The End of the Dollar Hegemony
De-dollarization podcast and content
Hi, I am the host of a new show called Geopolitics Demystified. It has 2-3 programs every week in three different formats. One is a monologue (like this one below), one is an interview (like I did with Scott Ritter), and the third one is a Spaces event on Twitter/X.
Here is the podcast on Dedollarization. It’s on YouTube and Spotify. Please Like and subscribe. Below the links is the content of the podcast, if you prefer to read.
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Content:
The most important pillar that holds up the American Empire is the US dollar. This underpins not only America’s prosperity and military but also its economic and geopolitical power over other nations and leaders. Without the exorbitant privilege of the US dollar and the global financial system that is controlled by the West, the US empire will collapse. This is why de-dollarization is the mother of all geopolitical phenomenon and a crucial topic. Weaken the dollar’s hegemony, you have neutralized America’s unipolar prowess. Let’s discuss.
De-dollarization is about decoupling from the US dollar, which was established as the global currency after WW2. Actually, the agreement was struck at the Bretton Woods conference in 1944, a year before the end of WW2. Interestingly, the dollar almost died in the 1971 when the US went off the gold standard and defaulted on its obligations. However, the dollar was brought back to life when a deal with Saudi Arabia created the Petrodollar – i.e., US dollar backed by oil.
This has led to the primacy of King Dollar. Now, all commodities around the world are priced in dollar; and countries buy and sell goods and services mostly in dollar. In order to trade in the global market, countries are forced to accumulate US dollar in their foreign exchange reserves. This creates an artificial demand for the dollar, which is why the US can borrow and print trillions of dollars without the dollar losing its value. Thus, America enjoys lavish lifestyle through enormous trade deficit and budget deficit every year, while other countries must work hard and be fiscally responsible.
The dollar also gives the US enormous geopolitical power. Why? If a country refuses to obey American diktats, the US can impose sanctions, seize its assets in US banks, and prevent that country from trading with others. Thus, the US can unilaterally wreck another country’s economy. This is an undemocratic and a tyrannical system, which exists solely because of the special status of the US dollar.
These are the reasons why countries are trying to decouple from the dollar and the US-controlled financial system such as the SWIFT.
Why de-dollarization?
Now, let’s discuss the explicit benefits of dedollarization – when countries no longer must depend on US dollar to conduct trade, investments and other financial transactions:
🔹Sovereignty. With dedollarization, developing countries no longer have to let the US dictate their domestic and foreign policies. This means freedom from fear of sanctions that bully countries, corporations, politicians and individuals.
🔹An America with diminished ability to print dollars. No more trillions of dollars created out of thin air, while the USD stays strong. When dedollarization reaches a certain threshold, the US will be forced to play by the same rule as others. This means fewer US military bases around the world, fewer US-funded NGOs that start color revolutions, fewer politicians being bribed around the world and so on.
Basically, a less corrupt world. And more “free market” and “free elections.”
🔹Free trade! Anyone can trade anything with anyone without Uncle Sam’s permission or threats. Same for investments. Freedom from dollar won’t just help countries like Cuba, Venezuela and North Korea, but everyone. For example, if India wants to build a seaport in Iran or buy oil from Russia, it can be done without begging the US for permission.
The world’s GDP will literally go up due to dedollarization!
🔹Cost savings: No middleman (i.e., US banks) taking commissions. For example, when China wants to buy oil from Saudi Arabia, both countries must now use US banks to do the trade, and the American banks take a commission for their “work.”
🔹Privacy: Using US banks and SWIFT mean that the US gets to spy on everyone and monitor all their. By circumventing this system, countries gain more privacy and freedom.
🔹Save time: Faster transactions in local currencies. No American banks needed.
🔹Less Exploitation of Developing Nations: The US dollar hegemony means that every country needs US dollar to survive. This artificial demand gives the US enormous power and makes the dollar strong. Thus, people in Mexico, China, Vietnam, India, Bangladesh, Africa etc. are forced to work for $1 or few pennies per hour to make products that are sold for hundreds or thousands of dollars by American/European corporations.
🔹Boost in global e-commerce and tourism: Way more options than under the current dollar regime.
🔹Debt Trap Gone: Far less debt trap and exploitation by Western countries and institutions like IMF and World Bank. External debts in US dollar are one of the primary tools used to impose austerity and privatization on developing countries. Look what’s happening right now in Sri Lanka, Pakistan, Argentina, Egypt etc. This exploitation has been going on for decades.
🔹Less need for FOREX. The entire concept of foreign exchange reserves will become less relevant since more trade will be done in local currencies.
Dollar, Euro and Yuan will likely be the three leading but equal choices as reserve currencies. There might also be a BRICS currency, if they manage to implement it wisely. No one country of region — USA, Europe or China — can bully others.
🔹Stability: The US dollar is also used to destroy currencies of other countries for political and economic reasons, as we are seeing in Turkey, where the Lira has lost more 50% of its value in the last two years, as the US tried to carry out a regime change by disrupting the economy and getting rid of Erdogan.
Sometimes, the destruction of the economies of developing nations is not even intentional. For example, over the last year or so, the Federal Reserve Bank has raised the rates by 5 percentage points (500 basis points). This made the dollar strong, crushing other currencies. Thus, to protect their falling currencies, developing countries are then forced to sell off their hard-earned forex dollars. In Asia alone, developing countries lost $200 billion in this process in 2022-2023.
🔹True Democracy: Multicurrency, multi-lenders, multi-partners… all these choices mean democratization of global finance.
🔹No more monopoly, no more hegemony.
A multipolar and more just world will arise out of dedollarization.
De-dollarization Movement
By the way, de-dollarization is already spreading like wild fire! Consider these examples:
The BRICS group is poised to announce its own gold/commodity-backed currency during its summit in October this year. The BRICS currency, if properly implemented, will be a game changer. Note that it will NOT be like the Euro, which replaced the currencies of individual countries. In contrast, the BRICS currency will be used only for trade, while preserving the sovereign currencies of its members.
How about internationalization of yuan? For the first time, China just bought natural gas in Yuan! Hello, petroyuan! Watch out, petrodollar!
India just signed a deal with Malaysia to enable trade in Indian Rupees; and India is working with 18 other countries to do trade in Rupees. These include not only neighbors like Bangladesh and developing countries in Africa, but also staunch US allies/vassals like Germany, UK and New Zealand. India is also in talks with the UAE to buy oil for rupee. Petro-rupee… who would have thunk?
Malaysia, Indonesia, Singapore and Thailand now have a digital payment system that enables settlements in local currencies. They have even standardized the QR code payments. No need for the dollar middleman anymore. Now, all ten ASEAN countries — with 600 million people — want to adopt this system and eliminate the use of foreign currencies such as US dollar and Japanese yen in the intra-ASEAN trade.
For the first time, China just bought liquefied natural gas (LNG) from the UAE using Yuan. Kind of a shocking news that should really be on the front page of CN and BBC.
Already, more than half of China’s trade and cross-border payments are happening in yuan.
Kenya’s President announced that Saudi Arabia and the UAE will sell oil for Kenyan Shilling! Ghana is buying oil in gold. True freedom for African countries.
Kenya and Iraq have made it possible for people and businesses to buy things on Alibaba — the Chinese e-commerce giant — with yuan. No need for US dollar in a globalized, hi-tech world.
Egypt has joined the BRICS Bank — the New Development Bank. Who needs the predatory IMF and World Bank, who anyway hate giving out loans for infrastructure projects and real development? Egypt is also issuing RMB-denominated bonds.
Indonesia’s President Jokowi has told his people to stop using Visa and Mastercard. And the reason he gave? How the US confiscated Russia’s foreign exchange reserves.
During his visit to China, the Malaysian PM Ibrahim proposed an Asian Monetary Fund to rival the IMF and to reduce dependence on US dollar.
By the way, the new head of BRICS bank is none other than Dilma Rousseff, the former President of Brazil. She was spied on by the NSA, the US spying agency. Later, the US staged a soft coup and removed her from the office by leaking a recorded conversation. Now, she will live in China and manage the New Development Bank. Her influence will likely bring Brazil into BRI - Belt and Road Initiative.
Brazil, which is the largest economy in Latin America, is now enabling yuan payments for Brazilian exporters. No more dollar, thank you. As a sign of things to come, the transactions will go through CIPS — the Chinese version of SWIFT. This is a complete decoupling from the post-WW2 financial world order.
40+ countries have established a currency-swap agreement with China.
Looking at Other Global Trends
Where to begin? There has been an overload of news regarding tectonic geopolitical changes from all over the world! There are outbreaks of peace between intense geopolitical rivals, which would have been unthinkable before… developing countries are suddenly breaking free from the clutches of a rigged global financial system… and a new world order is emerging at an astonishing pace. Let’s take a look at the astounding developments that presage an epochal realignment of geopolitics and geo-economics.
We can break down the other historic events into two categories:
Peace Movement: In an earth-shattering move, Saudi Arabia and Iran agreed to establish diplomatic ties — brokered by China. Saudi Arabia and Iran have also joined BRICS. Next, Syria’s President Assad visited the UAE and attended the Arab Summit — an equally astounding rapprochement. The third one is about the former Taiwanese President who visited mainland China — an unprecedented event since the Chinese civil war ended in 1949. All these are terrible for America’s power, which rests upon chaos, wars, and divide-and-rule.
Revolt against American Hegemony: There is a global revolt against the American Empire. Check out these recent rebellious events:
BRICS expansion: 5 joined last year (including the strategic Saudi Arabia, UAE, Iran, and Egypt). 30 more have applied for membership this year. We will find out the details in October when the BRICS Summit will take place in Russia.
“Mexico is not a colony of the USA” — thundered Mexican President Amlo a couple of days ago on the 85th anniversary of Mexico’s nationalization of oil. This progressive leader nationalized Lithium a month ago, to the great displeasure of his northern Big Brother.
Similarly, El Salvador’s Young and dynamic President Bukele warned the US that Monroe Doctrine is dead. (Bukele has cracked down on violent gangs and drug trafficking, which may have disrupted CIA’s revenue).
Another Latin American country, Honduras, just dumped Taiwan and recognized PRC in mainland China.
Heck, even some German leaders are talking about fixing the Nord Stream pipeline and renewing trade with Russia.
And how about Putin, the supposedly international pariah under 10,000+ US/EU sanctions? Recently, 40+ African countries sent representatives to Moscow to attend a conference titled “Africa and Russia in a multipolar world.” Not subtle at all.
Last year, Xi Jinping visited Moscow for a three-day visit and said that “Changes unseen in a century are happening; and we (Russia and China) are leading this.” Then, a few days ago, Russian President Putin visited China on a state visit, received a royal welcome, and cemented the alliance with China.
Then, there is the Putin essentially heralded the death of petrodollar and the birth of petroyuan by making these two points:
· Already 90% of Russia-China trade is happening with Yuan and Ruble.
· Furthermore, Russia will use Chinese Yuan to trade with Asia, Africa and Latin America. Then there are other profound changes: Russia using yuan as the main currency in foreign exchange reserves, Russian companies issuing RMB bonds, Russian banks allowing people to open yuan accounts and so on.
US in Denial
Americans are in for a rude awakening. The mainstream media, pundits and politicians are still engaging in bravado about the supremacy of the US dollar. However, events can unfold like an avalanche.
Meanwhile, Americans are not only in denial about dedollarization but also about its impact on the dollar’s global reserve currency status.
Here’s the simple truth: If people don’t need dollar for trade, they don’t need dollar in the foreign exchange reserves either. In the near future, technology and multi-currency trade will turn reserve currencies into an archaic and colonialist notion.
Dollar itself won’t just disappear but its hegemony will be gone. The US dollar will be one among major currencies such as Euro and Chinese Yuan.
Old world order: If you run out of US dollars, you must go begging to the IMF, which will impose austerity and privatization — i.e., let Western corporations plunder your country.
New world order: You buy oil in your local currency! Or, use another option like the RMB. Also, if you are a developing nation, China will not only give you the money but will build the infrastructure you need.
The big kahuna in this radical transformation is, of course, Saudi Arabia — the most influential Arab country and the de facto leader of OPEC. Saudi prince MBS is a visionary and shrewd person who understands geopolitics. Consider that public schools in Saudi Arabia are now teaching Chinese language!
MBS is making all sorts of long-term deals with China. For his $1 trillion futuristic city - Neom - he is getting yuan-denominated loans from Chinese banks! And Saudi Aramco signed a $12 billion deal to build refineries in China. In the future, Saudis can more quickly export petroleum products to other Asian countries.
The Saudi-Iran deal is also a geopolitical coup de grace for China. It may very well be the cornerstone for petroyuan — i.e., oil being sold for Chinese RMB. Obviously, this detente paved the way for both Saudi Arabia and Iran to join BRICS.
Imagine a BRICS+ with three oil giants — Russia, Saudi Arabia and Iran. And perhaps even Venezuela and Nigeria in the future. The “BRICS+” can account for 40-50% of world’s oil production! How hard will it be to create a new currency that’s backed by oil? Or even a combo of commodities — oil, natural gas, wheat, iron ore etc.? Remember that Russia and Iran are #1 and #2 in natural gas reserves of the world.
Endless possibilities in a multipolar world!
How long before the local de-dollarization stories are replicated worldwide? This is just a matter of scaling that needs the right governance and technology.
Imagine a future when any person in any country can directly and instantly trade with anyone in the world!
All the US sanctions and bullying will become meaningless. Already, look how most of the world is ignoring US/EU sanctions on Russia.
The proof is in the pudding. Look at how Russia’s exports of crude oil, petroleum products, LNG and coal have been virtually unaffected by US/EU sanctions. The message from Global South to the imperialists about the Ukraine war is clear: “Your monkey, Your circus.” Even the EU is still directly buying LNG from Russia. For oil, the EU is just fooling the world by buying Russian oil through India and Turkey.
Similarly, China’s Belt and Road Initiative has great potential to transform the world. With 147 members, the BRI is a transformative paradigm. Hopefully, some European countries will also grow spines, reject the life as American vassals, and embrace the BRI and a cooperative world. All the propaganda about debt traps or failures of projects is cynical and either exaggerated or blatantly false. If these holier-than-thou people are so concerned about debt trap, they should join the BRI, propose noble reforms and offer cheap loans.
Peace and Development
Poor countries have enormous challenges with the basics and are caught in a Catch-22. To get out poverty, they need to build infrastructure; but to build infrastructure, they need money! These countries suffer when there are endless perpetual wars that disrupt global supply chains and trade.
Plus, Western institutions don’t give loans for infrastructure. US military bases? Yes. Hydropower dams and internet connections? No!
The Middle East, for example, has so much wealth but many Arab countries are poor and/or destroyed by wars. This is why peace between Saudi Arabia, Iran, Syria and the UAE is a game changer. The leaders are finally realizing how much more they can accomplish through cooperation. It’s as if there is a spiritual awakening!
The only ones to benefit from conflicts are the US and the EU. Divide Sunnis and Shiites, Arabs and Persians… the US gets to be the hegemon of a pivotal region. Plus, keeping Iran down helps US/EU oil/gas companies make enormous profits. Of course, selling weapons is also a big industry in the US.
Needless to say, what’s happening in the Middle East is amazing. After decades of brutal civil wars, proxy wars and religious wars, Arab leaders are having an epiphany: “Hey, how about we cooperate with one another and find win-win ideas for peace and prosperity?”
This process is not easy as we are seeing with the Israeli war on Gaza and the attacks on Iran. It requires enormous diplomacy and strategic patience. However, the dividends of peace and development will be astronomical. And they can lay the framework for other countries to resolve their issues as well.
Imagine peace between:
North and South Korea
India versus China/Pakistan
China and Japan
Russia and Europe
One final note: The Saudi-Iran peace deal is also a proof of another phenomenon: China’s growing geopolitical clout and mastery. It’s not just a “workshop of the world” anymore. Who knows, maybe the Chinese will play a great role in ending the Ukraine war as well.
Arrogance and Ignorance
The hubris and ignorance in Washington/London/Brussels bubble are astounding. On one hand, US sanctions (weaponization of USD) and warmongering are accelerating the death of dollar hegemony, which underpins American power and prosperity. On the other hand, Europeans are meekly accepting their vassal state and sacrificing their economy, security — and potentially their lives — as geopolitical pawns in the proxy war against Russia.
Moreover, the US/EU financial systems have become Ponzi schemes on top of unsustainable debt and mind-boggling size of derivatives – in the order of thousands of trillions of dollars. Meanwhile, the de-industrialized Western economies can’t even supply Ukraine with enough ammunition. The American economy is a “fugazi” — financial capitalism with fake wealth created by printing trillions of dollars and hiding failures with bailouts, a.k.a. socialism for oligarchs and banksters.
All these are possible only because of the rigged global system.
Conclusion
The American Empire is based on three things: Dollar, Military, and Divide-and-Rule.
And all three pillars of the Matrix are crumbling in real time.
— S.L. Kanthan
Follow me on Twitter/X: @Kanthan2030
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