A Perfect Storm
The Bretton-Woods business deal was entered into in 1944. Flowing from that conference, the U.S. dollar became the world's reserve currency. American economic dominance that flowed from that agreement is coming to an end.
The BRICS Nations
The so-called BRICS nations are Brazil, Russia, India, China and South Africa, In August 2023, at the 15th BRICS Summit, South African President Cyril Ramaphosa announced that six emerging market group countries (Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates) had been invited to join the bloc. Full membership is scheduled to take effect on 1 January 2024.
BRICS had a cumulative GDP of $27.7 trillion, a 26% share of global GDP. BRICS' new members add $3.1 trillion of GDP to the bloc, with Saudi Arabia contributing the most thanks to its GDP of $1.1 trillion. The BRICS nations have communicated their intention to end reliance on the U.S. dollar as the world's reserve currency.
A Perfect Storm
Many observers have pointed to the likelihood of an economic downturn that may even outstrip the magnitude of the Great Depression of 1929. The reasoning that underlies these predictions is that, as demand for the U.S. dollar plummets, it will lead to hyper-inflation in the U.S. This is because the U.S. runs a large trade deficit. In other words, the U.S. imports more goods dollar-wise than it exports. As demand for the dollar falls, it's value with respect to other world currencies is also projected to fall. The cost of goods and services purchased off-shore are correspondingly more expensive.
De-dollarization
The BRICS nations have indicated their intention to trade among themselves using their own currencies. It is reported that China has just completed an order for Iranian oil using the Yuan as the payment mechanism.
SINGAPORE, Oct 11 (Reuters) - China has reaped savings this year of nearly $10 billion through record purchases of oil from countries under Western sanctions, according to Reuters' calculations based on data from traders and ship-trackers.
An unintended consequence of sanctions imposed by the United States and others on Russia, Iran and Venezuela has been to lower the oil import costs for refiners in top economic rival China, which often criticizes such "unilateral" penalties.
As the move toward trading in their own currencies intensifies, demand for the U.S. dollar will continue to shrink. This raises the spectre of hyper-inflation in the U.S. In layman's terms, hyper-inflation means that, domestically, the value of American's hard-earned dollars will shrink. The relative cost of foreign goods rises therefore. This means that, as costs rise, people will not be able to afford to buy as much as they did previously. Purchasing power of the dollar shrinks.
As demand for goods and services shrinks, people will buy less. This decrease in demand translates into higher unemployment. The result is a downward economic spiral that is difficult to intercept. Typically a country will try to spend it's way out of a recession.
The problem facing the U.S. now, however, is that the budget deficit in the U.S. is at a record level. The U.S. may, and likely will, find that it's ability to borrow more, in light of this record budget deficit, may be severely constrained. The current reality is that countries are dumping U.S. treasuries signaling a loss of faith by those countries in the continuing ability to repay the debt represented by those treasury notes.
A Global Issue
These pressures are not limited to the U.S. Many countries world-wide, in response to the c-19 debacle, deserted the exercise of monetary and fiscal responsibility. Hence, many countries in the western world are facing problems similar, or worse, than the economic issues faced by the U.S.
What Do You Do?
Many suggest that you trade your dollars for commodities. Not just gold or other precious metals. Not just the new digital assets I wrote about earlier today. Buy food. Stock up. As inflation accelerates you will have bought food and other commodities at lower prices as the purchasing power of your dollars continues to fall. If the shtf then you will have the ability to barter your food and other stores for other things that you need moving forward.
Recent Comments
9
It is an exciting and practical post.
Thank you, Grant.
Here is a fact I like to share.
I shop in discounted stores. Around two months back, I bought a rinse aid for the dishwater dishes to help dry them. The same brand was $12.00 at a discounted price at Costco wholesale.
Then I returned to the discounted store, and luckily, that item was available, but the price was $10.00, cheaper than Costco and twice as expensive as my last purchase.
I see people are building businesses around that.
Great post, Grant!
I too, have been monitoring this.
One thing I note is that western media publishes a lot of negative news about China.
My advice to people is to also read or watch articles that are not prejudiced against China. Or media that is controlled by western governments or companies.
Better still, watch videos of foreigners or journalists who are actually in China and report what they are seeing and experiencing. For example, there is an American who lived in China for the past nearly 20 years. His videos show how China has changed over the decades and what China's real economic growth is.
I saw a video where a professor was asked by a western journalist about how bad China is. The professor admonished the journalist, said the western media is incestuous where the journalists listen and get information from each other rather than find out the truth. He suggested that the journalist and others not be laptop warriors and go to the actual place to experience and find out the truth for themselves.
Just my humble suggestion.
Tim
Very hard to discern what the truth is in today's absurd world. I agree with your stance on mainstream media. I have turned to what people call the 'back channels'...Rumble, Bitchute...even on those channels there are those who appear to be 'controlled opposition'.
I won't go into it but I'm a tinfoil hat. I agree with you that we don't get a true picture of the reality in China. I hold the view that Xi, Modi, Putin and Trump are implementing a plan to bring down the deep state, the bankers, the boys in 'the club'.
Anyway Tim, looking forward to the continuing dialogue with you here on WA. My gut tells me we may have much in common. Have a wonderful Sunday!
Grant
Yes, agree that it is hard to get the truth in today's world. That is why I read or watch all news with skepticism.
I am skeptical that Xi or China have any plans to bring down other nations. The reason is that China is large enough. They have enough on their plate.
As for bringing down the deep state, etc, (sorry to say this) but it seems to me that the politicians and corporations are doing a good job of that on their own. Pardon me if I am wrong. I am also skeptical of the bad news I read of USA - e.g. rampant homelessness, videos of people looting stores, racism etc.
I wonder if it is all true? After all, USA is supposed to be the land of the free and the land of opportunity. I still read of people wanting to migrate there. If the country is so bad, why do people want to migrate there?
Also, I have friends in the states. And from the FB posts they share, they are having a great time.
You can see why I am suspicious of all the bad news I read about USA?
It's the same with Singapore. There is so much good news about Singapore that the bad things that happen here are often overlooked. Worse is that most tourists see only all the good things when they visit. Not many travels to the heartlands and see or hear the issues that locals face.
Glad to continue dialogue with you, Grant. Yes, I too believe we have much in common.
It's Monday here in Singapore. Have a great week!
Tim
Very good Blog, the last word is as our dollar shrinks along with our buying power we not only stock up at lower prices, but we also need to know how do grow our own food by gardening, rising small things like chickens (get fresh eggs), ducks, rabbits, geese, goats. What do you think, do you agree 👍.
Have a great weekend 😀.
Larry
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Great post. Until it hits their pocketbooks or their daily life, most people won't pay attention. They are distracted by totally useless endeavors. Like you, I don't listen to mainstream media anymore and am paying attention. Hopefully, you have hit a spot with some otherwise distracted.
~Debbi