paafin:
The old economic order, in which the dollar's centrality to global trade remains king, is beginning to fade. The latest example of the dollar's demise comes as China purchases coal and oil from Russia in yuan due to Western sanctions isolating Russian banks from the SWIFT payment system.

Chinese commodity firms purchased Russian coal in local currency in March, and the first shipments are expected to arrive in China this month, according to Bloomberg, citing Chinese consultancy Fenwei Energy Information Service Co. Traders said this coal shipment paid in yuan would be the first since the U.S. and Europe unleashed harsh sanctions severing some top Russian banks from SWIFT.

Traders are also reporting Russian crude bought in yuan. The first Eastern Siberia Pacific Ocean grade crude shipment will arrive at Chinese refiners in May.




Russia and China trading yuan for commodities is just one example of a new emerging economic order.

Premium subs should recall former N.Y. Fed repo guru and current Credit Suisse strategist Zoltan Pozsar's stunning note last week that said the consequences of the Ukraine war are ushering in "the birth of the Bretton Woods III - a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the west."

Fast forwarding to the punchline, Poszar wrote that if the framework he has laid out previously (and again, in his latest note) is the right framework to think about how to trade interest rates in coming years, inflation will be higher; the level of rates will be higher too; demand for commodity reserves will be higher, which will naturally replace demand for FX reserves (Treasuries and other G7 claims); Meanwhile, demand for dollars will be lower too as more trade will be done in other currencies; and as a result of this, the perennially negative cross-currency basis (the dollar premium) will naturally fade away and potentially become a positive cross-currency basis.

Translation: the dollar is on its way out as the world's undisputed reserve currency, a consequences of events that put in motion when Putin invaded Ukraine (with the implicit blessing of China and India) and when the West decided to expel Russia from the entire western financial system.

It is this chain of events that Pozsar calls Bretton Woods III and the reports of China's purchases of oil and coal in yuan (not dollars) suggesting the path to that new world order is accelerating faster that many hoped (as the surge in the Ruble may also suggest).

Pozsar spoke with Bloomberg's Joe Weisenthal and Tracy Alloway this week and recited his Bretton Woods III thesis, suggesting:

"Instead of a Volcker moment, we got a Putin moment and we basically have war and out of this war, something will also emerge.

"Out of this, I think this 'Bretton Woods III' that I started to kind of develop and run with, is a world where we are, again, going to go back to commodity-backed money — where gold, once again, is going to play a big role. And not just gold, but I think all forms of commodities," Pozsar said.
https://www.zerohedge.com/geopolitical/bretton-woods-iii-china-begins-buying-russian-coal-and-oil-yuan


For those who claim China are backing away from Russian commodities

joyandfaith:


Why not buying them with Ruble? Why yuan?

joyandfaith:


Why not buying them with Ruble? Why yuan?

VictorUSA:
Cheap propaganda.Trusted source has it that China avoided buying Russian oil despite heavy discount.

paafin:


China is not an enemy state.

Only Enemy states will pay in Rubles..

Friendly states can pay in whatever form they choose but not in Dollars or Euro.

joyandfaith:


China stills trade International in dollar but buying from Russia in yuan is to strengthen yuan against Ruble.

paafin:


Let's see your source

Hope it's not an unnamed Reuters source

MangekyoAlt:

The guy is a fool
He will give you Reuters and when you go on the read it, you'll notice that Reuters does not cite any source. They just put together articles and ditch out to gullible people

paafin:


Buying with Yuan with equivalent to the value of Gold..

Russia made more money

joyandfaith:


How did dollar become reserve currency? Gold factor. USA had highest gold reserve then. Which country has highest gold reserve now? USA.

paafin:


Russia is getting there soon

sapientia:
I read the first sentence and immediately rushed to source

joyandfaith:


International order does work that way.

gambojimeta:
Why not rubbles

Chinese man and cunniness. Awoof no go kill china

joyandfaith:


How did dollar become reserve currency? Gold factor. USA had highest gold reserve then. Which country has highest gold reserve now? USA.

paafin:


International orders are for slaves and puppets!

Drenimarcus:


Sorry Fort Knox is out of gold, Nixon changed this, why do you think it is called petrodollar when they signed the deal with the Saudis?

https://bulliontp.medium.com/1971-nixon-and-the-end-of-the-gold-standard-c43ff69221ad

joyandfaith:


USA still has highest gold reserve now.

atiku07:


stolen gold u mean

joyandfaith:


USA still has highest gold reserve now.

Drenimarcus:


Ah didn't see the post, yes we do but the gold isn't tied to the dollar anymore. Apologies.

joyandfaith:


Bretton Woods institutions