Rise of the East: Chinese Yuan to Strike Death Blow for U.S. Dollar
Rise of the East: Chinese Yuan to Strike Death Blow for U.S. Dollar
March 26th 2018, this date may very well go down in financial history as the day the U.S. dollar began its inevitable death spiral, as the Chinese Yuan oil contracts go live, allowing for purchases of oil using the native Yuan currency.[i] Up until this point, the U.S. Petrodollar has been the go-to ‘oil reserve currency’ but with the Yuan contracts going live, coupled with China’s insatiable appetite for oil outpacing that of the U.S. [ii] It looks as though the U.S. Dollar’s super dominance is not long for this world. Particularly when one considers the fact that the U.S. dollar has largely been propped up due to being the global standard in the purchases and repayments of oil contracts. Furthermore, the surge in imports of oil into China gives Beijing significant influence when it comes to negotiating with Saudi Arabia to request that payments for the oil contracts are repaid with the Chinese Yuan, as opposed to the long-standing U.S. Dollar.
Compounding the troubles is the fact that the Chinese Yuan is already one of the world’s fastest growing currencies, as reported by the International Business Times (2015).
“Yuan payments grew by 102 percent over the last year, compared to an overall annual growth of 4.4 percent for all currencies, Reuters reported, adding that China is expected to approach the International Monetary Fund later this year for the Yuan's inclusion to the IMF’s in-house currency basket.”[iii]
Conversely, for several years countries have been gradually moving away from using the Greenback for one reason or another, Iran for example refuses to use the Dollar for trade, preferring the native currencies of China, Russia or South Korea.[iv] Making the problems facing the United States even worse, is the United State’s immense debt, currently standing at north of 21 trillion dollars[v] and a federal annual deficit of over 700 billion dollars, with such insane levels of federal debt, can the currency stand to see it’s dominance as the standard medium of exchange for oil fall?
A standard, which up until this point has artificially, mind you, granted the Greenback favourable status amongst the global economy.
It cannot be overstated how important these Yuan contracts are, they challenge the super dominance of the U.S. Dollar and given the trajectory of China’s economy being set to overtake the U.S. within two decades[vi] it is only a matter of time until the average American feels the full force of this financial shift, from king to peasant.
Finally, should the fed raise interest rates on the already ballooning national debt, the ensuing money printing required to pay back all of the broken promises would most certainly cripple the U.S. economy and plunge the nation into a dollar crisis.
In short, for those who think the U.S. Dollar is rock solid and is as immutable as a Blockchain ledger, think again, big fat welfare spending, run away entitlements and a congress seemingly hell-bent on selling the unborn into debt slavery have left the United States exposed, it is only a matter of time until someone takes a swing at the former currency king.
[i] https://oilprice.com/Geopolitics/International/China-Prepares-Death-Blow-To-The-Dollar.html
[ii] https://www.bloombergquint.com/markets/2017/04/13/china-oil-imports-surge-past-u-s-to-record-as-output-stagnates
[iii] http://www.ibtimes.com/chinas-yuan-among-top-5-most-used-currencies-world-1797246
[iv] https://www.birchgold.com/dollar/crisis-deepens
[v] http://www.usdebtclock.org/
[vi] https://www.bloomberg.com/news/articles/2017-12-26/china-to-overtake-u-s-economy-by-2032-as-asian-might-builds
