by Rory Hall, Sprott Money:
If your country is ranked in the top 20 of 190 nations in economic strength are you an “emerging market” or have your “emerged”? Personally, I wouldn’t call a top 20 nation emerging, they have arrived. India 6th, Brazil 8th, Russia 12th and Turkey 17th are all in the headlines as struggling with monetary issues for one reason or another and constantly referenced as an “emerging market”. Why?
It could be argued that China, the second largest economy in the world, is struggling with monetary issues as well. This could have profound effects on the global economy, manufacturing and other areas that connect the global markets.
If one has been paying attention to the unfolding emerging market crisis then you already know we have some serious problems going on in the underbelly of the global economy. The size of the emerging markets GDP becomes less important when they begin having problems in bunches. If you have a single nation get themselves into monetary trouble it’s not a big deal. However, when you have Brazil, Argentina, Venezuela, Turkey, India, South Africa and China all struggling to one degree or another this has the potential to create a firestorm of economic problems. This is to say nothing of the potential impact the coming sanctions against Iran and Russia will have on the global economy.
We have documented, over the past several years, how China is on again – off again acquiring American debt, e.g. treasuries. It is also well known that China has built a parallel financial system to the current global financial system. Banks, electronic settlements, global trade mechanisms, gold settlement markets and all the other necessary support to step away from the current system entirely. Russia has, to a lesser degree, done the exact same thing. Russia’s financial infrastructure is not as robust as China’s but she has worked diligently to protect herself from a weaponized monetary system created by the Federal Reserve and western banking systems. The current system is coming to an end, we believe, within the next decade and now we find that Jim Rogers is saying the same thing.
“In the next few years the American dollar is going to lose its position as the world’s reserve currency and the world’s medium of exchange,” Rogers said, adding that the world has always moved away from dominant currencies in the past as situations changed.
He said that the British pound once used to be the dominant currency in the world, and before that there were other dominant currencies like the Spanish peseta, the French franc, and the Dutch guilder.
“They all had that position at one time or another but then went to excess and are not that sound anymore, they lost their position… People don’t like Washington’s power, so they are moving away and finding ways to get away from the dollar. It has happened throughout history, it happened to the pound sterling, you know the rest of that story,” Rogers said, adding there’s no need to worry because “it’s not a disaster.” Source
Now we learn that Russia and China are taking another step away from the Federal Reserve Note, US dollar debt based system, and will begin using more yuan and ruble to settle trade between themselves. Some of you are thinking “who cares“, it’s China and Russia. Well, you should care, as these are the number 2 and number 12 economies in the world and Russia is one of the worlds largest suppliers of oil. Some would argue Russia has the largest oil reserves in the world – not fracked oil, but actual oil that’s easily obtained and high quality.
VLADIVOSTOK, Russia: Russian President Vladimir Putin on Tuesday (Sep 11) said that Moscow and Beijing plan to use their own national currencies more often in trade deals as Russia’s relations with the West deteriorate.
“The Russian and Chinese sides confirmed their interest in using national currencies more actively in reciprocal payments,” Putin told journalists during a press briefing with Chinese leader Xi Jinping after talks at an economic forum in the far eastern Russian city of Vladivostok.
Putin said this would “increase the stability of banks’ servicing of export and import operations while there are ongoing risks on global markets”. Source