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PostThe US Dollar: Doomed or Immortal? (Eugenio Battaglia, Italy, 11/21/14 1:58 pm)
Several interesting articles appeared on November 19th:
Pepe Escobar wrote that Ukraine's reserves have been reduced to only 12.6 billion US dollars. It has to pay $3.1 billion to Gazprom. By the end of this year, the reserves could be completely exhausted.
For sure, the EU (and US?) cannot really help. Now the IMF could practically become the owner of Ukraine, and it could give some help in exchange for reforms that will turn most of the Ukrainians into desperate beggars.
In another article, Manlio Dinucci of Rete Voltaire has reported that the BRIC nations have created a bank with 100 billion US dollars plus 100 billion more in reserve. They have agreed to stop using the dollar for their internal financial operations. President Xi of China has stated that Russia-China relations are irrevocable; see the great military and economical agreements.
Dmitry Kalinichenko writes that in the last three months Russia has converted US dollars into 55 tons of physical gold, apparently getting a good bargain changing the overvalued dollar into undervalued gold. China has also recently stated that it does not want to accumulate any more US dollars. At this moment, Russian energy and Chinese merchandise are real, while the US dollar is only an intermediary, and an unnecessary one at that.
I do not know if the three gentlemen are correct, but in view of Italy's agricultural sector losing the huge Russian market to South African and South American products, I wonder if the present confrontation against Russia, by not recognizing the self-determination of the Russophones, is the right path to follow.
JE comments: Regardless of one's position on Ukraine, Eugenio Battaglia makes an important point. The sanctions against Russia are hurting Europe's agricultural exporters (let's add Poland's apples to the mix), while in the United States no one cares. What's more, nobody even notices.
Reports of the dollar's demise have been coming for years, and they never seem to stick. Just last week Time magazine ran this:
If I were Chinese or Russian, I'd probably resent the dollar, too. But when uncertainty raises its ugly head, I'd also want some bucks in my mattress.