The geopolitical battle over currency control

N the fifth of a series on the reduction of dollar power (and inevitable value of the dollar) and the impact that will inevitably have on your finances, I wanted to cover how the dollar has been weaponised and used as a geopolitical tool of compliance, punishment and hierarchy, and how that has led to governments, wealthy individuals and institutions moving away from it to protect themselves.

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Since 2014, Russia and others across the world have been quietly preparing alternatives to the dollar. They've built parallel systems, stock piling gold, reducing dollar exposure. Why? Because money has been turned into a geopolitical leash.

The weaponisation has deeper historical roots: Iran in 1979 and since. Venezuela. Saddam Hussein sought to sell oil in euros. Gaddafi backed a pan-African gold-backed dinar. Both faced military interventions shortly after.

The United States has long enjoyed what economists call "exorbitant privilege" the ability to print the world's reserve currency, set global interest rates and finance deficits without fear of collapse.

That privilege was based on trust. The dollar worked because people believed it wasn't political. It was reliable and safe in the face of difficulties. That illusion collapsed in 2022.

In response to the Ukraine war, the US and its allies froze more than $300 billion in Russian central bank reserves legally-owned funds held in supposedly neutral Western institutions.

You'd have to back to the Cold War to find such a move, and, even then, Moscow's reserves were left untouched.

An aside...you need to set aside any political bias or prejudice to think this through correctly.