The dominance of the US dollar was established in 1944 with the Breton Woods Agreement. The original system took more than a decade to fully implement and was based on fixed exchange rates and fixed prices for gold. The original agreement ended after the US abandoned silver coinage in 1964 and the gold standard in 1971. Instead the US and Saudi Arabia agreed that the Saudis would continue to price oil in US dollars (petrodollars) and purchase US government debt in return for US security guarantees.
A key topic at this week’s BRICS meeting in Kazan is the announcement of a new international payments system that can bypass western financial systems that have developed since Breton Woods. Unlike the existing systems, BRICS protocols are designed to allow direct transactions between nations without the need to go through western banks. The new system appears to use an architecture similar to that of the modern internet, while the existing dollar-based system is more like AOL from the 1990s.
This needs to be taken seriously and our government MUST STOP their wasteful spending that is supplying the gas for this fire. As our debt increases, our dollar weakens around the world and allows for other economies to be examined for being stronger than ours, it opens the door for the American dollar to stop being the “gold standard”.
Seems set-up to be an instant system for all of the world’s worst corrupt actors to steal, cheat, embezzle, launder, counterfeit, manipulate, extort, gamble and break institutions of their choosing.
A big issue is that western banks will not get their cut on BRICS transactions.
Breton Woods also established the World Bank and the IMF. I expect they will see new competition as well. Competition is bad for western bankers, but good for the rest of the world.
Since the US abandoned the gold standard in 1971, it has been able to run up enormous trade deficits year after year. The main export of the US is dollars. That is likely to end as non-dollar systems advance.
What was our national debt 15 years ago…12 trillion? How much has changed since then both internally regarding that same debt total and externally the number of countries now joining BRICS? Regarding this subject…look out of your windshield, not your rearview mirror. This truly is a potential problem.
2022 is the starting point. NATO confiscated Russian foreign reserves and ended SWIFT transactions. Both actions were designed to collapse the Russian economy, and the US says China is next.
The rest of world is looking for alternatives that are not dependent on whims of Washington.
15 years. Don’t make up starting points. They have accomplished little to nothing in 15 years. Again. This isn’t the first time somebody tries to unseat the dollar. It may eventually come.
At some point the dollar will be replaced though the claim that dollar as a global currency is dead or about to die has been made several times and its still here.
Btw @Bill.in.PA great thread topic, very interesting and no not saying that sarcastically.
Correct. But not the other way around. The debt itself won’t lose it the reserve status. In fact arguably the size of the debt in part protects its status like a self-eating ice cream
The collapse of the US or even global economy or the collapse of the consumer economy that buys so much foreign product that forces other countries to buy our debt.
