BRICS About To Take Their Shot At The Dollar

The world is moving to a multi-polar world as the West looks to gain greater resistance to it's dollarised system and the re-establishment of the BRICS but this time with a lot more intent and motivation to get it done right this time.

Like it or not, the fiat system is breaking apart, it was always going to as we stretch people's belief in the credit system and fiat compensation doesn't seem to be able to hold any value and needs to be re-pegged to something of value.

We can point to a lot of issues on why the dollar is not serving most of us, as I have done so many times in past posts, but I think the final nail in the coffin was the weaponising of it against Russia.

Seizing the funds, removing them from swift and showing countries that the US is willing to break central bank policy has freaked nations out, that they could be next if they don't toe the line and need to hedge this risk.

For context, even during World War 2, as the Nazis invaded, foreign central banks still did not seize German assets.

Give me rubles

Anyhoo the dropping of the dollar and the trade with rubles has been a double-edged sword for the Russians. On one end it's proven that sanctions don't work and that the world needs commodities, duh! That need has driven a bunch of European countries to submit to demands and exchange their fiat for rubles to buy gas, food, petrol, and more.

That demand has pushed up the value of the Ruble and while that is great for citizens who now have increased buying power, they have far less to spend it on as the West refuses to trade directly with Russia.

In addition the stronger the Ruble gets the more uncompetitive their exports become as the currency increases, so what can Russia do about this increased purchasing power and maintain a certain value of their currency? The option is to open up swap lines with other countries.

In comes the BRICS

Russia is now looking toward bringing back the BRICS, a previous group of emerging market countries that wanted improved relations. Brazil, Russia, India, China, and South Africa have all agreed to commit to the group and are making plans to expand what it is capable of doing and not only having a yearly meeting.

The BRICS countries alone account for around 3.1 billion people and 32% of the world's GDP, so they're nothing to laugh at, and with Argentina and Iran applying to join, it will expand even further. I can see other countries isolated by the West also wanting to join the BRICS in the future.

Belarus, Cuba, Venezuela, and Iraq could all make a play for it, who knows?

A new reserve currency

The BRICS countries are also exploring the option of creating an alternative reserve currency basket, that is made up of member currencies and backed by commodities from each country.

While it's not a reserve currency, the setup could be similar to the SDR which is based on a basket of currencies made up of the US dollar, the euro, the British pound, and Japan's yen — as well as China's yuan.

Personally, I think this could be better served if all 5 - 7 countries simply put bitcoin on their balance sheet instead. Having an apolitical asset that is produced with energy would simplify the trade and allow for a fair game with instant settlement.

But that's just me.

As for the dollar, it looks like the trap door is opening on it and the West will need to figure out another way of stemming the bleeding by losing that demand.

Sources:

• tass.com
• hellenicshippingnews.com
• businessinsider.com
• unherd.com

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