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China/Russia Attempt to Dethrone US Dollar Currency Supremacy

August 9th, 2013 | by Morris Beschloss | Comments

 

For a multitude of decades following the end of World War II, the U.S. dollar has reigned supreme as the universal currency with which most international trade was conducted. This was in keeping with the overwhelming supremacy of America’s sole economic superpower status in the exchange of goods on a worldwide basis. Although the German mark, the Japanese yen, and the British pound were often accepted on direct trade with these currency-emanating nations, the green back became even stronger in the mid-1950′s and beyond, as the post-war world economy hit its stride. The dollar took on a massively expanded posture as a fast-growing global population combined with a quickened wake-up call, for a growing number of developing nations throughout the world.

These factors had become even more favorable for the dollar, as the mark submerged into the harassed euro, and the yen suffered from a frozen Japanese economy in the 1990′s until most recently. Only the British pound still maintained global stature, primarily in the oil-rich Mideast, and to some extent, in trade with the United Kingdom’s former colonies, spread throughout all five continents. However, when it came to a convertible currency with which to purchase or invest on a worldwide scale, the dollar heavily predominated. Even as China awakened, and became the world’s runnerup world’s economic superpower, its “yuan” barely increased as a sovereign currency for global trade in general. If anything, the dollar has maintained its strength, and then some, as the foreign investment magnet has gravitated toward the U.S. This requires conversion by other world currencies into the dollar.

But, now, an unpublicized component of the recent Sino-Russian Alliance has been a joint effort to campaign for its relative currencies to be accepted in lieu of the greenback. This is based on Russia’s massive exports of oil and natural gas, and China’s unparalleled dominance in world export of finished commercial, industrial and consumer goods, as well as commodity components. A few preliminary statistics indicate progress in that direction:

1) China’s foreign exchange reserve, which has increased from $2.2 trillion in 2009 to $3.4 trillion currently, has been offset by China’s U.S. dollar reserves decrease from 69% to 54% during the same time period.

2) The People’s Bank of China has signed nearly two trillion yuan worth of currency swap deals with 20 countries and regions, including Hong Kong.

3) China and Russia have aggressively built up their gold reserves, still recognized worldwide as a stabilizing backup for world currencies used in ongoing international trade. This has greatly curbed the U.S.’s one indisputable world lead, which the China/Russia combine is attempting to eventually overtake.

Although the U.S.’s unexpected energy surge has slowed the Sino-Russian process, America’s skyrocketing U.S. Treasury debt of near $17 trillion, more than one-third of which has accumulated since President Barack Obama took office on January 20, 2009, anticipates a new international credit downgrade that could further undermine America’s dollar world supremacy. If straining of Russo/Chinese relations with the U.S. become even more intense in the forthcoming months, this would be a major blow to America’s international trade policy, a critical mass in warding off a weakened overall U.S. economy.

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