Thursday, September 14, 2017

BREAKING Venezuela Stops Accepting Dollars: Is This the Beginning of the Collapse of the Dollar as the Global Reserve Currency?

In retrospect, this could be the most important economic event of 2017.
The oil-rich country of Venezuela has
stopped accepting the U.S. Dollar as payment for oil.
Last week President Maduro warned that the country would this week ‘free’ itself from the US dollar.
“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar.”
Yesterday Venezuela temporarily suspended the sale of U.S. dollars through its Dicom auction system. This (and other moves) was in response to U.S. sanctions put in place by the Trump administration.
This morning The Wall Street Journal reports that the Venezuela is already telling oil traders not to accept the US currency.
Oil traders who export Venezuelan crude or import oil products into the country have begun converting their invoices to euros.
The state oil company PetrĂ³leos de Venezuela SA, known as PdVSA, has told its private joint venture partners to open accounts in euros and to convert existing cash holdings into Europe’s main currency, said one project partner.
The decision to suspend dollar trading on Diacom and to no longer accept the the U.S. currency for oil is potentially a major blow for the world's reserve currency.
Venezuela's decision comes at a time when other countries (namely Russia and China) are already finding ways to avoid using the U.S. dollar.
Jim Rickards comments:
China, Russia and Iran are coordinating a new international monetary order that does not involve U.S. dollars. It has several parts, which together spell dollar doom. The first part is that China will buy oil from Russia and Iran in exchange for yuan.
The yuan is not a major reserve currency, so it’s not an especially attractive asset for Russia or Iran to hold. China solves that problem by offering to convert yuan into gold on a spot basis on the Shanghai Gold Exchange.
This marks the beginning of the end of the petrodollar system that Henry Kissinger worked out with Saudi Arabia in 1974, after Nixon abandoned gold.
The Venezuelan move may be the first straw that breaks the status of the USD dollar as the world's global reserve currency. And gold may return to play that role.


  1. So how long until we hear of a "ISIS/Al Queda and Venezuela" connection?

    1. I think we will first hear something closer to "Maduro is using chemical weapons on his on people."

  2. Gary North thinks the US Reserve Currency worries are red herrings, but I think he is mistaken. And if the US loses its currency status, it will mean general inflation, not just inflation of imports.

    It's such an obvious way to undermine the US (as well as not buying US Treasuries), that one wonders why it's taken so long (and I'm sure it will take even longer).

    1. They are red herring in one sense. No one in the world financial market can currently float the currency velocity that the dollar maintains - contrary to what the BRICS would like you to believe.

      With that stated however, the world is chipping away at dollar FIAT faith as I like to call it. This will create cracks in the monopoly and other players will steal market share.

      Just like Rome, World reserve wont go away quick. More than likely someone will look at the data one day and conclude it had already happened without much fanfare

    2. Probably most nations aren't willing to shoot themselves in the foot just to stick it to the US.

  3. “We have many options for Venezuela, including a possible military option, if necessary,” Mr. Trump said.

  4. Regime change being fired up as we speak.