The BRICs Are Morphing Into An Anti-Dollar Alliance

Tyler Durden's picture

While numerous massively indebted administrations around the world hope to divert the attention of what's left of their struggling middle class away from its daily impoverished existence and distract it with flashing lights and glitzy animations showing another all time market high on a daily basis, a significantly more important shift taking place behind the scenes is appreciated by very few: the ongoing de-dollarization of the world. For the latest example of how increasingly more countries are setting the stage for the final currency war, we go again to Russia where VOR's  Valentin Mândr??escu explains that slowly but surely the BRICS - that proud Goldman acronym which was conceived to perpetuate the great American way of life by releasing trillions in US-denominated debt in heretofore untapped markets - are morphing into an anti-dollar alliance.

BRICS is morphing into an anti-dollar alliance, From VOR

Before the crucial visit to Beijing next week, the governor of the Russian Central Bank, Elvira Nabiullina met Vladimir Putin to report on the progress of the upcoming ruble-yuan swap deal with the People's Bank of China and Kremlin used the meeting to let the world know about the technical details of its international anti-dollar alliance.

On June 10th, Sergey Glaziev, Putin's economy advisor published an article outlining the need to establish an international alliance of countries willing to get rid of the dollar in international trade and refrain from using dollars in their currency reserves. The ultimate goal would be to break the Washington's money printing machine that is feeding its military-industrial complex and giving the US ample possibilities to spread chaos across the globe, fueling the civil wars in Libya, Iraq, Syria and Ukraine. Glaziev's critics believe that such an alliance would be difficult to establish and that creating a non-dollar-based global financial system would be extremely challenging from a technical point of view. However, in her discussion with Vladimir Putin, the head of the Russian central bank unveiled an elegant technical solution for this problem and left a clear hint regarding the members of the anti-dollar alliance that is being created by the efforts of Moscow and Beijing:

“We've done a lot of work on the ruble-yuan swap deal in order to facilitate trade financing. I have a meeting next week in Beijing”, she said casually and then dropped the bomb: “We are discussing with China and our BRICS parters the establishment of a system of multilateral swaps that will allow to transfer resources to one or another country, if needed. A part of the currency reserves can be directed to [the new system].” (Prime news agency)

It seems that Kremlin chose the all-in-one approach for establishing its anti-dollar alliance. Currency swaps between the BRICS central banks will facilitate trade financing while completely bypassing the dollar. At the same time, the new system will also act as a de facto replacement of the IMF, because it will allow the members of the alliance to direct resources to finance the weaker countries. As an important bonus, derived from this “quasi-IMF” system, the BRICS will use a part (most likely the “dollar part”) of their currency reserves to support it, thus drastically reducing the amount of dollar-based instruments bought by some of the biggest foreign creditors of the US.

Skeptics will surely claim that a BRICS-based anti-dollar alliance will not manage to deprive the dollar of its global reserve currency status. Instead of arguing against this line of thought, it is easier to point out that Washington is doing its best to enlarge the ranks of the enemies of the dollar. Asked by the Russia 24 channel to comment on Nabiullina statements, Sergey Kostin, the president of the state-owned VTB bank and one of the staunchest supporters of anti-dollar policies, offered an interesting perspective on the situation in Europe:

“I think the work on ruble-yuan swap line will finalized in the nearest future and the way for ruble-yuan settlement will be open. Moreover, we are not the only ones with such initiatives. We know about the statements made by Mr. Noyer, chairman of the Bank of France. As a retaliation for what Americans have done to BNP Paribas, he opined that the trade with China must be done in yuan or euro.”

If the current trend continues, soon the dollar will be abandoned by most of the significant global economies and it will be kicked out of the global trade finance. Washington's bullying will make even former American allies choose the anti-dollar alliance instead of the existing dollar-based monetary system. The point of no return for the dollar may be much closer than it is generally thought. In fact, the greenback may have already past its point of no return on its way to irrelevance.

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numapepi's picture

I read an article that claimed the collapse of AIG and Bear Sterns was orchestrated from overseas. The article went on to say that the attack came from Russia. Whether it was actually from Russia or the real attacker simply used a Russian IP, the reality is that there are people out there, with lots of money to spend, who would like to destroy the US. Since we are still a powerful military force and have an armed populace our financial system is our Achilles tendon.

Here is the article; http://www.theblaze.com/stories/2012/01/19/economic-terrorism-was-the-20...

Ancient Landmark's picture

We have met the "Anti-American Dollar Alliance" and he is us.

abcd0210's picture

Everyone that can afford a gold futures contract should buy at least one and take delivery of their brick.

metastar's picture

Agree,

Want to join the anti-dollar alliance? Buy gold!

daveO's picture

Gold is the anti-bankster metal.

MykeTheVet's picture

Great news for Industrial Hemp growers.

bobbydelgreco's picture

i hate the american plutocracy as much as any of you antisemitic zhers though i buy equities almost every day the market's eventual doom is something i am just as sure of as you losers but even more stupid then your faith in pm's is the idea all is going to work out for the brics 

daveO's picture

International settlements in $ have declined to around 60% from 75%, the last I've read. They don't have to do much more to tilt the scales against the Semites. Then, interest rates will probably take off. 

TK69's picture

Bunch of Nonsence.  Without the US dollars most of these countries would not exist, after all they are mercantile economices.  Without inflating, nationalizing, and exporting they would be nothing.  They are only made that the US is beating them to the punch.  I say go for it and see what happens.  The US really does not need the world. But the world does need the US. WHy?  Becaue most people in the world do not work, innovate, nor create.  Most are only order takers.

TK69's picture

Bunch of Nonsence.  Without the US dollars most of these countries would not exist, after all they are mercantile economices.  Without inflating, nationalizing, and exporting they would be nothing.  They are only mad that the US is inflating which is bad for their exports.  I say go for it and see what happens.  The US really does not need the world. But the world does need the US. WHy?  Becaue most people in the world do not work, innovate, nor create.  Most are only order takers.

SilvertonguedAngel's picture

Yer living in the 80's.

 

By the end of this year OPEC will open to non-dollar denominated transactions and then like the author said, everyone else will run for the doors too. Yeah their mad that we are robbing them, and killing them with drones, and savaging their economies, and plundering their resources.

If you think that other nations just can't live without that kind of treatment, well maybe there is something worse than mere nostalgia coloring your opinions, like maybe you work For the CIA or some other institution/entity that stands to lose with the upcoming inevitible death of the FRN...

TK69's picture

Oh?  OPEC needs US dollars to buy US weapons because they do not produce them along with a lot of other things.  Most of the world doesn't produce squat which is why US products are in demand. And what does the US import from these countries?  Things made from China?  Who will the chines export to if not american consumers?  Russia? for Russia Rubies which are not worth anything? The Bric countries who need loans to survive?  They along with Russia along with China and the rest if the world are going bankrupt for a reason.  All they can do is print, print, there money away.  But if printing worked, the soviet union would be here today and there would be no capital markets. The problem that the world has is that there are less and less americans buying things from them whihc means they have less US dollars to spend and thus to manipulate the currency, so they need an excuse for their failed economic policies.

usathoughts's picture

TK69. You are describing the United States. They are not mad at us. Just trying to save themselves from the rapidly declining value of the dollar.

 

You are correct in saying the U.S. is the dumping ground for their exports. Most of the products they export to us are those which all people require just to live. The U.S. suffers considerable inflation in this regard which reduces our imports. You can see where this is heading and it is not pretty for any of us. 

RMolineaux's picture

The BRIC countries are rapidly approaching a fork in the road, and their choice of which road to take in the future will have massive consequences.  If they decide to maintain their cooperation with the IMF they will have the advantage of an existing institution to expand a true international reserve currency and a less bumpy transition to dollar-free intrnational trade.  If they attempt to set up an alternative international settlement system they run the risk of falling into a series of bilateral swap and barter arrangements with little stability - such as the USSR had before its collapse.  A lot depends on whether the IMF can free itself from US dominance and give more equitable distribution to the members' voting power.  If worst comes to worst, the IMF can re-establish itself in Switzerland without US participation.