This Anti-Dollar Alliance Grows Bigger by the Day

As predicted, the wall of BRICS is growing bigger. Just a reminder, “BRICS” refers to the organization comprising Brazil, Russia, India, China, and South Africa. However, other countries have since joined the original group, so it’s often now referred to as “BRICS+6”.

The latest news from the BRICS+6 is that more than 20 countries have officially applied for membership. Another 20 have “informally sought to get information to join BRICS,” or so says Anil Sooklal, a South African ambassador.

By my counts, that’s 40-something countries interested in joining the existing 10. I would say 11, but there’s talk that Argentina, one of the new +6 countries, might decide not to join after all, since Tangoland’s newly elected Presidente wants to dollarize the disastrously inflationary LatAm economy, and that wouldn’t sit with the overlords in Beijing.

Either way, we’re talking about potentially 50-odd countries orbiting the universe anchored by Brazil, Russia, India, China, and South Africa.

At the same time, China is now aiming to convince many of the countries involved in the Middle Kingdom’s so-called Belt and Road Initiative to move toward a yuan-based trade and lending arrangement.

That initiative, to refresh your memory, is China’s effort at building a modern-day Silk Road connecting the country to pretty much every other country between Southeast Asia, through India and the “stans”, across the Middle East, down into most of Africa, and terminating in Western Europe.

In all, that amounts to more than 150 countries. And in China’s grand scheme, any of those countries borrowing from China will be repaying China in yuan rather than dollars. Moreover, China envisions a push to trade in local currencies rather than the dollar, which shoulders most of the world’s existing trade financing.

Now, will any of this happen?

Who can say?

Maybe it’s all just a tempest in a noodle bowl.

Maybe there’s fire when we see all this smoke.

Me, I’m willing to bet it’s more fire than tempest.

Already, various countries within the expanding world of BRICS are cutting their ties to the greenback and opting to trade in local currencies. That includes India, the United Arab Emirates, Egypt, and Ethiopia. Just recently, China and Saudi Arabia finalized an agreement I wrote about earlier this year—one that will see the two countries trade as much as $7 billion worth of goods between themselves, but in yuan and Saudi riyals.

Granted, $7 billion is a teensy number in the globally gargantuan world of dollar trade.

Then again, the tiniest blue-ringed octopus can take down a human with a bite that’s often not even felt.

Said another way: Big disasters often begin in unseen moments.

The more countries that ultimately agree to trade away from the dollar, the bigger the impacts on the dollar, the debt-afflicted U.S. government, and American families.

With nearly $34 trillion in debt, and with government dangerously reliant on taking on more debt every year to manage America’s finances, shrinking demand for the dollar is the worst possible news. The impacts are inflationary at the mild end, while at the severe end they spin the U.S. into a debt crisis it cannot escape except through radical devaluation of the dollar.

That said, I’m not convinced we will see the severe end.

Instead, we’re far more likely to see a replay of 1933 and 1971, when FDR and Nixon, respectively, devalued the dollar quietly by way of revaluing gold.

This time around, though, we also have the blockchain, the technology that runs the cryptosphere. We also have the U.S. and most other countries in the world building Central Bank Digital Currencies, or CBDCs.

As I’ve noted in past dispatches, a U.S. CBDC is basically just a bedazzled dollar. Instead of existing as physical notes and coins, they exist digitally. They spend the same, though, so functionally it’s all moot.

The issue I see is that Uncle Sam’s minions and mandarins are very likely to introduce a CBDC as a way of papering over America’s pending Thelma and Louise moment.

Launching an entirely new fiscal order will allow the wizards behind the curtain to devalue the dollar in some way. They’ll never announce it as a devaluation, but that is precisely what it will be. Creditors will be paid back less than they’re due, though it will look like they’re being paid off as promised. The greenbacks you own will be worthless.

Uncle Sam will be sitting pretty, though he will have done you and me dirty.

So that’s where we’re headed. Seems an odd segue from BRICS +40 and more to a CBDC, but the two are oddly related. The first has a direct impact on the second.

We’ll see soon enough.

I stand by the long-running assessment that America faces a fiscal crisis in the 2027-28 timeframe. That’s just about the time I also expect a Digi Dollar CBDC to launch.

Stay tuned. This promises to get real interesting, real soon.