Geopolitical Podcast: Will BRICS Gold currency usher in End of USD?
A geopolitical Podcast by Economist Christian Takushi on Wed 19 Jul 2023 – Switzerland
Will the possible launch of a New Gold-backed Currency by the BRICS usher in the end of the USD?
Many commentators are making bold predictions about the demise of the USD or the end of the USD hegemony. But many things are open and much will depend on the US retaliation and the response of the BRICS next month.
For the 1st time since the end of WW2 a large number of nations in the non-Western world is uniting behind a new currency project. Many say it is to “unseat“ the USD. This is the popular narrative, but our independent research shows the following:
https://spotifyanchor-web.app.link/e/cDPgOExfzBb
a) Main objective of the BRICS is De-Risking from the West – the healthiest Emerging Markets are worried about the collapse of the West’s huge asset bubbles, massive debt and the demise of our over-printed paper currencies. Their economies are overtaking the G7 in size, but all their trade and their savings are nominated in the USD and other G7 currencies. That is a great risk to their economic stability and increasingly national security
b) China’s main objective is a Gradual De-Dollarisation Process of their “reserves”. Beijing’s main concern is “stability”. Given the growing risks of the Western financial system, China and other emerging nations see these objective only attainable with a currency outside under their own control.
China’s geopolitical interests would prefer a faster decline of the USD, but that would be against its economic interests and its own financial stability.
c) A majority of the non-Western world is not seeking actively to destroy the USD, it is rather about the preservation of their stability .. at a time that their economies have become too big to remain bound to the USD and G7 policies. 9 of the 41 nations interested in the new currency see NATO as their enemy though.
d) An attack on the USD only if necessary. I have ascertained that while the BRICS need a stable and orderly adjustment process (a gradual increase of the role of their local currencies and the BRICS gold currency in their economies – an somewhat understandable need), they are preparing to go to monetary war if necessary. They are reserving a “killer option” should open hostilities be unavoidable or forced upon them.
Because of expected retaliation, I think, BRICS have moved to a multi-pronged strategy that includes the use of their existing currencies and decentralised crypto currencies (Bitcoin) in order to diffuse the Western retaliations. Ambiguity and back-ups were introduced after President Biden hit them hard last year with preemptive measures.
In fact with much of their debt issued in USD and much of their assets and savings in USD the BRICS it is not in the best interest of the BRICS to see a rapid decline in the USD value. Nevertheless, I still feel BRICS are underestimating Washington.
d) A matter of trust: The non-Western world is not primarily seeking a confrontation with Washington. They have rather lost trust in the West’s handling of their currencies (they are printing ever more money to finance their growing deficits) and need an alternative.
In a nutshell: Contrary to the spectacular claims so many experts are making about the desired imminent collapse of the USD, I expect a much more gradual process. It is in everybody’s interest. Furthermore, although China is rising, the BRICS are no where near capable to replace the USD nor leadership the USA provides. It is easy to criticise Washington and indeed much wrongdoing or abuse took place, but the USA may still be the most benevolent superpower humanity has had so far. Any other super power may have done the same as Washington.
Independent Global Geopolitical Macroeconomic Research – Made in Switzerland.
https://spotifyanchor-web.app.link/e/cDPgOExfzBb
The Podcast builds on and complements Christian’s recent newsletters.
Christian brings to you the perspective of the non-Western world. He says their view matters, because the BRICS have now more economic weight than the G7 (on PPP basis) and the rest of the world has a bigger economy than the West.
Global Geopolitical Macroeconomic Research by Macro Economist Christian Takushi – 19 Jul 2023 –
GEOPOLITICAL RESEARCH MADE IN SWITZERLAND
Disclaimer: No part of this opinion should be construed as investment advice. This opinion is based on the current state of our analysis, which builds on several working hypotheses. As more data is available our working hypotheses are continually re-tested and if necessary we will adjust our analysis. We do not work with conspiracy theories. 100% analysis-driven.
Global Geopolitical Research Team
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