Is this the beginning of the end for U.S. dollar as reserve currency?

[OnlinePoker]

In a symbolic blow to U.S. global financial hegemony, Russia and China took a small step toward undercutting the domination of the U.S. dollar as the international reserve currency on Tuesday when Russia’s second biggest financial institution, VTB, signed a deal with Bank of China to bypass the dollar and pay each other in domestic currencies.

The so-called Agreement on Cooperation — signed in the presence of Chinese President Xi Jinping and Russian President Vladimir Putin, who is on a visit to Shanghai — could be followed by a long-awaited announcement this week of a massive natural gas deal 10 years in the making.

“Our countries have done a huge job to reach a new historic landmark,” Putin said on Tuesday, making note of the $100 billion in annual trade that has been achieved between the two countries.

http://america.aljazeera.com/articles/2014/5/20/russia-china-bankdeal.html

[Demeter]

1. Short answer: Absolutely

Longer answer: and about time, too. They wouldn't listen to the People, because they were the 1%. Let's see how they do without that.

[Tuesday Afternoon]

2. Amen. I can't believe I am wishing this on all of us just to teach those asshats a lesson ...

But ...

LET THE CLASS BEGIN !!

Bring IT !!

[yeoman6987]

3. This is really not good at all

Ok so we symbolically can say, "See we told you so 1%ers" but the ones hurt from this ultimately will be the poor. What do you think they will cut when we need to make cuts to take care of the billions? The 1%ers? No way. It will be to cut the Social Security by 1 percent a year. Cut Food Stamps again. Cut unemployment time period by a month (at least), cut Veteran's pay by 1 percent, etc. The 1% will not see any cuts at all.

[Art_from_Ark]

6. I agree 100%

The so-called 1-percenters have all sorts of ways to avoid currency crises, but people who are stuck using the US dollar will find its value steadily eroding as it becomes just another over-issued, unbacked fiat currency. And those at the bottom will see the worst effects, as you have pointed out. The declining status of the US dollar is NOT something to be cheering for.

[magical thyme]

8. they will do fine.

the People are the ones who will pay for their misdeeds.

[dixiegrrrrl]

4. Iran has been doing same, which is part of reason for "sanctions"

the idea of using anything except dollars for trade is not new, but US certainly has fed the concept with plenty of ham handed hubris.

[mbperrin]

5. This is a positive for the US, actually.

Without being a reserve currency, values will align far more sharply with domestic supply and demand, instead of being subject to the sovereign whim of every mad dictator, cheating foreign businessman, or anyone else with an ax to grind with us.

Gives us a bit of a cushion, and yes, the seigniorage folks will be sad. Boo-hoo, get a real job.

[jakeXT]

7. As they say, the reserve currency is a blessing and a curse at same time. /nt

[AnneD]

9. Here on SMW and WEE...

We have suspected this was coming down the pipeline we just didn't know the trigger. We speculated Iran but it looks like Russian and China may get the honours.

Fasten your seatbelts, it's going to be a bumpy ride.

[roamer65]

10. Not quite yet.

When the Saudis start accepting other currencies as payment for oil, that will be the beginning of the end.