BRICS Claim They Want To Set Up A Reserve Currency

It seems like there is a lot of discussion these days about taking out the USD as the global reserve currency. We are in a period where all are complaining about it.

What is ironic is that the USD isn't the reserve currency, a point we will get to in a moment.

In the meantime, let us analyze some of what is taking place.

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BRICS Want The Own Currency

Many are familiar with term BRICS. For those who are not, this stands for Brazil, Russia, India, China, and South Africa. This is an alliance of developing countries designed to build an economic and financial center.

At their summit, the idea is being floated to create a currency that will rival the USD and the SDR from the IMF. This is what the BRICS feel is the solution to some of their issues. They feel beholden to the United States and are looking to get out from under their control.

One of the biggest challenges, other than what was mentioned before, is the fact that setting up a reserve currency is not something that happens overnight. A lot more goes into it other than just claiming you have one. After all, isn't that what we see in cryptocurrency? Many feel that throwing something out there is all it takes.

Sadly, it does not that the leaders of these countries understand the monetary system any better than those in crypto. For this reason, they are equally off-base.

Misguided Focus

While the attention is on the USD, the true currency that runs the world, for better or worse, if the Eurodollar. This is a system designed by the international banking system to the exclusion of governments and central banks. Included in this coalition are the banks from the BRICS also.

It might be to leaders such as Putin and Xi to talk to their bankers. They would tell them how things truly work.

The reality is the system that was created, only uses the USD as a unit of account. There are no actually dollars in the system. This is all done based upon the banks' balance sheets. That is what runs the entire system.

Therefore, if there is an attack on the USD, it is aiming at the wrong target. The bankers took control of money long ago. In turn, the US Government is as impotent in this areas as are the BRICS.

Nevertheless, the tentacles of this system, which does push some value back on the USD, is enormous.

More Than Just Flipping A Switch

Throughout our conversations about stablecoins and what it takes for something to become viable, we see the same situation with the BRICS. If they want to produce a new "reserve" currency, they are going to have to do a lot.

Again, this is more than simply creating the currency and proclaiming it as a competitor.

We also have to be mindful of where the power of the USD comes from, even if it is mostly as a unit of account. Most want to focus upon payments which is only a piece of the puzzle.

This leads people to believe that the USD's power comes from the mythological "petrodollar". It is a notion that stems from the belief the USD's value came from a commodity such as the Gold Standard. Thus, many still feel that it has to some type of commodity basis for people to want to use it.

Sadly, this is a complete misunderstanding of monetary history. The USD tied to the Gold Standard but you had US banks issuing convertible notes which provided the money elasticity. At the same time, you had the global banking system creating an entire network of money creation outside these bounds.

Ultimately, the power of the dollar (or Eurodollar) stems from the depth, liquidity, sophistication, and infrastructure. It takes decades for this type of development to roll out. Of course, this is the problem that stablecoin adoption faces. We are looking at years of infrastructure before other aspects can be even approached.

Bigger Problems Than Just Currency

The biggest challenge with this entire situation is all these countries are going to have major problems going forward.

To start, both Russia and China have major demographic issues. Over the next 20 years, the time it will take to develop a reserve currency, their populations are going to fall off a cliff. This is likely to cause major economic upheavals, as they scramble to convert their economies in an era of less people.

At the same time, globalization is seeing a pullback. There is little doubt that production is going to be closer to consumption. This means exporters are going to have issues. That really affects China and Brazil.

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This system look penetrable to the surface. From what you are saying it is more than just currency as we know it.
It is deeper since the big banks are the gate keeper of the world currency.
It comes back to control and this is a clear example of it.

!BEER

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More than gatekeepers, they designed an entirely new monetary system that excludes the governments and central banks. This is what makes it so difficult. Money actually changed completely and is something that people (including the Fed) does not understand.

In the world of balance sheet banking, collateral is what money truly is.

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You would assume that the BRICS know all this.

So, are they flying a balloon to see if anyone takes notice?

Are the central bankers so desperate that they are trying their second and third string ideas to get a new world currency?

They know the Dollar is dying, and so far every attempt to supplant it has failed.
Even the shit they tried to pull in the Fed.

Like you said, making a currency is easy. (there are even web pages to make a fork of bitcoin)
But getting people to use it is hard. Getting EVERYONE to use it is next to impossible.
But, the thing that everyone uses for money just seems to come about.
And like BETA vs VHS, the best one does not always win.

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You would assume that the BRICS know all this.

I wouldn't make that presumption. After all, since the 1970s the Fed has been basically clueless about this. They think they are in control when, in reality, the money system is completely out of their hands.

Yet they keep printing their reserve like they have any impact in the world.

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I just hope the aspect of exportation is being curtailed because that will affect the system so bad

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I just learned what BRICS stood for watching Timcast IRL, lol. Like just before reading this, lol.

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I still think the biggest issue with a reserve currency is faith in it. I don't really think they can build that faith but it is kind of shocking to see how far the eurodollar system has gone.

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Of course. It is all a confidence game. There is no way for anything financial or monetarily to move ahead if there is no confidence in it.

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Why focus on usd instead of euro dollars, I don’t want to believe some of this countries in BRICS doesn’t have this information they have another motive towards usd

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They feel subject to the US, hence a reason for a personal reserve currency. Unfortunately, this would take a lot of time to achieve and may end as a fools dream. I feel there are other factors at play more than what we're being told.

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Building a currency that rivals the USD seems like a utopia right now, but the world is made up of dreamers and believers, so if these countries work well, we could see many more countries forming part of the project in the near future.

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South Africa is going along with this as they think they can score from this and little do they realise they will be penalised as they have chosen sides. They expect free hand outs all teh time, but with Russia and China as partners this will come at a hefty price.

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Oh man, this is the type of topics I live for. Been studying Russian, Brazilian, Chinese, and South African economies & currencies for a while now, and there are several factors that will ultimately HURT any attempt at creating a BRICS-centric reserve currency.

Whatever you do, don't ask the South African government why it can't keep the lights on. They don't like admitting that they have a failed electrical grid that has regular outages, and it's 100% centrally-controlled and operated mostly by Eskom.

Brazil has one of the largest middle classes in the Emerging Markets. I've been a longterm investor in certain Brazilian equities since 2019, and one thing that there is no shortage of, is growth. Insane Growth. So much growth in 3 years that it puts the rest of the world to shame. Yet, Brazil's economy, overall, has been in a very poor condition for a long time. There's systemic corruption in the Brazilian government, including its financial regulators.

China - just look at what the CCP did to Jack Ma, their MOST-SUCCESSFUL BUSINESSMAN AND JOB-CREATOR EVER. They absolutely robbed him of his wealth HE helped build. China's real estate market is imploding as we speak. Evergrande just missed a $300B debt restructuring agreed-upon payment deadline. The stock was halted months ago. Hundreds of billions of dollars in equity were wiped out. The CCP has spent the past 2 years punishing Tencent and Alibaba for being successful and providing good products to the Chinese population. Is that the kind of stable system that good, sound money is built on? No way in hell. The Yuan is just as much a fiat paper sham as the rest of the fiat currencies.

Russia's economy is going through a transition period. The one thing that the Russian central bank did that was extremely intelligent, was dumping their USD-denominated debt. They are the only country I know of to do that. Russia's also been stacking physical gold bullion faster than any other country.

I honestly haven't studied India's economy as closely as the others. It's still very much in its infancy in terms of financialization, and there's still plenty of state-run and state-controlled enterprises that dominate communications. You can't have state-controlled communication networks being the backbone of a system - that's bound to fail eventually.

Creating a "reserve currency" based on a basket of the Brazilian Real, the Russian Ruble, the Indian Rupee, the Chinese Yuan, and the South African Rand is a bad idea from the start. I had wrongly-assumed that their reserve currency proposal would actually have real hard money backing it (such as gold or silver), but clearly, that would put too much power into the hands of regular people who own precious metals - and the communists in Europe and Asia can't have that :/

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