Opinion – Marcos de Vasconcellos: China and Russia use crisis to trigger New World Order (financial)

The war in Europe and the outbreak of the Covid-19 pandemic are enough for references to the year 2022 to occupy a few pages in the history books for the foreseeable future. Some lines will have to be dedicated to triggering a financial New World Order, by China and Russia.

Before this becomes history, it’s good to be aware and prepare for a tremendous change in the economic scenario.

With the historic high of oil, China is moving towards no longer paying for it in dollars. They want to trade in yuan (the local currency). The target of economic sanctions from the West since it invaded Ukraine, Russia has followed suit. They want to receive and pay in rubles and are even studying bitcoin trading.

The chronology makes it all the more interesting. Let’s refresh your memory: In January 2020, Chinese authorities identified a new type of coronavirus, affecting humans, with a high rate of transmission and lethality.

Borders were blocked, lockdowns were enacted, and, to try to heat up the economy, the US central bank fired up its printers and poured dollars and more dollars into the market.

The volume of prints was such that, as of December 2021, 80% of existing dollars had been printed in the previous 22 months.

The flood of American money took its toll, with uncontrolled inflation hitting the most diverse markets. The US and other economies, such as Brazil, raised interest rates in an attempt to drain the flow of money, and began to compete with the private sector for credit.

In January 2022, when inflation signaled to cool down, Russia invaded Ukraine, creating a crisis in the supply of oil, fertilizers, wheat and other essential inputs for the global economy.

The new wave of inflation has hit emerging economies, like us, with the prospect of a lack of inputs. And there is no interest rate increase to fix that.

Precisely at this moment, when the world is trying to digest the huge flow of dollars and, at the same time, suffers from a lack of inputs, China and Russia are moving to sell oil without the American currency.

Saudi Arabia, the world’s third-largest oil exporter (considering crude and refined), is in “intense negotiations” with Beijing to price part of its sales in yuan, Dow Jones reported.

A week after that news, Vladimir Putin announced that Russia will no longer accept payments in dollars or euros for the supply of oil and gas to the European Union and the United States.

In 2020 alone, Russia exported US$ 122 billion (R$ 579.73 billion) in oil (crude and refined) and China, US$ 24.3 billion (R$ 115.47 billion). Added together, they give the GDP of one Hungary, or half of Chile.

It is worth noting that the hardest blow against the dollarization of the economy came precisely from the country where the pandemic began and the one that kick-started the war in Ukraine.

Credit Suisse strategist Zoltan Pozsar, a former Fed executive, has already claimed that the commodity crisis triggered by the war and the pandemic was giving rise to the New World Monetary Order, which will weaken the economy. dollar-based system.

We went from the “gold standard” to the “dollar standard” and, now, we are moving towards the “commodity standard”.

As, especially after the 1970s, we started to “dollarize” our economy, every blow to the dollar is felt in the pricing of everything, or almost everything, in Brazil. Just as dollarizing investments is a good way to escape the highs of the US currency, exploring new markets should be an essential step for investors who are attuned to the global economy.

Studying the behavior of the BDRs (stocks representing other countries’ stocks) and commodities market is a good start.