• July 31, 2023
• By Ziad Abdelnour
• In Uncategorized
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There’s a basic question we have to ask ourselves first, one that everyone is forgetting: Why is this new currency “backed” by gold in the first place? Why not simply use gold?

In other words, why have a government middleman there to call some amount of gold a “franc,” a “ruble,” a ‘pound,” a “dollar,” or whatever? Who needs some untrustworthy intermediary to give you paper? Why not just allow everybody to use gold itself, the world’s only historically successful money? The only reason for a currency is because they’re planning on manipulating it, which means inflating it at some point.

Of course, it will be nominally backed by gold to start with – it has to be, because none of these governments trust each other. But who among them can be trusted to store and redeem the gold? Nobody. That guarantees that although it might start out well because somebody says it’s redeemable and limited in quantity, it’ll eventually fall apart.

Bottom Line: I’m all for anything that gets the world off the dollar standard. The fact the dollar is accepted everywhere allows the US government to do all kinds of things—almost all of them stupid and destructive—that it wouldn’t otherwise be able to afford. Roughly $800 billion dollars are exported annually. That trade deficit has been going on for over 40 years. It’s artificially raised the standard of living of Americans. It’s made them think government economic policy is wise. Which it isn’t. Decades of accumulated offshore dollars will someday—soon—come back home. Many trillions of dollars will be traded for real wealth in the US; prices will skyrocket, and the standard of living will collapse.

Since the early ’80s, the major US export has not been Boeings or wheat, or computers. It’s been dollars. Who knows how many scores of trillions of dollars are outside the US now? Foreigners only use the dollar because it’s traditionally accepted and convenient. Americans use it because they must, as “legal tender.” At some point, foreigners will dump the dollar for any number of reasons. It’s a time bomb waiting to go off. So brace yourselves.

It’s nice to see an alternative currency developing. But none of the governments involved—the Chinese, the Indians, the Russians, and 30 or 40 little players so far—have any reason to trust each other or the BRICS currency. Hence, despite all this scare propaganda by the media, I think it will fall apart too.

The BRIC won’t be used by tens of millions of individuals to help keep it stable. The BRIC is unlikely to be used for anything but accounting between governments.

Every currency in the world is a fiat unit, backed by nothing but faith and habit, backed by nothing except the force of a government to make it legal tender.

The dollar is just—for the moment—the most accepted currency.