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Bleak Friday: China and Russia renounce U.S. dollar

This doesn’t bode well:

At a joint press conference in St. Petersburg, Russian President Vladimir Putin and Chinese Premier Wen Jiabao announced their countries’ agreement Thursday to allow their currencies to trade against each other in spot inter-bank markets, thereby formally renouncing the U.S. dollar….

Despite the avowed assurance of not challenging the U.S. dollar, the trade pact between Russia and China will actually result in the undermining and marginalization of the U.S. dollar’s “petro-currency” status.

According to the International Energy Agency, China is the largest consumer of energy, and now the largest automobile market in the world, with an expected rapid increase in oil consumption. Concomitantly, Russia is the second biggest oil exporter and the biggest natural gas exporter in the world.

Add to this global energy picture the two countries’ phasing out of dollar usage for trading energy commodities, and there would indeed be a significant downgrade of the status of the U.S. dollar.

The Chinese Xinhua news agency reports that Russian trade with China was $45.1 billion this year. It won’t be in dollars anymore. Also, this:

Russia’s Prime Minister said Friday he was confident in the euro despite Europe’s swelling debt crisis and criticized the dollar’s dominance as a world reserve currency….

“We have to get away from the overwhelming dollar monopoly. It makes the world economy vulnerable,” he told a gathering of business leaders in Berlin through a translator….

Asked about the possibility of Russia one day adopting the euro as a currency, Putin did not rule out such an option. “The rapprochement of Russia and Europe is inevitable,” he said.

In his call to reduce the dollar’s dominance in the world economy, Putin noted an agreement signed this week with China to use their respective currencies, the ruble and yuan, for bilateral trade in the future.

Deutsche Bank AG’s chief executive Josef Ackermann echoed those comments, saying “I think it is completely accurate that we have to reduce the currency system’s dependence from one dominant currency such as the dollar.”

15 comments to Bleak Friday: China and Russia renounce U.S. dollar

  • YEA!

    We have forced our worthless currency on the world for 50 years under economic and military threats and finally these other countries are showing some nads. Let them trade THEIR worthless paper around for a couple of decades before they realize that it is worthless too.

    Hopefully, in 20 years or so, the world bankers will have taken control of ALL the money and wealth in the world and we can get down to being the serfs they want us to be. PEACE at last. Hail Chase Manhatten!!

  • Karrie E. Alms

    Good read: The Creature From Jekyll Island! now coming to a bend in the road.

    Do you remember Treasury Paulson talking about the best and biggest bang for the US bailout funds was to prop up the banks?

    And the gap widens, especially in the United States.

  • The Mouse

    Benedict Arnold Paulson was the beginning of the planned destruction of the US Economy.

  • Karrie E. Alms

    CJ: Informative post. I shared this ‘news’ with my husband. He shared that China had replaced the US as Brazil’s largest trading partner in 2009. Here are a couple of links to articles which report that China is entering into these types of agreements with many trading partners (at least seven) …. perhaps China is looking to be the world currency?

    Mouse: I think that the planned destruction started long before Paulson provided assistance. The banking/ treasury cartel from Jekyll Island with the creation of the Federal Reserve and the IRS, Bretton Woods, IMF, CFR (akin to the Fabian Socialists), the US moving away from the gold standard …… that is the manipulated and planned destruction.

  • The Mouse

    Karrie, I don’t disagree, but Paulson initiated the final push over the brink. We are now rolling downhill, at a frankly unstoppable rate. We can neither tax nor grow our way out of this debt hole they have put us in. Run the numbers. It isn’t possible.

  • It isn’t about destroying the economy, it is about having complete control of it.

  • Mahkno

    This move by Russia and China is mostly symbolic. Those businesses that rely on trade between each other will still be looking back at the dollar for reference. If anything, this will open the door for more mischief making within their own economies, which won’t be helpful for them.

  • aaron

    did we really think we could trade beads for land for ever? eventually, the land runs out and we hafta play with real money. although the bankers are trying (without much savoir faire) to keep the monopoly train runnin!

  • Dmitry

    The President of Russia is Medvedev not Putin.

  • Karrie E. Alms

    Putin is the Prime Minister.

  • Jon

    I can see Russia from my window…

  • The Mouse

    Putin runs the show.

  • meemee

    Interesting comments here. But for those who bemoan the loss of the gold standard and call for “real money,” remember that gold is actually worth nothing. It is the expense of getting it out of the ground that makes it valuable. On an island of starving people, the one with the sandwich is richer than the one with a suitcase full of gold or cash. Beads are as good a mode for symbolic wealth as paper, or even a metal with limited industrial use. Real wealth is measured in natural resources and produced articles that actually have value because they are useful in first, providing necessities of life, and next, improving the standard of living.

  • Anyone who has brought gold at retail and tried to sell it at wholesale knows that is right… you can’t eat it, you can’t do anything with it… it is only worth what the next guy is willing to pay for it… like stocks…