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.”
Jerry Bowyer is a Forbes contributor, contributing editor of AffluentInvestor.com, and Senior Fellow in Business Economics at The Center for Cultural Leadership.
Jerry has compiled an impressive record as a leading thinker in finance and economics. He worked as an auditor and a tax consultant with Arthur Anderson, as Vice President of the Beechwood Company which is the family office associated with Federated Investors, and has consulted in various privatization efforts for Allegheny County, Pennsylvania. He founded the influential economic think tank, the Allegheny Institute, and has lectured extensively at universities, businesses and civic groups.
Jerry has been a member of three investment committees, among which is Benchmark Financial, Pittsburgh’s largest financial services firm. Jerry had been a regular commentator on Fox Business News and Fox News. He was formerly a CNBC Contributor, has guest-hosted “The Kudlow Report”, and has written for CNBC.com, National Review Online, and The Wall Street Journal, as well as many other publications. He is the author of The Bush Boom and more recently The Free Market Capitalist’s Survival Guide, published by HarperCollins. Jerry is the President of Bowyer Research.
Jerry consulted extensively with the Bush White House on matters pertaining to the recent economic crisis. He has been quoted in the New York Times, The Wall Street Journal, Forbes Magazine, The International Herald Tribune and various local newspapers. He has been a contributing editor of National Review Online, The New York Sun and Townhall Magazine. Jerry has hosted daily radio and TV programs and was one of the founding members of WQED’s On-Q Friday Roundtable. He has guest-hosted the Bill Bennett radio program as well as radio programs in Chicago, Dallas and Los Angeles.
Jerry is the former host of WorldView, a nationally syndicated Sunday-morning political talk show created on the model of Meet The Press. On WorldView, Jerry interviewed distinguished guests including the Vice President, Treasury Secretary, HUD Secretary, former Secretary of Sate Condoleezza Rice, former Presidential Advisor Carl Rove, former Attorney General Edwin Meese and publisher Steve Forbes.
Jerry has taught social ethics at Ottawa Theological Hall, public policy at Saint Vincent’s College, and guest lectured at Carnegie Mellon’s graduate Heinz School of Public Policy. In 1997 Jerry gave the commencement address at his alma mater, Robert Morris University. He was the youngest speaker in the history of the school, and the school received more requests for transcripts of Jerry’s speech than at any other time in its 120-year history.
Jerry lives in Pennsylvania with his wife, Susan, and the youngest three of their seven children.