Finance in America There is bloodshed. Banks collapse one after the other. The Federal Reserve, equivalent to our Reserve Bank, has to intervene. Banks have to shell out billions of dollars to protect their depositors, whether their money is insured or not. There is also the practice of taking over the failed banks and their liabilities by financially sound banks. Inflation spreads. The question is – did anyone expect this to happen to the US so quickly? Is America facing a bigger crisis than the global collapse of 2008? Will the US ever recover from this collapse? Let’s check in detail.
∙ ‘The crash is extreme’
US Economist Peter Schiff says shocking things – “The collapse of a few banks is just the beginning. America and the Western world are on the brink of a major crisis. It will be worse than the 2008 global meltdown. The biggest financial disaster in the history of America is coming.
Although not directly related to the war in Ukraine, this is the beginning of the decline of American imperialism. The Ukraine war also happened during Mudyan. But will the US be ready to give up the supremacy of the dollar so soon? Won’t America turn against those who beat the dollar? America and President Joe Biden confidently boast that Ukraine will win the war and Russia will lose. Will Putin give up like that? That means this war will go on and on…there is no telling where it will end.
∙ Jeffrey Sacks says
Economist Jeffrey Sachs, director of Columbia University’s Center for Sustainable Development, says today’s US dollar is yesterday’s British pound. The pound was the world currency during colonial times. Pavan is Malayalam. After World War II, the value of the pound fell. Gone is the position of the most traded currency for world trade. The euro began to be used more commercially than the pound. Jeffrey Sachs says the US dollar is on the verge of falling into the same position as the pound.
All countries used billions of dollars to buy petroleum. Even that changed with the Ukraine war. Oil purchases shifted to other currencies. Russia, on the other hand, started using Chinese yuan for imports. It is an indication that Iran and Saudi are in economic alliance with China. Saudi has changed the step without speaking to America. If Saudi Arabia, which sells the most oil in the world, starts accepting other currencies instead of dollars…!
∙ Dollar is the reserve currency
The world’s foreign currency reserves are in dollars. For example, India has a foreign exchange reserve of around 60000 crore dollars. (Compared to that, Pakistan now has only 3 billion dollars in reserves. Bankrupt. That’s a different story.) However, globally, the use of the dollar as a reserve currency has dropped to 59 percent. America’s contribution to global domestic income (global GDP) is also declining. Countries that buy oil from Russia pay in their own currency instead of dollars.
The value of the Euro currency will fall further. European countries are in recession. The war is taking place in Europe. Countries that depended on Russia for petroleum and natural gas. America is self-sufficient in such fossil fuels. The war does not concern America. Because the US is located between the Atlantic and Pacific oceans, far from the war front.
That is why when the Second World War ended, Europe collapsed and the US collapsed. Ultimately, the US is trying to weaken Russia. Russia must be exhausted in the war. Prolonging the war is America’s strategy. The analysis of all the experts is that the war will be prolonged. America’s military-industrial complex needs it too.
∙ America’s enormous debt burden
The crisis of American banks was not caused by loans. Not from bad debts. Rather, the problem is America’s enormous global debt burden. When banks fail, the Federal Reserve has to step in to return investors’ money. Money from banks in good standing has to be used. Ultimately, this affects the American economy itself. Do you know how much is the total international debt of the United States? 31 lakh crore (trillion) dollars. Accordingly, the per capita debt for each American citizen is $94,240. 75 lakhs approximately. The trend of using the dollar as a reserve currency started in 1944.
Through the Brettonwood Agreement, in which 44 Allies participated. It gained strength after 1971. No matter how many dollars America prints, the value of the currency does not fall. Because it is the world reserve currency. All countries buy it and keep it. Want to win dollars? Can be bought from international market. Or America can produce and export the goods it needs and get dollars as its price. Exports to other countries are also priced in dollars.
No one knows that when the US runs out of debt to finance war, space research, research into new technologies, etc., the money for this is coming from global debt obligations. The US also borrows by selling Treasury bonds. China and others have bought trillions of dollars worth of US bonds. At the end of the bond period, the money must be returned with interest. Then that too will be counted towards the debt.
All these games are in the green of the dollar. If the dollar collapses…??? The world is pointing towards it. It is estimated that within the next 3 years, global transactions in dollars will decrease to 40%-45% of total transactions. Another result of the Ukraine war was that many countries started buying oil in their own currency or in other currencies instead of using the dollar.
∙ War good for America?
War in Europe is good for America. If Europe collapses America will have nothing and American dominance can continue. US also aims to destroy China. America will retaliate if China attacks Taiwan. War can also be used to weaken China. America’s economy is bloated by war. For them, war is gain, not loss. Because there is no war on American soil, no casualties. America is said to be beyond the seventh sea. They are not affected by war.
“But at the same time, economic recession and price rise have come together in the United States. Banks will fail. When the value of the dollar falls, all the investors start withdrawing their deposits from the banks. The truth is that their deposits are not sitting in the banks. The Federal Reserve will print billions of dollars to pay them. With that, the price of the dollar will fall again…inflation will increase…”Peter Schiff is predicting a terrible future.
∙ What replaces the dollar? And the Indian rupee?
There are Chinese Yuan, Japanese Yen, British Pound and Euro. The Euro is currently as strong as the Dollar. Replacing the dollar is not easy. Nouriel Roubini, a professor at New York University’s Stern School of Business, says the Indian rupee can also replace the dollar. Currently, India conducts trade transactions with many countries in rupees. Transactions between Iran and Russia are also denominated in Rs.
∙ America is backward in global politics.
Through China’s mediation, Iran and Saudi Arabia came together without US interference. Syrian President Al-Assad visited the UAE. Syria, Iran, Saudi Arabia and the UAE agreed to forget the old wars and unite. Syria returned to the League of Arab States.
Arab nations are coming together like that. Peace dawns there. There is peace with Israel, Saudi Arabia and the UAE. The conflict between Iran and Iraq also ended. None of this happened with the mediation of the United States.
China is mediating peace between Ukraine and Russia. These are signs of the end of America’s infallibility. The era of American intervention and stalling in Asia and the Arab world is over. The world with only one pole (unipolar world), with America as the only pole, is moving towards a multipolar world.
Roman, Ottoman, Mughal, Assyrian, Mongol, British…how many empires have been destroyed! Then!
English Summary: Impact of US, European bank crisis on India and the World