Here, the two parties in the United States have just reached a preliminary agreement on the debt ceiling issue, while on the other side, Russia takes the lead, joining a total of 12 countries to discuss de-dollarization.
I have mentioned before that the United States' squabble over raising the debt ceiling is purely a theatrical act, with the goal of not making the act of harvesting global wealth too unsightly. Indeed, it turns out to be correct; after several months of turmoil, the debt ceiling issue finally has a prospect. That is, both sides have reached a preliminary agreement, which will historically cut spending, and there will be no new taxes or new programs, with specific details yet to be disclosed, and now we just wait for the vote to pass.
Both sides have made concessions, agreeing to reduce spending, and the debt ceiling still needs to be raised, without increasing the burden on taxpayers. In fact, all these operations were within our expectations! That is because, in the end, no matter how the United States harvests the global wealth, the U.S. debt will not default; this play is just to make everyone feel more comfortable.
However, U.S. ally countries might buy into this, but the tough guy Russia will not. Just look, Russia, India, Pakistan, Iran, and 12 other countries have just held an international conference called the "Asian Clearing Union Summit." The most important agenda is de-dollarization, discussing how to use local currencies for settlement, and planning to launch a new cross-border payment system that can replace SWIFT.
Russia seems to be on a path to confront the United States to the end! So I can't help but ask, who will foot the bill for the U.S. debt negotiations?
In fact, since the Russia-Ukraine conflict, it has become the catalyst for accelerating de-dollarization globally.
Why did the United States have to provoke the unprovokable Russia, a country that does not take kindly to being pushed around, willing to suffer a thousand losses to inflict eight hundred on its enemy? The U.S. originally wanted a quick resolution, but it didn't expect Russia to engage in a protracted war. Instead, Russia has shifted its trade focus to the east, and its GDP in 2022 has risen instead of falling. The United States is now in a difficult situation, having to strongly support Ukraine, impose deadly sanctions, deal with a host of domestic issues, and now face the embarrassment of not having enough money. The old man is really in a pickle now!It is worth mentioning that during this round of negotiations, Middle Eastern countries have also allowed for the first time the settlement of oil in their own currencies or the Chinese yuan, bypassing the US dollar. In addition, Middle Eastern countries such as Egypt, Saudi Arabia, and the United Arab Emirates have all expressed their desire to join the BRICS. This is really a strategic blow to the United States!
Now, Russia, as an energy superpower, no longer uses the US dollar; Middle Eastern countries also allow the settlement of oil in foreign currencies, and they also wish to join the BRICS; countries like Brazil and Argentina are already discussing the creation of a common currency called "Sur."
Iran has stated that de-dollarization is no longer a voluntary choice for countries, but an inevitable response to the weaponization of the US dollar. To put it bluntly, since the Russia-Ukraine conflict, the United States has weaponized and politicized the US dollar, forcing everyone to de-dollarize. To say the least, it's a case of being forced into it; who would want this if they had a choice?
In fact, there are two major obstacles on the path to de-dollarization: the first is the inability to unify exchange rates among various countries' currencies, and the second is the lack of a viable alternative to cross-border payment systems. Although countries can settle in their own currencies, this is only a temporary solution, as it is inconvenient, and for smaller countries, who would want to use their currency for settlement? Moreover, how can cross-border payments be made? One cannot simply carry a stack of currencies to make purchases!
That being said, if Russia and other countries can indeed introduce an alternative payment system this time, it means that the global process of de-dollarization has reached a new level. What follows is how to anchor the exchange rates of various countries' currencies, or perhaps the introduction of another consensus currency, and de-dollarization will be settled.
Although replacing the US dollar as the dominant currency in the international payment system is not an easy task, once the arrow is shot, there is no turning back; the global path to de-dollarization is irreversible. We can see this by looking at a set of data: according to an analysis by Bloomberg, the proportion of the US dollar in the foreign exchange reserves of governments around the world is now about 58%, while at the end of the last century, this proportion was as high as 85%.
So, the new question arises: as the acceleration of global de-dollarization, it is no longer a question of whether the United States will raise its debt ceiling, but who will pay and for how long.
This time, raising the debt ceiling will definitely have a limit, and it will not be unlimited, because it has to be done with some dignity; it cannot be so blatant! Raising the debt ceiling is nothing more than changing printing money to borrowing, using the United States' credit and economic size as collateral to borrow from the world. Since the US dollar has already moved away from the gold standard and deviated from the characteristics of the oil-based standard, it has now become a credit dollar.
But now, does the United States still have creditworthiness to speak of? If it did, it would not repeatedly raise the debt ceiling! In terms of economic size, the United States may be able to earn money to repay everyone in the future, but now the United States is already in an economic recession, with the speed of earning money not keeping up with the speed of repaying debts. Under such circumstances, who knows what the future holds? We can understand this point through the joint de-dollarization efforts of Russia, India, Pakistan, Iran, and 12 other countries, and I believe that more countries are on the path to de-dollarization.So, in this case, whether the United States raises the debt ceiling and by how much becomes irrelevant, because what will be reaped next are only the United States' staunch supporters and allied nations. Those countries that have seen through the true intentions of the United States are likely not to become the United States' "fodder" anymore.
