Latest U.S. Sanctions Will Only Make Matters Worse

Hey There Income Hunters,

 

The latest round of U.S. sanctions announced yesterday were a serious blunder by the Biden administration that could hasten our nation’s monetary decline.

 

Here’s why …

 

        • A major consideration for the launch of China’s digital Yuan was to lessen the U.S. grip on sanctions …
        • We are playing right into their hands as they develop railways, freeways and major ports in Russia … 
        • Last year, China/Russia trade nearly hit $110 billion, and Putin and Xi announced a new goal of $200 billion in trade by 2024 …
        • This will motivate Russia to consider greater exchange of Yuan and Ruble for trade. They hit a high last year of 24%. It had been 90% dollars not long ago … 
        • The US is in too weak a position to play hardball. We would be better served to lay low and strengthen our position. Look at the dollar’s reaction to this news …

 

 

This may be the administration and Fed’s self-serving intent — to devalue the currency and lessen overall debt.

 

However it weakens our position on the global stage and speeds up the process of transition to a new monetary system …

 

The dollar will always have a role but there will be less need for dollars in a new system where multiple currencies will be used in exchange for international trade.

 

Three Reasons Why the U.S. Dollar Is Losing Its Grip on Global Trade

 

1. De-dollarization Is a Key Russian Policy Amid Sanctions …

 

That was Putin’s announcement in January of this year. It was also around the time when Russia’s gold holdings eclipsed their dollar reserves…

 

You see, Russia’s main weakness in trade with China is the ruble’s value so it would make sense for Russia to shore up the ruble with Gold reserves and strengthen their trade position with China.

 

“Expanding the use of the yuan and ruble can significantly lower the geopolitical risk of trading in U.S. dollars,” said Jiang Yi, a deputy director of Russian studies at the Chinese Academy of Social Sciences. “It is convenient for trades involving imports of bulk commodity goods such as crude oil, energy and military equipment from Russia.” 

 

As some of those goods are subject to US unilateral sanctions, it can be a way for Chinese enterprises to avoid secondary sanctions, Jiang added. 

 

2. China and Russian Strategy for Increasing Trade

 

 

China’s Belt and Road Initiative is breathtaking in scope …

 

        • Six proposed economic corridors, railroads, gas and oil pipelines and ports with Chinese engagement 
        • Covers two-thirds of the world’s population spanning China, Russia and Africa
        • The Digital Yuan completes the picture as the People’s Bank of China will be able to provide low-cost loans anywhere without having to issue bonds or worry about their P&L. That is the power they have as the world’s largest exporter… 

A key Belt and Road hub is Vladivostok, Russia’s largest port on the Pacific Ocean. Jim Rogers, an internationally famous investor, is very bullish on Russia and particularly interested in the city as a place where massive investment is made in infrastructure, roads and universities …

 

Oh, and here’s a fun fact: Vladivostok translates to “Lord of the East.”


Subtle!

 

3. The U.S. Eurodollar System Is Inefficient and Broken

 

Just to clarify, the eurodollar system has nothing to do with Euros. It is simply the lending and borrowing of dollars in non-U.S. banks … 

 

        • The issue is it has the same problem as quantitative easing. The Fed is not involved; it is completely controlled by the Foreign banks.
        • The Banks do not want to lend dollars to corporations for the same reason they don’t lend in the U.S. … They don’t want the default risk.
        • During the 2008 crisis, the Fed set up swap lines with all the foreign banks so they could exchange dollars for foreign currency to provide liquidity in dollars. However, just as money is trapped in the U.S. banking system, it was the same story abroad.

 

The Vision for a New Monetary System

 

It is time for a wake up call, folks.

 

We are starting to see what the transition to a new monetary system will look like …

 

China will play a major part in the new system and they have executed an incredible strategy to put themselves in this position.

 

Digital currency will severely limit the banks’ role in the new system. Central Banks can cut out the banks — and we’re heading toward a place where money could be immediately lent and borrowed anywhere in the world.

 

The system would utilize blockchain technology for safety and security. It would also facilitate simultaneous settlement of all transactions — with an ability to track the flows.

 

Each central bank would manage its own currency and digital currencies could still be backed by gold as a means to strengthen them.

 

Bring It Home

 

When major systems go through a paradigm shift, we must think outside the box and take a glimpse into the future.

 

As #IncomeHunters, we must scout out all possibilities and run through probabilities to determine where we can make our greatest returns.

 

Investing internationally in high-growth countries is a double-win. You can win on the currency exchange and on the return.

 

There is much more to discuss on this and I wanted to attack it today since we made our first of probably several major blunders that weaken us internationally.

 

As always send me your comments and thoughts. I love discussing these major issues with readers. And as always …

 

Live and Trade With passion My Friends,

 

Griff

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