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Bitcoin to avoid WWIII

Fri 07 Apr 2023 ▪ 7 min of reading ▪ by La Rédaction C.
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The global slingshot against the dollar is raising the specter of a world war. To avoid it, Bitcoin has to become the next international reserve currency.

dollar

The right to seigniorage

Stamping money has always been a demonstration of power. The first coins appeared in Babylon around 2000 BC, but it was only 1,400 years later that the idea of minting coins came about.

It is king Allyattes I of Lydia who had this idea. He used electrum (a natural alloy of gold and silver) to melt coins that he struck with his seal. The major innovation was that the weight of the coins was certified by this official stamp. This standard gave Allyattes’ coins a huge advantage over other coins.

The powerful Greek cities quickly did the same with theirs. They even had the idea of not accepting any other currency within their walls. This made it possible to make foreigners pay an exchange tax. A trick that has not aged a bit…

In the Middle Ages, minting money even became a sacred royal right. The fact that a duke minted his own gold coins represented a rejection of the king’s authority.

It also meant granting oneself the right of seigniorage. This meant the big tax for minting gold or silver coins. This usually ended in war…

The exorbitant privilege of the dollar

On a global scale, it is the United States that enjoys the privilege of seigniorage. This has been the case since the Bretton Woods Agreement, when the dollar, supposedly “as good as gold”, became the world standard.

This privilege increased in 1975, when Washington imposed on Saudi Arabia to sell its oil exclusively in dollars. Foreign exchange reserves in dollars have grown even larger as a result of globalization. They now stand at $6.47 trillion.

Clearly, the Americans enjoy the privilege of having a chronically negative trade balance without the dollar exchange rate collapsing. Or how to exchange paper for raw materials and other tangible goods…

The explanation lies in the fact that foreign exchange reserves in dollars are returned to the United States in the form of investment in the public debt (to earn interest). This is why the impact on the exchange rate is neutral, despite a huge trade deficit.

Controlling the international currency also makes it possible to blackmail the rest of the world. The $6.47 trillion is a sword of Damocles. Any country that refuses to align itself with Washington’s imperialist foreign policy risks losing everything.

Iraq, Afghanistan, Iran and Russia know something of this. The EU and Uncle Sam have not hesitated to “freeze” 300 billion dollars (and euros) of reserves belonging to the world’s leading nuclear power!

Not to mention fines, embargoes, speculative attacks on exchange rates, disconnections from the SWIFT network, etc.

The end of the dollar empire

The dollar is a weapon with incomparable advantages. Indeed, the current account deficit which it creates is a source of untold wealth. Over the last 12 months, the Americans have been able to drain the equivalent of 943 billion dollars from the rest of the world. That is the equivalent of 10,000 Airbus A380s…

Americans will have to accept a more reasonable lifestyle if the dollar’s share of foreign exchange reserves collapses. The depreciation of the greenback would result in a reduction in imports and high inflation. It would be a forced regime.

We are getting there in no time. Even Donald Trump has accepted it…

The rejection of the Southern countries to apply the Western sanctions against Russia is causing a backlash that has turned into a global rebellion against the American monetary hegemony.

Yet Russia does not intend to waste this rare opportunity. Duma Deputy Chairman Alexander Babakov said on March 30 that the BRICS club is working on a “new currency”:

The transition to settlements in national currencies is the first step. The next one is to ensure the circulation of digital or any other form of fundamentally new currency in the near future. I think the BRICS leaders’ summit will announce the readiness to implement this project, such work is underway.

Matching their words with deeds, Brazil and China signed an agreement last week to trade in their own currencies. And moreover via the Chinese CIPS instead of the SWIFT network.

Bitcoin for peace

For the first time in a long time, the international monetary system will change. Unfortunately, there is little chance that the Atlantic Alliance will stand by and watch. Especially if the BRICS currency were to offer privileges to its creators.

The West could be convinced that it is on a level playing field, but not at a disadvantage. This would be the case if Alexander Babakov is telling the truth and the BRICS back their currencies with the value of gold and “other commodity groups such as rare metals or agricultural land”.

Indeed, the West is not particularly rich in raw materials. It is largely in its interest to preserve the existing world order, even if it means bringing out the war drums.

Joe Biden indeed declared in February: “The idea that we’re going to send in tanks to Ukraine, that’s called World War III”…

Xi Jinping, who, according to Reuters, refuses to talk to his counterpart, told his generals that they had to “dare to fight”.

We must seriously consider the bitcoin as the next international reserve currency. Stateless, a store of value and an uncensored payment system, it is the perfect currency to oil international trade.

What could be fairer than a currency backed by the most common element: the electron. Not every country has gold or lithium mines, but they can all produce electricity.

Moreover, a currency based on agricultural land and other commodities would only repeat the experience of the dollar. Eventually, trust will be broken. Do not miss our article on the palpable fears expressed on CNN and Fox News about the twilight of the dollar standard.

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La Rédaction C. avatar
La Rédaction C.

L'équipe éditoriale de Cointribune unit ses voix pour s’exprimer sur des thématiques propres aux cryptomonnaies, à l'investissement, au métaverse et aux NFT, tout en s’efforçant de répondre au mieux à vos interrogations.

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.