The supremacy of the dollar is under threat as it has never been before.
Since emerging as the world’s foremost superpower after World War ii, the United States and its powerful dollar has been able to dictate the global economy. Today, the U.S. economy is experiencing record-breaking numbers and record low levels of unemployment.
At least 50 percent of all international trade invoices are in dollars. Two thirds of foreign-exchange reserves are in U.S. dollars, as it is the preferred currency of capital markets and central banks.
The global economy is dependent on the fluctuations on Wall Street; perceptions of American foreign policy directly impact the world’s financial appetites. America is the heart of the global economy. Its life is sustained by the U.S. dollar.
America also has strong control of the Belgian-based swift, the cross-border banking messaging system used by over 200 countries and territories worldwide in international trade. swift’s decision to follow American instructions means the U.S. can instantaneously isolate and cripple a nation by denying it access.
The U.S. flexed its financial muscles following the 9/11 terrorist attacks, Russia’s annexation of Crimea, and France’s bnp Paribas’ legal issues in 2014. But President Donald Trump has taken the use of sanctions to a new level.
According to law firm Gibson Dunn, in 2018, a record 700 individuals, entities or companies were placed under sanctions, a 50 percent increase on 2017, the previous record year. As a result, according to the Economist, “Its rivals and allies are both looking at other options,” or alternatives, to the dollar, as its aggressive use of sanctions endangers its reign.
In 2018, the U.S. banned Iran from swift and banned companies and governments from doing business with Iran. Iranian oil exports fell by over 1.5 million barrels in just under nine months.
European companies found doing business with Iran similarly found themselves locked out of swift, U.S. markets and the global economy as a whole. Such is the financial might of the U.S., that any opposition to its directive can be debilitating to a company or even a country.
That was the threat leveled at Swiss-Dutch engineering company Allseas, which was constructing the Nord Stream 2 gas pipeline project. We wrote on December 24, “With the stroke of a pen, United States President Donald Trump shut down the most significant energy project in the world.”
President Trump has also used sanctions to choke the economies of North Korea, Russia, Turkey and Venezuela. The much-publicized trade war with China has seen an assault on Chinese phone company Huawei, accused of spying on behalf of Beijing. Additionally, Russia has been under sanctions, according to the Treasury Department, for “continuing to occupy Crimea and instigate violence in eastern Ukraine, supplying the Assad regime with material and weaponry as they bomb their own civilians, attempting to subvert Western democracies, and malicious cyber activities.”
As we have written at the Trumpet, the U.S. is currently experiencing a resurgence, one that has seen its economic power grow under a president who does not hesitate to use it, especially against nations engaging in unlawful activities and practices. But according to the Economist (emphasis added):
Other countries view it as an abuse of power. That includes adversaries such as China and Russia; Russia’s president, Vladimir Putin, talks of the dollar being used as a “political weapon.” And it includes allies, such as Britain and France, who worry that Mr. Trump risks undermining America’s role as guarantor of orderliness in global commerce. It may eventually lead to the demise of America’s financial hegemony, as other countries seek to dethrone its mighty currency.
Consequently, Russia is de-dollarizing its currency and its debt. As the U.S. maintains power through the dollar being the world’s foremost reserve currency, Russia has cut its dollar share of foreign currency reserves from 40 percent to 24 percent since 2013. Its central bank has also reduced its American Treasury debt by 90 percent since 2018. In addition, Russia’s trade with China was, in 2013, almost exclusively done in dollars. Today, it is less than half.
China itself is looking to bypass the dollar’s dominance and has established the cips system, which is its own version of swift. The Economist reports that it is looking to run a swift alternative with its regional and trade partners. It is even looking to establish a common cryptocurrency with other brics countries (Brazil, Russia, India, China and South Africa).
America’s allies are also seeking an alternative to the dollar. Former President of the European Commission Jean-Claude Juncker called the dollar’s dominance an “aberration”; the current president has emphasized the desire to “strengthen the international role of the euro.”
The commission is therefore “working on a new action plan, part of which involves encouraging European Union countries to eliminate ‘undue reference’ to the dollar in payments and trade invoicing.”
Robert Malley, president of the International Crisis Group, wrote, “If U.S. dominance over global markets means control over swaths of European foreign policy, the challenge for Europe is to find effective ways to circumvent the current financial system and establish one that is immune from America’s long arm.”
America’s allies, led by France and Germany, desire to operate beyond the scope and wrath of the American economy and even created Instex, a clearing house, for this very purpose. Several EU member states plan on joining the Instex initiative.
America’s temporary resurgence and its confident use of sanctions, along with other nations’ eagerness to escape the dollar, are creating the ideal conditions for an economic conflict and the prophesied death of the greenback, which will plunge the U.S. into a financial crisis.
Herbert W. Armstrong, founder of the Plain Truth magazine, predecessor to the Trumpet, warned in 1968, “If the dollar is devalued, inflation will almost surely result, and eventual economic collapse for the United States.” Trumpet writer Richard Palmer wrote in “Europe Lays the Groundwork for Trade War”:
Herbert W. Armstrong warned for years that America would face economic attack, and that nations around the world would work together to undermine America economically. He based this forecast on some of the most basic biblical prophecies about Britain and America, the two most prominent end-time descendants of two of the tribes of ancient Israel. Deuteronomy 28 and Leviticus 26 prophesy that these nations will be besieged and cut off from the world’s economic system. Isaiah 23 identifies some of the powers involved in this anti-American economic alliance, including Europe, China and Japan.
The recent signing of a U.S.-China trade agreement has many believing the worst is behind us. But in fact, the preparations for the real, prophesied trade war are being fulfilled before our very eyes. To learn more about this coming trade war, read “America Is Being Besieged Economically,” by Trumpet editor in chief Gerald Flurry.