by Kerry Lutz, Financial Survival Network:
Why the “De-Dollarization” Narrative Keeps Misunderstanding International Capital Flows
Every few years, the macro financial media enters a collective frenzy over the same recurring headline: De-dollarization has arrived.
The catalysts always look convincing on paper. Central banks buy gold at a multi-decade pace. BRICS summits issue grand communiqués. China’s Cross-Border Interbank Payment System (CIPS) processes tens of trillions in volume, and mBridge settles non-dollar trade in seconds.
Yet during this exact period, the Renminbi’s share of global payments sat below 3%. The dollar still anchors nearly 50% of global SWIFT traffic and roughly 60% of central bank reserves.
A cratering yen has set off alarms on Wall Street and in financial centers around the world. If the Bank of Japan sells its behemoth stockpile US Treasuries (now exceeding $1.2 trillion) to support its sagging currency, the US bond market could go into a nosedive dragging the global economy off a cliff. That is why on Friday, July 31, US Treasury Secretary Scott Bessent launched an unprecedented currency intervention to prop up the anemic yen and to forestall an impending financial meltdown. Surprisingly, Bessent implemented a euros-for-yen trade via the New York Fed so as not to weaken the dollar or trigger a selloff in bonds. The gravity of the intervention, however, was not lost on jumpy investors who have connected the dots and understand that America’s $40 trillion debt Ponzi is growing increasingly unstable and could trigger another financial crisis. In short, the teetering yen is merely the canary in the coalmine signaling deeper structural issues that could take down the entire dollar-based house of cards. This is from Forbes:
The RBI governor says all BRICS nations are interested in cross-border payments as they offer “a lot of scope for reducing cost”
A Delicate Meal To Cook Before Midterms
US intervention shows all isn’t well with the US dollar.
There has never been a currency intervention in history that has worked.