One Bric at a time

An interesting analysis of the BRICS attempting to come up with an alternative to the US dollar. No sudden shocks just a slow but steady movement away from it. A bit like how the US dollar replaced Sterling. Quite a balanced article on the subject with some sceptical views:

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You think Bretton Woods was slow but steady?

We got the Navy, get in line! :slight_smile:

The Captain

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There have been some studies showing that the dollar replaced sterling as early as the 1920’s, others say in the 1950’s. Whatever it was a slow drawn out affair.

Sergey Glazyev and The BRICS are playing the long game here and I’m quite impressed by their tactics.

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I take a different view, sterling fell with the fall of British empire and the dollar rose with the rise of the American empire. Which empire are the BRICS betting on? China was a candidate for a time. India? Brazil?

It’s the golden rule. He who has the gold, rules!

The Captain

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…and who has been buying gold:

Not in the literal sense. Gold in the productive sense. Gold in the power sense. Gold in the economic sense.

The Captain

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I’m talking about gold in the vaults sense :slight_smile:

Yep. Whatever country dominates world trade winds up with the global currency. Those changes aren’t a fast process though.

Which up and coming country is the one to bet on? Here’s the population pyramid for China. They have a crushing demographics problem. For decades China’s explosive growth was driven by their huge population of young workers. But now there aren’t enough young workers to replace the older workers, and there is nothing they can do about it.

Under a fiat currency system I would agree.

However BRICS aim (as far as I can see) is that they want to remove the dominance of any one country. A gold backed currency may help do this as there would be no counterparty involved.

Sergey Glazyev was tasked by Putin to undermine the US dollar and he’s hell bent on doing this one way or another. Alasdair Macleod broadcasts and writes extensively on gold. I found this article very interesting:

BRICS countries, particularly China, do not want to send shock waves through the financial system, as I’m sure that Russia would given half a chance. Things are changing and I expect that change will be a long slow one. The seven billion of the world’s population outside The West are no longer content for the one billion or so in The West to financially rule them.

Before covid we spent a lot of time ‘Out East’ and there is a dynamism there that is certinly lacking in the UK. Our fortunes, and those of Europe are tied in with the dollar.

Interest in the BRICS summit is growing:

I wouldn’t mind going myself :slight_smile:

So you don’t see the future of that alternate system being dominated by the Chinese and whatever their interests turn out to be?

DB2

No idea at the moment, it’s still a work in progesss. It wouldn’t surprise me though, as things never turn out as planned, certainly not in economics.

That is, by definition, what the world operates on.

Of course they do. In the history of the world it has always been the aim of everyone else to not have to slave their economic system to someone else’s. And in the history of the world it has almost always not worked. The changes from a dominant economy to another take decades, often centuries - see: Rome, Spain, France, England, US.

What they “want” and what they are able to accomplish are usually two quite different things.

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The shift may well have started in the aftermath of WWI, as the US was the only country to finish the war with a halfway decent balance sheet. The UK owed the US $4B, plus interest. The other allies, interestingly, owed the UK just about $4B. And all the debtors were looking to squeeze enough out of Germany in reparations to pay the debts.

To enforce it’s payment demands, the US Congress passed a law that would ban anyone who defaulted on their debt to the US from access to the US financial system. I would suspect that, if London was still the financial center of the universe, the US’ threat would not have gotten the response that it did.

Steve

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