Yoon has repeatedly denied requests from law enforcement to appear for questioning over his martial law declaration. Authorities say they have requested the warrant on charges of abuse of power and for leading an insurrection.
Yoon’s legal team denies the charges, arguing that “an incumbent president cannot be prosecuted for abuse of power.”
Yoon has been suspended from office since the National Assembly’s impeachment vote but has vowed to “fight until the last moment.” He claims he never meant to disrupt the “constitutional order” when he sent hundreds of troops to the National Assembly on Dec. 3.
Now, South Korea’s Constitutional Court must decide whether or not Yoon should be removed from office. If the court decides to oust Yoon, an election will need to take place within 60 days of the ruling. A majority of South Koreans reportedly believe that the declaration of martial law by Yoon was inexcusable.
Political crisis in S. Korea worsens as N. Korea breaks silence on situation
North Korea, well known for its long history of suppression of free speech and abuse of human rights, broke it silence on Wednesday, Dec. 11, over President Yoon Suk Yeol’s short-lived declaration of martial law last week. North Korean state media KCNA called the move an “insane act, reminiscent of the coup during the military dictatorship decades ago.”
The North Korean outlet also focused on a series of protests by tens of thousands of people demanding Yoon’s impeachment, which lawmakers reportedly tried and failed to do over on Saturday, Dec. 7.
Foreign policy experts told NBC News North Korea’s criticism is in line with its history of exploiting civil unrest in South Korea, but they said it’s unlikely the nuclear-armed Pyongyang can take advantage of the political chaos, considering some of its most elite forces are currently fighting for Russia in Ukraine.
Seoul’s political crisis continued to spiral this week. CNN reported South Korean police raided the presidential office on Wednesday, as the probe of Yoon’s martial law declaration widens.
Additionally, the former South Korean defense minister reportedly tried to commit suicide while in police custody. South Korean officials said he has now been moved to an isolation room and has no health issues.
During the martial law declaration, South Korean security forces reportedly broke windows and doors at the National Assembly in an attempt to stop lawmakers from gathering.
Before resigning, the former defense minister took responsibility for the military’s actions.
“All troops who performed duties related to martial law were acting on my instructions,” he said.
China’s population problem: Aging people, fewer babies, ‘lying flat’ youth
At one point, China was so worried about its rapidly growing population that the Chinese Communist Party implemented notorious family-planning policies. But now its population has peaked, its workforce is aging and the party can’t convince its people to have more kids.
In 2023, India will take the long-held title of the world’s largest population from China. In August, state media reported that China’s fertility rate hit a new record low of 1.09 births per woman in 2022. The United Nations population replacement level is 2.1.
“I think the government underestimated what the one-child policy would do,” China sociologist Doug Guthrie said.
Flipping the family-planning switch
After the Chinese Communist Party took control in 1949, leader Mao Zedong encouraged the Chinese to have many children, believing population growth would strengthen the country.
In a two-decade span, China’s population surged from around 550 million to over 800 million. By the 1960s, women on average were having more than six kids each.
“China had a massive population and needed to really think about economic growth in the context of that demographic bubble,” said Guthrie, who is director of China Initiatives at Arizona State University’s Thunderbird School of Global Management.
The CCP determined it was time for a course correct. In the 70s, the party launched a nationwide family planning program, promoting delaying marriage and childbearing, child spacing and limiting fertility.
The fertility rate plunged but by 1980, the CCP took it even further with the one-child policy. China’s fertility rate eventually dropped below the replacement level and after decades of low fertility, the CCP again tried to course correct. In 2016, the one-child policy became the two-child policy, and in 2021, they upped it to three. But still, the fertility rate dropped.
“They thought, ‘If we just take away the regulations, people will have more children and we’ll have a new demographic level growing up to help run the economy,’” Guthrie said. “And I think the cultural change was what the party underestimated because people didn’t immediately start having more children and bigger families. They thought, actually, a single child for two parents is the right number.”
China recorded its first population drop in modern history in 2022. China’s total population could be cut nearly in half by 2100, according to the UN’s medium projection.
I don’t think it’s catastrophic. This is still the second-most populous nation in the world. There’s 1.4 billion people. There’s a lot of people that still live in abject poverty who need to work in the manufacturing sector. And there’s a very robust, private economy.
Doug Guthrie, China scholar and sociologist
The age-old problem
It’s the rapidly aging population that’s of bigger concern for China’s economy. By 2079, there could be more people outside the working-age population than in it, according to the UN’s medium estimate. That would mean a lot of dependents for a shrinking workforce to take care of.
But while that is decades down the road and China’s working population is currently at its peak, there are already economic implications at play for the working age.
“Most of the consumption in a modern system happens when you’re in your 20s and 30s, when you’re buying cars and raising kids and buying homes,” geopolitical strategist Peter Zeihan said in a recent SAN commentary. “Because of the one-child policy, the Chinese don’t have much of a generation in that block at all. And since the one-child policy is now over 40 years old, we’ve now had a full generation of people to not have kids and that is manifesting in the data as well.”
Not only are they not having kids, there is a movement of young adults that are not buying into the grind. In China, it’s called the “lying flat” youth, where a generation is rejecting working long hours for little pay.
“Maybe this is a vestige of the sort of cultural residuals of the one-child policies,” Guthrie said. “If you have two parents taking care of you and then you go off to college, maybe you’re not so ambitious, maybe you do just want to lay at home and look on social media. So there’s a big demographic here that I think the government worries about. It’s not just about people not finding jobs, it’s people are not wanting jobs to be the engine of the performance as much as possible.”
For June, China’s urban youth unemployment rate hit a new record of 21.3%. July’s numbers are not publicly known. China said it would suspend reporting the data, mere months after it stopped publishing consumer confidence.
Russia sanctions ‘weaponized’ US dollar and now countries want to move away
The latest swell of dedollarization really gained steam after the U.S. levied harsh financial sanctions against Russia for invading Ukraine. Russia, its allies and economic partners have gone as far as discussing creating a brand new currency to combat dollar dominance.
As the current world reserve currency, the U.S. dollar is at the center of the vast majority of global transactions.
“It gives us the ability to inject ourselves into any economic exchange, and I don’t mean to minimize how useful that can be. That’s one of the reasons why the sanctions on Iran have been so effective and even relatively light sanctions, in comparison, on Russia have been effective.”
Peter Zeihan, geopolitical strategist
But those sanctions have in turn spurred renewed desires by some nations to move away from the U.S. dollar.
Peter Zeihan: Financial sanctions actually weaponized the U.S. dollar, really, for the first time against a significant state. I mean, when you do it against Iran or North Korea, it’s really pretty small, it doesn’t matter. Russia matters.
And the Europeans made the decision as part of that process to basically make the euro, from a legal point of view, a subsidiary of the U.S. dollar system. So you now have the three biggest currency blocs in the world, the dollar, the euro and the yen, that have basically moved into lockstep.
So if you want to have a currency system, you have to have one that is now outside three of the four largest economies in the world, and the remaining one, China, is not convertible. So you are saying that you would have to build an independent currency that trades alongside of these that is fully convertible to all of them that is not under their control.
So then the question becomes, whose control is it under? Because if it’s an independent authority, wow, the best way to get what you want for your country is to bribe the hell out of that authority. And that’s one of the reasons why this just can’t work. You can really only have one.
Brent Jabbour: Peter, is this why the idea of the BRICS currency can’t work? Because there’s no possible way that it can’t be bought and paid for by somebody?
Peter Zeihan: Either it’s independent, in which case it’s the most corrupt system you can imagine, or one of the countries manages it, in which case that country manages it for his or her own economy, in which case everyone else is left on the outside.
Even with the United States weaponizing the dollar, it is still the least bad option for everyone, even the Russians. One of the things that the Russians discovered when they dumped a bunch of money into the yuan is they went back a few months later and tried to pull it out and the Chinese were like, “No, no, that’s okay. We don’t want it back. You can keep it.”
And they had to go back to basically pulling dollars off of international exchanges on the black market and then flying gold around because it was really the only other option they had.
Simone Del Rosario: I read that Russia is holding about a third of the tracked world reserve currency in yuan, is that correct to your understanding?
Peter Zeihan: That sounds about right, yes.
Simone Del Rosario: That’s a significant stake there when you’re talking about global proportions, for Russia to be holding a third.
Peter Zeihan: And as the Chinese have shown them, it’s not something they can do anything with.
The dollar is king but for how much longer? How reserve currencies fell.
The U.S. dollar has been the world’s dominant reserve currency for as long as most people alive can remember. Dedollarization talk in the past has never amounted to much, but with renewed calls to dedollarize, is king dollar about to lose its reign?
I should say never is a very long time. I shouldn’t say never. We’re nowhere near it today, how about that?
Peter Zeihan, geopolitical strategist
Most strategists will agree the dollar is in a safe space at the top for now. But history shows nothing lasts forever and a look back at previous world reserve currencies proves it.
Simone Del Rosario: If we look at the timelines of reserve currencies in history, I would say they average about a century in power. The U.S. is kind of getting up to that point now, so why is it so out there for you to think that another currency is going to rise and take its place?
Peter Zeihan: Well, I should say never is a very long time. I shouldn’t say never. We’re nowhere near it today, how about that?
So if you look at the big currencies of the past, first you had Spain, which was basically a metals-based currency based off the Potosi silver mines in what is today Bolivia. And for several decades, the Potosi mine produced more silver than the rest of the world combined.
So we got the worst kind of inflation you can possibly imagine out of that. Silver was available in limited quantity and so if you wanted to have trade, you had to get silver, which pushed up the value of the currency.
But the Spanish were literally mining the currency. And whenever the Spanish had an interest, they would go into a local market and buy up whatever they needed: equipment, steel, ships, men, whatever, to launch wars.
So you got disruption, you got supply-side inflation, you got demand-side inflation. At the same time, you had global disconnects and disruptions. So yes, it was our first true global currency, but it was never going to last because of the way the Spanish managed it.
The Brits came up with the pound and gold and that was a technological currency because they had their technological revolution at a very similar time frame. And as they became the global navy, combined with the industrial revolution, they were able to do it on military and economic terms and that was much better for everyone, unless of course you are one of the hundreds of countries that happened to be under the colonial boot every once in a while because the Brits really did control everything for a while.
That was ultimately displaced when the technologies of industrialization went other places. By the time we get to the end of World War II, France is industrialized, the Netherlands is, Germany is, Japan is, the United States is. And because of the destruction of the war, the United States emerged from the war with an economy roughly the same size as everybody else put together, meaning we didn’t even have an option as to what the currency would be then.
We are now entering a period where globalization is breaking down and the United States was already, of the major countries, the one least involved in trade. So again, at this moment, the United States is the only one on the board.
If you fast forward 50 years, if we get a different global economic system that is based on something else, if we find out what sort of economic model we’re going to get in an environment where demographic decay has been going on for decades and capitalism and socialism and fascism no longer work, then we’ll have a conversation about what the currency is going to be.
But right now, the United States has the healthiest demography of all of the G20 countries except for Argentina. It’s the largest economy by far. It’s the least involved in international trade and it has rule of law. So you might not like the United States for this, that or the other reason, but from a mechanical point of view of what makes a good currency, no one else even scratches one of those categories, much less all three.
Foreign ministers from Brazil, Russia, India, China and South Africa, nations known collectively as BRICS, have recently discussed using alternative currencies to challenge U.S. global influence. Representatives from the bloc gathered in Cape Town, South Africa, in early June ahead of a pivotal August summit.
“In the aftermath of the United States doing some pretty severe financial sanctions on the Russians, people are wondering if there’s a way to get away,” geopolitical strategist Peter Zeihan told Straight Arrow News’ Simone Del Rosario.
The BRICS bloc already consists of more than 40% of the world population and about a third of global economic output. Now it is considering expanding its ranks for the first time in more than a decade.
At least 19 countries have asked to join the emerging-nations group, according to Anil Sooklal, South Africa’s ambassador to the group. Saudi Arabia, Iran, Argentina and the United Arab Emirates are among those interested in joining.
Back to dedollarization
With the likes of China and Russia in the group, it’s unsurprising BRICS is looking for ways to diminish U.S. influence. Since its creation, BRICS has been a counter to Western economic influence, from using the U.S. dollar as the world reserve currency to the U.S.-centric World Bank.
BRICS countries established the New Development Bank in 2015 as an alternative to the World Bank to facilitate funding for projects in developing nations.
While the NDB currently uses the U.S. dollar for most of its financing, President Dilma Rousseff announced this year the bank plans to finance more projects in local currencies to avoid foreign exchange fluctuations.
“We need to create a diversified global currency system,” Rousseff said in May. “In the future, it is unlikely that one single currency can dominate the world’s currency system.”
More than 58% of global reserve currencies tracked by the International Monetary Fund are held in U.S. dollars as of 2022. Less than 3% is held in the Chinese renminbi, the currency of the second-largest economy in the world and the most dominant nation in BRICS.
Would a BRICS currency work?
While BRICS members have discussed the possibility of creating a BRICS currency to counter the U.S. dollar, Zeihan expressed serious doubts about establishing a new currency.
“If it’s an independent authority, wow, the best way to get what you want for your country is to bribe the hell out of that authority. And that’s one of the reasons why this just can’t work.”
Peter Zeihan, geopolitical strategist
“Either it’s independent, in which case it’s the most corrupt system you can imagine, or one of the countries manages it, in which case that country manages it for his or her own economy, in which case everyone else is left on the outside,” Zeihan said. “Even with the United States weaponizing the dollar, it is still the least bad option for everyone, even the Russians.”
Without naming the Russians, South Africa Foreign Minister Naledi Pandor said the purpose behind exploring alternative currencies is, “to ensure that we do not become victim to sanctions that have secondary effects on countries that have no involvement in issues that have led to those unilateral sanctions.”
The next BRICS summit is scheduled for late August in South Africa but Russian President Vladimir Putin will not be in attendance. The International Criminal Court has issued a war crimes arrest warrant for Putin, and as a member of the ICC, South Africa is theoretically required to arrest him if he steps foot in the country.
Read about the effect Russian sanctions have had on the move away from the U.S. dollar here.
Countries are souring on the US dollar. Is dedollarization really a risk?
Is the U.S. dollar really at risk of losing its reserve currency status? Dedollarization talks are heating up as more countries look to cut the U.S. dollar out of trade transactions. What would a move away from the U.S. dollar mean for the U.S. economy and what currency could replace it? Geopolitical strategist Peter Zeihan joins Straight Arrow News for an in-depth conversation.
This year’s buzzword: Dedollarization
In 2023, more and more countries are talking about mobilizing against the U.S. dollar, which has been the global reserve currency for nearly a century. The idea of dedollarization is not new but the world is seeing renewed momentum behind it, enough to get the attention of bigwig economists and major financial institutions.
First, the basics: What does it mean to be the world’s reserve currency?
The global reserve currency is the dominant currency countries hold and use for international trade. For example, over the past two decades, about three-quarters of trade invoicing in Asia happened in U.S. dollars, not the Japanese yen, not the Chinese yuan. Central banks and other financial players hold more U.S. dollars than any other currency by a long shot. The U.S. dollar became the official global reserve currency in 1944 (read more about how that happened here).
A large percentage of commodities, like gold and oil, are priced in the global reserve currency, so other countries hold this currency to pay for those goods.
What does it take to be the world’s reserve currency?
A reserve currency needs to be stable and safe. There has to be a massive amount of that currency in circulation to be able to facilitate transactions all over the globe.
“You have to not care at all what happens to the value of your currency on any given day because if you go in and actively manipulate the exchange rates for trade purposes, then no one is going to use your currency because they don’t know what it’s going to do. It’s not reliable,” geopolitical strategist Peter Zeihan told Straight Arrow News.
Because of that, Zeihan said it’s hard to see a currency like the Chinese yuan taking the place of the U.S. dollar someday.
What’s driving dedollarization talk?
The most pressing anti-dollar movement is coming from BRICS countries (Brazil, Russia, India, China, South Africa). The group of nations is discussing whether to introduce a common currency to use for trading purposes to cut out the greenback.
Why is this significant? The BRICS bloc consists of more than 40% of the world population and about a third of global economic output.
Despite heads of state proposing a BRICS currency as an option, Zeihan told Straight Arrow Newshe has serious doubts the bloc would ever agree to it.
“We’ve got R and C whose relationship is a tryst. We’ve got R and S who compete. We’ve got R and I who don’t trade, I and C who don’t trust, C won’t let enough happen to make anything move and that just leaves B and S and you know, color me a skeptic.”
Even without BRICS nations agreeing to create a new currency, international investors are still moving away from the U.S. dollar, weakening its dominance as the global reserve currency. Trends show investors and countries are diversifying into the euro and yuan, mainly.
What’s driving it? Inflation and higher interest rates are piling on the dollar’s problems. Then, in August, Fitch Ratings cut the U.S. government’s credit rating in the latest blow to dollar dominance.
The U.S. dollar’s share in central bank reserves has fallen from 71% in 1999 to less than 59% in 2022, according to IMF data.
The sanctions sting
The U.S. action to aggressively sanction Russia following its invasion of Ukraine was largely so powerful because of the U.S. dollar’s standing as the world reserve currency. But the move is now also triggering dedollarization fears as countries look at how to get away from the overpowering influence of the U.S.
“They’re creating a secondary economy in the world totally independent of the United States. We won’t have to talk about sanctions in five years because there’ll be so many countries transacting and currencies other than the dollar, that we won’t have the ability to sanction them.”
Would your money lose value if another currency takes over?
There are a lot of dedollarizing theories out there, even though most experts cast doubt the U.S. will lose the reserve currency status anytime soon. One such theory is that the U.S. dollar would become worthless if it is not the reserve currency.
While Zeihan insists dedollarization will not happen — “I should say never is a very long time, I shouldn’t say never” — if it did, he said the dollar would just revert back to a normal currency.
“There is a cost in that scenario that would probably force our political leaders to be a little bit more judicious with their spending in the long run because we wouldn’t be able to just dump our debt on everyone else’s system. That’s probably the real superpower: It allows us to not be fiscally responsible.”
