Russia and China in lock-step to bring severe pressure against the dollar

Many here on Rogue Money have already seen or heard the data that China is dumping Treasuries to both stabilize their currency and markets, and to put pressure on the U.S. for what are now full fledged attacks that by all estimations include military or covert insurgencies against the heart of the Chinese economy.  In fact, according to a recent interview by Dr. Jim Willie, Tianjin harbor is not just a location for port services for shipping, but it also contains a super computer than is an important part of their military and cyber warfare program.
However, if there is one thing that is for certain, China is no longer an isolated target for Western governments to try to go after just as they have tried against Russia with economic sanctions.  And back when the initial hit of those sanctions threatened the Rouble and overall Russian economy, China stepped in and publicly backed their currency with Yuan support should it have been necessary during their days of instability.

And now that China has become center stage for U.S. economic and terrorist aggression, Russia is returning the favor by going straight at the heart of Washington hegemony and calling for an end to dollar use in Eurasian countries within the CIS.

On Aug. 31, Russian President Vladimir Putin increased global tensions against the United States by doing two acts that threaten the national security of America’s foreign and economic policies. Beginning in the Middle East, Putin sent arms and advisers in support of Syrian leader Bashir Assad against the Western backed terrorist groups of Al Qaeda and ISIS. Then just this morning on Sep. 1, the Russian President introduced legislation that would ban the use of the dollar within CIS economies that function within the Eurasian sphere of influence.

These new and sudden acts of aggression by Russiacome one day after China experienced their third mysterious attack on their ports and mainland in just the past 10 days, sparking a potential retaliation to what appears to be military or covert terrorist acts in response to China’s dumping of U.S. Treasuries, and devaluation of their RMB currency. And with the world rushing headlong into global recession entering into the month of September, the ground is being set for the two year proxy war that has centered around economic sanctions to expand into direct confrontation. – Examiner

Yet this wasn’t the only new move by Russia, and in fact, what might take place could be far more significant than the siphoning off of lessor Eurasian countries from using the dollar in global trade.  As economic sanctions continue well into their second year, Japan is seeking to enlarge its currency swaps with the Rouble as trade has become much more difficult between the two economies because of these sanctions and through the dollar reserve system.

russia japan
russia japan

Japan Bank for International Cooperation (JBIC) is turning to currency swaps as using the US dollar in transactions is difficult because of the Western anti-Russia sanctions, the bank’s senior managing director said answering a question from Sputnik.

“We’re now studying that [the effects of ruble devaluation]. We need some of the swap arrangements with the local banks. We are elaborating opportunities with Russian banks such as Gazprombank, VTB, VEB… Because of the US sanctions, we cannot use the US dollar anymore, we have to switch to other currencies,” Tadashi Maeda said on Thursday, speaking after a conference at the Eastern Economic Forum (EEF) in the Russian city of Vladivostok. – Sputnik News

Yet reliance only on the dollar is expected to change shortly as China is prepared to bring online their own parallel SWIFT system within the next 15-60 days, creating an alternative for nations to divest their dollar reserves and open the door for more direct bi-lateral trading, or at the very least, use of the Yuan as a medium for trade instead of the dollar.

What is also of interest, and something all Rogue Money members should pay close attention to going into the Labor Day weekend, is news that may come from Saudi Arabia’s visit to the White House right now after spending time in Moscow during the MAKS airshow last week.  OPEC is at a crossroads, and could decide the fate of the dollar if they choose to accept a future agreement with Russia to begin accepting payments for oil in currencies other than the dollar.  And when you include China’s saber rattling going on off the coast of Alaska at the very same time President Obama was visiting the Great White North, the conflict that had once been relegated to covert financial and cyber stratagems is now playing itself in the mainstream, and the stakes could now never be higher.

7 comments

  1. I am naive but when O’Bummer put sanctions on Russia, and didn’t let the banks deal with Russia and didn’t let Visa and Mastercard process transactions, what did he really expect from Russia? It seems they had two choices, either give in and do whatever O’Bummer says about everything, or put themselves into a position where they didn’t need USA banking system and never have to say “yes Sir!” again. It appeared to be a no brainer to me. Putin is eating O’Bummer’s lunch at every opportunity.

  2. There isn’t one serious person in the financial service industry that has anything good to say about the prospects for the markets. In all my years of watching, I don’t remember a time that it was this ominous. The only question is which comes first war or economic collapse. The next question is are we seeing the prelude to the opening of the seals. To some extent the first 4 appear to be happening but will certainly increase dramatically in intensity.
    For those that think we will come out of this after some hard years and find something on “the other side” I would humbly disagree. I think we are in the process of “crossing over” from the kingdom of this world and all of it’s system to the reign of Yeshua. There are just too many prophecies falling into place. It might take some more years, but we are entering the darkness before the dawn stage.

    The root of the word Hebrew is avar, which means to crossover. We are witnessing the very beginning stages of the kingdom of this world becoming the kingdom of God. When Israel and the mixed multitude left Egypt, they experienced some of the plagues, then they were separated. This is necessary to get people to move out. Sometimes we are comfortable in our slavery. This world system is all about enslavement. This Exodus is going to make the one out of Egypt look relatively calm.

    Batten down the hatches and stand firm.

  3. Ken: When China devalued the RMB vis-a-vis the USD, does this act on China s part signify a de-pegging of RMB from the USD? Currently, the HKD is still pegged to USD at the rate of 7.775. A colleague of mine raised this theory that when 2 currencies are pegged to each other, it demonstrates a covert sense of mutual trust between the 2 currencies. When one of them breaks the peg, it denotes the lack of trust by the peg breaking party (in this case China) pertaining to the continued stable valuation of the other currency (in this case, the USD). Kindly comment on this train of thought.

    1. Not quite a de-pegging, however… I heard that China screwed the US quite a bit when they devalued their currency, THEN sold bonds. It got them an additional 5% on what they sold. And when youre talking $100 billion, that’s an additional $5 billion the Fed had to pony up when bought those Treasuries back through their BLICS proxies.
      Eventually China will de-peg from the dollar, but why do it now… since they can use that peg always to their advantage in the trade deficit. When the US stops buying Chinese goods to any measure, then would be a perfect time to drop the peg.

  4. Ken,
    Good job, so this is how they tether two hard assets together with the Yuan. No need to exchange foreign currencies for a federal reserve note when the option for a hard asset backed currency is available. Expect “flying monkeys” to increase the level of chaos exponentially.

    Fight the good fight

    The Repulic of Texas

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