More and more top economists predict the end of dollar dominance
In the following is our translation of an analysis from RIA Novosti, based solely on data from US financial news sources, with commentary and notes [in brackets] by Vince Dhimos. Author Ivan Danilov points out that the standard fare in US financial and economic reporting has been to point out that, while the Fed had printed trillions of unbacked dollars at the time of the 2008-9 Great Recession, the USD pulled through just fine, so not to worry. However, Danilov reminds us there was no pandemic at that time threatening the US economy – which has so far lost about one-third of its size and has shed the last 5 years of economic growth just this year alone. With plenty of room for more loss. The upshot is that more and more prominent economists are piling on with the prediction that the dollar may well lose its status as the dominant world reserve currency. That didn’t happen after the QE’s of the Great Recession.
Our previous articles on this subject:
We have also been writing since 2017 about the efforts of non-US-aligned countries to de-dollarize world trade:
Now that Trump has gone off the deep edge with sanctions on just about everyone, including old faithful allies, there are many countries that have been seething for revenge, looking forward to what is happening right now to the USD. No matter what happens, if the dollar crashes, it will be a bitter-sweet experience for us all.
"Vampire Squid" Sounds the Alarm: The Dollar Will Be Dismissed As World Currency
A major American bank, known for its political influence and the fact that dozens of high-ranking officials around the world are its former employees, has issued a shocking statement: the dollar's status as the world's main currency may come to an end.
Goldman Sachs is a well-known structure in financial circles that manages a trillion dollars in assets, is highly respected on Wall Street, conveys its ex-employees to high positions in the US Treasury by the conveyor belt method, and also has a dubious distinction, a corporate nickname, the “Vampire squid,” a label applied with the light hand of investigative journalist Matt Taibbi after the 2008 crisis. "The first thing you need to know about Goldman Sachs is that it is everywhere. The world's most powerful investment bank is a huge vampire squid wrapped around the face of humanity, mercilessly squeezing its bloody beak into anything that smells of money," he wrote in an extensive investigation published in The Rolling Stone magazine in 2010. And since then, it is this description that has haunted the reputable American financial structure.
For the above reasons, when the "Vampire Squid" comes out with some kind of public position, especially in those cases when his assessment is very different from the ideas of the mainstream media class about what is possible, you have to listen to this position.
The American bank's criticism of the dollar's prospects as a world currency is doubly surprising because even global financial structures "registered" in the United States have a specific, but very noticeable patriotism, which they periodically back up with generous donations to future senators and congressmen. In a sense, Goldman Sachs is America, and to be more precise, it is modern America that has moved away from the machine and is deeply involved in financial manipulation. Once the symbol of the United States was not a bank, but the industrial corporation General Motors, of which Secretary of Defence Wilson said: "What's good for General Motors is good for America." Now the symbol for the United States is not a production company, but an investment bank that periodically paints its logo in minority colours, has a reputation as a deeply immoral but influential structure and is now very worried about the future of the American currency, whose problems will seriously affect prospects for America as a whole.
US financial information agency Bloomberg restates analysts' fears at the reputable bank: “Goldman Sachs Group Inc. took note of suddenly heightened concerns about US inflation by issuing a bold warning Tuesday that the dollar was at risk of losing its status as the world's reserve currency.
As Congress moves closer to yet another round of fiscal stimulus to prop up the pandemic-ravaged economy, and the Federal Reserve has already increased its balance sheet by about $2.8 trillion this year, Goldman strategists warned that US policy raises "currency depreciation fears." which could end the dollar's dominance as the dominant force in the world's foreign exchange markets."
We must pay tribute to the analysts of Goldman Sachs: back in the spring, when the printing press of the US Federal Reserve was just beginning to work overtime to support the financial markets and the US budget in an epidemic, and Congress and the Senate reflected on the size of budgetary injections into the economy and the accompanying increase in the deficit, the bank held special meetings with its clients urging them to exchange dollars for gold (or even Bitcoins) based on the risk of impending inflation. Now the bank has decided to bring the same problem to the widest possible audience, and it has done well – almost all the world's leading media have written about the dollar's likely loss of its status as the world's main currency.
Of course, it should be borne in mind that (as the same Bloomberg and other media commentators rightly note), “in most financial circles, this point of view is still a minority – and Goldman analysts do not say they believe this (depriving the dollar of the status of the world reserve currency. - Author's note) will definitely happen."
A typical position of this nature is that the US dollar "is not even close to losing its reserve currency status, given the depth of capital markets and the overwhelming volume of global transactions that take place in US dollars," Michael Krupkin, head of foreign exchange, in North and South America of British bank Barclays, told Bloomberg.
The problem is that when the majority of the American analytical community starts to adhere to this position, it will be too late. In the sense that the process of dismantling the world system based on the dominance of the American currency will either be completed or have already passed the point of no return.
Another argument in favour of the fact that the dollar system will outlast all its critics is the fact that it was able to survive the last "bout" of unrestrained money-printing performed by the Fed in 2008-2009. The problem with this argument is that the intensity of the printing press is nowhere near what happened during the last crisis and that in 2008-2009, the United States was the undisputed leader of the unipolar world. [Yes, and the pandemic is not nearly over. The Fed will likely be printing up trillions and trillions more before it is all said and done. And meanwhile, now that the government has stopped boosting the unemployment payments, the economy will slide even farther as people tighten their belts and spend even less. Some economists are also saying the trade war with China is causing investors to lose confidence in the US dollar. The time has come to stop worrying about China and look in the mirror]
This time around, the situation looks completely different: American cities are on fire, both leading parties are talking about the likelihood of non-recognition of the results of the next presidential election and a possible civil war, and there is no longer a unipolar world – and the only question is what form Cold War 2.0, already started between the United States and China, will take ...
The wise and well-informed "Vampire Squid" is sounding the alarm for a reason, trying to appeal to budget discipline and protection of the system that has given the United States colossal privileges over the past 50 years. The warning of an influential bank will surely be heard, only now there are serious doubts that American politicians are capable of taking those unpopular steps that will require the preservation of the dollar as the main world currency.