If the BRICS create a new currency based on gold and other commodities, will that be the death of the dollar as the world's reserve currency?

[Adaeva]

BRICS: Brazil, Russia, India, China and South Africa

BRICS currency will give petro-dollar a taste of its own medicine.

BRICS is the powerful association of five major emerging economies namely Brazil, Russia, India, China and South Africa. The group represents 41 per cent of the global population, 24 per cent of the global GDP and around 16 per cent of the global trade. All the member nations have been holding annual meetings since its formation (2009/10). This year the 14th annual meeting of BRICS nations was held virtually in China.

In this decisive meeting, Russian President Vladimir Putin put forth a revolutionary idea. He announced that BRICS nations are planning to issue a “new global reserve currency” dubbed as BRICS currency. So, if the decision goes as planned, it will be a major jolt to the US dollar. https://tfipost.com/2022/10/brics-currency-will-give-petro-dollar-a-taste-of-its-own-medicine/

Updates

+1 y

There is $7 trillion in gold. That is ten to 100 times the amount needed to have a gold standard. Just as there is not enough dollars a bank to convert all the accounts to dollars. People hold very little of their money in dollars because it is enough to know that they can withdraw dollars if they want.

The gold standard is similar. People will hold very little of their money in gold. It is enough to know that if they want to, they can convert or withdraw their money accounts into gold.

[Soteris]

While Russia likes the idea of a gold backed currency, thanks to their immense gold reserves (and no other reason), other countries does not. It is fundamentally a weaker form of currency compared to the standard around the world because it limits what you can do with it which in turn makes the country more vulnerable to economic problems.

This is simply Russia and China trying to flex some soft power and play politics. It is not some revolutionary new economic ideas. Its been tried previously in history and it has been abandoned because its not competitive.

[Adaeva]

Gold is the only money that has every survived and held it value. All other currencies have always lost most of their value and ultimately failed. The US dollar has been better than most and has already lost 98% of its value. It too will fail because it has no intrinsic value. There are no fiat currency exceptions.

[Soteris]

You say that losing value is a bad thing but modern economies more or less relies on a 2% inflation AKA devaluation to fuel a healthy economy. If they wanted to they could easily have a zero percent or even a negative inflation value meaning the money increases in value. They choose not to though. Why? Because inflation is good for the economy.

You are not supposed to sit on money, it only has value when it is being actively used. It is a medium of trade, not an investment that increases the economy or growth. Many people forget this.

[Adaeva]

During the 19th Century, the US used sound commodity money—gold—and the value of the dollar was not only stable, but typically went up every year. That encouraged people to save, because their money became worth more every year. That resulted in both a growing store of real capital and naturally low interest rates.

By contrast, in an inflationary environment, currency debasement discourages people from saving. And if you don’t save, you can’t build capital. And if you don’t build capital, you can’t make investments and you can’t improve the standard of living.

[Soteris]

I am just going to put all that aside, because again, you are missing the point.

Strictly speaking, you dont want people to save money. That is mainly why billionaires and millionaires are generally bad for the economy, because wealth stagnates in their hands and reduces growth. Money has to circulate to produce value.

Wealth accumulation comes in other forms such as stocks, but what is more relevant to average people is house ownership. Point is, its better to invest money into tangible things such as houses or investing into companies, things you can later convert into money later on, because such investments grow the economy compared to just having money collecting dust in a bank somewhere.

[Adaeva]

Opinion that are probably based on Keynesian economic nonsense taught in liberal colleges for the last 50 or more years.

[Soteris]

You flatter me, but no. I am far more pragmatic than that. I am interested in what has a proven track record and history behind it. Gold backed currencies has already failed historically, why revisit them?

[Adaeva]

No gold backed currency has ever failed; just replaced by non-gold backed currencies, all of which have failed. 100% of fiat currencies have failed or will fail within 200 years and typically in less than 100 years.

[Soteris]

Being replaced is a good definition of failure in my book not to mention that again, it has been responsible for economic problems such as the great depression, again a good definition of failure in my books.

[Adaeva]

The dollar will fail for the same reason most fiat currencies fail. That is, the government keeps counterfeiting more and more trillions of dollars. The dollar will also fail because the USA uses the dollar as a weapon and steals dollars from countries that don't obey the USA such as the $300 billion the USA stole from Russia. Of course they don't call it theft but theft by any other name is still theft. No one puts their money in a bank that is going to steal their money.

[Soteris]

That is complete bollocks.. All of it.. Also, you once again say that people are not going to save money in banks as if that is bad for the economy. Its not.

[Anonymous]

Let's hope so

[Leopard23]

It would have to be back exclusively by Chinese money as Russian oil/gas is unstable right now. Gold as a reserve currency like oil or gas is completely dependent on how much gold is mined every year, so like like the US did during the Obama administration to attack Russian oil/gas profits was to start major fracking, up us oil production and get the Saudis to lower their oil prices. This had the knock on effect of making energy cheaper which undermined the Chinese economy by making US manufacturers more competitive.

Brazil is on the up but its in America's back yard, the US is a major influence over it and its economy. South and central America are a part of US sphere of influence. Even before the US was a Super power it was a regional power.

Russia is in no real postion to achieve this. The war in Ukraine is costing them too much and sanctions are crippling them. They are desperately searching for a way around sanctions to be able to trade internationally again but other BRIC countries aren't really on their side and India and China have been taking advantage of their weakness.

India is keeping its foot in the BRIC water but China is a rival and direct competitor. For the last few decades they leaned towards Russia for support as the US cozied up to China and Pakistan but now with tension between China and countries in Pacfic are leaning towards the west.

China certainly has an intrest in setting up a rival currency to the petro-dollar and they have tried and failed before. I dont believe China has an intrest in helping Russia but sees current events and Russian weakness as an opportunity for technology, cheaper energy, cheaper food, cheaper mineral resources, regaining lost Chinese territory and for China to become the dominant regional power in the oil/gas rich Central asia where china a plans to build its new silk road through.

South Africa is in bad economic shape, its infrastructure is crumbling. This once prosperous country looks set to go the way of its neighbor Zimbabwe.

[DWornock]

That will happen; probably sooner rather than a few years or more later. The USA has stolen $300 billion of Russia's money. Of course, the USA and others will not call it stealing. Instead they called it freezing but theft by any other name is theft.

The entire world took notice that money place in places under control of the criminal USA is not safe. Therefore, a system that can be trusted will be established and that will be the death of the dollar as the world's reserve currency. China would not do that but they are wiser then the USA.

[jshm2]

You're not well informed.

Russia is pretty much being excluded in everything. China is in the middle of a pandemic, Brazil is as divided as the USA, India is practically imploding, and South Africa is in political turmoil

The BRICS are not in any position to do anything together. Let alone challenge the OPEC

[Adaeva]

Google and you find plenty of articles that indicate otherwise.

[BeMuse]

You ever consider the possibility that America is purposely trying to kill the Federal Reserve? You probably know the globalist want to replace the USD with CBDC, but there is an alternative path... What if central banking in the USA is ended... It wouldn't be the first time...

[abc3643]

Yeah... that's not going to happen, so no worries.

First off, the Indians won't go along with anything else the Chinese are doing, so they are ever-more aligning with the West. Same with South Africa and likely Brazil.

[Aiko_E_Lara]

Most likey and USA will more likely to promote more propagandas into its puppet countries that depends on the US dollar to prevent them from siding with BRICS.

[OddBeMe]

Just shows how stupid those countries are. How much gold is there in the world? Best guess by geologists?

[Leopard23]

Gold is only worth the value given to it by the availability of it.

[OddBeMe]

@Leopard23 yeah but if you require a piece for every dollar bill, and there’s only say 6 trillion bucks of gold left in the world…you just fcked your economy.

[Leopard23]

The worth of gold is determined by how much is mined every year

[OddBeMe]

@Leopard23 you’re not getting me. If there’s only 6 trillion bucks of gold left in the earth that’s not enough to cover our debt.

[Leopard23]

Again there are other metals and who knows how much gold is still to be mined. Russia has a lot of gold but it doesn't seem to be doing them much good.

[Leopard23]

It's like Iran with their oil. They should be loving it large like the Saudis.

[OddBeMe]

@Leopard23 The Saudi royals live large. Arabia as a country is actually still third world. And geologists have theories on how much gold is left to be mined…and it’s not much.

And switching to an another metal is economically disasterous. You keep a “standard” that’s dependable.

This is why fiat money is better. No worries of running out of metals to back the currency. Not saying there aren’t dangers. But it’s tripled the economy since we got off the gold standard.
https://en.wikipedia.org/wiki/Fiat_money

[Leopard23]

The saudis Royals live large but the people too, few men actually work, they are given money from oil profits. Keeps them happy and from rebeling. The only work they do is the army or police. We've already switched to other resources over gold. The value of gold is only worth what we attribute to it.

[OddBeMe]

@Leopard23 um no. 74% lower than the US…
www.numbeo.com/.../country_result.jsp

[Leopard23]

Lowe cost of living coupled with a decent income.

[OddBeMe]

@Leopard23 decent incomes don’t equate with lower costs of living. I’d seriously take an economics course online. Find a lot of free ones available. You’re making a fool of yourself….

[Leopard23]

If you are making more money in America than in Saudi Arabia but struggle to buy a house or pay rent, feed your family, own a car, fuel your car etc it does.

[OddBeMe]

@Leopard23 not if the Saudis live in shitholes.

[Jamie05rhs]

So this is what the coup in Brazil was about.