down goldIs the petrodollar monopoly about to be shattered?   When U.S. politicians started slapping economic sanctions on Russia, they probably never even imagined that there might be serious consequences for the United States.
But now the Russian media is reporting that the Russian Ministry of Finance is getting ready to pull the trigger on a “de-dollarization” plan.
The fact that the Russian government has held a meeting to discuss “getting rid of the US dollar in Russian export operations” should be front page news on every mainstream news website in the United States.  That is how big this is.
If Russia starts asking for payment in currencies other than the U.S. dollar, that will essentially end the monopoly of the petrodollar.
Is Putin on the verge of dealing the US dollar a death blow? 

 

SDWC

 

From The Economic Collapse Blog:

For decades, virtually all oil and natural gas around the world has been bought and sold for U.S. dollars.  As I will explain below, this has been a massive advantage for the U.S. economy.  In recent years, there have been rumblings by nations such as Russia and China about the need to change to a new system, but nobody has really had a big reason to upset the status quo.  However, that has now changed.  The struggle over Ukraine has caused Russia to completely reevaluate the financial relationship that it has with the United States.  If it starts trading a lot of oil and natural gas for currencies other than the U.S. dollar, that will be a massive blow for the petrodollar, and it could end up dramatically changing the global economic landscape.

The fact that the Russian government has held a meeting to discuss “getting rid of the US dollar in Russian export operations” should be front page news on every mainstream news website in the United States.  That is how big this is.  But instead, we have heard nothing from the big mainstream news networks about this so far.  Instead, we have only heard about this from Russian news sources such as the Voice of Russia

Russian press reports that the country’s Ministry of Finance is ready to greenlight a plan to radically increase the role of the Russian ruble in export operations while reducing the share of dollar-denominated transactions. Governmental sources believe that the Russian banking sector is “ready to handle the increased number of ruble-denominated transactions”.

According to the Prime news agency, on April 24th the government organized a special meeting dedicated to finding a solution for getting rid of the US dollar in Russian export operations. Top level experts from the energy sector, banks and governmental agencies were summoned and a number of measures were proposed as a response for American sanctions against Russia.

The “de-dollarization meeting” was chaired by First Deputy Prime Minister of the Russian Federation Igor Shuvalov, proving that Moscow is very serious in its intention to stop using the dollar.

So will Russia go through with this?

After all, this wouldn’t just be a slap in the face.  This would essentially be like slamming an economic fist into our nose.

You see, Russia is not just a small player when it comes to trading oil and natural gas.  The truth is that Russia is the largest exporter of natural gas and the second largest exporter of oil in the world.

If Russia starts asking for payment in currencies other than the U.S. dollar, that will essentially end the monopoly of the petrodollar.

In order to do this, Russia will need trading partners willing to go along.  In the article quoted above, the Voice of Russia listed Iran and Chinaas two nations that would potentially be willing to make the switch…

Of course, the success of Moscow’s campaign to switch its trading to rubles or other regional currencies will depend on the willingness of its trading partners to get rid of the dollar. Sources cited by Politonline.ru mentioned two countries who would be willing to support Russia: Iran and China. Given that Vladimir Putin will visit Beijing on May 20, it can be speculated that the gas and oil contracts that are going to be signed between Russia and China will be denominated in rubles and yuan, not dollars.

 

 

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And the reality of the matter is that China has seemed ready to move away from the U.S. dollar for quite some time.  In a previous article, I included a quote from a French news source that discussed how China’s official news agency has even called for a “new international reserve currency… to replace the dominant US dollar”…

For decades the US has benefited to the tune of trillions of dollars-worth of free credit from the greenback’s role as the default global reserve unit.

But as the global economy trembled before the prospect of a US default last month, only averted when Washington reached a deal to raise its debt ceiling, China’s official Xinhua news agency called for a “de-Americanised” world.

It also urged the creation of a “new international reserve currency… to replace the dominant US dollar”.

For much more on what China is thinking, please see my previous article entitled “9 Signs That China Is Making A Move Against The U.S. Dollar“.

So why is the petrodollar so important?

Well, it creates a tremendous amount of demand for the U.S. dollar all over the globe.  Since everyone has needed it to trade with one another, that has created an endless global appetite for the currency.  That has kept the value of the dollar artificially high, and it has enabled us to import trillions of dollars of super cheap products from other countries.  If other nations stopped using the dollar to trade with one another, the value of the dollar would plummet dramatically and we would have to pay much, much more for the trinkets that we buy at the dollar store and Wal-Mart.

In addition, since the U.S. dollar is essentially the de facto global currency, this has also increased demand for our debt.  Major exporting nations such as China and Saudi Arabia end up with giant piles of our dollars.  Instead of just letting them sit there and do nothing, those nations often reinvest their dollars into securities that can rapidly be changed back into dollars if needed.  One of the most popular ways to do this has been to invest those dollars in U.S. Treasuries.  This has driven down interest rates on U.S. debt over the years and has enabled the U.S. government to borrow trillions upon trillions of dollars for next to nothing.

But if the rest of the world starts moving away from the U.S. dollar, all of this could change.

In order for our current standard of living to continue, it is absolutely imperative that everyone else around the globe continues to use our currency.

So if Russia really does pull the trigger on a “de-dollarization” strategy, that would be huge – especially if the rest of the planet started following their lead.

The U.S. economy is already teetering on the brink of another major downturn, and there are a whole host of indications that big trouble is on the horizon.  For much more on this, please see the article that I posted on Monday entitled “If Economic Cycle Theorists Are Correct, 2015 To 2020 Will Be Pure Hell For The United States“.

Just about the last thing that we need right now is for our petrodollar monopoly to be threatened.

It would be nice if things would calm down in Ukraine and the relationship between the United States and Russia could go back to normal.

Sadly, that does not appear likely any time soon.

In fact, the Ukrainian government has already admitted that “we are essentially at war“, and on Tuesday six Ukrainian soldiers were killedand eight were wounded in a convoy attack in eastern Ukraine.

The regions in eastern Ukraine that have just declared independence have given the government in Kiev until Wednesday to pull their forces out of eastern Ukraine or else face war.

If a full blown civil war does erupt in Ukraine, it is going to take this crisis to a completely new level.

Unfortunately, most Americans are incredibly apathetic at this point and know very little about what is going on.

But in the end, this could have dramatic implications for all of us.

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    • When I watched that clip, I smiled. I watched that live. None other than Howard Cosell called that fight.
      Damn, now I feel old for knowing that.
       
      For my money the single greatest round in boxing was Gatti vs Ward 1. Round nine.

    • @SilverDollar
      “…None other than Howard Cosell called that fight.  Damn, now I feel old for knowing that.”

      This is Howard Cosell sayin’ “Drive a Datsun!  Then Decide!”
       
      …feel better now????   ;)

    • As much as we all loved to hate old “worst rug on the planet” this one is surely in the top 5 of the best calls of all time in the world of sports…
      … speaking of calls, where are all the “Jackass” doubters on his call that Russia was about to dump the dollar, and that the days of the Petrodollar were numbered? 

    • When the transition finally comes and the ‘switch’ is thrown, it will be a very rapid process.  The ‘switch’ will turn off dollar acceptance.  The acceptance of non-dollar payments has already begun and, internally, Russia is capable and ready for the transition.  And the transition period itself will be a function of how long it takes the non-domestic purchasers to rotate themselves into the acceptable forms of payment and out of the dollar.  Again, that process is actually well along at this point. In the meantime, each rotation out of dollar settlement will result in orphaned dollars arriving on the Federal Reserve’s doorstep, trickling at first, increasing, and then flooding… Yellen better have a kapok good life preserver because there will come a time when all her BS becomes waterlogged.
       
      The key to calling the progress of the transition will be to watch the Forex for signs of increased dollar distribution.  We haven’t seen it yet to any measurable degree because the Federal Reserve has been buying dollars with shenanigans like fronting the Belgian treasury purchases with swaps which, so far, are masking the increase pressure on the dollar.

      That game will not work for very long.

      Also, in late news it appears Gazprombank is pulling their money out of Brussells and Luxembourg. Published reason: To protect customers from frozen funds due to western sanctions… but very consistent with a payment changeover… Hmmmm…..

      http://rt.com/business/158592-gazprombank-transfer-sanctions-europe/

    • I hear that, Sov. “E”!
      If we just watch the MSM, it will be months or maybe a bit longer. 
      If we stay on SD, we will know when each domino falls into the next!

    • SDR’s are the currency of the IMF and they are beginning the distribution of the first of, I think it’s $3Billion now…  Ukraine’s gonna pay off some of the Gazprom bill and the rest will disappear down the cracks of corruption.  Supposedly, they were going to buy gold with a portion of those IMF proceeds, but I wouldn’t hold my breath that this story has any truth to it….  even as Russia may demand payment in gold or roubles or yen before too long…

  1. The author makes it sound like the Ukraine situation is just sort of coincidental with the US$. Does it seem like to anyone else that Putin is working on Ukraine precisely because he has some leverage with respect to the US$. The Ukraine situation won’t just die down because he doesn’t yet need it to.

  2. Sovereign Economist
     Kapok life preserver?  I haven’t heard the word kapok for about 50 years
    They’re now called PFD, or personal floatation devices
    In the case of Yellen,  throw her a PFD—aka Putin F**** the  Dollar
    Throw one of those  to the Chairfellen
     watch her get waterflogged PDQ

  3. Nice coin you have there, Mars.  yes it contains 1 kg. of silver, I believe.  That coin is real silver, with no tungsten or molybdenum core.  The Russian people are too smart to even consider making something fake, with a representation of Putin on it.  They know better.
    Translation:
    (Above the stars):  Vladimir Vladimirovich Putin
    (Below the stars):  President of the Russian Federation

  4. Does no one here see the forest for the trees?
     
    This is nothing but a made for TV “movie” to keep the populace alarmed. If there is a “war” you can be sure that it will be a joke that will go on forever. Both sides (all sides) will profit commensurately….just wait and see. This is just to keep us deterred and follow the red bouncing ball of information-by-design.
     
    “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by an endless series of hobgoblins, most of them imaginary”  ~ H L Mencken

    • “De-Dollarization” will be reported (in a most lame manner) by the MSM as part of the upcoming False Flag. 
      If reported at all. 
      The only side that will NOT Profit will be the US Population. Not “all sides”. Close, and you still get the cigar :D

    • @TheRedPill
      “…This is nothing but a made for TV “movie”
      What, precisely, is the “This” you are referring to in your statement here?  This thread has touched on a few issues, some perhaps more ‘theatrical’ in nature than others, but your reference leaves me unclear as to which element you are referring to…

  5. East / West paradigm , media beat-up aside, this would have to be one of the biggest beta tests ever.
    The enemy tosses the FRNs aside, accepts only gold for gas bill ( although SDRs may be offered ( proxy FRNs ) and lets all stand back and watch, wait, and see what happens.
    Russia is a good candidate for this, no?

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