ONE OF the main consequences of the US-led sanctions designed to strangle the Russian economy and lead to regime change has been to hasten the collapse of the US dollar as the dominant world currency, and accelerate the crash in the once mighty US capitalist economy.
Last week, economists at the Wall Street bank, Goldman Sachs issued a warning that freezing the Russian Central Bank’s foreign currency reserves has prompted other countries to start dumping US dollars and move as fast as possible away from a currency that has been ‘weaponised’ in the drive by US imperialism to dominate the world.
Alarm bells have been ringing for some years as US imperialism used economic sanctions against a number of countries – including Afghanistan, Iran and Venezuela – to crush any opposition.
Many of these countries, along with companies in Russia, have been adopting financial mechanisms to bypass the US dollar in international transactions for some time now, but these moves have been vastly accelerated by the economic and financial sanctioning of one of the world’s biggest economies.
For the first time Russia, a major economic power, has been treated as a ‘vassal state’ with the US, UK and EU governments seizing $300 billion of its foreign exchange reserves held in western banks.
This has sent shock waves through the international financial and political system, and forced economists at Goldman Sachs to confront the reality that American capitalism, far from being the world’s powerhouse, in fact owes its position entirely to its ability to print trillions of worthless paper money and force the rest of the world to buy them.
The Goldman Sachs report highlights the fact that America has only a tiny share in global trade compared to the dominance of the dollar, and that the country faces a massive national debt as it relies almost entirely on imported goods.
The dollar owes its position as the world’s reserve currency to the fact that, after the Second World War, it was guaranteed by the United States, the world’s largest industrial producer and preeminent military power, which crucially insisted that all oil produced in the world was traded in dollars.
Today however America is no longer the economic powerhouse it once was. Its industrial and commodity production is negligible, vastly outstripped by China, and with countries like India fast catching up. The US national debt stands at over an eyewatering $30 trillion – more than 124% of the country’s GDP.
The only way it can afford this huge debt and finance all its military and government spending is by forcing other countries to trade in the worthless paper money it churns out. Money that is returned to the US as nations buy up America’s government bonds and keep their dollar reserves in US banks – which can be stolen from them anytime the US wants to ‘discipline’ them.
With even close allies like Saudi Arabia seeking deals to sell oil to China in exchange for Chinese currency, and Russia insisting that hostile countries pay for oil and gas in roubles, the dollar is going the same way as the British pound.
Once the preeminent world currency, the pound collapsed under the weight of the huge debts the UK amassed after the Second World War and as its imperial empire disintegrated.
Goldman Sachs’ report noted: ‘If a reserve currency issuers’ debt is allowed to grow relative to GDP, eventually foreigners may grow reluctant to hold more of it.’
Not just reluctant – countries are dumping the dollar as fast as they can across the world, spelling the end of dollar supremacy and driving the collapse of US imperialism into bankruptcy and recession.
When British imperialism and the almighty pound collapsed in the 20th century America was strong enough to step up and take over running world capitalism.
Today there is no capitalist country in the world that can step up as the US goes down, dragging the entire capitalist system with it.
It now falls to the working class, the only force powerful enough to step forward and put an end to this historically redundant bankrupt capitalist system through the victory of the world socialist revolution.