The Suicide of the Dollar: How A Legally Dubious 9 Billion Dollar Punishment from Eric Holder Endangers Us All
The Justice Department under Eric Holder just imposed a massive 9 billion dollar penalty on French company BNP Paribas, for violating trade sanctions which France does not recognize. These huge, 9bn-type fines imposed by the Obama administration on foreign companies for violating US law (even when the actions were not done here, and were legal in the domicile country in which they occurred) are giving foreign companies a large incentive not to transact business in dollars. Let’s say we have sanctions against doing business with some country, but France doesn’t have those sanctions; under Holder, the US is asserting the right to legally punish foreign companies for violating US sanctions against that country, even though the transaction didn’t occur in the US or through US banks. Our point of leverage is that the world runs on dollars, for now. But if running on dollars means putting your company under the arbitrary rule of regulators, this means the dollar is marginally less attractive with each massive punishment. This is how a reserve currency commits suicide…
“Gold is absurdly expensive to use as a medium of exchange, set against the microseconds it takes to transact through JPMorgan’s correspondent bank. But if JPMorgan is instructed by the US government to block payments from your account or to your creditor, those microseconds can turn into months.
“The result is a quiet, but growing, market for settlement in gold, in those parts of the globe where traders who do not share the US view of the world fear the consequences unless they do.
“This physical metal may merely wear a new label in the same bank following the transaction, and the more it happens, the cheaper the process becomes, and the more ways round US hegemony will be found. Using the dollar as a political weapon will (eventually) kill the goose that lays those golden eggs.”