Putin: US Dollar is a Weapon, But America is ‘Killing It’ – Is USD Dominance Declining?

Is the mighty US dollar, long considered the king of global currencies, starting to show cracks? Russian President Vladimir Putin certainly thinks so. In a recent interview, Putin didn’t mince words, stating that the US dollar is indeed a weapon wielded by the United States to maintain its global dominance. But here’s the twist – Putin argues that America’s aggressive weaponization of the dollar is actually backfiring, ultimately weakening its own power. Let’s dive into Putin’s intriguing perspective and explore whether the dollar’s reign is truly under threat.

Putin’s Bold Claim: US Dollar as a Weapon

Putin didn’t hold back in his assessment, clearly stating, “The dollar is the main weapon used by the United States to preserve its power across the world.” This isn’t just about economic influence; it’s about geopolitical leverage. He suggests that the US uses the dollar’s central role in global finance to exert pressure and control on other nations. Think about it – the majority of international trade, especially in commodities like oil, is still conducted in US dollars. This gives the US significant influence over global financial flows.

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The ‘Grave Mistake’: Weaponizing the Dollar

Here’s where Putin’s critique takes an interesting turn. He believes that when the US decided to use the dollar as a tool for political battles, it made a “grave mistake.” In his view, this weaponization is not a sign of strength, but rather a strategic blunder that’s harming the dollar itself. He emphasizes, “As soon as the political leadership decided to use the U.S. dollar as a tool of political struggle, a blow was dealt to this American power.” Putin’s argument is that by using the dollar as a stick, the US is eroding trust in its stability and reliability as a global currency.

“Killing the USD With Its Own Hands”

Putin’s language becomes even stronger when he declares that America is “killing the USD with its own hands.” This is a powerful statement, suggesting self-inflicted damage. He points to several key factors supporting his argument:

• Sanctions and Restrictions: Putin highlights the US’s increasing use of financial sanctions, asset freezes, and restrictions on dollar transactions against countries it deems adversaries. He argues this sends a clear message to the world: the dollar’s accessibility and usability are not guaranteed and can be politically manipulated.
• Allies Seeking Alternatives: He claims that even traditional US allies are starting to reduce their dollar reserves, seeking safer and more politically neutral alternatives. This is a significant point, as it suggests a broader shift away from dollar dependency, not just from countries in direct conflict with the US.
• Rising US National Debt: Putin also mentions the ballooning US national debt, currently exceeding $34 trillion. He questions the long-term sustainability of a currency backed by such massive debt, especially when coupled with the Fed’s continuous money printing. “The Federal Reserve won’t stop printing,” Putin stated, adding fuel to concerns about potential dollar devaluation.

De-dollarization in Russia: A Case Study

Putin provides concrete examples of how Russia has actively reduced its reliance on the US dollar. Before 2022, a staggering 80% of Russia’s foreign trade was conducted in US dollars and euros. However, due to sanctions and geopolitical tensions, this picture has dramatically changed:

• Dollar usage plummeted: Transactions with third countries in US dollars have dropped from approximately 50% to a mere 13%.
• Rise of Ruble and Yuan: The Russian Ruble and Chinese Yuan have stepped in to fill the gap. Transactions in Rubles now account for 34%, and Yuan transactions are at a similar level, slightly above 34%.

This shift is not presented as a voluntary choice but as a necessity driven by US policy. “It was not us who banned the use of the U.S. dollar, we had no such intention. It was the decision of the United States to restrict our transactions in U.S. dollars,” Putin clarified.

BRICS and the Push for Local Currencies

Putin also emphasizes the growing influence of the BRICS economic bloc (Brazil, Russia, India, China, South Africa, and now including Saudi Arabia, UAE, Iran, Egypt, and Ethiopia). He notes the bloc’s rapid development and its increasing push for using local currencies in trade among member nations, further reducing reliance on the US dollar. This trend towards de-dollarization within BRICS and beyond could have significant long-term implications for the dollar’s global standing.

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Is Putin Right? The Broader Implications

While Putin’s perspective is undoubtedly influenced by geopolitical tensions, his arguments raise important questions about the future of the US dollar. Is the US indeed overplaying its hand by weaponizing the dollar? Are we witnessing the beginning of a slow but steady decline in dollar dominance? Here are some key takeaways to consider:

• Erosion of Trust: Weaponizing the dollar can erode trust in its neutrality and reliability, potentially driving countries to seek alternatives.
• Rise of Multipolarity: The push for local currencies and the growing influence of blocs like BRICS suggest a move towards a more multipolar financial system, where the dollar’s dominance is challenged.
• Economic Consequences for the US: If the dollar’s global role diminishes, it could have significant economic consequences for the US, potentially impacting its borrowing costs, trade advantages, and overall economic power.

Final Thoughts: A Wake-Up Call?

Putin’s interview serves as a stark warning. Whether you agree with his geopolitical stance or not, his points about the potential risks of weaponizing the dollar are worth serious consideration. He concludes with a direct question to the US: “Do you even realize what is going on or not? Does anyone in the United States realize this? What are you doing?” Perhaps this is a wake-up call for the US to re-evaluate its approach and consider the long-term consequences of its financial policies on the dollar’s global standing. The future of the dollar, and indeed the global financial landscape, may well depend on the answers to these critical questions.

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