it out of the horse’s ass … I mean “mouth.” However, there is not much difference in this case. Yanet Yellen, who is anything but a US treasure or a responsible US Treasurer or even a knowledgeable banker or an economist — who cannot see a crisis when she is drowning in it — is now the one saying that the US dollar will slowly decline as the global reserve currency. That’s worth noting because I’ve never heard any treasurer admit that before. Still, Yellen has scarcely been right in any predictions she has made; so, what does it really mean?
Yellen, remember, infamously predicted that quantitative tightening would be so boring it would continue on autopilot in late 2017, as QT began. They pulled the plug on that disaster in a hurry, and it ultimately piled up as a massive inter-banking crisis, known as the “repo crisis,” or “repocalypse” as I was calling it. She, with equal institutional infirmity, infamously stated that inflation was “transitory.” Then it turned into the raging inferno some of us could easily see was inevitable due to massive money printing in the face of massive global scarcities. She assured the nation our banking system was sound, and three days later the first bank collapsed. She assured us it was sound again, and then two more banks collapsed. She scares me by continuing to say the system is “fundamentally sound,” almost assuring me by her track record that we are going to cascade into deeper trouble. You might almost use her as an adverse weather vain by considering her to be one who always points into the wind. Whatever she points to as being calm will be the direction from which the storm comes.
So, she is certainly not one to be listened to or taken at face value. However, when she suddenly changes her direction as she just appeared to do and seems to speak against her own institutional interest, my ear picks up. Yellen’s apparent turn from her usual position could be taken as admission of US monetary defeat, and undoubtedly will be by some:
Speaking today, US Treasury Secretary Janet Yellen said that there should be an expectation of a slow decline in the US dollar as a reserve currency. Moreover, the statements arrive amidst international de-dollarization efforts employed by a host of countries, including the BRICS economic bloc.
Yellen had previously stated her expectation that the US dollar would remain unchallenged as the global reserve currency. However, it appears as though recent developments have shifted her stance on the matter.
On the face of it, in one of those two seemingly contradictory instances, she must not have — once again — known what she was saying.
Some may jump on her comment to claim, “See, even the US Treasurer knows the Chinese yuan and the BRICS nations are about to stamp the dollar into dust.” Not so fast, I’d say. I think she is only admitting to as much as I have been saying all along, which is practically inevitable: The dollar’s path to replacement will be one of slow decline, not quick defeat. The operative word intended in all of this was not “decline” but “slow.” She is admitting the dollar’s dominance will decline over time, but …
Sure, Yellen also admitted that China was trying to compete against the dollar; but she was merely admitting what the data says is slowly happening and what the BRICS have said they are intending:
The global reserve currency status of the US dollar has been a constant headline over the past several months. Indeed, as international trade has worked to de-dollarize itself, the currency has seen a lessening prevalence.
However, look where she goes next:
Yellen maintained her confidence in the US dollar. Specifically, the confidence that it would remain the global reserve currency. Despite the de-dollarization action that has been taken by countries like China and Russia.
She admits that the BRICS nations (Brazil, Russia, India China and South Africa) are doing their best to take down the dollar, but she also says they have slight chance of succeeding. Though many won’t believe her on that part; that’s OK. My point is to emphasize that her point was to emphasize that dedollarization will be a slow process:
Subsequently, she acknowledged attempts by these nations to create an international trade alternative but described them as difficult to conceive.
While I wouldn’t take Yellen’s word on anything, I’ll come back to why the BRICS really are not going to take down the dollar, but the dollar will slowly take down itself … by design. What Yellen is really saying is what I have been saying for a long time. The dollar will gradually transition. It is planned to transition. The important question is to what and how, and here is where her comments get meaningful because they contain a veiled clue of a deeper global monetary plan:
Moreover, Yellen discussed international financial institutions (IFIs) and their role “as part of our broader economic and foreign policy toolkit.” Additionally, she referenced these institutions as “fostering a more resilient global economy.”
That is what we should be focused on — the meaning revealed behind those words. The takedown of the dollar is not going to happen because the BRICS bring on a rapid collapse or any kind of collapse. What you can see in Yellen’s statement is the allegiance (“our”) the Federal Reserve has with other “international financial institutions.” She does’t quite say “international central banks” because some of these institutions that are her friends are not specifically central banks, such as the Bank for International Settlements and the International Monetary Fund. You could call the BIS the central banks of central bankers, but it is not officially or specifically referred to as a central bank.
The Ukraine Pain Plan
Her statement indicates that the real path forward is in COOPERATION with the BIS, the IMF, and the various central banks (particularly of the West), such as the European Central Bank, the Bank of England, the Reserve Bank of Australia, the Bank of Canada, the Swiss National Bank, etc. These are the institutions the US has allied with for decades — “our” big participants at the World Economic Forum and in the Bilderberg group. These global banksters didn’t just throw up their hands and give up their plans because of Russia. On the contrary, Russia has caused them to band more tightly than ever together. It is with these partners that the US Treasurer will seek to “foster a more resilient global economy.” The globalists did not just quit the party and run home. This isn’t their first rodeo!
The world has bifurcated because of Russia’s invasion of Ukraine more distinctively into a Western financial hemisphere and an Eastern one. That is what I said we would see right from the start of the Ukraine war. While the BRICs nations are actively trying to take dominance away from the West, the concern for those of us who live in the West is how the leaders of the West will continue forward with the same global agenda they have always had. They are NOT giving up because of Putin or China. What Yellen is saying without saying it is that the same global plan is marching ahead with all of those banks of the West, and she likely knows that is planned to eventually lead to a global digital currency that supersedes the dollar.
That has been my steadfast thesis for the dollar’s path for years, and I am only more convinced of it now than ever. The dollar will merge into something more global and something cashless because the people of this world are constantly moving on their own toward preferring a global digital currency.
I’m not preferring such a monstrosity; and, as a reader here, you may not be either; however, I can readily see and acknowledge trends that are pervasive, whether I like them or not. Most people in this world don’t give a second’s thought to what money is and what it does. They just want to have it and spend it as conveniently as possible, and convenience and familiarity from birth within a digital world is rapidly moving people toward acceptance of a new kind of currency. They are not thinking about the manipulative and controlling dangers of those currencies, but I am pretty sure central bankers and their governments are.
The new bipolarization has not defeated the “plan.” It is moving ahead right on schedule in the West, and the East will merely not be included in that if it doesn’t want to be. In fact, the Ukraine conflict is likely expediting those moves in the West.
The Eastern side of the bipolar world
And, so, we come back to the yuan’s weakness as a BRICS vehicle for dominating the dollar. Again, in today’s news, we see that China has practically destroyed its economy with its centrally planned Covid policies. Here is a quick uptake of what the headlines provide:
Tumbling exports, as I talked about in other recent editorials, are causing factories in China to seriously scale back production and work forces. While one of today’s articles blame that solely on declining economies in other nations backing off in purchases from China, I already noted another major factor: China’s role in the supply-chain crisis because of all its lockdown, plus the earlier Chinese role in those supply-chain crises that came as a result of Trump’s trade war with China, forced a multitude of companies throughout the West to divest from China — to seek sources for parts and resources elsewhere because they were no longer attainable from China. Most of that was China’s own fault as it locked down ports and manufacturing meccas for months on end, forcing numerous companies to invest billions in diversifying. They are simply NOT going back to China for parts or labor now that they have steered themselves into different channels to diversify at such cost and with such intensified effort.
So, worker unrest is growing in China’s factories as youth unemployment tops 20% in China now.
Home prices have stopped rising, and sales are reported again to be seeing massive declines. The same is true in the West, of course, but China’s situation is made worse by even more overbuilding in past years and by its soaring unemployment, putting purchases beyond question.
China’s central bank, the People’s Bank of China, is again in the news today for moving to even greater financial easing. The Fed, on the other hand is all over the news today for telegraphing a decidedly more hawkish stance to come. That means, the yuan will keep falling in international value relative to the dollar, and that typically is not the kind of price action those banking their sovereign funds want to see. It may help China’s products to become less expensive and may help shore up those seriously declining exports, but it doesn’t make the yuan a reliable contender for a stable sovereign reserve currency.
So, Yellen’s odd admission should be taken in this light: All the institutions in the West remain as fully set as ever on cooperating with each other toward “fostering a more resilient global economy,” where the dollar as we know it will be transitioned out to something more global that still includes the US as a dominant player among these global institutions and governments, and China’s own seriously self-created economic damage puts it in no place to sweep in with a global alternative of its own, though it may gain some acceptance in the East.
In fact, my position since the start of the Ukraine War, is that the war has pushed the West into a stronger, tighter alliance. It has strengthened NATO tremendously, bringing it more eager partners and more financial backing from every existing partner — like it or nor — and it has pressed Western nations to try to work in greater, more intensified financial accord, difficult as that may be with differing national needs in a time when almost all of the West is imposing sanctions on Russia.
I pay no attention to what I or my readers WANT to happen. I look for what IS happening, whether I like it or not, and that cold glass eyeball on the future that is not based on emotions or wishes, has seen pretty clearly over the last five years. So, read here if you want it straight. Read elsewhere if you just want to read what you want to believe. That’s why I called it The Daily Doom. It is what it is, not necessarily what you (or I) want it to be; but we are better off if we see it like it is.
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