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De-Dollarization, & more!

Good Afternoon - A lot of people are claiming Trump will be able to Pardon himself if elected.

Trumps charge is one of the state, so if elected he will not be able to give himself immunity.

Global Insights

Global De-Dollarization

During a meeting in Russia on Tuesday, BRICS announced that it is nearing the completion of its de-dollarization initiative. Economic ministers from prominent BRICS member nations revealed that their new payment system has been finalized, positioning it as a contender against the current global reserve currency, the US dollar.

The bloc aims to establish a multipolar international monetary system, signaling the eventual end of the US dollar's dominance as the sole global reserve currency. While discussions surrounding a new payment system have circulated for some time, BRICS officially confirmed its development, with the initial target being the US dollar.

For the past two years, the BRICS economic alliance has actively challenged the Western-dominated financial order, advocating for increased de-dollarization efforts and the promotion of its member countries' local currencies.

In addition to the de-dollarization agenda, the two-day meeting convened by the BRICS alliance in the Russian city of Nizhny Novgorod included discussions on expansion and economic cooperation, with 20 countries in attendance. Foreign Ministers of BRICS member countries deliberated on topics such as the forthcoming expansion of the BRICS+, strengthening economic ties, and advancing trade relations.

BRICS wants to stop using the US dollar and switch to using local currencies for transactions between its member nations. This change has caught the attention of more developing countries, who are interested in joining BRICS in 2024. Many people like the idea of using local currencies instead of the US dollar, and creating a new global reserve currency. BRICS has also discussed the concept of a gold backed currency as well as a CBDC.

Until 2022, roughly 80% of all Russia’s foreign trade transactions were done in U.S Dollars & Euro’s, as of early 2024 that has dropped to about 13%.

Nowadays, 90% of payments between Russia and China are made using Rubles and Yuan. In the past, the majority of these transactions were conducted in Dollars and Euros.

This week, Russia stopped trading in U.S. dollars, euros, and Hong Kong dollars on its main stock exchange after the U.S. imposed new sanctions to cut off funds and resources supporting Russia's war efforts in Ukraine. The Chinese Yuan now takes the lead as the most traded foreign currency on Russia's Moscow Stock Exchange. Since the United States started imposing these sanctions in 2022, Russia’s Economy has grew stronger in direct response, backfiring on The United States.

Additionally, the historic US-Saudi Arabia petrodollar agreement, a cornerstone of global finance for 80 years, has come to a close. Initiated on June 8, 1974, this pivotal deal facilitated the exchange of US dollars for crude oil exports, reinforcing the dollar's supremacy. It officially expired on June 9.

"Petrodollars" refer to US dollars earned by oil-exporting nations through oil sales, shaping global economics and geopolitics since the early 1970s. Initially, the Bretton Woods Agreement of 1944 established the US dollar as the primary reserve currency, linked to gold, promoting international trade and economic stability post-World War II.

However, in 1971, US President Richard Nixon ended the dollar's gold convertibility leading to fluctuating exchange rates and heightened currency volatility. The following year, OPEC's oil embargo, in response to US support for Israel during the Yom Kippur War, caused oil prices to surge.

In response, the US forged a pact with Saudi Arabia and OPEC nations, ensuring oil trade exclusively in US dollars in exchange for military protection and economic assistance, marking the birth of the petrodollar system.

In 1974, amidst an oil crisis and soaring prices due to OPEC sanctions, the US and Saudi Arabia struck a crucial deal.

The US agreed to purchase oil from Saudi Arabia and provide military aid, while Saudi Arabia would reinvest petrodollar revenue into the US economy, ensuring a steady oil supply to the US and financial stability for Saudi Arabia, benefiting both parties.

With the agreement's expiration, Saudi Arabia is now free to sell oil for any currency including currencies like the yuan, euros, rubles, and yen, and is exploring digital currencies like Bitcoin.

Interesting side note: Saudi Arabia intends to convert certain off-shore Oil Rigs into adventure parks tailored for tourists. THE RIG, an entertainment venture unveiled by the Saudi Public Investment Fund, marks a step in the government's initiative to enhance tourism in Saudi Arabia.

Trending

Ukraine 10 year security agreement

The US and Ukraine finalized a 10-year security agreement, as the G7 leaders vowed to secure a $50 billion loan for Ukraine, in which the funds came from frozen Russian assets.

President Biden and Ukrainian President Volodymyr Zelensky signed the security deal during a joint news conference at the G7 summit in southern Italy. The agreement focuses on enhancing cooperation in weapons production, offering military aid, strengthen defense capabilities & improving intelligence sharing.

Additionally, the Pentagon pledged to continue training Ukraine's armed forces for another ten years under this agreement. Zelenskyy stated that Ukraine urgently requires additional air defense systems to ensure the protection of its citizens and vital infrastructure.

Zelensky was supposed to finish his term in May 2024, but due to the war with Russia and the imposition of martial law stopped the planned election He's expected to stay in power for the duration the war.

French elections, what happened?

France's snap legislative election is of great importance for France, with the potential for significant political shifts, including the right wing National Rally (RN) gaining a parliamentary majority. Along with calling for snap elections, President Macron dissolved parliament as well.

Dissolution of a legislative assembly (or parliament) is when all its members' terms end simultaneously, in expectation that a new assembly will convene later, possibly with different members.

A snap election is an election that is called earlier than the originally scheduled one.

The election, divided into two rounds on June 30th and July 7th, is governed by a two-round simple majority system. Candidates must secure over 50% of votes in the first round, or the two highest scorers proceed to a runoff.

President Macron called for these elections following his centrist Renaissance party's loss to RN in the European parliamentary elections. This move is unprecedented, given his party's low polling at barely 15%. RN, despite its previous fringe status, has gained substantial support.

In France, parliamentary elections happen every five years. The next ones were set for 2027, shortly after the upcoming presidential elections. However, Macron wouldn't be able to run again since he would have completed two terms.

The roles of parliament, government, and president are distinct: the government manages policy, parliament passes laws, and the president oversees foreign affairs. A cohesive relationship between the president and parliament would mean a more one minded governance.

History & Culture - The creation of Bitcoin

Bitcoin emerged in 2008 amid a financial crisis, aiming to address trust and stability issues in traditional economic systems by bypassing corporate banks and centralized financial institutions.

Bitcoin's Proof of Work (PoW) consensus system and encrypted blockchain technology offer a secure, transparent, and trustless transaction environment while maintaining user anonymity. Innovations like Bitcoin mining incentivize network growth, while halving controls the currency's supply, ensuring scalability and sustainability.

Bitcoin's creation significantly influenced the digital economy, showcasing cryptocurrencies' potential as both a store of value and a medium of exchange. But why was Bitcoin created?

Its origins are as mysterious as they are revolutionary. Rising in the wake of the 2008 financial crisis, Bitcoin aimed to provide a secure, independent means of holding value and transacting globally without relying on banks or payment processors.

Despite its groundbreaking nature, Bitcoin's creator(s) operated under the pseudonym 'Satoshi Nakamoto'. Nakamoto, active in cryptography forums in the mid-2000s, expressed concerns about online transactions and the global economy's state. They envisioned an alternative that would empower individuals to control their money digitally, akin to simple cash transactions but for the internet.

Nakamoto's vision was a 'trustless' cash system, enabling value storage and exchange without relying on third parties. They sought to replicate the simplicity of in-person cash transactions online, free from the complexities of bank-mediated transactions.

In Nakamoto's proposed system, transactions would be peer-to-peer (P2P), bypassing banks and central authorities. Unlike traditional currencies, Bitcoin would have a fixed supply and operate independently, reflecting Nakamoto's belief that trust should be minimized in financial transactions.

The 2008 financial crisis, marked by distrust in financial institutions, fueled Nakamoto's alternative solution. Bitcoin aimed to replace the traditional trust-based system with transparent, proof-based transactions. The hash-based Proof of Work (PoW) system, which underpins Bitcoin, ensures secure, distributed information processing, with transaction records publicly accessible yet user identities protected.

Nakamoto's Bitcoin white paper laid the groundwork for this innovative digital currency and transaction processing. Despite initial skepticism, Bitcoin launched in 2009, introducing concepts like mining to manage the ledger and control the currency supply.

At the time of this post, 1 bitcoin = $65,312

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A proud man is always looking down on things and people; and, of course, as long as you’re looking down, you can’t see the things above you.

– C.S. Lewis