Friday, August 14, 2020

Cowboy Trump desperate for a few dollars more

May 09. 2019
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Donald Trump doesn’t seem to know nor want to accept that America’s imperialism and exceptionalism will come to an end when the dollar collapses.

By unilaterally imposing sanctions to stop any country buying Iranian oil, and exacerbating the chaos in Venezuela by staging a failed coup after trying to cut the civilian electricity supply, Trump’s administration is desperately and belligerently pursuing regime change in Iran and Venezuela, just as his predecessors did in Iraq and Libya. 

In sanctioning Iran, the US is breaching the United Nations’ nuclear deal with Iran. 

In Venezuela, Washington’s selection of unknown Juan Guaido to replace the legitimately elected President Nicolas Maduro is even more absurd and unthinkable.

Trump spoke of citizens’ suffering under the regimes in Iran and Venezuela while faking ignorance of the fact that their hardship stems from years of sanctions imposed by the US.

Trump’s goal is to shut down oil output from Iran and Venezuela as both countries have ditched the dollar as their petrol currency. If more oil exporting countries follow Russia, Iran and Venezuela in shifting to other currencies to sell their oil, the global demand for dollars will shrink. When the dollar tanks, the US government will find it difficult to raise money by issuing treasury bonds. Investors will be reluctant to hold more dollars or bonds unless there is a higher yield. However, a higher interest rate will drag the US economy further down since its government will find it difficult to finance its huge debt. The US national and corporate debt now stand at highs of $22 trillion and $9 trillion respectively.

However, much of the current chaos is self-inflicted. America is threatening countries with ejection from the Swift international dollar payment system, which is forcing the sanctioned countries to ditch the dollar and develop their own payment system. The EU is developing INSTEX (Instrument in Support of Trade Exchange) to buy Iranian oil while the BRICS countries are working on BRICS Pay. Russia has long since developed the STFS (System for Transfer of Financial Messages) as it has been sanctioned for years by the US. China has developed its own CIPS (China International Payments System) and pays for its oil in yuan. When all these payment system are implemented, fewer dollars will be in circulation. 

Trump’s dilemma is that he cannot strengthen the US economy by retrenching. He has to bloat military spending in order to threaten his adversaries. Trump wants to act like a tough cowboy, his way or no way. But he is no John Wayne, he does not want just his opponent’s gun and belt, he wants to beat their pants off. With his unpredictable, capricious and insidious behaviour, Trump resembles the third of the trio in the Spaghetti Western “The Good, The Bad and the Ugly”.

Yingwai Suchaovanich

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