The older I get the more time I spend asking the question, “Why does someone want me to know this?” Our media is so compromised that questioning the editorial bias of every issue is a full time job.
And I know that it is done on purpose to distract us from the real issues in some instances while advancing an agenda in others.
In 2023, the topic of de-dollarization has been all the rage. It’s been a non-stop barrage of hype and hyperbole. The din of de-dollarization talk became so loud in the lead up to the recent BRICS Summit that it drowned out what was really on the agenda for those few days.
This talk came from all sides, from the BRICS leaders themselves as well as the western press dominated by both British and Davos interests.
People fell all over themselves talking up the “BRICS gold-backed currency” trying to edge each other out in being ahead of the curve on this issue. After a while it became another moment to ask who benefits from all of this amplification?
I’ve been writing about these things for years, knowing that those who control the production of commodities would ultimately get tired of the wealth extraction schemes operated by the financialization masters in New York, London, and Zurich.
It was only a matter of time before they would make their move.
And I can tell you for real that I’ve never been amplified on any subject like this until such time as people in Moscow, Brussels and Beijing wanted this commentary out there.
Don’t take this for grousing, because it isn’t. It’s just an observation born of years of experience. I’ve come to understand what a lack of amplification means; that this is the story no one wants to be told.
So, this begs the question, why do they want it told now?
For Davos de-dollarization is just another attack vector on the United States. By playing up the problems the US has domestically as well as geopolitically they create uncertainty. Capital hates uncertainty.
Throw in a purposefully-belligerent and incompetent “Biden” administration and you have a perfect cocktail of uncertainty which keeps capital markets globally distrustful of both the near-term policy mixed with the long-term trends.
Conclusion? The US is FUBAR.
Russia is at war with the West, so, of course, Vladimir Putin will talk his book on de-dollarization. He is the point man on the BRICS being “anti-dollar.”
There’s only this one little problem with all of this: The US dollar itself and the lack of alternative infrastructure for ditching it. Despite all of the jawboning and, frankly, propaganda on this subject, the reality is far, far different.
While everyone is talking de-dollarization, the real currency losing it’s position in global trade is the euro. But no one is talking about de-eruoization. I guess it doesn’t roll off the tongue as well?
According to the latest data from the SWIFT RMB Tracker, there is no currency that has lost more ground in global trade than the euro. In just over two years the euro has fallen from 39.5% of global payments outside the euro-zone to just 13.6%.
The dollar absorbed most of those payments with the British pound, Japanese yen and, yes, the Chinese renminbi taking up the rest.
So, the great distraction about de-dollarization is, in part, about paying no attention to the rapid demise of the euro and the emerging sovereign bond crisis that ECB President Christine Lagarde works everyday to paper over.
I’ve talked about this so much people are getting sick of it. (Here, Here, Here, and Here)
Eventually, however, no matter how hard they try to game the math, paint the tape and make deals to keep up appearances, markets are simply smarter than central planners.
So, with this in mind I fully expect over the next couple of months for the bond vigilantes to return with a vengeance now that Jerome Powell has everyone’s attention. He can further up his street cred with another 25 basis point raise in September, but honestly, he may not have to.
BRICS in the Wall
But, back to the BRICS. If de-dollarization wasn’t the point of the Summit this year, then what was?
Expansion.
And not just expansion for the sake of expansion, but geographically strategic expansion.
The BRICS formally added six countries — Iran, Saudi Arabia, United Arab Emirates, Argentina, Egypt and Ethiopia. They could have added others and almost added Algeria if not for a last-minute veto by India on behalf of France.
Algeria is symbolic of the fight between Italy and France for access to African oil and gas. There can be no Ital-exit from the EU without Italy minimizing France’s influence in North Africa, shoring up its energy needs as collateral for a return to the lira.
Thankfully, with the help of Russia and China, the Africans are taking care of the Italians’ French Problem all on their own.
If there is one common theme beyond the geography (more on that in a bit) with all six of these countries it is their relationship with the supposedly former British empire. From the Arab states and Egypt to those that defied the Brits in the past — e.g. Iran and Argentina — these additions represent a power shift that is profound.
One look at the world map should make this point crystal clear.
Countries in Red are members of the alliance. Those in green have formally applied for membership and yellow are those that have openly expressed interest.
But it is the 5 countries clustered around the center of global trade that should grab your attention. Because all talk of a BRICS common currency are nothing more than theatre if there isn’t a fully developed alternative financial supply chain to capture the profits and minimize currency risks and friction for all the members.
Taking them one by one let’s discuss.
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