The Church of God International

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Watch the Dollar

by Mike James

Some seem to be concerned by the meeting between Vladimir Putin and Xi Jinping in late March, but some may have missed something that was said during that meeting. Describing their discussions, Putin said, “We are in favor of using the Chinese yuan for settlements between Russia and the countries of Asia, Africa, and Latin America.” So, what’s the big deal?

Well, according to Fareed Zakaria (CNN commentator) and others, China and Russia are trying to weaken the United States (US) dollar’s dominance as the primary currency of the international financial system. 

The US dollar is America’s secret weapon in the world. It gives us unrivaled economic and political power. We can put sanctions on countries unilaterally, freezing them out of large swaths of the world economy. And when we spend freely, we are certain our debt, usually in the form of T-bills, will be bought by other countries in the world.

But due to US sanctions on Russia because of the war in Ukraine and our recent confrontational stance with China, things might be changing in the future. Both Russia and China are quickening their pace in diversifying away from the dollar. China and Russia’s central banks are holding less of their reserves in dollars, and most of the trade between them is in the Chinese yuan. They are also trying to influence other countries to do the same.

Some countries have begun to take notice of the US’s ability to put sanctions on countries due to the power of the dollar. Countries don’t want to be put into a position like Russia is now in. I’m sure the Iranians would agree. Evidence of this can be seen in global bank reserves. Over the past 20 years, the dollar has dropped from about 70 percent of those reserves to about 60 percent now. Both the Europeans and Chinese are trying to build international payment systems outside the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system, which is dominated by the US dollar. Saudi Arabia has talked about pricing its oil in Chinese yuan. India is settling most of its oil purchases from Russia in non-dollar currencies. Digital currencies are being discussed as an alternative by many nations. China’s central bank has already created a digital currency.

Any change away from the US dollar as the primary world currency will add costs to nations that decide to move away from it. But it seems clear Russia and China are willing to add costs to obtain political goals. 

Ruchir Sharma, Rockefeller International, chairman, opines: “Right now, for the first time in my memory, we have an international financial crisis in which the dollar has been weakening rather than strengthening. I wonder if this is a sign of things to come.”

It is also Sharma’s opinion that the world is slowly moving to a post-dollar world. He foresees a weakening of the US dollar moving forward.

If the world begins to move away from the dollar, according to Zakaria, America should worry. He says America’s politicians are used to spending without concern for deficits. Our public debt has gone up from $6.5 trillion 20 years ago to $31.5 trillion today. The Federal Reserve has solved recent financial crashes by expanding its balance sheet from around $730 billion 20 years ago to about $8.7 trillion today. We can do this because of the special place in which the world holds the dollar. But if the world decides to go in different directions, the US will be facing an economic reckoning.

Perhaps our leaders in Washington need to wake up to the fact that all worldly powers eventually fall. The record of history makes this clear. We have placed on our currency the words, “In God we trust.” But the actions of our leaders and our citizens don’t reflect this. 

The prophet Micah provided a warning to the leaders of Israel (Micah 3:8-12) that we need to heed today. Israel’s leadership, despite their sin, believed they would be protected since they claimed to believe in Yahweh. But Micah promised a reckoning from God despite Israel’s belief. Hypocrisy can only last so long before there is a reckoning.

All of us need to heed the words in Proverbs 3:5, “Trust in the Lord with all thine heart; and lean not unto thine own understanding. In all thy ways acknowledge Him and He shall direct thy paths.” 


Sources: “The Dollar is Our Superpower, and Russia and China are Threatening It,” by Fareed Zakaria, The Washington Post, March 25, 2023

“We are moving toward a post-U.S.-dollar world, says Rockefeller International’s Ruchir Sharma,” CNBC, March 17, 2023, https://www.cnbc.com/video/2023/03/17/we-are-moving-toward-a-post-u-s-dollar-world-says-rockefeller-internationals-ruchir-sharma.html