Long Game Alert:

 

Toppling the dollar as reserve currency risks harmful fragmentation

"Rather than paying debts to the enemy, today’s standard response is to paralyse the aggressor’s economy — even if you are not involved in the fighting."

"Freezing the Central Bank of Russia’s reserves was a particularly unexpected, ruthless and effective act. It stripped away Moscow’s means to stabilise its currency. The ruble duly collapsed. But the use of so powerful a sanction has raised fears of unintended consequences for the international financial system. If your dollar-based central bank reserves can be frozen when you need them most, then what is the use in holding them?"

(There are leaders the world over thinking the very same thing)

"But while the freeze on Russia will spur on those who would like to supply an alternative — most notably China, via internationalisation of its currency, the renminbi — they are unlikely to supplant the dollar. The greater threat is of fragmentation in a financial system that, while imperfect, allows all to prosper together."

(I'm sorry, I'm over here just shaking my head, two things: 1)Who is it Putin met with in early Feb again? and 2) "The greater threat is of fragmentation in a financial system that, while imperfect, allows all to prosper together." Not sure about you, but a system in which 2/3rds of your country is living pay check to pay check isn't exactly prospering together")

"Zoltan Pozsar of Credit Suisse argues that the central bank freeze marks the death of the post-Bretton Woods system, born after Richard Nixon took the US off the gold standard in 1971, and the start of a new monetary order “centred around commodity-based currencies in the east”. If your dollars can vanish at the whim of the issuer, the logic runs, then a reserve must exist outside the dollar-based financial system."

( "If your dollars can vanish at the whim of the issuer, the logic runs, then a reserve must exist outside the dollar-based financial system." I 100% agree with the logic, and besides, Revelation 16:12.)

"China’s $3.2tn in foreign currency reserves, the largest stockpile in the world, suddenly look more like a weakness than a strength. Only by becoming an issuer rather than a holder of reserves can Beijing wrest some of America’s financial power for itself."

( Who did Putin meet with in early Feb again? What do you really think is going to happen?)

"The might of the world’s pre-eminent economic and military power ensures that US Treasury bonds are stable in a crisis; the US Federal Reserve ensures they are liquid"

(Don't hold your breath on the first highlighted statement and the second one gets undone when interest rates hit 4.5%)

"The risk, then, is of fragmentation. In his book, Mulder charts how the rise of economic sanctions and blockade during the interwar years, as a tool to enforce peace, drove the autarkic policies of Nazi Germany and Imperial Japan, ultimately destabilising the international system rather than fortifying it. The world has been drifting for several years towards the formation of rival economic blocs. One way to prevent that is to keep the dollar at the heart of the international financial system."

("The world has been drifting for several years towards the formation of rival economic blocs."  Ever since the Financial crisis as many have pointed out. "One way to prevent that is to keep the dollar at the heart of the international financial system.", which is why this conflict is about so much more than Ukraine.)

I love you baby.

So much.