Because of Obama Administration sanction threats, the interest rate for Gazprom debt in dollars is rising dramatically while that of Yuan debt is falling, making it attractive to issue the Yuan debt. But this is a decision that makes more than business sense. It accelerates a trend by Russia, China, Iran and other countries to abandon the US dollar as world central bank and trade reserve currency. The US Government is able to finance wars in Syria, Libya, Afghanistan and elsewhere because of the reserve currency role. Other trading nations like China or Russia who buy or sell dollar-priced goods must have dollars for trade, so their central banks invest their trade surpluses into “safe” US Treasury bonds. Ironically, that has in effect meant that the US has been able until recently to finance its foreign wars and trillion dollar military budget using Chinese, Russian and other nations’ dollars. When the Euro threatened the reserve currency status of the dollar in 2010 as Washington ran annual trillion dollar+ budget deficits, the Chinese and others began buying bonds denominated in Euros instead to diversify their risk of a possible US default. To prevent the emergence of the Euro, Washington launched a financial warfare operation using key Wall Street banks like Goldman Sachs and JP MorganChase together with the US-based credit rating agencies Standard & Poors and Moodys and the US Federal Reserve to prevent the shift to the Euro. It was called the “Greek Crisis.” The Euro fell and the dollar was suddenly “safe haven...”, for a while.
Posted on: Sat, 19 Apr 2014 13:35:55 +0000
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