BRICS to reduce dollar dependence

Mike Hoxbig said:
Easy to pay your debts when you hold the reserve currency, you just print money to pay it.

Inflation, what inflation? Hike your rates, everyone flocks to your currency, because guess what - it's the reserve currency and you can get a better return on it.

Awesome, your inflation is now under control while everyone else gets to sit with it.

There's a good reason why it's starting to be questioned, if you can look past any biases. People are tired of being at the mercy of America, where their own economies are impacted through no fault of their own. When there's sufficient trade not being conducted in dollars, the American system collapses under the debt that they now can't repay...
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Again, missing the point that the US is the biggest economy.
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www.visualcapitalist.com

The U.S. Share of the Global Economy Over Time

As of 2019, the U.S. made up almost a quarter of the global economy. This chart shows how the U.S. Share of the global GDP has changed over time.
www.visualcapitalist.com www.visualcapitalist.com

Find another country that is another quarter of the world's economy, and isn't someone manipulating currency/market directly (China).
 
Johnatan56 said:
Find another country that is another quarter of the world's economy, and isn't someone manipulating currency/market directly (China).
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Lol that's exactly what the US does, by virtue of having the reserve currency pegged to nothing.

Let's see how big that economy is when suddenly neutral countries aren't trading in dollars. When there's no demand for dollars, what do you think will happen? If BRICS is willing to buy oil in Riyal at a price set by the Saudis, what do you think will happen? If BRICS is willing to buy gold in Rands at a price set by us, what do you think will happen? There's no printing your way out of this one, they'll have to deal with schit the same way everyone else has to...
 
Mike Hoxbig said:
Lol that's exactly what the US does, by virtue of having the reserve currency pegged to nothing.

Let's see how big that economy is when suddenly neutral countries aren't trading in dollars. When there's no demand for dollars, what do you think will happen? If BRICS is willing to buy oil in Riyal at a price set by the Saudis, what do you think will happen? If BRICS is willing to buy gold in Rands at a price set by us, what do you think will happen? There's no printing your way out of this one, they'll have to deal with schit the same way everyone else has to...
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Again, why would there be no demand for dollar? Only currency right now that could possibly be a reserve one is the Euro, and I am doubtful of that, since, once again, the US is the largest economy in the world (bigger than EU combined).

And US doesn't really have a debt issue, most of the debt is owed to itself/its citizens.

Last comment on the matter from my side, no point discussing this with someone who thinks: Brazil -> BB rating extreme economic crashes/unstable last decade, Russia -> at war and probably default and propping up exchange rate and fake GDP data, China -> currency that is internal/manipulated and does not want others to trade it and fake GDP data, South Africa -> <1% of the world GDP, exactly who wants to trade the rand, especially country in junk status. This entire BRICS talk is postulating, no one is going to swap from dollar as reserve any time soon.
 
Johnatan56 said:
Again, why would there be no demand for dollar? Only currency right now that could possibly be a reserve one is the Euro, and I am doubtful of that, since, once again, the US is the largest economy in the world (bigger than EU combined).

And US doesn't really have a debt issue, most of the debt is owed to itself/its citizens.

Last comment on the matter from my side, no point discussing this with someone who thinks: Brazil -> BB rating extreme economic crashes/unstable last decade, Russia -> at war and probably default and propping up exchange rate and fake GDP data, China -> currency that is internal/manipulated and does not want others to trade it and fake GDP data, South Africa -> <1% of the world GDP, exactly who wants to trade the rand, especially country in junk status. This entire BRICS talk is postulating, no one is going to swap from dollar as reserve any time soon.
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There's a lot of assumptions in that post about where you think I stand. And FYI I generally tend to align with the US in a lot of things, but economics is not one of them.

Keep going back to this "largest economy thing". It's only that way because world trade is conducted in dollars, creating demand for the dollar. Then printing money, creating domestic inflation and hiking rates, further increases demand, because world trade is conducted in dollars.

It's artificial demand pegged to nothing other than "please trust us". They import twice as much as they export. So where's the real demand for the dollar? Commodity-based countries are waking up to the fact that they can be creating value for themselves instead of the US. You have case studies 200-odd countries in how economics should work, but you're trying to defend the odd one out. Seriously, expected better from you - not your position but your behaviour. Anyway as you were...
 
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@Johnatan56

I am not sure what you disagreeing with?

1. That there was no agreement after WW2
2. That the dollar was not pegged to gold
3. That Nixon abandon this in the 70s
4. That USA prints money and exports their inflation


1-3 are historical facts: Screenshot_20230823_083106_Chrome.jpg
Screenshot_20230823_083046_Chrome.jpg


So that leave 4? Not sure why you would disagree, Zimbabwe and Venezuela found out the hard way what happens when you print money. So why does USA avoid being affected by it, because as the world reserve currency, their inflation is transferred to the countries selling their resources for essentially toilet paper. Since without the dollar being the reserve currency, it would be the same as Zimbabwe and Venezuela.
 
At the end of the day its just a lot of political hot air IMHO.
 
etienne_marais said:
Yeah, China with its prosperous cities seems alluring but they still imprison people without trial, have people disappear, burn churches and have internment camps. So much for a clean and peaceful world they want.
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But that's all internal stuff and has nothing to do with a cold war.

I'm not a Chinese apologist but I find it funny how everybody has a problem with how they run their country yet have no problem buying the western goods that are manufactured/assembled there due to the cheap labour. This same phenomenon is now happening in India too as the west tries to reduce it dependence on China.
 
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Can we please go back to the barters system? One bushel of carrots for a litre of Saudi oil?
 
Mike Hoxbig said:
Lol that's exactly what the US does, by virtue of having the reserve currency pegged to nothing.

Let's see how big that economy is when suddenly neutral countries aren't trading in dollars. When there's no demand for dollars, what do you think will happen? If BRICS is willing to buy oil in Riyal at a price set by the Saudis, what do you think will happen? If BRICS is willing to buy gold in Rands at a price set by us, what do you think will happen? There's no printing your way out of this one, they'll have to deal with schit the same way everyone else has to...
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What will happen is that the non-criminal, non ***hole countries will find ways to do business without us and get the resources they need from each other - and we'll be part of the little camp of misfits trying to stay alive sucking commie potatoes and doing what they tell us while we all think we'll be magically well off when we wont.
 

Xi says China ready to import more from ‘strategic partner' South Africa​


Chinese President Xi Jinping says China stands ready to import more quality products from South Africa, while also encouraging Chinese enterprises to invest in the country, which he described as a “strategic” bilateral and multilateral partner.

China is South Africa’s single biggest trading partner and South Africa is China’s largest African trading partner, with bilateral trade of $57-billion recorded in 2022.
 
neoprema said:
What will happen is that the non-criminal, non ***hole countries will find ways to do business without us and get the resources they need from each other - and we'll be part of the little camp of misfits trying to stay alive sucking commie potatoes and doing what they tell us while we all think we'll be magically well off when we wont.
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What resources from who? Is the US going to buy oil from the UK? Where's the UK going to get it from? At some point somebody's going to have to buy in non-USD.

Most of the commodity-based countries are in favour of doing away with the dollar, so they can set terms on their resources. This also introduces a measure of competition between countries - it's not a bad thing...
 
DreamKing said:
really? :p

Valued at over $51 trillion, the U.S. has the largest bond market globally. Government bonds made up the majority of its debt market, with over $26 trillion in securities outstanding. In 2022, the Federal government paid $534 billion in interest on this debt.
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www.pgpf.org

The Federal Government Has Borrowed Trillions. Who Owns All that Debt?

Most federal debt is owed to domestic holders, but foreign ownership is much higher now than it was about 50 years ago.
www.pgpf.org www.pgpf.org
Majority owed to itself or own citizens, I specifically stated that, not that there is not a lot of debt. Can just raise tax rate and it will all start flowing back.
Only time debt becomes an issue is if growth is slower than servicing that debt.

rh1 said:
@Johnatan56

I am not sure what you disagreeing with?

1. That there was no agreement after WW2
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That he stated it as though the US broke the agreement when there is a second one where all parties together annulled it.
rh1 said:
2. That the dollar was not pegged to gold
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Didn't disagree.
rh1 said:
3. That Nixon abandon this in the 70s
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Under Nixon*
rh1 said:
4. That USA prints money and exports their inflation
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Sure.

The actual disagreement is why the US dollar is still the world's reserve economy. It's because it's the largest economy in the world, and it drives most demand, and fulfills most advanced supply.
Mike kept phrasing it as though BRICS was a viable alternative currency, completely missing the point of why the US is, and why right now there is no alternative outside of EU, and US is still better.
 
Johnatan56 said:
www.pgpf.org

The Federal Government Has Borrowed Trillions. Who Owns All that Debt?

Most federal debt is owed to domestic holders, but foreign ownership is much higher now than it was about 50 years ago.
www.pgpf.org www.pgpf.org
Majority owed to itself or own citizens, I specifically stated that, not that there is not a lot of debt. Can just raise tax rate and it will all start flowing back.
Only time debt becomes an issue is if growth is slower than servicing that debt.
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your own source. :)
==>

At the end of 2022, the nation’s gross debt had reached nearly $31.4 trillion. Of that amount, about $24.5 trillion, or 78 percent, was debt held by the public — representing cash borrowed from domestic and foreign investors.

Foreign Holders of Federal Debt​

Foreign ownership of U.S. debt, which includes both governments and private investors, is much higher now than it was about 50 years ago. In 1970, total foreign holdings accounted for $14.0 billion, or just 5 percent, of DHBP. As of December 2022, such holdings made up $7.3 trillion, or 30 percent, of DHBP. Of that amount, 54 percent was held by foreign governments while private investors held the remaining 46 percent. Because Treasury securities are backed by the full faith and credit of the U.S. government, creditors including foreign investors often view lending to the United States as a safe investment.

I really don't understand how can you "raise" the taxes and then the problem will be solved.
if it can be solved, the percentage of foreign debt should be decreasing, not increasing.
 
DreamKing said:
your own source. :)
==>

At the end of 2022, the nation’s gross debt had reached nearly $31.4 trillion. Of that amount, about $24.5 trillion, or 78 percent, was debt held by the public — representing cash borrowed from domestic and foreign investors.

Foreign Holders of Federal Debt​

Foreign ownership of U.S. debt, which includes both governments and private investors, is much higher now than it was about 50 years ago. In 1970, total foreign holdings accounted for $14.0 billion, or just 5 percent, of DHBP. As of December 2022, such holdings made up $7.3 trillion, or 30 percent, of DHBP. Of that amount, 54 percent was held by foreign governments while private investors held the remaining 46 percent. Because Treasury securities are backed by the full faith and credit of the U.S. government, creditors including foreign investors often view lending to the United States as a safe investment.
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So you quote me saying I am not saying it's not a lot of debt, as in it is a lot of debt.

So $31.4tn debt -> $24.5tn by public -> $7.25tn is foreign / 23% of total. That includes that that debt is used as a security by those countries, and doesn't take into account how much of Swiss/Belgian/UK debt is owned by US.
DreamKing said:
I really don't understand how can you "raise" the taxes and then the problem will be solved.
if it can be solved, the percentage of foreign debt should be decreasing, not increasing.
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Then you don't understand the difference between debt of an individual vs a country.
A country does not have a finite lifespan, you don't need to worry about it dying, so so long as the economic growth created by that debt is larger than the cost of servicing that debt, you make money.
If you were to increase tax in order to pay back all the debt quickly, you'd stop it from being invested back into the economy/slowing down growth, which is why the debt was taken in the first place.
That debt also means people can be sure on pension payments etc., by investing in it as guaranteed payout (one of the reasons why foreign countries want to own US debt, there is basically nothing else as secure (not to say it is completely secure, it's relative)).

Debt is not a bad thing, as long as servicing it is feasible/profitable.
 
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