Written by: Kevin Shepherd (California Maritime Academy)
Edited by: Aimee Casey (Diablo Valley College)
Faculty Advisor: Nolan Higdon (California State University, East Bay)
De-dollarization throughout world trade is vastly underreported by corporate media outlets with larger implications of the United States’ declining power throughout the global economy. Dollarization is the use of “a different country’s currency as legal tender for conducting transactions.” In recent years, economic players in Europe and Asia have increased gold and currency reserves as well as reinstated domestic currencies. This shift is important because the power of the U.S. dollar in international trade and the United States’ hegemonic control has declined with little media coverage. Corporate media has obfuscated the minimal coverage about de-dollarization and left most of the public unaware to avoid weak appearances in the international arena.
De-dollarization is the opposite in which a country’s official currency replaces foreign currency as accepted legal tender for conducting transactions. On May 20, 2015, IWB published “De-Dollarization: China’s Gold Could Break Global Dependence On U.S. Dollar; Russia, India Closer To Switching To Local Currencies; Ruble-Yuan Settlements Shaping Up To Set A New Chapter”. The article explained the global economy’s dependence on the U. S. dollar as well as the attempts to circumvent the dollar and reinstate domestic currency by major economic players such as China. The article also noted that the increased rate of gold reserves purchased by China will eventually allow the country to challenge the United States’ longstanding hegemonic position in the realms of global trade and international financial markets.
De-dollarization is significant because it is a direct challenge to the United States’ political clout in and financial control of the global economy. According to the International Monetary Fund (IMF), the United States maintained control of the majority of the global economy with over 60% of economic reserves claimed as U.S. dollars. As more countries such as China, Russia, and Iran attempt to reinstate to their own and use alternate currencies in international trade, the United States loses economic control and the value of the U.S. dollar declines. In fact, China’s increased purchasing of gold reserves facilitates the country’s access to control the world’s reserve leaving the United States’ current control weakened. “Gold has become increasingly attractive as an alternative to reserve currencies… all weakening against the dollar in 2015, while emerging-market economies have also been keen to diversify away from U.S. assets”. In addition, the increased trading between Russia and China using domestic currencies such as the Ruble-Yuan settlements have begun to reshape the existing western-dominated economic model. Critiques of the U.S. dollar and previous attempts to de-dollarize individual economies and the global economy have experienced “sanctions, currency attacks, artificially low oil prices, ratings agency downgrades, color revolution destabilization attempts, and military threats” instigated by the United States in order to maintain financial control. The United States’ declining control throughout the global economy and declining value of the U.S. dollar is significant yet underreported.
Corporate media coverage regarding de-dollarization has been sparse and incomplete. The subject remains obscure and hidden from the public with almost no mention of the topic among the many corporate media outlets. On March 9, 2015, CNBC questioned the clout of U.S. dollars in emerging markets but failed to examine the motives for or effects of the decline. A pacification was presented in the final quote to reassure the reader that “major commodities are still priced in dollars; as long as that’s in place, even if more countries start ditching the dollar for payments, it won’t have a big impact on USD dominance”. On March 10, 2015, The Washington Post reported that a new economic system, China International Payments System (CIPS), was designed to facilitate the use and conversion of China’s renminbi currency in international trade. The article mentioned the long-term threat posed to the U.S. dollar along with potential issues such as “crushing domestic inflation and a whole host of uncomfortable economic consequences”. The author did not elaborate or inform the readers of the motives and effects of de-dollarization in foreign or domestic economies but offered consolation in the fact that Chinese currency would not replace the United States’ currency as number one over-night. On February 10, 2016, CNNMoney reported concern for China’s increased gold reserve purchases yet offered no conclusions regarding the motives. The article noted the Chinese government as the biggest buyer of all consumers of gold throughout China, but failed to speculate on possible motives, not even postulating that China might be trying to wrest control of the world’s economic reserve. “China seems to be following a more strategic campaign to counter the weight of the dollar, embodied by its successful multiyear bid to bring the yuan USDCNH, +0.4442% the IMF’s special drawing right”. The lack of critical examination and investigative journalism demonstrates how corporate media outlets are doing much less than independent outlets regarding the topic and significant effects of global de-dollarization.
The lack of corporate media coverage regarding de-dollarization may be attributed to narcissistic patriotism and political red tape. As de-dollarization is a direct political and economic challenge to the United States’ hegemonic global control, the issue remains obfuscated and hidden from public view. The few articles featured by corporate media outlets downplay the effects of the declining currency without discourse of de-dollarization motives. It is against the United States’ interest to question effects of dollarization as well as the subsequent de-dollarization actions of others because “these policies serve the empire”.
In conclusion, the underreporting of de-dollarization from corporate media outlets has left the public uninformed when it comes to this global economic reform. The de-dollarization of large economies along with China’s continued purchasing of massive amounts of gold is inevitably bound to affect the United States’ control throughout the world’s economy. The corporate media, unlike the independent press, has failed to clearly report this situation to the public leaving the people unaware and miscued about this important topic.
Kevin Shepherd, a sophomore at Cal Maritime Academy from Essex CT.