Analysis: As sanctions 'weaponize' U.S. dollar, some Treasury buyers could fall back

Biden and Yellen stated they would not weaponize the USD. Then they did.
https://www.reuters.com/business/fi...e-treasury-buyers-could-fall-back-2022-03-29/

March 29 (Reuters) - U.S. sanctions against Russia should hasten a move by some countries to reduce their reliance on the U.S. dollar, which could also soften demand for Treasuries just as the Federal Reserve, the largest holder of U.S. debt, looks to cut its bond holdings.

“The more we use it, the more other countries are going to diversify due to geopolitical reasons,” said Zongyuan Zoe Liu, a fellow for international political economy at the Council on Foreign Relations.

 

https://www.foxbusiness.com/markets/biden-yellen-us-dollar-strategy

Biden, Yellen not planning to weaponize US dollar for trade power

 

The dollar is not looking like a safe investment anymore.

 

I take it that means you will be getting rid of all of yours?

 

Globalization will occur regardless of our participation.
I think we need to participate, as it's hard to score if you aren't in the game.
It's not a matter of accepting or not, it's a matter of being in the game or left in the dust.
And it doesn't mean we have to acquiesce to everyone else, but work together, as a world wide effort. We can't afford to sit on the sidelines.

 

The article is not about globalization. It's about weaponizing the USD. This makes the USD unsafe to own.

 

You're very welcomed.

 

I see sanctions and such actions as part of globalization. If the US sanctions another country, they will naturally look for other means to accomplish their goals or acquire goods. To me, they are intertwined, along with the dollar, yen, euro and a million other things.

 

Main problem with the dollar losing its power is the amount of US dollars outside of this country made it easier for banks inside the country to loan money to middleclass people for house loans, truck loans, business loans, etc... It also allowed our government to go into the negative ( which we do every single year) with out much fear. As our dollar loses its power, so does the ability for our banks to loan to middle class families. To allow our government to go over deficits with out dire consequences. Our country needs a strong dollar.

 

Biden and Yellen understood the negative response that would happen if owners of USD were sanctioned and said they would never "weaponize" the dollar. Now we are seeing Russia and SA accepting other countries currency for oil and gas. The USD is slowly being pushed out as the world reserve currency. Those dollars will come back to the US creating uncontrollable inflation.

 

I'm turning a lot of mine into hard assets.

 

When countries trade their dollars in for other currency the dollars will come back to the US creating uncontrollable inflation.

 

We, as a country, have been doing sanctions a hell of a lot longer than Biden and Yellin has been in office. Trump did it. Obama did it. Bush did it, Clintion did it. and so foth. In fact, sanctions have been in use since 1990. But since Trump and the 21st century, they have been used more commonly, affecting more and more countries even with the target sitll being Russia, Iran, Myramar, and PRC now. So, countries are seeing their own alternative. Brazil is now going to trade with China in its own currency instead of US dollars. China is trying to replace the US Dollar as the global currency and this is a wake-up call for the US to be more in tune with our international neighbors and their concern. Most of our neighbors, even our allies, do not want to get involved with our politics or our political grievances. To them, we are just babies, fighting or scraps of food like little children. And that is how they see our politics today.

But what it also means is the US needs to start redeveloping our allies and alliances again like we used to in the 1980s and 1990s. We do have a strong alliance with Japan-South Korean-Taiwain in the South China Sea, but that too needs to be expanded to Cambodia, Thailand, Vietnam, New Zealand, the Philippines, and Australia. We are now starting to have access to Philippine bases that are nearest to the South China Sea, but we also need to cultivate alliances, which means going against the Trump doctrine of "we can do it alone" mentality or "we don't care mentality" either.

And then we have our current financial crisis. If you want the dollar to still be number one, then changes need to be made to assure our international partners in economics that our financial system is the safest in the world and will not be used for political purposes. But neither the Democrats nor the Republicans will agree to this, and hence why we have the problem still.

 

that is not what is going to happen. Trade will be reduced, especially with "safe" trading partners like Brazil for instance. They will tend to forgo trade with us to trade with China. And this is the next step in Trump's trade war that he started.

 

It will happen because the dollar is no longer a secure investment thanks to Biden and company weaponizing it. No one wants to hold crap.

 

No worries, our leaders will do it for you/us It will not be yours of my choice..

Are you prepared?

 

I feel sorry for those that do not understand the ramifications of the oncoming war on the U.S. dollar

 

Just because we did it before, doesn't mean it's not having consequences right now. And no, it's not the typical debt ceiling thing that's causing these other nations to move away from the dollar. We haven't had a budget in over 15 years!

https://www.cwla.org/2023-budget-likely-delayed/ It would be funny if it weren't our nation but between inflation, credit card debt, student loan debt, etc a lot of issues have basically tied up US money and therefore actually have an artificial deflation of the US dollar. It should be much stronger, if not for several of these factors.

And then on top of the domestic issues here at home pertaining to our dollar, we entered into the European quagmire, and Russo-China-Iran, who already were tying close together decided to throw away all pretense and have greatly accelerated the situation. Biden will get his war against the autocracies that he wishes for, with our soldiers as the ginny pig.

Our financial system was the safest in the world, because our country was the safest. But in the global 'battle for democracy', there's a lot less safety in war. Votes have consequences. 2024, our opportunity to exit ramp left from this shitshow.

 

You see sanctions as part of globalization?

That's not making a great case of globalization.

 

Not to Biden, but to banks with less than $250 million in assets, who no longer have to do the stress test, the overuse of sanctions as a political winner, and finally, the lack of true, honest diplomacy that has been lost since the Trump administration especially with the Trump trade war.

 

We had a "war" before with the very same argument when the Euro came into being and started to replace the US dollar as the predominant currency in places like Italy, greece, France, and a few other countries. Now it is the Euro. And even they are weary of our trade wars and political childish behavior.

 

Our dollar has devalued since the 1980s. If you look at this graph, it has been going on since the 1980s. It rises and falls, Currently, from 2021 to 2022, it fell. And in the graph, the biggest decline was in the 1980s, when we had a recession, dropping interest rates since 1983, and a strong economy. But the world has become more competitive, especially since the fall of the Berlin Wall.

But the financial system has had its strain, mostly because the FED is not allowed, or pressured to not perform its duties for political fear. Congress is not much help either. Remember, we had near zero interest rates and yet the dollar still fell during the Trump administration. So, you really can't blame this on one administration or another, now can you?

 

Yes, I didn't say it was a good part.
Globalization, to me, is the action of the globe intertwining, which will eventually lead to world wide governance. I think it is inevitable that it will happen, and the more we keep that in mind and plan accordingly, the better.
Let me add, it will take a looooooooooooooooooong time, and we are in an infant stage. Learning to cooperate for common goals across the planet is very difficult, and there will be many ups and downs, but sanctions are part of the process of learning to work together. For example, part of the sanctions with China stem from trade disputes, which is really just part of a negotiating process, just not a friendly one, and may be unproductive. The trade deficit with China has only grown. So obviously it isn't working like intended, and one of the things I'm disappointed in Biden for is not relaxing them.
There are many, many aspects to globalization, not all pretty, sanctions being one of them.
Currency will be a big issue also, because all the major players want their money to be traded, but it won't be stable until they come up with a world wide money system. Sanctions sometimes force contries to look elsewhere for goods or services, so the money exchange may change and we will have no hand in it.
I know that's a long answer for a short question, but I'm actually shortening it up quite a bit.
Just my opinon...........................

 

I don't see anything inevitable about it and it really is a bit far afield from the topic. It might be a good start to another thread though.

 

It's like the ramifications of Russia going full Nazi Hitler has caused a reaction of all surrounding countries from the west to drastically increase defense budgets and military spending...

And guess which country they are buying from?