by Simon Black

On the morning of February 23, 1944, US President Franklin Roosevelt sent a crucial telegram to 2 of his key allies overseas– British Prime Minister Winston Churchill, and Joseph Stalin of the Soviet Union.

World War II was still raging. And while the allies had seized the upper hand, peace was greater than a yr away.

Surprisingly, though, Roosevelt didn’t write to his allies to debate the war. He was already enthusiastic about what the world would appear to be AFTER the war was over… and within the telegram, Roosevelt invited them to take part in a conference on “postwar economic collaboration”.

The US was already the most important and strongest economy on the earth. America was the one major power that hadn’t been devastated by war. And, most significantly, the US was so RICH that they were the world’s primary creditor.

Britain, actually, was heavily in debt to the US… and on the time was actually negotiating to borrow even more cash. So Churchill couldn’t exactly refuse Roosevelt’s invitation.

44 allied nations ultimately attended what would grow to be referred to as the Bretton Woods Conference that took place in July 1944. This event famously established a brand new, post-war monetary system by which the US and US dollar became the epicenter of world commerce and finance.

What loads of people don’t know is that a form of ‘pre-conference’ took place the month before, in June 1944, in Atlantic City.

That site was chosen specifically for its cooler weather. British economist John Maynard Keynes suffered from a terrible infection in his heart valves, and hot weather made him feel much worse.

Keynes even pleaded to senior Treasury official Harry Dexter White, “For God’s sake don’t take us to Washington. . .” where the weather was sweltering in the summertime.

In the long run they settled on Atlantic City, specifically for Keynes’s health. And the primary meeting to shape the brand new global economic system even took place on the beach!

Despite the balmy setting, nonetheless, Keynes was a thorn within the side of the American delegation; he was adamantly against a post-war financial system by which the US dollar had total dominance.

As a substitute solution, Keynes advocated for competing reserve currencies… in addition to a special central bank reserve currency that he desired to call the ‘bancor’.

In the long run, though, Keynes was overruled. The US was the one country able to calling the shots, and the remaining of the world accepted America’s latest dominance.

It’s been this manner for the past 80 years. Even today, the US dollar continues for use for the nearly all of cross border trade, foreign reserves, and international financial transactions.

But as I actually have written again and again before, this status is just not written in stone. And it’s starting to alter very rapidly.

One very recent development is that, in China, the yuan just overtook the US dollar as essentially the most widely used currency for international trade.

China has essentially been the manufacturer to the world for a long time and does business with nearly every country on the planet.

Yet, up until last month, most of China’s trade was conducted in US dollars. If a Chinese manufacturer sold machinery to a Brazilian company, for instance, or if a Chinese producer bought cobalt from Indonesia, those transactions traditionally took place in US dollars.

Over time, nonetheless, China has been steadily using its own currency for trade. And other countries have been glad to go along.

So now, for instance, China might buy cobalt from Indonesia using yuan as an alternative of US dollars.

Because of this other countries will start holding increasingly more yuan to trade with China… and hence fewer and fewer US dollars.

This is just not an accident. Back in 1944, the US was very aggressive in whipping the remaining of the world into accepting the US dollar. China is following the identical playbook– aggressively rallying other countries against the US dollar and towards the yuan.

And it’s really becoming obvious.

After a recent visit to China, French President Macron urged Europe to maneuver towards independence from US foreign policy, and to rely less on the US dollar.

France… which is literally America’s oldest ally, certainly one of the most important economies in Europe, and a key leader of the European Union, is pushing against the dollar.

As well as, China and France recently accomplished their first yuan-settled LNG (liquified natural gas) trade. Again, this shows a shift from France solely using the US dollar for foreign trade, to also using the yuan.

Just before that, China and the United Arab Emirates made history with the primary ever LNG trade settled in yuan. Then Brazil and China reached a deal to ditch the US dollar and trade in their very own currencies.

Malaysia’s Prime Minister has proposed an “Asian Monetary Fund” to scale back dependence on the US dollar. Malaysia also struck a cope with India to trade within the Indian rupee.

India and Russia are settling oil deals without US dollars.

Then there may be “BRICS”— Brazil, Russia, India, China, and South Africa which account for about 40% of the worldwide population and 1 / 4 of the worldwide economy.

At a Bretton Woods-esque summit planned for this summer, BRICS will discuss making a latest currency, potentially pegged to gold, which they’ll use to trade.

Most significantly, Saudi Arabia is open to breaking the petrodollar and to begin selling oil in yuan; on top of this, Saudi’s crown prince recently stated that he was “now not interested by pleasing the US”.

The pace at which countries are turning away from the US dollar jogs my memory of the Hemingway line I discussed recently about going broke: “steadily, then suddenly.”

I’ve been warning readers concerning the decline of the dollar’s reserve status for over a decade. And it could have seemed controversial back then that the dollar could possibly be dethroned.

Now it’s blatantly obvious. This is not any longer a prediction, it’s happening in front of our very eyes.

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