In July 1944, a monumental event occurred in Bretton Woods, New Hampshire, where 44 delegates from Allied nations gathered to establish an international currency system. This system was designed to manage foreign exchange in a fair manner, allowing for post-war reconstruction and global trade. The result was the U.S. dollar becoming the world’s reserve currency, a status it has maintained for nearly 80 years, and a key factor in the world’s exponential GDP growth.
However, the rise of China’s influence and its efforts to disrupt the dollar’s dominance present a grave threat to global stability. It is imperative that the Biden administration addresses this issue with the utmost urgency, and that Americans recognize the significance of these developments.
Despite the recent focus on former President Donald Trump’s indictment, the real story lies in China’s moves to conduct transactions in yuan with major allies and trading partners. This strategy is aimed at undermining the U.S. dollar’s position as the world’s reserve currency, a move that could have severe consequences for the global economy.
Reports from Bloomberg News in February 2023 initially dismissed the rise of the “Petroyuan” as a myth. However, just a month later, Saudi Arabia and OPEC are considering using the yuan to settle Middle East oil transactions. This shift reveals China’s relentless pursuit of economic dominance, with the potential to grant unprecedented powers to the Chinese Communist Party (CCP) if the yuan becomes the global reserve currency.
Unlike the United States, where the founders separated the purse from the sword and established the Federal Reserve as an independent body, China’s President Xi Jinping holds control over both the military and the nation’s finances. Consequently, if the yuan replaces the dollar as the world’s reserve currency, the CCP would effectively control the global money supply, enabling it to manipulate economies, dictate credit terms, and impose sanctions on any nation that does not fall in line with its agenda.
Inflation and deflation are both economic phenomena with potentially devastating effects, as seen in the Great Depression and the lost decade of the 1970s. Handing over control of the global currency to China would put the international community at the mercy of a hostile foreign power that has shown no hesitation in retaliating against those who challenge its authority.
If the Chinese yuan were to become the global reserve currency, the CCP would possess the power to cripple entire nations, forcing them to comply with its policies or face economic ruin. Under such conditions, governments may be coerced into accepting human rights violations, persecution of minorities, and the erosion of civil liberties in order to appease the CCP.
The prospect of a world where the global reserve currency is controlled by an authoritarian regime like China’s Communist Party is a sobering one. It would leave nations vulnerable to the whims of the CCP, potentially forcing them to compromise on their values and principles in order to maintain economic stability.
It is therefore essential that the United States and its allies recognize the threat posed by China’s attempts to undermine the U.S. dollar’s dominance and take decisive action to protect the integrity of the global financial system. The consequences of inaction could be dire, with the potential to reshape the world order in ways that are detrimental to democracy, human rights, and global stability.