The death of the dollar?

POSTED BY: SIGNYM
UPDATED: Sunday, August 23, 2026 15:35
VIEWED: 15891
PAGE 14 of 15

Every nation in the world, except maybe N Korea, accepts the dollar in payment for goods (oil, textiles, metals, chemicals, chips etc) or services (call centers, radiology readings, etc).

As a result, every bank in the world (except maybe N Korea) has dollars in its coffers and many nations hold dollars as foreign currency reserves, sometimes quite a lot of them. Because of that, every nation that hold a significant # of dollars (Saudi Arabia, China) has an interest in keeping the value of the dollar stable compared to other currencies.

We don't realize how extraordinary that is, but if we lived in different country with a different currency, the Malaysia ringgit, for example, our currency might not even be easily convertible to other currencies, or not at a stable value.

This didn't come about by accident, but as a result of the Bretton Woods agreement and, after that, the petrodollar.

In addition, the West developed a bank to bank communication system, the Society for Worldwide Interbank Financial Telecommunication, called SWIFT. This is how nearly all banks transfer money between themselves. Since SWIFT was developed early, it's relatively primitive.

So the USD is the world currency, like English is the lingua franca

More later.


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"It may be dangerous to be America's enemy, but to be America's friend is fatal." - Henry Kissinger


AMERICANS SUPPORT AMERICA

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So all nations with banks are, or were, part of SWIFT. All nations that purchased oil used the dollar. Nations that took out international loans often took them out in dollars. The dollar-dominated IMF and World Bank were at the ready to "help" struggling nations with loans. Bonds were insured thru AIG and similar insurances. Ships took out insurance from Lloyd's of London. It was a complete, well developed worldwide ecology for USD payment, trade, finance, investment and insurances. And our military would step in, when necessary, to enforce the use of the dollar for oil payments (petrodollar).

It was impossible to trade or make payments outside of the dollar.

****

The USA State Department wielded the power of the USD with abandon. As of June 2023 the USA had trade or financial sanctions against

Afghanistan
The Balkans
Belarus
Burma
Central African Republic
China
Cuba
Democratic Republic of Congo
Ethiopia
Hong Kong
Iran
Iraq
Lebanon
Libya
Mali
Nicaragua
North Korea
Russia
Somalia
Sudan
South Sudan
Syria
Ukraine
Venezuela
Yemen
Zimbabwe

All our unilateral sanctions, not authorized by the UN, are ILLEGAL according to international law.

They took the extraordinary step of kicking the Russian Central Bank and eight other Russian banks off of SWIFT, expecting the Russian economy to collapse by blocking international payments for oil, gas, fertilizer, grain and so forth.

But while China, India, and other nations took advantage of Russian difficulties by negotiating lower prices for Russian commodities, they managed to evade USA sanctions.

So in summer 2024, the USA announced it would ramp up enforcement of secondary sanctions that is, the USA would sanction other nations that didn't honor OUR sanctions against Russia.

That, IMHO, was the last straw. It was OK for us to make select nations suffer, and OK for us to squeeze Russia, but we just threatened the economies of many nations that depended on Russia for critical imports of oil, gas, grain, fertilizer, and so forth. It's one thing for the EU to commit economic suicide, another thing to require so many other nations to do the same.

Hence, the push to create a whole new payment, finance, insurance, and rating system outside of SWIFT and the dollar.

The first is a cross border international bank messaging system. This appears to be central bank block chain payment transfers.

The second is to ease the conversion or use of local currencies. Bc so many Russian banks had been removed from SWIFT it was difficult for private banks to convert rubles to yuan, rupee, or whatever. This will now be accomplished at the Central Bank level, which will communicate outside of SWIFT, and us called BRICS Bridge.

There is a bank set up already called the BRICS Bank, which can lend money in whatever currency to nations temporarily short of cash. There is a payment clearing function, called BRICS clear (IIRC), and even an insurance function.

So trade between the BRICS nations CAN be outside of the dollar. Since the BRICS nations include China, India, and Saudi Arabia, they will of course continue to trade in USD as well.

*****

What can the USA do?

Well, it can sanction nations that are participating in this BRICS system, but since that includes China and Saudi Arabia, that would be economic suicide. Trump, probably the only American politician who sees and publicly responded to this threat (so far) said he would tariff products 100% of nations that avoided the dollar, but that's just another form of sanction, with the possible result of economic suicide.

The most effective response to keep this thing from snowballing would be to selectively sanction or tariff some of the smaller nations, like Vietnam, to try to split them out of the BRICS trading system. But it seems to me that might incentivize other nations to join BRICS.

This is one of those cases where events behave "gravitationally", that is, the more there is, the more there is.

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