Uncle Sam can Sing Chicken Little's song now – The Sky has Begun to Fall
Posted by JIBRAN at 5:16 AM
The seeds are being planted for the removal of the dollar as a reserve or so it seems this fine Tuesday morning. I woke up to read in the Financial Times that both Brazil and China will seek to use their own currencies in trade rather than the popular US Dollar. What this means is that instead of China buying goods from San Paolo using the greenback, the Brazilians will accept the Renminbi and when purchasing goods from Beijing, the Chinese will accept the Real. This has huge implications and I will explain why.
Although this is a small deal between an economic mammoth and a moderate sized country, it opens the doors for other countries to do the same – it sets the precedent. And while it is not necessarily a Chinese or Brazilian declaration that they are ditching the dollar as a reserve, it allows them to begin scaling down their reserves as it is not needed for trade anymore. The Chinese have figured out a smart way to do this, without sticking a huge middle finger up at the US, and without making tsunami sized waves. This will be slow process, a backdoor to redefining the global monetary system without anyone seeing it happen before it is too late.
