Below is our translation of another article by the brilliant Ivan Danilov from RIA Novosti with an introduction and notes [in brackets] by Vince Dhimos. What makes Danilov unique is that, though Russian, he scours and analyses the US financial press for news that is pertinent to the non-US-aligned East, ie, Russia and China and their friends and allies. His facts are American but his analyses are common-sensical and straightforward, unlike US state-controlled financial journalism.
“Henry Paulson, in his article, also in Foreign Affairs explained that, despite all the technical advantages, China does not have political and financial stability, and it does not have the reputation of a truly reliable financial centre that the United States has. In essence, this means that the reasons why many in Washington are convinced that the dollar will be the forever attractive (and de facto standard) world trade currency are purely psychological or image-related. That is, the United States has a reputation of a reliable financial centre, but China does not have it and, according to American financiers, it is unlikely to be such without ‘democratic reforms.’ “
This is hilarious. So this great American financial analyst claims that the US, with its constant wars with countries that are not a threat to the American people, wars that it never wins, with its sanctions even against allied countries, and with its economy based on the Fed’s issuance of unbacked dollars, and now with riots in the streets of its major cities, is a “truly reliable financial centre” while China, with a real economy backed by goods, services, a stable of top-notch professionals several times larger than that of the US, and with several times more STEM graduates and universities specialized in training them, and with a relatively unified stable society, is “unlikely to be a reliable financial centre” because it does not have a “democratic” system like that of the US, where citizens cannot agree on anything and are now on the streets in a pre-civil war situation beating each other up! (I explained here why the US cannot be even remotely be considered a democracy).
The US could have had a stable currency but it chose to weaponize the dollar instead.
China is preparing a killer for Bitcoin and a problem for the dollar
May 06, 2020
American analysts have suddenly realized that China has been preparing a technology that would become a killer for Bitcoin and a threat to the US dollar. And if investors are worried about the competition for the main world cryptocurrency unless they have invested in this exotic digital asset, then the future of the US dollar as the main currency of world trade immediately turns into a national security problem. But even before it comes to crowding out the dollar from its pedestal as the base currency for the international exchange of goods and services, the very fact of launching a financial instrument that is “invisible” to the United States and has great potential to be used as a means of ensuring trade is already becoming a direct threat to the geopolitical interests of Washington, which is afraid of being denied the opportunity to impose sanctions and spy on its opponents.
In a sense, the Chinese instrument for combating the dollar-based US financial superweapon reflects, like a drop of water, the ability of Beijing strategists to combine seemingly completely opposite things, such as an ancient form of money, and high technology, which is at the forefront of the development of cryptography, cybernetics and finance. The Central Bank of China (People’s Bank of China) has decided to cross the “banknote” (or “coin”) with cryptocurrency and untie the circulation of money from the banking system, closely linking it to direct state control.
Concerned experts at the American agency Bloomberg are discussing the specifics of this financial hybrid:
“Most of the money exchanged electronically is just loans and debits in accounts with different banks. Digital cash (that is, the so-called digital yuan of the Central Bank. – author’s note) In China is designed to be an electronic version of banknotes or coins: it simply lives in a digital wallet on a smartphone, and is not present in a physical wallet. The value (digital yuan. – author’s note) will be set by the state. But virtual money will be faster (circulating in the economy. – author’s note) and easier to use than paper, and will also give the Chinese authorities a degree of control that cannot be obtained with physical money. "
Critics of this innovation may point out that this, in fact, is a step backward into the past, ie, the Middle Ages or even Antiquity, when money had a material component, and was not (if very crudely) just a form of debt of various banking structures with which consumers and producers of goods or services exchange among themselves.
Proponents of this approach, however, will note that China is taking a step not into the past, but into the future, ridding itself of several problems at once. For example, there is no need to fear for the banking sector, because a payment system based on this kind of “digital banknote” (or “coin”) does not depend on the financial condition of banks, their credit rating and interaction among themselves; that is, the stability of the country’s basic level of the financial system rises sharply. No bank manager will be able to steal money, withdraw it somewhere or give it out for dubious loans. In this case, the state has full transparency of all payments almost in real time, as well as the ability to use the data to fine-tune the economy. And all this without the additional cost of servicing inconvenient paper or metal cash. And most importantly, there are no technical restrictions that would hinder the removal of this system from China. And here’s where the fun begins.
Bloomberg reporters cite assessments by scholars worried about the prospects for economic sanctions: "Aditi Kumar and Eric Rosenbach of the John F. Kennedy Harvard School of Management in a May issue of Foreign Affairs magazine claim that the digital version of the renminbi (the Chinese virtual currency is officially known by this name [it is also known as the e-RMB or virtual yuan]) may ultimately allow Iran and other countries to more easily avoid US sanctions or transfer money without being discovered by the United States government, because at some point it may become possible to transfer digital currency across borders without going through dollar-based international payment systems."
At the same time, we must pay tribute to the Washington political and financial establishment – they took very seriously the threat of the digital renminbi, that is, a digital form of payment, for access to which, by and large, just a (probably, Chinese) smartphone is enough. The problem is that, having examined this threat, they came to the conclusion that the dollar is, in general, not in danger, despite the obvious advantages of the digital renminbi.
The best argument in support of the perpetual hegemony of the dollar came from the pen of the former US Treasury Secretary under Obama. Henry Paulson, in his article, also in Foreign Affairs explained that, despite all the technical advantages, China does not have political and financial stability, and it does not have the reputation of a truly reliable financial centre that the United States has. In essence, this means that the reasons why many in Washington are convinced that the dollar will be the forever attractive (and de facto standard) world trade currency are purely psychological or image-related. That is, the United States has a reputation of a reliable financial centre, but China does not have it and, according to American financiers, it is unlikely to be such without "democratic reforms."
Accordingly, in this picture of the world, the future of the dollar depends solely on the American ability to maintain, strengthen, and invest profits from its privileged position in the global financial system in its own economy. The drawbacks of this logic are that for a week now, on every television screen and monitor of the planet, surprised earthlings have been watching dozens of American cities burn, with police kneeling before marauders (advocating social and racial justice), and the US president arguing with high army ranks about whether he can send troops to suppress riots. It is difficult to come up with a more effective advertising campaign in favour of the digital renminbi, and we will definitely see the results.
Syria responds to offer to ease sanctions after US mocks economic crisis
By News Desk 2020-06-09
BEIRUT, LEBANON (6:30 P.M.) – Syria criticized the statements of the American envoy, James Jeffrey, about the current situation in Syria, stressing that it affirms that the United States is looking at the region with “Israeli eyes”, and it also represents a recognition by Washington of its responsibility for the suffering of the Syrian people.
An official source in the Syrian Ministry of Foreign Affairs told state-owned SANA, “The intensification of sanctions is the other side of the declared war on Syria after the aggressive project staggered in the face of successive defeats of its tools from terrorist groups,” according to the Syrian News Agency.”
The source said, “These statements confirm once again that the United States is looking at the region with Israeli eyes, because the demands that Jeffrey talks about are old and renewed Israeli demands to impose their control on the region.”
He continued: “This American policy, which constitutes a flagrant violation of the most basic human rights and international humanitarian law, will fail again in the face of the Syrians insistence to adhere to the sovereignty of their homeland and the independence of their political and economic options.”
The U.S. envoy to Syria, James Jeffrey, said in a video interview with a number of Syrians abroad two days ago that the U.S. sanctions against Damascus “contributed to the collapse of the value of the Syrian pound” and that “the Syrian regime is no longer able to manage an effective economic policy, or launder money from Lebanese banks, due to the economic crisis that is also affecting Lebanon. ”
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He added that “the U.S. Congress stood behind (Caesar’s law), and that the sanctions covered by the law to protect Syrian civilians, will automatically affect any economic activity, as well as any dealings with the Iranian regime.”
The U.S. administration recently approved the “Caesar Law” which comes into effect this month.
The Caesar Law, in addition to the Syrian government, targets all individuals and companies who provide funding or assistance to Syria, as well as a number of Syrian industries, including those related to infrastructure, military maintenance, and energy production.
In this context, Jeffrey indicated that his country had presented Syrian President Bashar al-Assad with a way out of this crisis, and that if he was “interested in his people, he would accept the offer. Washington wants to see a political process and it may not lead to a regime change.”
Kuwaiti newspaper Al-Qabas revealed Jeffrey’s offer, noting that “it requires going to a political solution to implement Security Council Resolution 2254 and the decision, and Completion of a new constitution and holding elections under U.N. supervision after achieving a safe and neutral environment and acceptance of international decisions,” stressing that Washington’s offer is Assad’s commitment to the “Geneva 1” statement, which he says is not possible to stay in power.