Ghana plans to buy oil with gold instead of dollars
aljazeera.com
aljazeera.com
Now true, having your product be a hot commodity everybody wants is good for business but there’s only so much of that before your competitor starts offering a more readily available product.
Pepper that with some morally objectionable stances the US has taken over the past 22 years and suddenly your ultra safe and liquid commodity while still good and desirable for this present crisis might not be as desirable for the post crisis era. Where one crack starts many others can possibly form.
Over the last 15 years, USD has increased in value against the Ghanaian Cedi by almost 16x. If we're trying to destroy confidence in USD, then Ghana sure makes it seem like we're doing an awful job.
https://www.google.com/search?q=1+USD+to+GHS&oq=1+USD+to+GHS
However, look at the US dollar over longer durations against wheat [1], copper [2], gold[3], or Bitcoin [4]: the dollar buys significantly less than 10, 15, 40, or 100 years ago.
While the Cedi may be much weaker against the dollar, the dollar is loosing against real commodities/assets that can't simply be created by banker's fiat.
So, the dollar's the cleanest dirty shirt in the room. And Ghana just announced that they'd rather trade oil for a clean shirt (gold) rather than taking a dirty one.
[1] https://www.macrotrends.net/2534/wheat-prices-historical-cha...
[2] https://www.macrotrends.net/1476/copper-prices-historical-ch...
[3] https://goldprice.org/gold-price-charts/15-year-gold-price-h... / For 100 year chart, https://www.macrotrends.net/1333/historical-gold-prices-100-...
[4] https://www.xe.com/currencycharts/?from=USD&to=BTC&view=10Y
If you have gold but can’t get your hands on USD then something is very wrong, but I doubt that is the case.
Something I have been shouting hoarse is that this war in Ukraine is going to have multi-generational effect on world order with USD coming under US pressure.
If Saudi drops USD, which now seems extremely unlikely, then it's truly a descent for the US empire.
Similarly, the INR is being (slightly) liberalized, not because Indians prefer international trade in their local currency but because it costs them so much to have such a bad currency.
There are reasons to think people would prefer a different currency to USD to be the reserve currency but it’s because it’s not liberal enough. Switching to extremely repressive currency regimes like the yuan or the rupee is counterproductive To the people who want a different international trade currency.
USD in oil is barely $3T per year
Nothing external will ever pressure USD without the United States having collapsed first.
edit: not sure why I'm being downvoted for asking a relevant question
Spoiler - we didn’t print nearly as much as you think we did. And we generally haven’t even scratched the surface of how much more a normal growth of the currency since 2008 was needed.
The question that needs to be asked is more political and societal than monetary. Does the US want to lead the world by resuming at marketing a more true and secular beacon of hope and freedom or does it want to become isolationist and toe the line of each dog to its own. If we choose the former the question than arises if that’s even still possible and if we ever were true to it or were we just lucky enough to enjoy the arbitrage of developing countries not having developed yet.
I personally don’t have all the answers but it seems to me that combined with our questionable moral standing in the last 22 years and our secular stagnation the latter is the path we’re choosing to follow.
You do realize that it's not actually just printed and given to people right? The fed buys government bonds, the people through taxes pay the interests on this loaned printed money.
So, the money is printed and loaned to the government, the government uses this printed money to make the rich richer (supporting big companies so the economy doesn't crash, through Blackrock who gets to decide who gets what based on ..weird values), inflation is a tax on the people already, and they're the ones paying back that loan, and the poor countries get poorer because their dollar reserves aren't enough to buy things from the US and other countries who trade in USD.
So thinking QE on that scale is good is either being a contrarian for the sake of ego or believing everything you hear on CNBC.
Spoiler - we didn’t print nearly as much as you think we did. And we generally haven’t even scratched the surface of how much more a normal growth of the currency since 2008 was needed.
If by “normal” you mean debasing and destroying the government money just like every empire before, sure.
The main issue is that the global supply chain cannot literally serve richer American consumers, so the cost of supply increases and everyone (in the US and out) faces inflation pressure.
Don't watch the score and, especially, don't complain about it.
I inquired why I was being downvoted for asking a question. I was genuinely curious about how that was bad.
I was under the impression that you can buy dollars much easier than oil.
The reason for that is post 2008 banks have become much more risk averse (seeing what happened to Lehman et al) and they are mostly the conduit through which broad currency is generated. That mechanism is mostly broken unless you’re an ultra rich company like Apple or Google.
So today to make a bank create USD for you you’d be required to have the best of the best collateral namely sovereign bonds. As it stands the US hasn’t taken even close to enough debt and thus issued Treasuries to even come close to the shortage in dollars that banks’ risk aversion has created since 2008.
But using the gold for currency does sound like it could be more efficient, cutting out the middleman.
Note: normally countries maitain a float of foreign reserves for this, and I'm guessing this stash of economic lubrication has run a business dry for Ghana and they don't have the luxury of rebuilding their reserves, and hoping to use gold as a more immediate solution.
That doesn't make sense - just take some gold, and buy USD. Is there some physical shortage of paper or something?
But even if there was a shortage, I doubt that on a country level USD (or any currency, for that matter) is bought in physical form - it’s just credited to the country’s bank account.
I guess inflation is a lot more complex than the comments section here would have you believe.
Also helps to look like you're doing something about a debt crisis even if the net effect is minimal or negative...
Gold is, for all intents and purposes, usable as money, at least between sophisticated parties such as governments. It lacks some of the features of USD, but if Ghana is out of USD, then those features don't matter to them.
Look at HN's somewhat sophisticated audience heralding it as a power move against the dollar rather than a country scrabbling around for ways to dig itself out of a financial hole caused in part because the dollar holds value much better than their own currency.
Countries have resources thus commodities. Commodities have value. Real value.
Trade in local currencies can be backed by these commodities.
Necessity will force countries to find USD alternatives.
You're misunderstanding the fundamental problem. It's not about a "shortage" of USD for Ghana, where they ran out of USD suppliers and no one is willing to sell them USD so they will need to switch to RUB.
You get USD by exporting stuff and you can import stuff when you spend USD. The fundamental problem for Ghana is that they need to import valuable stuff but they are running out of valuable stuff to export in exchange, hence their USD reserves are dwindling. You can't solve that problem by changing the currency. If someone is to give you their RUB, they'll still want valuable stuff in exchange.
But now the US is even destroying confidence in the dollar, through its confiscation of the Afgan central bank reserves (which included private citizens' deposit accounts) and distributing the money to families of Sept 11th victims; or freezing the Russian central bank reserves, even though the international settlement system was meant to be apolitical.
“Apolitical” does not mean “usable by any party for any transaction.” SWIFT policy prohibits using its system in support of illegal activity [0], and the settlement system has been denied to sanctioned countries before [1].
[0]: https://www.swift.com/about-us/legal/compliance-0/fighting-i...
[1]: https://www.aljazeera.com/economy/2018/11/5/what-swift-is-an...
If BRICS launches their own basket of currency that will be the first major salvo at USD.
The further a society drifts from truth, the more they will hate those who speak it.
This seems like the core of the story. Nearly 6 years after that incident, Ghana has been unable to repair the factory and refine it's own oil. My assumption is the tale behind that is tragic and timeless corruption.
Now it’s been imported again…
[0] https://www.reuters.com/article/cameroon-refinery-idUSL8N23A...
[1] https://www.reuters.com/markets/commodities/ghana-orders-min...
The big difference:
2. Since you need large reserves (see 1), why hold USD and see it inflate away? No one holds USD. What they hold and trade are treasuries. The return is small, but if you have 10 billion in reserves, 100 million isn't spare change This is the real lynchpin:
- the massive market for treasuries significantly lowers the cost of the US' deficit. The US can debt finance itself artificially lowering taxes or inflation.
- To maintain this position, "dollars" have to available -> the US must run a deficit. If there were no more deficits, the debt would wither, there would be a global monetary contraction.
- Effectively this is a way of exporting inflation: the treasury issues debt -to finance government -> the t-bills are treated as equal to USD -> the excess currency is soaked up by 8 billion people instead of 330 million
- unlike cash, the treasury can wake up one day and wipe (I mean "freeze") your account if you've been naughty. Imagine PayPal writ large.
In the short run it works great for the US, but in the long run it makes exports more expensive therefore eroding US industry. Short term gain for long term pain? Politicians love it!
A holds gold.
B holds dollars.
C holds oil.
A trades B, gold for dollars. A holds dollars, B holds gold.
A trades C, dollars for oil. A holds oil, C holds dollars.
After your suggested trade result:
A holds oil.
B holds gold.
C holds dollars.
If there is no "middle man", party A gets oil, party C gets gold. Party B keeps their dollars. End result:
A holds oil.
B holds dollars.
C holds gold.
Assuming "B" is USA, USA doesn't get to export its inflation/funding for stimulus checks/student debt/pension crisis/(or in trump era - a wall that does nothing) away to "C", whoever that ends up being, meanwhile, Ghana gets the oil it wants, and "C" gets currency without having to pay for the choices of politicians they have no control over.
[1] https://en.m.wikipedia.org/wiki/West_African_CFA_franc
Say A, B, C account. A sells gold and get dollars from account B to account A. And now they can buy oil from owner of account C.
But who owns and runs these accounts or the transactions between them? One option is SWIFT system. Which Russia got excluded in some capacity from. As such it is clear that system cannot be trusted. Value of dollars there are very unlikely to be good for long term. And same applies to any accounts in banks in western influence sphere.
Thus directly transacting is better option in long run. For any country that wants to keep their economy stable.
That is quite a leap. Russia was also excluded from the NY stock exchange due to the ongoing sanctions; does that mean we can no longer trust stocks bought and sold there?
You're using the law of averages. Not all financial markets participate in the same sanctions to the same extent at the same time, which means that the decision about where to invest can be important.
> taking this absolute stance
You're the one characterizing this as an absolute stance, rather than a practical stance related to the current condition of the markets of the most powerful country that demands the most sanctions.
Ya, kicking them off SWIFT was pretty stupid. The spooks and the economists were super pissed.
Countries don't buy oil (or anything else) with a suitcase or few stuffed with $100 bills.* Instead, they have a really big bank move US dollars through the international banking system electronically.
Any really big bank that wants to keep its US-issued "Allowed to Handle US Dollars Electronically" License has got to follow a bunch of US-made rules. Which rules doubtless permit the US to make & enforce a very long blacklist, of various countries / organizations / people who the US doesn't want banks to work with.
(That said, I see no reason to suspect that Ghana has any interest in "Decoupling from the western financial system", as elzbardico put it. Though obviously the subjects of oil, gold, dollars, etc. are pushing a whole lotta people's emotional buttons in this item.)
*Yes, there are exceptions - usually involving sanctions-busting by folks who don't care about drawing hostile attention from the US.
Source?
Do you mean this in some metaphysical sense? Because you can exchange USD for gods or services outside the US without the US government getting involved.
This creates a demand for dollars in Ghana, that puts downward pressure on the cedis.
So this avoids that, hopefully reduces inflation.
For folks getting really excited here about the US, the US Dollar, etc. - imagine that, for some weird reason, the world's reserve currency was the Tongan paʻanga ( https://en.wikipedia.org/wiki/Tongan_pa%CA%BBanga ). And that (similar to what the the story notes, for USD) Ghana's reserve of paʻanga was running low, so they were looking to buy oil with gold instead of paʻanga, to (as others have noted) put a smokescreen in front of a big new tax on local gold producers in Ghana. (Gold was ~50% of Ghana's exports in 2019, so there's plenty of income to tax there.)
How differently would you view this situation and story, if "US" and "USD" were replaced with (presumably emotionally neutral) "Tonga" and "paʻanga"?
Gold is valued in dollars. Oil is valued in dollars. Any gold for oil exchange will be decided by the going dollar rate of each. Counter parties and middlemen assisting this trade will be hedging their positions with dollar settled derivatives traded on deep and liquid dollar markets.
Oil is primarily transacted with dollars because it’s the worlds reserve currency. But if that were to change to whatever, you can still sell your oil and gold for whatever the new dominant currency is. Meanwhile your dollar is (presumably in this case) worth way less in terms of buying power than when you first bought it.
To see an actual switch from usd to gold for valuing oil, you’d need to see the market liquidity migrate from usd/oil pairs to gold/oil pairs. Ghana making a political statement isn’t that.
If a long term contract is signed it protects you from dollar's inflation/volatility as the contract used gold as currency. I think this is important as tomorrow Fed's decision is no longer that important for your energy costs.
The more important part is that if enough contracts are signed in gold(highly unlikely given U.S's oil exports) then the dollar is no longer relevant to the oil price.
So even if you are signing contracts in gold/oil pairs, effects of fed decisions can impact your trade in ways that you are protected from in usd/oil pairs as gold is usually viewed as a safety asset - so when animal spirits take off due to fed statements gold can go down while oil takes off. This has in fact happened several times over the last decades.
The Fed decision wasn't important to energy costs anyway, though. Oil is priced in dollars, but the price changes minute-to-minute. Whatever the Fed decides about the value of a dollar, the oil price will reflect that.
If you're involved in a long-term contract involving the exchange of oil for dollars, then the Fed's decision can have a big impact on you. But that's true of all long-term contracts involving dollars; there's nothing special about the other side of the contract being oil.
Of course it was. Rate hiking makes the dollar more expensive for anyone buying dollars(to pay for the oil). Were they dealing with gold they would not have this issue. Not to mention if the buyer is a gold producer.
What Ghana is doing is a symptom of global liquidity crisis not a dollar crisis... Ghana cannot print dollars... It is short dollars and would rather have more then less of dollars. So this situation makes dollar more wanted not less.
Michaell Howell is an expert on Global Liquidity and does good job at explaing it.
https://hiddenforces.io/podcasts/global-liquidity-matters-no...
I think you are mistaken.
The technical fungibility of dollars/gold/oil is irrelevant.
The requirement to sell other assets to buy dollars in order to settle oil is not a minor detail - it's the whole point ...
... and it would, indeed, be a sign of an erosion of US currency and trade dominance ... which is why it's not going to happen.
Ghana will either not go through with this plan or they will proceed and pay an enormous economic and political price ... or worse.
[1] https://www.forbes.com/sites/rrapier/2022/10/05/opec-thumbs-...
Also, some of these Nations can no longer determine what benefit it is to them is using the US Dollar as their reserve currency and trading currency. Some nations might have alternative properties/currencies that would favour their external trade but yet they are stock with the Dollar and must defer to the US in all that concerns it.
I would really love someone more knowledgeable to make a prediction as to where all these could be going.
Do you see a country like Saudi going off the USD? Do you think the West-African countries relying on CFA will turn away from that any time soon? Is there a case to be made why these nations should maintain the status quo?
This is completely backwards. The problem right now is that the dollar is too strong, meaning expensive wrt other currencies. In this context, inflation of the USD supply, leading to devaluation of the USD would actually help other countries that are suffering from the strong dollar.
I'm not saying it would be good for the US, but it certainly would be good for pretty much everybody else.
Triffin paradox predicted in the 60s at it's full glory.
It's also worth noting that at the moment both the Fed and the Treasury (obv) are mandated to be operating with an inward looking view only. Meaning we run a global reserve currency with no 'department' in charge of the global part.
Maybe because of the "left's deficit spending" part, which is not wrong, but ignores the right's historical deficit spending (e.g. TCJA). Or perhaps the "political suicide" part is misinterpreted: It would be political suicide for a politician to interfere with Fed policy and undercut their blunt force effort to reduce domestic inflation.
But any way you slice it, right now the Triffin dilemma is indeed exactly what we're experiencing.
You are mistaken - there is an enormous "department" in charge of the global part: the US Navy.
The dollar shouldn't be a global currency.
The dollar is the global reserve currency because the US has centuries of reasonable behavior and military and natural resources that guarantee long term stability. There isn’t a better option unless you’re playing temporary political games or if your macroeconomic situation is so bad you can’t play the game normally.
Reserves are a little different, but even then, whenever something bad happens, the dollar strengthens as investors flock to it. When the 2008 crisis happened (and it was US-centric!) US and the dollar were still the safe haven everyone escaped to. Not the Rouble, not the Yuan, not so much EUR or CHF or, from memory, gold.
So we'll see people avoid the USD as a medium of exchange, maybe, even if the prices are fixed on USD-denominated prices. But also remember, gold is not a great medium of exchange. Will Ghana ship physical gold around the world (risky and expensive)? Or will they sign a piece of paper saying "gold held by in a safe by someone else and owned by me is now owned by someone else" - in which case there is similar counterparty risk, except perhaps not against the US government. But if you think the US is an evil octopus with long tentacles, surely they could get their hands on this gold. Where will this haven safe from US interference be?
If anything, I can more easily believe an alternative economy based on crypto. It's actually happening and working well, for all sorts of shady or illicit activity.
The US holds a quarter of all the known gold reserves in the world, and has more gold than the next three countries combined, so there's a decent chance that Ghana's gold is already in the US.
RUB backing economy is pretty much one major export.
JPY makes American debt look chaste in comparison
CHF does not want the job, primarily because its use as a basket currency already makes it too strong
CNY does not want the job, and their past history of capital controls make America look chaste
You’re free to “divest” as you put it… But you’re still expected to behave & play nicely with your neighbors.
But the U.S empire has been pretty amazing for a pretty amazing number of people across the globe, and it is shockingly easy to stay on the good side of U.S. foreign policy.
Be reasonably democratic, don’t genocide undesirable elements of your population, don’t pick on other reasonably democratic countries, don’t threaten world trade and resources, don’t steal all the Americans’ stuff by suddenly socializing industries in your country, don’t fund terrorist activity against them.
Yeah you can find exceptions to every one of those listed items - welcome to global politics.
Hell no
> Be reasonably democratic, don’t genocide undesirable elements of your population, don’t pick on other reasonably democratic countries, don’t threaten world trade and resources, don’t steal all the Americans’ stuff by suddenly socializing industries in your country, don’t fund terrorist activity against them.
I'm sure Iraq and Palestine would agree.
And of course the country that did very well to the world, also wanted to illegally control the worlds population for its own interest.
https://en.wikipedia.org/wiki/National_Security_Study_Memora...
> Yeah you can find exceptions to every one of those listed items - welcome to global politics.
Which is why everyone wants to get rid of the dollar.
>sovereign actions
Nice euphemism for genocidal, imperialist war.
You’re referring to the U.S. right?
You must claim to be very sarcastic!
No, I'm refering to only country in XXI century that literally decided to annex other country's territory - two times. All that while losing war, and deciding to unleash hell on civilians they claim to be "their kin".
At least we can cheer our hearts looking at fields littered with dead russian soldiers and see that there are countries of the world that won't leave those who need help alone.
I predict we'll see blocks forming up again, something like: - West (US+EU) - East (China+Russia) - India (India, Sri Lanka, Himalayan States, South China states) - Middle (Middle East+North Africa) - Latam (Central + South American States)
One wild card IMO would be the rise of the Indian sphere of influence. I'll leave some room for India's remarkable ability to snatch defeat form the jaws of victory. If they don't f this up, they have UUUGE tailwinds going for them.
Middle east is overrated IMO, its like an oasis with oil instead of water. When the oil money runs out, not gonna be fun any more.
Latam is probs the biggest wildcard, even bigger than India. They don't need a lot of things to be right to wildly outperform as a block. Just like the US, they are protected by two oceans so they can choose to not involve themselves in stuff.
Africa is highly overrated IMO, the entire continent is cursed in multiple ways. If u compare africa to another post colonial continent like Latam, africa is in a place where they need to get so many things right to just survive, let alone to catch up.
But, what are the UUUGE tailwinds benefiting India? India, even more so than China, seems likely to "get old before it gets rich." Its TFR is already below replacement and falling rapidly.
Demographics aside, India is a perfect replacement for China in high tech manufacturing. Stability is a huge factor here giving India a massive edge compared to south east asian alternatives.
On top of that, you have young highly skilled & literate workforce. A largely discounted wealthy diaspora investing back into the motherland. Huge pool of software talent.
IMO it makes for a huge Shenzhen like moment for India. Again, I leave a massive amount of room for India to duck this up but it is India's opportunity to fuck up. The winds have shifted heavily in their favour.
India ones are still over replaceability.
[1] https://en.wikipedia.org/wiki/Total_fertility_rate#Replaceme...
>get old before it gets rich
If PRC's official population is as low as Yi thinks, then her per capita GDP is already "secretly" high income at ~14000 USD. She would technically already have gotten rich before old. CCP has incentive to overreport population / underreport GDP to keep "developing" country status.
>India ones are still over replaceability
Indian overall TFR this year is ~2.0, but more important to break down Indian TFR by state, which will reveal all the high HDI/developmed/educated regions are ~1.6 and trending down, while the underdeveloped and poorly educated regions are still >2. The TLDR is India's demographic divident in her high potential regions is basically over, while low potential regions are generating excess bodies that will have little opportunity develop. Recipe for disaster in democracy, and hence:
> India, even more so than China, seems likely to "get old before it gets rich."
Of course India is going to grow, by a lot, but much of her high potential demographic divident is already tapped out while stuck in low middle income unless the system get it's shit together.
People that keep bunching Russia with China are deluding themselves that Russia is anywhere on China's radar except as a source of cheap resources (gas, oil, wood)
In a de-globilised world split into spheres of influence, Russia would be a foothold into Europe.
Cheap resources cant be discounted, China has duck all for resources. It imports everything (raw nat resources) and its current source Australia is not an ally.
If anything happens, it will be a massive extortion like Iran-China deal. https://en.wikipedia.org/wiki/Iran%E2%80%93China_25-year_Coo...
Current Urals price is profitable but way below needed to maintain blown up russian budget by war effort. China likes this.
BUT, there is definitely way more chatter about alternative payment options, including from well-placed government sources and central banks in important non-west allied countries.
It's now a matter of "when", not "if" when an alternative currency pops up, maybe a BRICS currency.
The use of a supposedly neutral financial network (SWIFT) as a sanction weapon will make other nations who aren't on good terms with the U.S. and the West (and not just the "usual suspects" but many nations in Africa and South America too) seeking alternatives.
As previously mentioned, Bitcoin is a viable alternative. But there may be others. In any case I see nations ganging up to create an alternative to the SWIFT network, potentially undermining its usefulness.
Is it only a genocide if a non-western ally does it?
0: https://watson.brown.edu/costsofwar/costs/human/civilians/ir...
For spot transactions, it doesn't really matter beyond giving the buyer and seller a common language to negotiate in. For contracts sometime in the future, if you're Argentina, no one wants to bet on where the Peso will be in 6 months.
The dominance of the USD is EXTREMELY important to the U.S. and I can assure you that Washington is even willing to wage war over it.
But I believe the ball has already started rolling with Bitcoin and Russia's demand for payment in Rubles.
Bitcoin is already demonstrating its usefulness by helping countries evade economic sanctions. There are a truckload of nations who're fed up with the West's financial dominance and are actively seeking alternatives.
Bitcoin was down well in advance of the FTX collapse. The reason it is down is because it's a Ponzi scheme, and an unconscionable waste of resources so that cryptobros can LARP at being a libertarian.
Is the rest of the stonks also a ponzi scheme? Because if you didn't notice, those are also very down.
Both are too important to the strategic and economic well-being of the U.S. to cut loose.
- EU royally f'd with their stimulus & rates. Mind you, they were in a very precarious position to start with. - China has proven themselves to be a house of cards with zero covid, massive public/corporate debt bubbles and Ji becoming god emperor. - Russia is a glorified gas station with an economy the size of florida.
The reason for Ghana's action, Saudi looking to end petro dollar, China+Russia looking to form a block etc: US deep state ducking up big time.
The weaponised the dollar.. They've been ramping this up big time during the past few decades but the Ukraine War was a UUUUGE reveal the cards moment.
During the last 2 years, Russia was filling up their coffers with high oil prices. The US turned these foreign reserves into worthless numbers on a screen overnight with the press of a few buttons.
Now pretty much every country is looking at each other like "oh shit".
In reality, global trade is not in USD purely because it is backed by carriers and they can invade anyone, but because this navy also protects shipping lanes and offers international rule of law. Remember when the US took a break in the gulf of Aden and it took us Europeans (+Russia and token help from US!!) years to agree and secure it. So, things are not black and white.
Anyway, this system is collapsing from within and will be replacing. The success of the S.Arabia pivot is going to merely decide if it happens in 10 or 20 years time. Btw does anyone know how did the MBS-Xi meating go?
> Btw does anyone know how did the MBS-Xi meating go?
Will commence in December, previously rumored didn't happen
China because of the potential assuming similar GDP/capita as the current USA.
Not soon because I expect as a prerequisite for change being the new winner's GDP to be dominant rather than just joint top 3 in a ranking system that changes their ordering depending on what you value most.
Not gold because the justifications given for why we all stopped using the gold standard in the fist place, still seem to apply.
But having people willingly adopt it?
If people are unsatisfied with the USD in specific ways, how would those specific ways be better using the RMB?
It'd be pretty shortsighted to complain about US financial manipulation or use of currency to further political goals... and then jump in mainland China's pool!
The plan the international community hoped for is actually somewhat working, the timeline for China's giant population to metabolize it was just wrong.
Large Chinese middle class = power = political risk to disrupting the economy = incentive not to rock the international trade boat's status quo.
The CCP is already seeing with the anger over zero-COVID that {middle class life} >> {good of the Party} for most of the population.
Unfortunately, China probably also learned from the USSR that the entire charade only collapses when you blink and refrain from using the military to crush civilian dissent. Which doesn't bode well for Chinese citizens...
I also suspect that political stability is more likely to favour China than the USA over the next few decades — it is very human for success to be followed by the assumption of indefatigability and that to be followed by fighting over who leads the nation, rather than continuing to focus on what actually made a nation dominant and how to keep it that way. The UK lost its literal empire that way; the Soviet Union took 50 years to go from agrarian to space, but by the end they had become at least as out of touch with their own people as the last Tsar had been; I think the US may lose its metaphorical empire similarly to the UK's actual empire, though the group deciding to call itself "The Tea Party" at least implies the possibility of it failing, with analogy to the USSR, in the same way it was formed.
As for the US, they're not alone in this but they are now in a situation where younger voters with a longer time horizon are able to win majorities against older voters with shorter time horizons. This means they're entering into a period of creativity. It is not clear what the outcome will be. But it is clear that we cannot take for granted that pursuit of an unreformed ideology will distract them from the compromise and teamwork that brought them to strength.
In both cases, I think you're extrapolating from recent politics. But both countries are in different turns of the demographic wheel, and have different ways of dealing with that. Democracy also tends to make turmoil more obvious to external observers, so it's easy to accidentally compare apples to oranges when you're looking at a democracy and an autocracy.
That's a naive view of russia. Up to this day, one of the main tasks of russian army - as previously soviet - is potato harvest.
Ghana is not triggering any chain reactions.
(Which also sounds crazy nevertheless.)
I'm much less confident in these predictions than that one, but I'll predict Saudi Arabia won't go off the USD because they depend on US military support in a pretty warlike part of the world and the CFA will be replaced by 2027 as currently planned without any major interference from the European powers.
As for a case for maintaining the status quo - The example made of Ghaddafi comes to mind.
The rest of the world will react eventually, the Zelenksy-Putin puppet show will only distract them for so long.
This is not an excuse for imperialism and crony capitalism that exploits developing nations. Especially in how multinational oil companies corrupt entire nations. Working toward the end of fossil fuels will hasten them losing their power. But the lesson of this year is that those dull bureaucratic things like NATO and the EU are what keeps fascistic autocrats contained and gives aggressor nations the thrashing they deserve.
Even the Tories are realizing they got played by Putin's plan to divide the nations that could hold him back.
Going off, certainly not (why would they?)
But exchanging their oil for other currencies, absolutely.
What will be interesting is how long the Sauds will remain in power once they agree to exchange their oil against other currencies.
Historically, all regimes that made that decision were or are in the process of being taken down either directly by the US or a combo of their close allies (see: Khadafi, Saddam Hussein, Vlad Putin, etc...)
What do you think led Vlad to invade?
The US has been mounting a proxy war against Russia in Ukraine for the past 20 years, one they're ready - barring political upheaval in the US - to fight down to the last European.
> proxy war against Russia in Ukraine
To a certain extent this is true, but the Ukranians have been very keen on it as they've benefited from not being a puppet state run by a corrupt president who built himself a huge palace. And Russia has no right to be "in" Ukraine in the first place.
Very clearly Poland done some things right, while Ukraine did not.
The one important thing that we have done right appears to be immediate turning towards West after collapsing communist regime in 1989. Joining NATO and EU.
Poland never wanted to be in the Russian sphere of influence. We have spilled rivers of blood in countless wars, uprisings and protests against Russian imperialism in past 300 years.
Ukraine means "borderland". Historically Ukraine was in a constant state of wars between Polish-Lithuanian Commonwealth, Swedish Empire and Russian Empire since before USA even existed.
So, historically Ukraine was always split between West and East. All regions of Ukraine very clearly wanted independence in 1991. But modern Western Ukraine wanted to join EU and follow Polish path to prosperity. That's why Maidan protests started in late 2013.
Putin invaded Ukraine because he believed in a false story that Ukrainians wanted to be Little-Russians fed to him by FSB agents (KGB successor). And in order to keep Ukrainians from the Western path to prosperity. Ukraine as prosperous as Poland, meaning more prosperous than Russia, would threaten his regime and Russian idea of greatness.
But Russian speaking Ukrainians sympathetic to Russia never asked for their whole lives to be upended and to be bombed by Russia into oblivion. Ukraine is no longer split. This war is their war of independence, true nation forming event. Their new found hatred towards Russia and Russians is enormous and that leaves them with the only other direction - towards West.
There are vast natural resources in Ukraine which threatens Russias place as the gas station to the world.
They also have imperialistic ambitions to try and restore what they see as the glory days of the USSR.
Any combination of (in no particular order):
- paranoia
- phantom empire pains
- complete and utter failure to produce anything of note on ideological level except "we're a great empire that is surrounded strictly by enemies".
- waning economy with no means, desire, or knowledge to maintain or support it
> The US has been mounting a proxy war against Russia in Ukraine for the past 20 years
No on has done more to alienate Russia from its closest neighbours more than Russia itself.
all the others probably no as they will see the new gana embargo :(
the terms first world and second world were originally coined to means country under petrodollar and countries under ussr. third world was a term that meant free for all to the to two powers.
I worked in oil, and now work in an industry where I sell parts worldwide. I'm not a trained economist, but deal with currency and transfer pricing with labor and goods.
Couple things: what a lot of people don't know or understand is that pretty much all transactions worldwide are intermediate by USD. Meaning, if a company in Sweden wants to buy something in Cameroon, the banks don't swap currency. They buy dollars with krona and then buy francs with the dollar.
This may seem "academic" on paper, but the world essentially has to deal with the dollar and the USA fed and its people with every transaction countries do! They're getting taxes each time they want to trade. Switzerland has purposely devalued its currency because the opposite happened: people were buying Swiss francs as a "safe" investment and not trading or circulating them. I digress ...
The only country I see that could actually disrupt the petro dollar is Russia. Russia is doing this on a small scale by forcing Europe to purchase energy in rubbles. Ghana? They may be seeing a three letter agency from the USA very soon ...
China? They do too much contract manufacturing for America, and no one wants yen or a currency from a dictatorship. Europe? Too much debt, and they would have to centralize spending (trying to do this with EU commission).
This is sad precisely because it's so true. I wish poor countries were free to make trades on terms that were more fair. But that's not the world we live in.
In any case, I applaud Ghana for trying.
I really do wish them luck, but I'd advise them to ready their internal security services. (I suspect there will be a lot of unrest there in the very near future.) And I'd also advise beefing up the quality of their healthcare facilities. Because I think they may see a rise in cancer diagnoses among leaders in their steward classes over the next few years.
Remind me in 60 days!
meanwhile in the real world https://www.tbsnews.net/world/china-more-democratic-america-...
Yen is Japanese currency; yuan is China's money.
Yeah this shows how little your credibility is. Idiotic meme that was never true
The fbi had plans to assassinate MLK, and the cia led how many revolutions.
It’s common knowledge to the unknowledgeable, which was my point about credibility. it’s a meme and that’s it.
https://www.reddit.com/r/neoliberal/comments/m9sll7/why_nati...
https://en.m.wikipedia.org/wiki/1954_Guatemalan_coup_d%27éta...
1) Please keep this site as a place for discussion and throw information rather than insults.
2) A three letter agency seems believable to me. Do you remember what happened in Libya 2011? It is believed this was in a large part due to their planned move to an afro dollar.
https://theecologist.org/2016/mar/14/why-qaddafi-had-go-afri...
I think your priorities are out of whack here. There’s lots of complaints about Us policy: that they overthrow nations to uphold the petrodollar is not one of them.
How about reading an actual analysis instead of continuing a meme that was never true
https://www.reddit.com/r/neoliberal/comments/m9sll7/why_nati...
I think it's really scary that the powers at be can destroy your 6 million person country overnight.
And, frankly, thats their bloody job.
No, it seems that Ghana is experiencing the classic forex problem of not being able to export enough valuable production in order to afford its imports, and it's very hard to reduce imports of fuel without drastic drops in either lifestyle or production capacity. And if you can't afford fuel to produce exports, then you have a death spiral.
Unfortunately, this story is not unique to Ghana and if the situation does not improve, I fear for how next year will look.
From what I understand, if you send US dollars around the world, they need to go through a US bank. All US banks must obey US government sanctions.
Now, if I were the Chinese with an overabundance of dollars (or worse, US Treasury bonds), I'd be trying to convert them into something else ASAP. They tried to buy companies, agricultural land and other things with intrinsic value, but were blocked by CFIUS and the EU is setting up its equivalent.
For them dollars earn much more being held rather than being invested in most other things within reach.
They can dig up more gold from their own mines which they're always doing anyway regardless of its prevailing price.
At some point, when push comes to shove, someone has to take delivery of something. This comes down to a matter of efficiency and faith. Who do you have more faith in? A random bank claiming to having a certain amount of gold on deposit? Your own central bank taking in tons of gold for delivery of a good?
This is silliness. If the USD is inflating too much (or if you perceive American sanctions as too onerous) then use a different currency like the Swiss Franc or the Euro.
None of this really matters. What matters is international settlements, agreements, and force. If you're on the wrong side of the WTO your economy is cooked anyway. Besides, if Ghana were some stalwart of anti-corruption then this may mean something, but it isn't. It's middle of the pack. Well behind Canada, Europe, Japan, and The United States; all countries or blocks that are perfectly fine selling and buying in USD.
In other words, they suddenly had granted themselves legitimacy to enforce US law anywhere on the planet as long as a single dollar changed hands.
As the US perceives itself as an empire, it makes complete sense from their POV.
But mayyybeeee, if you're in Ghana, you still cherish delusions of being a sovereign nation ...
But also if anyone tells you they know the future, they're probably trying to sell you something. If I were in charge of Ghana's finances, I'd be pretty cautious of standing in front of any windows for the next few years.
At least the half dozen "gold dinar" projects had a bit of global ambition and a theoretical rationale for the religion of much of the world's oil exporting economies to participate.
I always considered Brexit to be the end of the UK's involvement in the EU? Your source(s)?
Gold is fine for now and maybe in future some new agreed upon commodity-current basket currency.
It's also got way too shallow a gene pool (meaning too few hold too much).
Until it gets spread further and wider it can't be relied on for much.
You can spend bitcoin in every country, it's valuable everywhere.
All work isn’t equally valuable. Some work is worth nothing.
> It is impossible to generate more whenever you want.
Value and wealth do not only arise from scarcity.
Eventually Bitcoin or a similar style coin will be used for global trade
Executive summary: It’s stronger than ever.
(it's also increasing in the 3 last years)
2) just because it’s strong now doesn’t mean it cannot ever fail. Ray Dalio’s new book might interest you as he breaks down past world powers and how their currencies (which were global reserve currencies at the time) collapsed
Would they be trading in Gold for other exports?
that's if ghana is lucky and they don't try to liberate them from [insert lies] with bombing and boots on the ground.
But I hope the U.S doesn't do to Ghana what they did to Libya, the last country to try something along those lines: forment revolt and overthrow the government, then literally sack the country and leave with billions in gold bars, and say they gave the country freedom and democracy.
The US has been allowed by the rest of the world to use the dollar as a weapon since the end of WWII, specifically using it to impose unilateral economic sanctions on anyone they don't like, thereby flouting or downright ignoring other countries sovereignty in the process.
The have also used the privileged status of the dollar to gain systematic, unfair and generally undeserved economic advantage in international markets.
They have also used this advantage to create a completely unsustainable amount of debt which the US will never be able to repay now that the dollar is becoming just another currency.
Picasso was famous for writing checks, knowing fully well that they would never get cashed out because, bearing his signature, there was an intrinsic demand for them and the thing would be kept as is by the owner.
US dollars are very similar to Picasso's checks in the sense that foreign country all keep large amounts of US currency reserve and debt instrument, but they never "cash them out" (exchange them for US-based hard assets such as land and businesses).
The world has allowed this to happen for near 70-ish years because the for the longest time, the US was perceived by a large part of the world as a force for good.
That ship has sailed though, and in 2022 it's getting pretty hard to find folks outside of the US that view it as a force for good anymore (or just don't downright hate their guts with a passion).
To be a useful tool, a currency should be, among other things:
a) managed in a sane manner (as in: the amount issued should be on a fixed schedule, as per Milton Friedman)
b) not used to tilt the playing field
c) essentially politically neutral, and in particular managed by an entity not in any way controllable by the government.
Good riddance.
Yeah ideally, I agree that some competition might be good to keep US in check. Chinese Yuan seems most likely at this point.
But I think the world would be in a “worse” place when the break happens. Purely due to geopolitical instability and all the second order effects that is bound to happen when US hegemony ends.
If they manage it properly that is, as in: not print mountains of it, and not using it to enforce their political aims.
They're currently actively busy making the Renminbi reserve and default trading currency in much of Asia.
And, as a last resort, there's always Bitcoin and gold, although, as Ghana will discover (unless they make the mistake of using a 3rd-party custodian) gold is very tricky to move about.
Ah yes, the CCP, famously known for not enforcing political aims.
You also have Xi next month meeting Arab leaders in Saudi Arabia, a lot of people are expecting a PetroYuan announcement or at the very least the foundation of such an agreement. I think after those two events are handled and closed, China should be in an excellent position to become Asia's major energy hub. They can get Russian, Qatari, Central Asian stans and Saudi energy products without having to use Western financial institutions or services. I think the Russian and Arab leaders want a bigger share of the Chinese bonds and financial markets so they can grow their RMB reserves like they are already doing with their dollars.
Ghana going with gold for energy imports seems smart for now but yeah moving gold isn't easy, also verifying the gold is also not easy. That's why i think BRICS+, SCO and BRI nations will create a block chain with a digital currency(Central Banks digital Currency) backed by a basket of currencies and commodities to facilitate import and export and government to government financial transactions.
Look at how successful Putin was in demanding payment for Russian oil in Rubles. It has propped up the Ruble enormously and its predicted collapse hasn't occurred. In fact it has rallied.
I assure you that other nations have taken note and will take similar steps in the future. Other commodities may well be priced in local currencies of the producing nations. Think gold, diamond, gas, oil, timber, wheat.
The overall impact seems to be fading to zero relatively quickly, excepting a much stronger ruble. Future growth numbers will be interesting to follow. Much could shift radically one way or the other depending on oil prices, but the US seems to have a declining level of influence with OPEC+.
It's 3.9% (which rounds up to 4%, not to 3%) this year and 5.6% next year.
This forecast is based on figures kindly provided by Russian authorities, which in times of war have strong incentives to be creative.
I don't think there's much reason to trust Russian Central Bank which has strong incentives (read: orders) to enhance the numbers.
>I assure you that other nations have taken note and will take similar steps in the future.
Why would any country do that if they don't plan similar genocidal war?
Because not everybody likes to be controlled by the US?
So although it is possible that "we'll see the dominance of the USD erode in the next three decades", it is much less likely that "commodities [in general would] be priced in local currencies of the producing nations [following the example of Putin's Russia]". The problem with your prediction though is that it's boring - it's too easy to be true as phrased. For instance, if we see a new cold war divide into a China-focused world and a US-focused world, then the growth of whatever currency the China-focused world uses will necessarily result in decreased USD dominance. Or if not China, then India. Or who knows who. Or maybe the US will descend into civil war and someone else will pick up the mantle of world hegemon. Or the US will amicably divorce, and the Floridollar will dominate international trades.
So it's more likely that you'll be right for the wrong reason, than that you'll be right for the reasoning established in your post.
The problem Russia has is that it can't buy anything from the West no matter how much money it's willing to pay because of trade sanctions.
The sanctions will eventually be lifted since Russia will almost certainly demand this for stopping the war.
Iraq nets handsome profit by dumping dollar for euro (2003)
https://www.theguardian.com/business/2003/feb/16/iraq.theeur...
Sounds like South Sudan, which Indigo Traveller recently visited... tl'dr: it is a huge mess.
https://www.youtube.com/channel/UCXulruMI7BHj3kGyosNa0jA/vid...
And this likely one of several other reasons like ensuing oil/gas flowed to west. And his history of supporting terrorism. Wider arab spring and hope to remove dictatorships.