The US is losing power: is the collapse of the dollar system possible?

Photo: © Global Look Press/Christian Ohde/imageBROKER.com

Photo: © Global Look Press/Christian Ohde/imageBROKER.com

The American economy is going through hard times. Experts predict the collapse of the dollar, and the United States – a new Great Depression. Moreover, Washington has driven itself into a trap by announcing anti-Russian sanctions. IN publication The New York Post believes that due to the restrictions imposed, the dollar will soon lose its status as a world currency.

In the material REN TV we will tell you whether the dollar can completely disappear from the world market, what currencies will come to replace it and whether the United States will lose its influence in the international arena.

Dollar under threat

The New York Post said that anti-Russian sanctions could lead the United States to financial collapse. The dollar’s status as a global currency is under threat, writes columnist Jay Newman. According to him, the main trap that Washington fell into was that more than a hundred countries refused to support sanctions against Moscow. Because of this, energy trade went “bypassing” the dollar – in other national currencies.

“Abandoning the dollar would deal a powerful blow to America’s position in the international arena. The era of unlimited dollar printing may be coming to an end, leaving behind our ability to buy foreign goods cheaply,” he noted.

Photo: © Frame youtube.com

The journalist admitted that the lack of an alternative to American money turned out to be a myth. According to him, trading in other currencies reduces the demand for the dollar and its value. At the same time, Western financial institutions are losing their credibility as trade shifts to Asia.

Newman drew attention to the fact that many countries, including European ones, are creating new exchange platforms and special mechanisms to facilitate non-dollar transactions and circumvent sanctions against Russia.

“At some point, the States may face a debt crisis because no one else will come to buy US bonds. And then the US dollar will become the most ordinary currency – one of many. Eventually, if the dollar loses its luster, the US lose their power, wrote the columnist.

“The United States has exhausted its credibility”

Associate Professor of the Department of Political Economy of the Faculty of Economics of Moscow State University named after M.V. Lomonosov Maxim Chirkov told REN TVthat anti-Russian sanctions are certainly hurting the dollar. One of the striking consequences of the restrictions imposed is the inflation that has engulfed the United States and other Western countries.

“The main reason for leaving the dollar is the loss of credit of confidence in the financial system, currency and the US economy as a whole. A very large category of investors, in particular Chinese ones, is taking money out of the American economy. So, the dollar is starting to lose its role as the main world currency. This is already obvious , since many countries are moving to use their own currencies”, the expert said.

Chirkov added that Western countries impose their sanctions in a very chaotic manner, which makes them very unpredictable partners. He drew attention to the fact that now the volume of trading in the ruble-yuan pair has significantly increased on the Moscow Exchange.

When could the dollar move away?

According to the economist’s forecasts, the dollar may lose its leading position in the next two or three years.

“The withdrawal from the dollar will not happen instantly, the process may take from 1 to 3 years. It depends on how sharp the changes in the Western economy are. Changes will lead to the depreciation of the dollar. We are already seeing record inflation in Europe and the United States – and this is only the beginning.The dollar will lose its leading position and will lose its value.The problems in the banks that have now begun are just talking about it.The attractiveness of Western financial institutions is sharply declining.And this process will be much more difficult than simply moving away from the dollar as a the main currency – it will be comprehensive”, – says Chirkov.

Can the dollar completely disappear from the world market

However, the expert believes that the complete disappearance of the dollar from the world market is impossible – the American currency will continue to exist.

“From my point of view, a complete collapse of the dollar is impossible. The huge problems that the American economy has will result in the dollar depreciating. Formally, this will not be a collapse. The dollar will continue to exist. But to solve the problems, the States will have to launch serious inflationary processes “Hyperinflation may occur. But many currencies had such periods, for example, in Europe, and this did not stop them from existing,” says the economist.

Photo: © Izvestia/Konstantin Kokoshkin

At the same time, Chirkov noted that dollar holders would face serious problems. Hyperinflation will eat into the savings of individuals and companies, and after the collapse of banks, the state will close their debts to depositors, he explained.

The collapse of the American empire

The economist is convinced that Washington has already begun to lose world influence and this process will only increase. He noted that the dollar still remains one of the most important instruments of pressure used by the United States. However, now this lever of influence has begun to lose its strength.

“The United States is guaranteed to lose its global influence. This is already happening. Most of the world seeks to maintain friendly relations with states that do not support the American point of view. These are, for example, Russia and China. Now the Americans have less and less leverage over other countries. The dollar remains, perhaps, one of the few tools, but now it acts weaker. After leaving the dollar, the influence of the United States in the world will significantly decrease – and political, economic, and military,” Chirkov says.

What currencies will replace the dollar

According to the economist, alternative currencies are already replacing the dollar. Chirkov named the Russian ruble, the Chinese yuan, as well as the national currencies of India, Turkey and the countries of South America among the main ones.

“We see the growing role of the currencies of the BRICS countries (Brazil, Russia, India, China, South Africa. – Ed.). China is a big beneficiary. The Russian ruble is also greatly increasing its presence in the world. This is due to trade with friendly countries and the transfer of payments into rubles. The currencies of Turkey, India and the countries of South America – Brazil and Argentina play a big role. These are very large economies, “- noted the expert.

Photo: © Global Look Press/Rafael Henrique/Keystone Press Agency

Chirkov stressed that now the currencies of countries that remain neutral and interact with all other states will come to the fore. In addition, the economist noted that the countries of the Middle East have great economic potential.

“The dollar is a piece of paper on trust”

Recall that since the beginning of March 2023, three large banks have already closed in the United States: Silvergate, Silicon Valley Bank and Signature Bank. The bankruptcy of the second, by the way, was the largest since the 2008 crisis. Former US President Donald Trump has already predicted for his country a new Great Depression – much more powerful than the one that occurred in 1929.

On March 13, current US leader Joe Biden held an emergency press conference. The President tried to reassure fellow citizens and convince them of the security of the national banking system. But his speech only lasted five minutes. Hearing reasonable questions from journalists about the global financial crisis, Biden left the room.

The collapse of American banks was also commented on in Russia. The official representative of the Russian Foreign Ministry, Maria Zakharova, said that the attempts of the United States to save the US financial system with “paper and paint” would bring even more problems to the world.

Alexei Drobinin, director of the foreign policy planning department of the Russian Foreign Ministry, called the US dollar “a piece of paper on trust.”

“Confidence in the US dollar turned out to be undermined, which helps to accelerate the process of its demonopolization as the main means of international settlements, savings, investments. Let’s be frank: the dollar is nothing more than a “paper on trust”, and the US government will never pay off the galloping public debt of this country , which recently exceeded 31 trillion dollars”, – he said.

Source: Ren

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