Trickle Down BRICS

This article on BRICS by Rachel is both enlightening and incredibly sobering.

I’m from a western country so this doesn’t particularly fill me with glee — but at the same time I can’t help but acknowledge that it was only a matter of time.

I do find it remarkable that I barely hear about any of this type of reporting in the news. And when I do, it’s been… what should I say?… watered-down — to ensure us western folk don’t worry our little selves about what “those in charge” will handle.

If the members agree to launch BRICS-pay, which is whispered to be announced at their upcoming October conference, the effect would be a drop in the value of the US Dollar, US Treasury bonds, and US trade. The effects of dethroning the Dollar would ripple across the world, and could see a knock-on devaluation of currencies whose central bank reserves are mostly made up of the Dollar. It would also surely wobble the Euro and the British Pound, two other hard currencies relied upon for reserves, whose main political alliances ensure a continuing dependence on the USD. In short, de-dollarization could change everything.

[…] …the group has created the National Development Bank (NDB) and the Contingent Reserve Arrangement (CRA), two institutions to challenge the World Bank and the IMF, respectively. Developing nations can now raise condition-free finance in their local currencies through the NDB, and the CRA insulates members’ economies from medium-sized crises, protecting them from going directly to the IMF for conditional support.

[…] All of this really matters. BRICS nations account for 44% of crude oil production, which has been their main source of political power as independent nations, while the West has dominated the service economy like banking. Bypassing the existing financial institutions by opening local currencies up to the world, offering no-strings attached loan financing, and trading in currencies other than the Dollar doesn’t just threaten Western hegemony, but actively topples it.

[…] On a local level, de-dollarization could pop the housing market bubble, given just how intertwined the real estate and banking markets are. We would surely see energy prices go up due to the loss in value of allied currencies like the EUR and GBP, but also possibly due to market volatility after the initial decoupling of the USD and oil.

[…] Politically, nations like Iran would be open to trade with the world, undoubtedly impacting alliances in a Middle East that is threatening to boil over into multiple wars. The USA, UK, and Europe would see an immediate weakening in their power, and governments would perhaps be forced to cough up huge financial packages to rescue their own currencies and bail out banks, all at a time when cost of living for their most vulnerable residents is going up. What would this do to tensions already running high? In countries suffering from riots? In nations merely an election away from fascism?