{"id":1401864,"date":"2023-08-14T07:30:00","date_gmt":"2023-08-14T11:30:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1401864"},"modified":"2023-08-14T07:30:00","modified_gmt":"2023-08-14T11:30:00","slug":"what-are-the-brics-planning-with-august-22nd-durban-accords","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/what-are-the-brics-planning-with-august-22nd-durban-accords\/1401864\/","title":{"rendered":"What Are The BRICS Planning With August 22nd Durban Accords?"},"content":{"rendered":"

What Are The BRICS Planning With August 22nd Durban Accords?<\/span><\/p>\n

\n

Authored by Peter Reagan at Birch Gold Group<\/a>,<\/em><\/p>\n

Photo by Khashayar Kouchpeydeh<\/a><\/em><\/a><\/p>\n

In my first explainer about the BRICS nations<\/a>, you met the players and you know why their decisions affect the global economy. But why do their decisions affect us?<\/strong><\/p>\n

You need to understand that first \u2013 before the August 22nd Durban Accords will make any sense. (But once you do understand<\/em>, you\u2019ll be astonished\u2026)<\/p>\n

Professor Reagan\u2019s class is now in session!<\/p>\n

Global trade runs on U.S. dollars<\/h2>\n

Since World War II, the U.S. dollar has enjoyed the role of global reserve currency<\/strong>. You may have heard those words before \u2013 here\u2019s what they mean\u2026<\/p>\n

Worldwide, when companies or nations transacting with one another don\u2019t share a common currency, they use U.S. dollars.<\/strong> When a Chilean copper mine sells tons of raw ore to a Canadian refiner, they invoice (and get paid) in U.S. dollars.<\/p>\n

Obviously, most nations don\u2019t have a common currency (the exception is the Euro zone).<\/strong> So the use of dollars for international trade is simply huge<\/em><\/strong>, approximately 85%<\/a> of the global total.<\/p>\n

So the world relies on dollars to do business. That\u2019s a great deal <\/em>for us! That means, for example, that deficit spending and newly-printed money always have a home <\/em>somewhere in the world. Simply because the world has to have dollars.<\/em><\/p>\n

Like I said, that\u2019s a great deal for the nation that exports dollars. It\u2019s not such a great deal for everyone else\u2026<\/p>\n

\u201c<\/span>It\u2019s our<\/em> currency, but it\u2019s your<\/em> problem\u201d<\/span><\/h2>\n

In 1971, President Nixon ended the convertibility of dollars to gold.<\/p>\n

The rest of the world, to put it mildly, went nuts. <\/em>The gold standard was supposed <\/em>to prevent inflation \u2013 but it hadn\u2019t (primarily because American citizens weren\u2019t allowed to swap dollars for gold since 1933<\/a>).<\/p>\n

Absent a gold standard, how was the U.S. going to guarantee the value of the dollar? When challenged with this question by his counterparts at a G-10 meeting in Rome, U.S. Treasury Secretary John Connally astounded his audience<\/a> by proclaiming:<\/p>\n

\u201c<\/span>The dollar is our<\/strong> <\/em>currency, but it\u2019s your<\/strong> <\/em>problem.\u201d<\/span><\/h3>\n

With no restraint on money-printing, the U.S. went on to make a whole lot more dollars\u2026 Take a look at this chart. The blue line indicates total dollars (M2, a measure of money supply) and the red line indicates purchasing power, which has declined 86.6% over the decades:<\/p>\n

<\/a><\/p>\n

So, along with dollars, the current system exports inflation, too.\u00a0<\/em><\/p>\n

That\u2019s what Connally meant when he said it was their problem.<\/p>\n

Well, the rest of the world has just sucked it up for the last 50 years, right? Why are things different now?<\/p>\n

Weaponizing the dollar<\/h2>\n

Whether it\u2019s marketed as a \u201cpeacekeeping operation\u201d or a \u201cpolice action,\u201d going to war is ruinously expensive <\/em>at best. Therefore, the U.S. historically uses financial sanctions as a \u201cnon-kinetic\u201d method of dissuading behavior not in line with U.S. interests.<\/p>\n

Simply because the world has to have dollars, <\/em>as I explained above, whoever controls the dollar also has an outsized impact on the global economy. When the U.S. uses financial sanctions against another nation, we call that \u201cweaponizing the dollar.\u201d<\/p>\n

Now, this has been going on for decades<\/em>. Cuba, for example, has been sanctioned for over 60 years! <\/em>Iran, for more than 40 years. In some sense, weaponizing the dollar is business as usual for the U.S. So it came as no surprise when, in 2022, the U.S. did it again.<\/p>\n

In response to the invasion of Ukraine, the White House froze the Russian central bank\u2019s $300 billion<\/a> in U.S. dollar assets. A stroke of Joe Biden\u2019s pen rendered them completely worthless<\/em>. In addition, the Russian economy was shut out of SWIFT<\/em><\/a>, the international money transfer system.<\/p>\n

The results of this \u201cshock and awe\u201d economic warfare were underwhelming. <\/strong>The Russian economy failed to collapse \u2013 instead, they kept up business as usual, taking payment in yuan or rupees or gold instead of dollars.<\/p>\n

And there are other consequences. As Bloomberg columnist Matt Levine<\/a> wrote back in March of 2022:<\/p>\n

But every time the U.S. and its allies kick a country off this system, it goes and finds other [methods] to use to trade. And other countries, countries that have not been kicked off the main network but who are not necessarily aligned with the U.S. in every way, think that the main network looks a bit less attractive<\/strong>\u2026 For another thing, the main system is visibly a tool of political power<\/strong>, and if you are not aligned with the U.S. you might worry about one day being kicked off the system yourself. So you get more interested in trying out alternative systems now, before you need them.<\/strong> And so kicking Russia out of the dollar-based international financial system makes it more likely that that system will be replaced<\/strong>, over time, by something else.<\/p>\n

\u2026the system is weakened each time it exercises its power. <\/strong>[emphasis added]<\/p>\n

That\u2019s what the Durban Accords on August 22nd are about \u2013 Levine\u2019s \u201csomething else.\u201d<\/p>\n

August 22nd may mark the beginning of the end of \u201cbusiness as usual\u201d<\/h2>\n

You\u2019ve seen that the BRICS nations cannot be ignored<\/a>. Note that two of the five core members (Russia and China) are historically <\/em>rivals of U.S. geopolitical dominance.<\/p>\n

Both nations have been actively signing \u201cbilateral trade agreements\u201d with other nations \u2013 meaning they can buy and sell from one another in their own currencies, rather than using the dollar as an intermediary. But the whole reason a global reserve currency exists is to make international trade less cumbersome.<\/p>\n

So the Durban Accords are an agreement, presumably to be announced on August 22nd, to launch a new, international currency <\/strong>backed by commodities<\/em><\/strong>. \u201cBacked by commodities\u201d is important \u2013 because it\u2019s the easiest way <\/em>for a new currency to gain credibility. Think about it \u2013 what currency in existence today derives its value from anything other than hope?<\/em><\/p>\n

This new BRICS currency would allow participating nations to circumvent U.S. financial sanctions \u2013 and <\/em>to avoid the problem of dollar inflation. (In other words, \u201cour currency\u201d is about to become \u201cour problem\u201d).<\/p>\n

Initially, my sources indicate the BRICS currency could be backed by commodities produced and traded by BRICS nations \u2013 things like oil, industrial metals and grain \u2013 or, more likely,<\/em> gold.<\/p>\n

Backing their new currency with gold would be an obvious move for the BRICS. China and Russia are, respectively, the world\u2019s #1 and #2 gold-mining nations<\/a> (South Africa and Brazil are #13 and #14, respectively). Both China and Russia already have sizable official gold reserves (6th and 7th largest in the world).<\/p>\n

That, in essence, is what the Durban Accords are all about:<\/p>\n

An alternative to U.S. global financial dominance
\n\tA method of avoiding the weaponized U.S. dollar
\n\tA way of avoiding inflation caused by excessive dollar-printing
\n\tA means of simplifying and streamlining the bilateral trade agreements already in place<\/p>\n

The Durban Accords may mean the first <\/em><\/strong>viable, useful alternative<\/em><\/strong><\/span> to the U.S. dollar.<\/em><\/strong><\/p>\n

And that\u2019s why this is a very big deal.<\/p>\n

P.S.\u00a0<\/strong>On July 7, the Russian state-run media outlet RT confirmed the goal of the Durban Accords was to launch a \u201cnew trading currency backed by gold<\/a>.\u201d<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nMon, 08\/14\/2023 – 03:30<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/geopolitical\/what-are-brics-planning-august-22nd-durban-accords<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

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