MCViewPoint

Opinion from a Libertarian ViewPoint

EconomicPolicyJournal.com: U.S. Threatens Iraq That It Will Lose Access to Its Bank Account at the Federal Reserve

Posted by M. C. on January 12, 2020

You can be sure that every country in the world will take notice of the threat.

When the move away from the dollar as a reverse currency begins in earnest, the flight from the dollar on foreign exchange markets will be fierce.

https://www.economicpolicyjournal.com/2020/01/us-threatens-iraq-that-it-will-lose.html

This is stunning news.

The Trump administration warned Iraq this past week that it risks losing access to a critical government bank account if Baghdad kicks out American forces following the U.S. airstrike that killed a top Iranian general, according to Iraqi officials, reports The Wall Street Journal.

Here are the details via The Journal:

The State Department warned that the U.S. could shut down Iraq’s access to the country’s central bank account held at the Federal Reserve Bank of New York, a move that could jolt Iraq’s already shaky economy, the officials said.

Iraq, like other countries, maintains government accounts at the New York Fed as an important part of managing the country’s finances, including revenue from oil sales. Loss of access to the accounts could restrict Iraq’s use of that revenue, creating a cash crunch in Iraq’s financial system and constricting a critical lubricant for the economy.

Bottom line: The U.S. continues to use the global dominance of the US dollar to bully countries that don’t fall in line with its demands.

You can be sure that every country in the world will take notice of the threat.

When the move away from the dollar as a re(serve)verse currency begins in earnest, the flight from the dollar on foreign exchange markets will be fierce.

And that is what economic blowback will look like: The crash of the dollar.

RW

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