The Wall Street Journal reports that the United States is threatening to cut Chinese banks off the dollar. This financial bomb would greatly benefit bitcoin.
The United States seriously threatens the Middle Kingdom
The confrontation between the West and the BRICS will intensify now that the US Congress has released 100 billion dollars to continue the war. Nearly 61 billion to arm Ukraine, 26 billion for Israel and eight billion for “counter communist China”.
The icing on the cake is that Joe Biden is also preparing to disconnect Chinese banks from the dollar. It is armed with this threat that the Secretary of State Anthony Blinken visited Beijing this Wednesday.
“China cannot have it both ways”declared Mr. Blinken on the occasion of the G7 which took place in Capri a few days earlier. “China cannot claim to want to maintain friendly relations with European countries while fueling the greatest threat to their security since the end of the Cold War. »
“All banks that facilitate financial transactions involving military assets to the Russian defense industrial base face the risk of US sanctions”declared the Secretary of the Treasury Janet Yellen at the beginning of the month.
Problem is, Russia and China have almost stopped using the dollar. More than 95% of Sino-Russian trade is now settled in yuan or rubles. So the only credible threat is a disconnection from the SWIFT network. Or a freeze of the 775 billion dollars that the Chinese central bank holds in the form of US Treasury bonds…
However, China has its own international payment system. THE CIPS facilitated transactions worth the equivalent of $17 trillion in 2023.
And while 85% of Chinese international transactions involved the dollar in 2010, it is only 42% today:
The freewheeling Empire
The United States is increasing sanctions. Venezuela paid the price again a few days ago, and Pakistan could well be next on the list. Washington made its threats immediately after the Iranian president's recent three-day visit to Islamabad.
The gas pipeline project has provoked the ire of the Americans who want at all costs to prevent Iranian gas from reaching the Chinese industrial giant. Iran indeed has the second largest gas reserves in the world.
Let us not forget that Syria was destabilized to prevent the gas junction between Iran and Europe. Its geographical position makes it essential for any gas pipeline connecting Europe to the Middle East. Unfortunately for the Syrians, favoring the Iranian tube rather than that of Qatar caused their downfall.
[L’Iran et le Qatar puisent en effet tous deux dans le même gisement gazier North Dome / South Pars à cheval sur leur frontière maritime.]
The Shiite alliance (Syria, Iraq, Iran) had long displayed the ambition to build this “Friendship Pipeline” towards Europe. But the Swiss Elektrizitäts-gesellschaft company in charge of the project was forced to withdraw because of American sanctions.
It is no coincidence that the “Free Syrian Army” was created just a few months after the signing of the agreement in principle between Iran, Iraq and Syria. Not to mention ISIS which emerged at the same time on the Iraqi side…
Geopolitics is inseparable from the fossil fuel map. It is about controlling energy resources and the currency in which they are purchased. But the Persians refuse to sell their carbon in dollars.
Hence the embargo that the United States has imposed on them for several decades. We always come back to the privilege of the petrodollar.
Chaos and bitcoin
How much longer can the United States afford to sanction all nations that refuse to align with its imperialist foreign policy?
BRICS is now an alliance far too large to be intimidated by force. The alliance holds nearly 40% of the world's oil reserves (even 57% with Venezuela). It’s almost 60% for gas.
The hostility of the West towards emerging countries is very worrying. We are heading towards a breakdown in trade (and energy) ties, or even a world war if the United States does not agree to abandon its exorbitant privilege.
More than 20% of oil exports are now sold in currencies other than the dollar. BRICS will not turn back.
As the chief economist of the S&P rating agency said last summer: “the dollar no longer has the same force of attraction as before”.
“The US dollar will remain a leading global currency, but it will no longer be the dominant global currency”had added Mr. Gruenwald.
Unfortunately, the United States refuses to make up its mind. The risk being a breakdown in commercial relations if the tone rises. Nothing could be more bullish for bitcoin. For three reasons.
The first is that bitcoin transactions are unstoppable, unlike those on the SWIFT network. Bitcoin and the Lightning Network form a global payment network that is very valuable in the event of fragmentation of payment systems.
Second, if Beijing also has its foreign exchange reserves “frozen”, the whole world will be looking for a new international reserve currency. This is actually already the case since the freezing of Russian foreign exchange reserves. Central banks are buying gold lavishly, which bodes very well for bitcoin.
Finally, the generalized inflation that de-globalization would cause will quickly draw attention once again to bitcoin and its absolutely finite money supply.
It is no coincidence that bitcoin appreciates as geopolitical tensions increase. If you liked this article, don’t miss this one: Bitcoin must replace the dollar.
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