U.S. Reality Check: China, Russia Drop the Dollar

Bubles... Dollars... Yuan

A look at how the use of bilateral trade settlement is growing

By Tony Richardson11/27/2010

Chinese Premier Wen Jiabao and Russian President Vladamir Putin announced in St. Petersburg, Russia, on November 23, 2010, that they will stop using the U.S. dollar to settle bilateral trade and instead use the ruble or the yuan, according to a report in the state-run China Daily. Bilateral trade between the two countries stands at roughly $60 billion. Put in perspective, assuming two-thirds of international trade is transacted in U.S dollars, this accounts for 0.3% of dollar usage in a global economy valued at roughly $30 trillion. This agreement, then, is not particularly meaningful in terms of U.S.-dollar utilization, but when we consider the exponential implications, the effects are huge.

Consider the fact that China not only has this trade-settlement arrangement with Russia, but also has a growing list of settlement partners that so far includes Argentina, Brazil, Belarus, Iceland, Indonesia, Japan, Laos, Malaysia, Myanmar, Philippines, Singapore, South Korea, Thailand and Vietnam. And then, if each of these countries develops bilateral trade-settlement partnerships in their own currencies absent the dollar, how would this affect our currency, Fed policy and the U.S. economy?

To understand how this might play out, we need to take an imaginary trip to a border region of China and Russia:   READ MORE 

Franklin D. Roosevelt:

“The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism — ownership of government by an individual, by a group, or by any other controlling private power.

If one uses   Benito Mussolini  Fascism, you have something coming close to the Chinese:

The Fascist conception of the State is all-embracing; outside of it no human or spiritual values can exist, much less have value. Thus understood, Fascism is totalitarian, and the Fascist State—a synthesis and a unit inclusive of all values—interprets, develops, and potentiates the whole life of a people.
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