The Rush to De-Dollarise and Bring Gold Standard

Russia has pegged its currency to gold. It has announced a fixed price for purchasing gold with rubles—RUB5,000 for a gram of gold. The value of the ruble, vis-à-vis the dollar, was rising since Russia passed a decree requiring buyers of its gas to pay in rubles. Now that the ruble is linked to gold, its credibility has further improved. 

Following Russia’s example, Iran is planning to announce that it will sell its gas in local currency, not in American dollars. They are planning to link their currency to gold, at an attractive rate. China too is planning to impose the condition on its buyers that they should pay in local currency. They are close to linking their currency to gold. China is the world’s largest gold producer, and its undeclared gold reserves might surpass that of the USA. 

When Russia, Iran, and China are de-dollarising and linking their currency to gold, how can the rest of Asia avoid this path? People in most Asian countries want to ditch the dollar. Japan, India, Saudi Arabia, and several other countries could de-dollarise and link their currency to gold in the next five years. De-dollarisation could soon become the new reality of the Asian economies.

Now take a guess, which country is dead set against linking currency to gold. That would be the so-called bastion of capitalism: America. The American policy makers want their fiat currency, the dollar, to be the global reserve currency because this system brings huge financial benefits to them. Since the world’s major financial systems are based on the dollar, America has a stranglehold on the economy of almost every country. 

One reason for which America invaded Iraq and overthrew Saddam Hussain’s government was because he had dumped the dollar, which he called “the currency of the enemy,” in favor of a more fair currency, the Euro. In October 2000, he passed a decree requiring the buyers of Iraqi petroleum to pay in Euros. The fate of Saddam Hussain proves that America is ready to use its military power to defend the dollar.

The dollar is not a fair currency. It is a tool of American (Western) imperialism. America would not be the world’s largest economy if the dollar was not the global reserve currency. It is a good thing that now the Asian countries are trying to de-dollarise their economy. Africa and South America should join Asia in giving the dollar a boot. Unless the hegemony of the American dollar is broken, a fair global economic system cannot be developed.