Echoing the notorious and empty threat of Soviet Premier Nikita Khrushchev: "We will bury you," Russia now threatens to cut its U.S. Treasury reserves and replace them with International Monetary Fund bonds.
Russia wants to replace the U.S. dollar as the principal international reserve currency of the global economy, reports Barrons.com.
Toward that end, both Russia and Brazil have recently bought a total of some $10 billion in IMF securities.
But a mere $10 billion hardly diversifies Russia's currency reserves, which at latest count stood at $400 billion. Russia, however, says it's planning further cuts.
Russian President Dimitry Medvedev recently challenged the U.S. dollar's strength in view of the ever-increasing U.S. debt and deficits, financed by trillions of dollars in Treasuries.
A U.S. dollar, devalued because of the nation's huge debt, would also decrease the value of foreign reserves held in American currency.
In response to these moves, 10-year Treasuries temporarily hit a 4 percent yield, a level not seen since last October, before pulling back.
Although the Russian stock market and ruble spiked upward recently as crude oil jumped to $70 a barrel, the nation's economy rests on a shaky foundation.
Russia continues to struggle with double-digit inflation, and their multi-billion dollar stimulus package has yet to produce the desired results.
Despite public statements denouncing the U.S. buck, just last month, as The Wall Street Journal reports, Brazil, Russia, India and China — the so-called BRIC nations — acquired a total of some $60 billion in U.S. dollars.
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