BRIC Countries Kick Sand in the Face of 98-pound-weakling US Dollar
Well, there they go again, as Ronald Reagan used to say. The Russians, that is, sniping at our powerful, globally-respected currency. Get a load of this commie carping —
June 5 (Bloomberg) — Russian President Dmitry Medvedev questioned the U.S. dollar’s future as a global reserve currency and said using a mix of regional currencies would make the world economy more stable. The dollar “is not in a spectacular position, let’s be frank, and its prospects cause various questions as do the prospects for the global currency system,’’ Medvedev, who today hosts an international economic forum in St. Petersburg, said in an interview published by the Moscow-based Kommersant newspaper.
A new world currency may be on the agenda when Medvedev meets counterparts from Brazil, India and China on June 16 at a summit in the Ural Mountains city of Yekaterinburg, the Kremlin said this month. “This idea has potential, even though some of my G-20 colleagues aren’t actively discussing it at the moment,’’ Medvedev told Kommersant. “However, for example, in the opinion of our Chinese colleagues it is quite a possible step. The most important thing is not to walk away from discussions on this topic.’’
Turning the ruble into a reserve currency is still a possibility, especially if some of Russia’s partners start making payments for their oil and gas in rubles, Medvedev said. Russia might consider setting up ruble-yuan swap positions similar to the recent accord suggested between China and Brazil, he said.
Kidding aside, let’s examine some facts. At 2.85 billion, the population of the BRIC countries is more than nine times higher than that of the U.S. Their combined GDP is slightly larger, too.
Currently, the English-speaking financial centers of New York and London have carved out a role for themselves as global cross-rate middlemen. If you want to exchange rubles for yuan, typically you must do back-to-back transactions — rubles to dollars, then dollars to yuan. Forex dealers love the fat spreads and dual commissions.
If the BRIC countries decide to walk away from this exploitative, anachronistic scam, there won’t be a damned thing that the Anglosphere can do about it.
More significant than the eroding economic leadership of the U.S. is its eroding intellectual leadership. Bretton Woods I, circa 1944, was an Anglo-American production. Bretton Woods II, circa 1971-1973, was an abortion caused by U.S. default on its promise to redeem overseas dollars for gold.
Now, virtually all innovative thinking on global monetary reform comes from the BRIC countries, while Anglo-Americans stand by sucking their thumbs, navel-gazing, and tweaking their high-speed presses. Does the unmerited privilege of seignorage make you poor and stupid? The evidence points that way, comrades.
Thanks Machinehead for a another super artilce.
Good article. Machinehead; thanks for sharing! Love to keep an eye on how other countries are leaning in terms of currency changes.