The mechanism behind the current dollar standard is well known. The US dollar is that has become a reserve currency again with the help of the "petroleum dollar". further supports the use of the US dollar and its monetary status after it breaks away from the gold standard . So, from this perspective, when the US dollar leaves the gold standard, this matter itself shows that the value and status of the US dollar are slowly declining.
As we all know, behind currency are commodities and transactions. The credit currency (paper banknotes) without transaction support is like waste paper. The reason why the US dollar is the main reserve currency is that the goods represented by oil are denominated in US dollars, and controls and dominates the exchange and clearing system between international currencies.
htmlFor 150 years, the world has been following the principle of "you need US dollars to buy oil". It allows the United States to buy oil in luxury through uncontrollable printing of money. However, other trading countries must pay the exchange rate fee to obtain the US dollar, and are subject to US dollar reserves. Therefore, the oil dollar artificially creates additional market demand for the US dollar, and further stabilizes the US dollar status and ensures its share of use, which is crucial to credit currencies, because the US dollar status is crucial to the US economy.
So, this further explains that the oil dollar is the core foundation of the dollar. Another advantage is that the United States can spill out the world market to the deficit, debt interest and high inflation risks every year. Exporting the dollar to countries that need to buy oil is one of the reasons to reduce its rising inflation rate.
On the other hand, most of the US dollar earned by countries around the world through sales and services will return to the United States in the form of U.S. bond investment products. At the same time, international reserve assets are also calculated in US dollars. Therefore, under the endorsement of the US economic strength, the petrodollar and U.S. bonds jointly support the currency status of the US dollar after the decoupling gold standard.
300 years ago, physicist Newton asked the state to issue currencies based on gold reserves , using gold to specify the value represented by the issued currency. Newton also became the first pioneer to propose the gold standard system. Now we all know that, for example, the British pound before 1931 and the US dollar more than 40 years ago, were such a currency.
In fact, this is also the origin of the term "US dollar", and "money is naturally not gold, gold is naturally currency", Marx even revealed the value connotation and essence of gold and currency in one sentence.
The status of the global reserve currency is not eternal
But now the situation has changed a lot. html On September 30, economists of the Federal Reserve wrote an article on the New York Fed website and bluntly pointed out that although the US dollar still occupies an absolute position in international reserve , foreign exchange system and commodity settlement, this is not unchangeable, and warned that "the US dollar cannot maintain the monetary power for a long time." This may not be a coincidence, because the latest de-dollarization trend is worth paying attention to.
At the moment when the US dollar abuses its main reserve currency status, many countries have actively or forced to turn to US dollar alternatives, thus establishing a de-dollarized world financial order parallel to the US dollar. At the same time, this is nothing new to those who study currency history, but it is new to the possibility of Fed economists publicly acknowledging the dollar crisis .
In response to this, senior American economist Jeffrey Sax said that in the end, we will see an alternative payment system in which the US dollar, euro and renminbi share the halo of global reserve currencies.
As BWC Chinese website has been tracking de-dollarization reports for many years, the world has once again lost confidence in the US dollar. Last time, after the US dollar left the gold standard, although the US dollar continued to dominate, the current US dollar can no longer regain the crazy magic of the US dollar in the past, and has even reached the point of abandonment or stopping. In the view of financial research institution Zerohedge, the de-dollarization process is accelerating. Not only that, at present, the fire of abandoning the US dollar has spread to Europe.
In fact, Europeans' distrust of the US dollar has shown that in recent years, many countries including Germany, France, Poland , Hungary and other countries have begun to ship gold from the United States or Britain back to their country in advance. Not only that, according to data released by IMI International Commissioner on July 2, 22 central banks in eastern Europe, in the 24 months ended August 30, purchased the largest amount of gold since the pound crisis. At the same time, Japan, another ally of the US economy, has been adding Chinese bonds to mainstream investment banks in recent times.
And behind this, the US dollar has left the gold standard and continuously charged seigniorage by printing money, and repaid debts by printing a large amount of money, creating one high-valuation dollar asset price after another, while the US dollar is also declining day by day.
It is in these contexts that the United States proposed to return the gold standard. A member of the United States named ALEX NOONEY in West Virginia once again submitted a new bill to the House of Representatives, trying to restore the US monetary system to the gold standard. The solution is to control the Federal Reserve's money supply and reinject the value of gold into the US dollar.
right is ALEX NOONEY
Alex Mooney submitted to the U.S. Treasury Department about urging the auditor-general to immediately review the U.S. gold reserves (HR3526) mentioned that because the federal authorities lack transparency and the astonishing level of federal debt financing spending triggered a sustained inflation nightmare, weakening global confidence in the country's gold reserves and the US dollar, Mooney proposed in the bill to control the Federal Reserve's money supply and return its decision to the U.S. market, in other words, to return to the gold standard.
Please note the picture below. What happened to U.S. Treasury bonds since Nixon ended the gold standard. As most U.S. debt appears after leaving the gold standard, this is just more evidence that the US dollar has over-inflated.
In this regard, Lawrence Larry, professor of economics at George Mason University, said that the significance of the proposal initiated by Mooney is worthy of the market's attention. The United States has enough gold to restore the gold standard, and the gold standard can continue to play a role in today's global economy.
We have noticed that this is the first time that the United States has made to use gold standard to stop the current US dollar anchoring the US bond issuance system after the US dollar breaks away from the gold standard and the US dollar has entered its climax again after many countries show their swords. According to this legislative proposal, the US dollar price will be affected by the economy, rather than the instinct of human nature.
Lawrence Larry further explained that Bretton Woods system pegs the main currency to the US dollar, the US dollar itself is pegged to gold, at $35 per ounce. Since the currency is pegged to gold, it also means that the Fed will be unable to print money without bottom line during the recession. In this system, the attractiveness of the gold standard is that it can play a role through market forces.
Wall Street Prophet Peter Schiff told Zerohedge on October 1 that in the context of the reappearance of the gold standard, now all parties including the Federal Reserve Board and Wall Street elites have reached a consensus that the US economy will decline, which will be the beginning of this dollar contraction. Such a result will put gold (or digital currency anchored to gold) again at the center of the international central bank monetary system.
Peter Schiff warned that the Fed has printed a lot of money, and the value of this money is falling, and it will eventually collapse one day.Even the Dutch Central Bank wrote an article on its website that suggests that gold can once again become the core of the currency system to prevent the dollar system from collapsing, which is quite surprising to the market, because it is a Western central bank that provides negative interest rate loans.
There is no doubt that de-dollarization has become a major event overnight. In the past few decades, many US dollar users seem to have begun to go from being cautious to publicly staying away from or getting rid of their dependence on the US dollar. This voice has even appeared above Wall Street, the US dollar base camp.
Immediately afterwards, Wall Street financial tycoon, known as visionary investor, Rogers warned that "the decline of the dollar is an inevitable historical process", JPMorgan Chase also expressed doubts about the US dollar as the world's major reserve currency in its latest updated industry report, and pointed out incisively that it is precisely because of a series of economic measures and actions of the Federal Reserve that the status of the US dollar's reserve currency will be threatened. This is the real behind the current de-dollarization of many countries in the world.
Obviously, when the Fed's different elastic monetary policies only target their own economic goals without considering the spillover effect of trillions of dollars, it will overdraw the credit of the dollar and prompt the world to find alternatives to the dollar. Because debt has always been a shadow on the dollar, but it has not happened now.
So, from this perspective alone, the financial research team of BWC Chinese website exclusively analyzed that with the sharp increase in US debt and the continued deterioration of inflation, the phenomenon of the US dollar's monetary status reset is expected to occur. At that time, those smart economies will link their currencies to strategic resources such as gold or digital currencies with decentralized functions, which also indicates that global de-dollarization may enter a new stage.
According to the continuous reporting statistics of the financial team of BWC Chinese website, at present, China, India, Japan, Russia, Germany, Israel, Italy, Indonesia , UAE, Angola , Turkey , Qatar , Vietnam, Pakistan , Romania , Spain, Ireland , Netherlands , Armenia , Portugal, Kyrgyzstan , Hungary, Bahamas , El Salvador , Paraguay , Paraguay , Paraguay , tm1 More than 40 representative countries, including l2, Ecuador , Uganda , Brazil , South Africa, Venezuela , Iraq , Canada, Malaysia , Thailand, Kazakhstan , Belarus , Switzerland , Brunei , Sweden , Lithuania , Kuwait , Nigeria and Cambodia , etc., have begun the de-dollarization process in their own way.
Former Bank of England Governor Carney
According to former Bank of England Governor Carney, the dominance of the US dollar has brought problems to decision makers outside the United States. He believes that the best way to reduce the US dollar status or SWIFT is to replace some of the functions of the US dollar with a globally accepted digital reserve currency anchored by gold or SDR to facilitate trading in global markets.
This means that in the process of de-dollarization of the US dollar (please note that this is not referring to USD index ) and the process of de-dollarization of more than 40 countries around the world, the constant value of gold will become increasingly important. This can be seen from the wave of global central banks continuing to purchase gold and announcing that they will transport overseas gold back to China. This is also one of the core logic behind the continued decline in the reserve share of the US dollar in the foreign reserves of central banks in various countries. (end)
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