BRICS meets in August their main topic will be dumping the dollar in favor of a new gold backed currency. What implications do you think it will have for the global economy? The US economy?

China and Brazil have launched trade in national currencies. Beijing and Brazil have signed an agreement on trade in mutual currencies. The agreement will enable the two BRICS members to conduct their massive trade and financial transactions directly, exchanging RMB Yuan for Brazilian Real and vice versa.

https://m.economictimes.com/ne...cleshow/99197624.cms

Lots of economic things happening with currencies, the fed, and more. It's hard to discern fear porn from valid trend analysis to see how any of this might affect us personally.

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What implications do you think it will have for the global economy? The US economy?

It's being discussed in another thread:

The end of the petro-dollar will be the end of the dollar as the world's reserve currency. That will also mark the end of our ability to print vast quantities of dollars, accepted for trade with the rest of the world.

We won't be able to deficit spend, essentially financed by the rest of the world. In short, we will have to drastically cut government or drastically raise taxes. I would be fine with this if it meant drastically cutting government, but I'm afraid it won't. It will mean raising taxes to the point that we are no longer free.

https://sigforum.com/eve/forum...260017994#6260017994

The Petrodollar Just Got Smaller Today as The First LNG Shipment Between UAE and France Is Traded in Yuan

Two major energy trade developments today highlight how the Western Alliance is quickly losing a grip on the world energy market, as an alliance between China, Russia, Iran and the Middle East Gulf Cooperation Council starts to take shape with actual trade exchanges that are not in dollars.

https://theconservativetreehou...in-yuan/#more-244904

Tucker Carlson Outlines the Ramification of Trillions in U.S. Treasury Bonds No Longer Needed as Global Securities

For his opening monologue and first interview tonight, Fox News host Tucker Carlson outlined the ramification of non-western nations now trading in alternative currencies to the U.S. dollar. As the dollar diminishes in value, and as an outcome of Biden using U.S. treasury bonds as part of the sanction regime against Russia, various non-western nations now perceive holding dollars as exposing themselves to risk.

Carlson is joined by Luke Gromen who accurately notes the dollar as a global trade currency may continue, but foreign nations holding U.S. treasury bonds as an asset will likely start contracting. The result of U.S. treasury bonds returning after maturity with no repurchase, would be an inability of the U.S. to borrow against their sale. This could, perhaps likely will, severely diminish the amount of money the U.S. congress can spend.
WATCH:



None of this should come as a surprise to those who have paid attention. Factually, in March of last year, one month after the Russian sanctions were announced, the International Monetary Fund’s (IMF) Deputy Managing Director said the sanctions against Russia are likely to undermine the US dollar’s global dominance as a trade currency. Everyone could see this coming.

https://theconservativetreehou...urities/#more-245219

Jeez, maybe we should start drilling here, now. You know, become independent. While we're at it, maybe we could ramp up manufacturing here as well.

China and Russia have been trying to do this for years. It's always failed so far. I don't see this will be any different.

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Originally posted by BBMW:
China and Russia have been trying to do this for years. It's always failed so far. I don't see this will be any different.

While that's certainly true, this particular movement sure does seem to have more traction than previous actions. Our current administration is far less impressive in actions to mitigate it than previous ones, I guess we'll see.

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Originally posted by Johnny 3eagles:
Jeez, maybe we should start drilling here, now. You know, become independent. While we're at it, maybe we could ramp up manufacturing here as well.

Look, we ARE independent see This . We mostly sell more than we use (depending on the year and winter basically). However economics are gonna economics. The oil goes to the person willing to pay, and that process sets the price for everyone. Unless you want to nationalize and subsidize oil, that will be the case.

The BRICs issue is different, but that has been something brewing for a long time as other countries don't want to deal with the US's shit and seek alternatives. That's how the smaller countries get attention, playing the larger countries (who seek global interests) against each other for that smaller country's "best" interest. This process has been happening since the creation of the nation state (what, 4000 B.C.?) in one form or another and will probably continue to do so long after we are all dead. Unless the Singularity gets us first.

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Originally posted by BBMW:
China and Russia have been trying to do this for years. It's always failed so far. I don't see this will be any different.

It could last a big longer than other attempts however, those two governments just don't like each other. Russia is like Uncle Rico, had a small moment in the sun but, everyone laughs at them when they walk past. China just ins't very good at relationships, they're the clumsy guy with a lot of money, a nice car & house but, has zero game, has no style and isn't very cool to hang with.

India wants to be a player but, historically has shied away, Saudi Arabia has gotten tired of the US Dems openly calling them out, Brazil like South Africa has some industry but are an unstable mess domestically.

Hang on it’s going to get bumpy.

quote:

Originally posted by BBMW:
China and Russia have been trying to do this for years. It's always failed so far. I don't see this will be any different.

Same take Larry Kudlow has. 6 trillion business, daily based on the dollar. We are #1 and China is at the bottom.

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Originally posted by BBMW:
China and Russia have been trying to do this for years. It's always failed so far. I don't see this will be any different.

The difference is that the Biden administration has now weaponized the dollar. The Biden administration froze USD assets that were owned by Russians. The rest of the world saw this and is now thinking, "why the hell would I want to keep owning US dollars if the US has shown that they are now willing to use them as a weapon against me?" Dozens of countries (including many of our allies) are now supporting the move away from the USD because of that and the fact that we have been printing like mad, thus decreasing the value of their holdings.

Macron Says Europe Should Reduce Dependence On US Dollar, Seek 'Strategic Autonomy'

https://www.zerohedge.com/geop...k-strategic-autonomy

As the United States combats a recent flood of countries 'de-dollarizing' - trading commodities in other currencies, the last thing that was needed was French President Emanuel Macron amplifying this message.

After spending around six hours with Chinese President Xi Jinping as part of a three-day state visit to China, Macron made extremely clear that France wants nothing to do with WWIII, emphasizing that Europe must employ "strategic autonomy," presumably led by France, to become a "third superpower," according to Politico.

While speaking with reporters aboard COTAM Unité, France’s Air Force One, the French President said that the "great risk" facing Europe right now is that it "gets caught up in crises that are not ours, which prevents it from building its strategic autonomy."

This isn't the first time Macron has suggested reducing dependence on the US. In November, the French President called for a "single global order" while discussing the power interests of Russia and China and the threat of war.

"We are in a jungle and we have two big elephants trying to become more and more nervous," he said.

"If they become very nervous and start a war, it will be a big problem for the rest of the jungle. You need the cooperation of a lot of other animals, tigers, monkeys and so on," added Macron.

China agrees

Macron's concept of strategic autonomy was 'enthusiastically endorsed' by Xi and the CCP, who have been focusing on the notion that the West is in decline while China rises, and that weakening the transatlantic relationship will accelerate this trend.

"The paradox would be that, overcome with panic, we believe we are just America’s followers," said Macron. "The question Europeans need to answer … is it in our interest to accelerate [a crisis] on Taiwan? No. The worse thing would be to think that we Europeans must become followers on this topic and take our cue from the U.S. agenda and a Chinese overreaction."

Just hours after his flight left Guangzhou headed back to Paris, China launched large military exercises around the self-ruled island of Taiwan, which China claims as its territory but the U.S. has promised to arm and defend.

Those exercises were a response to Taiwanese President Tsai Ing-Wen’s 10-day diplomatic tour of Central American countries that included a meeting with Republican U.S. House Speaker Kevin McCarthy while she transited in California. People familiar with Macron’s thinking said he was happy Beijing had at least waited until he was out of Chinese airspace before launching the simulated “Taiwan encirclement” exercise. -Politico

Macron's submissive statements come after he and Xi 'intensely' discussed Taiwan, according to French officials who accompanied the president.

That said, European Commission President Ursula von der Leyen, who accompanied Macron, said she stressed stability in the region, telling Xi during their meeting last Thursday in Beijing that "The threat [of] the use of force to change the status quo is unacceptable."

According to the report, Xi responded by calling anyone who thought they could influence the CCP on Taiwan was deluded.

"Europeans cannot resolve the crisis in Ukraine; how can we credibly say on Taiwan, ‘watch out, if you do something wrong we will be there’? If you really want to increase tensions that’s the way to do it," said Xi.

According to Yanmei Xie, a geopolitics analyst at Gavekal Dragonomics, "Europe is more willing to accept a world in which China becomes a regional hegemon."

"Some of its leaders even believe such a world order may be more advantageous to Europe."

During Xi's trilateral talks with von der Leyen and Macron last Thursday, the Chinese leader became upset over two things;

"Xi was visibly annoyed for being held responsible for the Ukraine conflict and he downplayed his recent visit to Moscow," said one source who was present in the room. "He was clearly enraged by the U.S. and very upset over Taiwan, by the Taiwanese president’s transit through the U.S. and [the fact that] foreign policy issues were being raised by Europeans."

In this meeting, Macron and von der Leyen took similar lines on Taiwan, this person said. But Macron subsequently spent more than four hours with the Chinese leader, much of it with only translators present, and his tone was far more conciliatory than von der Leyen’s when speaking with journalists. -Politico

Time to ditch the dollar?

Macron suggested that Europe was too dependent on the United States for weapons and energy, and must now focus on boosting their own defense industries.

But perhaps most notable was his suggestion that Europe needs to reduce its dependence on the "extraterritoriality of the U.S. dollar," a line which both Moscow and Beijing have been emphasizing.

"If the tensions between the two superpowers heat up … we won’t have the time nor the resources to finance our strategic autonomy and we will become vassals," he said.

Russia, China, Iran and other countries have been hit by U.S. sanctions in recent years that are based on denying access to the dominant dollar-denominated global financial system. Some in Europe have complained about “weaponization” of the dollar by Washington, which forces European companies to give up business and cut ties with third countries or face crippling secondary sanctions.

While sitting in the stateroom of his A330 aircraft in a hoodie with the words “French Tech” emblazoned on the chest, Macron claimed to have already “won the ideological battle on strategic autonomy” for Europe. -Politico

Every decade the French are looking for reasons, any reason, to get off the dollar.

Thanks to de Gaulle's push for autonomy, French defense industry is quite extensive and has been quite lucrative over the last two decades, France has been pushing their domestic industries HARD to others. Got to hand it to them, they are one of the very few with forces can conduct actual power projection around the world.

BRICS De-Dollarization Push Gathers Momentum

https://slaynews.com/news/bric...ign=daily-newsletter

The push for de-dollarization led by the BRICS group is continuing to gather momentum as Indonesia moves to shift away from the U.S. dollar for trade and financial transactions.

The Indonesian central bank announced that it has updated its policy to shift away from the U.S. dollar and is following the lead of the BRICS (Brazil, Russia, India, China, and South Africa) economic bloc.

Jakarta has introduced transactions in the local currency to settle cross-border trades, the portal SINDOnews has reported.

The report cites Bank of Indonesia Governor Perry Warjiyo.

On Friday, addressing a press conference with the board of governors meeting, Warjiyo said Indonesia plans to begin trading in local currency.

“Indonesia has initiated diversification of the use of currency in the form of LCT [local currency trading],” Warjiyo said.

“The direction is the same as the BRICS.

“In fact, Indonesia is more concrete.”

Warjiyo added that Indonesia has already implemented the practice with a number of countries, such as Thailand, Malaysia, China, and Japan.

It also plans to sign a cooperation agreement with South Korea regarding local currency trading in early May.

https://www.kompas.id/baca/eng...ues-de-dollarization

The yuan is the only currency that could be big enough to replace the dollar, but there are many problems with and a justifiable lack of trust in China. There probably won’t be “a new world reserve currency”. I would expect a basket of currencies/gold/SDRs* if there is a single new standard. However, it may be that, at least for some time, countries trade in their respective currencies. Anymore, they are all funny money (fiat currency), including the dollar.

*SDR - Special Drawing Rights, a non-currency reserve item from the IMF (International Monetary Fund) based on the value of five currencies, the dollar, the euro, the renminbi, the yen, and the pound sterling.

Meanwhile, BRICS may be facing internal problems as India has been unable to pay Russia for the weapons it needs to hold China on its side of the Indian-Chinese border.

Apparently BRICS hasn't come up with a fiat currency strong enough bypass US sanctions, which means that neither the hostile relationship between China and India nor the economic and manufacturing weakness of Russia can simply be papered over and ignored.

http://www.bloomberg.com/news/...s?leadSource=uverify wall

It's kind of hard to see how BRICS is going to come up with a world-dominating (or even functional) currency when two of their biggest members are perpetually on the edge of going to full-blown war with each other - and never mind the current state of the Russian and Chinese economies.

Logic and math mean nothing when it comes to international finances and politics. If BRICS or some other group decides to dump the dollar, they will. For our enemies, they are willing to take a loss in the short term if they believe they can damage us sufficiently.

An apt description of the dollar is it is the least smelly turd in the punch bowl. Still a turd but not as bad as other currencies. But if BRICs decide they like a different currency they will use it.

De-dollarization of world trade will be a really bad thing for us. For one thing it will cause an immediate devaluation of the dollar, making everything much more expensive for us to import. It will require much higher federal bond interest rates to attract buyers, which will put the fedgov in a crisis of either not being able to borrow any money to fund the deficit, or having to pay such high interest rates that the budget balloons immensely just to pay the interest.

I've recommended the book before, "The Mandibles" by Lionel Shriver. Part of the plot is such a de-dollarization, and the result is quite plausible.

No other currency is anywhere near the size of the USD. However, the weaponization of the swift system is a very bad idea.