Authored by James Rickards via DailyReckoning.com,
Janet Yellen delivered a speech at the 2024 U.S. Treasury Market Conference in New York on September 26, focusing on risks in the banking system and the U.S. Treasury debt market.
In an interview with Politico before her speech, Yellen was questioned about potential risks associated with a smooth presidential transition during the current election cycle. The implication was that there could be challenges if Donald Trump were to contest the election results or if radical groups like antifa were to incite violence in case of his victory. Yellen emphasized the importance of a democratic system and the rule of law in maintaining a stable financial system.
Yellen’s remarks subtly hinted at Trump’s actions on January 6, 2021, and the potential risks they pose to the rule of law and financial stability.
Yellen’s statements reflect the Biden-Harris administration’s comprehensive approach, where all government departments are expected to align with top priorities, even if unrelated to their usual scope.
Yellen’s involvement in discrediting Trump by suggesting he threatens the financial system and Treasury market is a political maneuver that extends beyond the Treasury Department’s usual role. Ironically, Yellen’s own actions, particularly her attempts to appropriate Russian Central Bank-held Treasury securities, pose a significant threat to the Treasury market.
Efforts by the BRICS and the Global South to establish a new gold-linked currency, partly in response to Yellen’s actions, will see significant progress at the upcoming BRICS leaders’ summit in Kazan, Russian Federation.
While the potential new BRICS currency may not immediately replace the dollar as a dominant reserve currency, it poses a substantial challenge to the existing financial order.
BRICS Currency Won’t Displace Dollar Overnight
The BRICS, consisting of Brazil, Russia, India, China, and South Africa, have been actively working on developing initiatives such as the New Development Bank and the Contingent Reserve Arrangement to establish their financial infrastructure.
With the addition of new members and potential expansion, the BRICS are positioning themselves as a significant economic and geopolitical force.
The transition from a payment currency to a reserve currency, especially for the proposed BRICS currency, requires the development of a robust bond market and legal infrastructure, which currently lacks the necessary framework.
Despite challenges, recent developments such as the U.S.’s weakening rule of law due to actions like sanctions on Russia and Yellen’s controversial tactics, have prompted a shift towards alternative assets like gold among central banks.
The upcoming BRICS summit and Yellen’s actions are contributing to the growing momentum towards a new payment currency and the decline of the dollar’s dominance.
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