|Russia and China Dump the US Dollar
by Dr Paul Craig Roberts
Global Research (November 29 2010)
On Thanksgiving eve the English language China Daily and People's Daily
Online reported that Russia and China have concluded an agreement to
abandon the use of the US dollar in their bilateral trade and to use their
own currencies in its place. The Russians and Chinese said that they had
taken this step in order to insulate their economies from the risks that
have undermined their confidence in the US dollar as a world reserve
This is big news, especially for the news dead Thanksgiving holiday
period, but I did not see it reported on Bloomberg, CNN, New York Times or
anywhere in the US print or TV media. The ostrich's head remains in the
Previously, China concluded the same agreement with Brazil.
As China has a large and growing supply of dollars from trade surpluses
with which to conduct trade, China is signaling that she prefers Russian
rubles and Brazilian reals to more US dollars.
The American financial press finds solace in the episodes when sovereign
debt scares in the EU send the dollar up against the euro and UK pound.
But these currency movements are just measures of financial players
shorting troubled EU-denominated debt. They are not a measure of dollar
The dollar's role as world reserve currency is one of the main instruments
of American financial hegemony. We haven't been told how much damage Wall
Street fraud has inflicted on EU financial institutions, but the EU
countries no longer need the US dollar for trade between themselves as
they share a common currency. Once the OPEC countries cease to hold the
dollars that they are paid for oil, dollar hegemony will have faded away.
Another instrument of American financial hegemony is the IMF. Whenever a
country cannot make good on its debts and pay back the American banks, in
steps the IMF with an austerity package that squeezes the country's
population with higher taxes and cuts in education, medical and income
support programs until the bankers get their money back.
This is now happening to Ireland and is likely to spread to Portugal,
Spain, and perhaps even to France. After the American-caused financial
crisis, the IMF's role as a tool of US imperialism is less and less
acceptable. The point could come when governments can no longer sell out
their people for the sake of the American banks.
There are other signs that some countries are tiring of America's
irresponsible use of power. Turkey's civilian governments have long been
under the thumb of the American influenced Turkish military. However,
recently the civilian government moved against two top generals and an
admiral suspected of involvement in planning a coup. The civilian
government further asserted itself when the prime minister announced on
Thanksgiving day that Turkey is prepared to react to any Israeli offensive
against Lebanon. Here is an American NATO ally freeing itself from
American suzerainty exercised through the Turkish military. Who knows,
Germany could be next.
Meanwhile in America the sheeple remain content with, or blind to, their
role as sheep to be slaughtered to feed the rich. The Obama administration
has managed to come up with a Deficit Commission whose members want to pay
for the multi-trillion dollar wars that are enriching the
military/security complex and the multi-trillion dollar bailouts of the
financial system by reducing annual cost-of-living increases for Social
Security, raising the retirement age to 69, ending the mortgage interest
deduction, ending the tax deduction for employer-provided health
insurance, [and] imposing a 6.5% federal sales tax, while cutting the top
tax rate for the rich.
Even the Federal Reserve's low interest rates are aimed at helping the
The low interest rates deprive retirees and those living on their savings
of interest income. The low interest rates have also deprived corporate
pensions of funding. To fill the gap corporations are issuing billions of
dollars in corporate bonds in order to fund their pensions. Corporate debt
is increasing, but not plant and equipment that would produce earnings to
service the debt. As the economy worsens, servicing the additional debt
will be a problem.
In addition, America's elderly are finding that fewer and fewer doctors
will accept them as patients as a 23% cut looms in the already low
Medicare payments to doctors.
The American government only has resources for wars of aggression, police
state intrusions, and bailouts of rich banksters. The American citizen has
become a mere subject to be bled for the ruling oligarchies.
The police state attitude of the Transportation Security Administration
("TSA") toward airline travelers is a clear indication that Americans are
no longer citizens with rights but subjects without rights. Perhaps the
day will come when oppressed Americans will take to the streets like the
French, the Greeks, the Irish, and the British.
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(c) Copyright Paul Craig Roberts, Global Research, 2010
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