Oddbean

Vladimir Putin's statements about the US Dollar For those interested in reading what Putin had to say about the US Dollar, without watching the full 2hr+ interview with Tucker Carlson - snippet below from the Tucker Carlson interview. There's something to be said here about the use case and need for a neutral, apolitical, global reserve asset that no entity can control. **Tucker's Question:** Is the USD going away? How have sanctions changed the dollars place in the world? **Putin:** To use the dollar as a tool of foreign policy struggle, is one of the biggest strategic mistakes made by the US political leadership. The dollar is the cornerstone of United States power. I think everyone understands very well that no matter how many dollars are printed, they are quickly dispersed all over world. Inflation in the United States is minimal, it’s about 3 or 3.4 percent, which is I think total acceptable for the US. But they won’t stop printing. What does the debt of 33T dollars tell us about? It is about the emission. Nevertheless it is the main weapon used by the United States, to preserve its power across the world. As soon as the political leadership decided to use the US dollar as a tool of political struggle, a blow was dealt to this American power. I would not like to use any strong language, but it is a stupid thing to do and a grave mistake. Look at what is going on in the world. Even the United States allies are now downsizing their dollar reserves, seeing this everyone starts looking for ways to protect themselves. But the fact that the United States applies restrictive measures to certain countries, such as placing restrictions on transactions, freezing assets, etc, causes great concern and sends a signal to the whole world. What did we have here. Until 2022, about 80% of Russian foreign trade transactions were made in US dollars and Euro’s. US dollars account for approximately 50% of our transactions with 3rd countries, while currently it is down to 13%. It wasn’t us who banned the use of the US dollar. We had no such intention. It was the decision of the United States to restrict our transactions in US dollars. I think it is complete foolishness from the point of view of the interest of the United States itself and its tax payers as it damages the us economy, undermines the power of the United States across the world. By the way, our transactions in Yuan accounted for about 3%. Today 34% of our transactions are made in rubles, and about as much, a little over 34% in Yuan. Why did the United States do this? My only guess is self conceit. They probably thought that it would lead to full collapse, but nothing collapsed. Moreover, other countries including oil producers are thinking of and already accepting payments for oil in yuan. Do you even realize what is going on or not? Does anyone in United States realize this? What are you doing? You’re cutting yourselves off. All experts say this. Ask any intelligent and thinking person in the United States, what the dollar means for the US. You’re killing it with your own hands. **Tucker's Follow Up Question:** I think that’s a fair assessment. The question is what comes next. And maybe you trade one colonial power for another, much less sentimental and forgiving colonial power. Is the BRICS for example, in danger of being completely dominated by the Chinese economy, in a way that’s not good for their sovereignty. Do you worry about that? **Putin:** We have heard those boogie man stories before. It is a boogie man story. We are neighbors with China. You cannot choose neighbors just as you cannot choose close relatives. We share a border of 1000km with them. This is number one. Second, we have a centuries long history of co-existence, we’re used to it. Third, China’s foreign policy philosophy is not aggressive. Its idea is to always look for compromise and we can see that. The next point is as follows, we are always told the same boogie man story, and here it goes again, through a euphemistic form, but it is still the same boogie man story. The cooperation with China keeps increasing, the pace at which China’s cooperation with Europe is growing is higher and greater than that at the growth of Chinese Russian cooperation. Ask Europeans aren’t they afraid. They might be, I don’t know. But they are still trying to access China’s market at all costs especially now that they are facing economic problems. Chinese businesses are also exploring the European market. Do Chinese business have small presence in the United States? Yes. The political decisions are such that they are trying to limit their cooperation with China. It is to your own detriment, Mr. Tucker, that you are limiting cooperation with China. You are hurting yourself. It is a delicate matter and there are no silver bullet solutions, just as it is with the dollar. So before introducing any illegitimate sanctions, illegitimate in terms of the charter of the United Nations, one should think very carefully, for decisions makers this appears to be a problem.