BRICS-G7 War: Mercantilism, Multipolarity, and Gold
After watching a recent interview of Zoltan Pozsar in which he touches on *how* nation-states are navigating current global trends, it made sense to review the world-path from here. Pathways are narrowing. Like an end-game in chess ( or Go), there are fewer and fewer correct moves with bigger consequences for bad ones.
About the format: Most sentences below are enumerated in an older writing style. Accordingly, authors and concepts influencing some comments are included in italics as a kind of citation. All maps via The Grand Chessboard.
The Conclusion: We are at war.
The path forward continues to march onward as described below.That path is now inevitable. In a mercantilist, protectionist environment accompanied by (caused by) collapsing complexity (de-globalized supply chains, trade relationships shredded) weaker countries must pick sides for economic and territorial protection. The world is now a jail. Pick your gang. This side-choosing is also inevitable in the 21st Century new Cold-war climate.
What is not inevitable is the outcome of this war. It can remain economic via a new industrial renaissance in the West vs. a further maturing of Eastern economies; Or it can end in hotter bigger wars all over the globe as neo-colonialist behavior follows mercantilist philosophy. Both will probably happen. Skirmish wars in Southeast Asia, Europe, and LATAM will increase while superpowers enact land-grab policies amidst the chaos.
Taiwan is Ukraine. pic.twitter.com/TAu0NOvV5w— VBL’s Ghost (@Sorenthek) April 22, 2023
With a focus on Gold, Oil, The USD, and geopolitical economics, the following 43 points summarize what has happened, what is happening, and likely will happen culminating in the outcome possibilities above.
Inflation will not base at 2% for at least 5 years, and likely over a decade.- Furman, TS Lombard, Pozsar
The US economy must retool itself into manufacturing from financial services or be left behind globally.
Deglobalization has forced mercantile policies to reassert in an attempt to protect sovereign economies while they get their houses back in order post deglobalization. But the word “mercantilism” cannot be spoken in these times — for that invokes Gold (happening again anyway), and colonization (again a risk as financial colonization recedes) - Pre-WW1 behavior, Blyth, Every
Nations can now be categorized as either: Emerging (mostly BRICS) or Developed (mostly G7) now.
Nations with weaknesses in natural resource supply-chains (like many G7 types) and needing unfettered access to them to sustain economic growth must become self-sufficient in securing them.- Germany's delayed unification and subsequent aggression in run up to WW1
The G7 must therefore reshore, onshore, friend-shore raw material and labor supply-chains (or colonize and invade!!)- Mercantilism, Tainter, Durant
Nations weak in advanced manufacturing, innovation, and technology but rich in natural resources (like many BRICS) must develop those tools to ensure their own self-sufficiency- Tainter, Durant
The G7’s commodity problem is the BRICS technology problem. The West's inflation is the East's recession.
The Developed G7 nations will treat their intellectual capital more like a national security interest, and restrict access to BRICS. They will seek to impede BRIC progress in becoming self-sufficient technologically. (mercantilism)- Pozsar, US body language
The Emerging nations (BRICS) similarly will seek to protect their natural resource advantages by restricting flows of raw materials offshore via tariffs, seeking technological investment by the buyer of said resources, and by simply refusing to export. (also mercantilism)- Pozsar, BRICS leaders
In Summary, and over-simplistically, there are two trading blocs globally now.- Blyth, Orwell, comparative trade economics
The G7 bloc currently has a distinct advantage in development, application, and leveraging of natural resources for the purposes of innovative economic progress.- Luongo
The BRICS has the shovel-ready natural resources by which the first, (and the BRICS ideally) can innovate.
China has an economic foot (manufacturing) in both spheres, as does India (dual membership, geographic location), and Japan (natural resources, location).
It can be said that the US and UK in this regard have a foot in neither sphere.. Their manufacturing has deteriorated, and their policies and consumption have short-circuited domestic supply chains. This needs to be fixed yesterday. The financialization game is ending for the West.
The US/UK debt burdens will necessitate devaluation against the Emerging nations with natural resources. Commodities will go up for western purchase in price as a proxy for depreciating purchasing power in the East with them - Gromen, Pozsar
Fifteen and 16 are examples, and cases can be made of strengths, weaknesses and exceptions in every country
Both trade blocs seek to shore up their weaknesses while impeding their opposition’s strengthening of its own weaknesses.
Why this happened: The BRICS feel their currencies trade too weak versus the USD as a symptom of being underpaid for their labor and natural resource contributions to the global economic pie- Xi, Putin, etc
They have likely felt this way for decades, but also felt they had no better alternative until now.
Now, due to a combination of interrelated events (accelerating and more apparent post Covid), they believe an alternative is viable, and feel less beholden to the US and G7.
They believe their economies and governance have achieved a level of maturity where they can now go it alone, or at least with new partners promising them better times. - Zizek, Mao, Yew
The East’s maturity economically can be seen in that they have successfully (so far) implemented an alternative to Democratically Governed Capitalism. It has been labeled Authoritarian Capitalism, (a proto-fascist, state controlled type of system) described also as Capitalism with Asiatic Principles by Marx- Zizek, Kotkin
The re-birth of this state-controlled style of capitalism can be traced back to Singapore which itself was in part a study and adaptation of what Stalin’s USSR did wrong. Xi was a student of Yew
The recent failures of western liberal-style democracy to take hold in (ME and LATAM) countries that had adopted some form of Capitalism as their economic engines attest to this
Each BRICS and G7 country has individual reasons for their separation from the other, and will sever ties in varying ways and degrees. But one thing is certain...
Everything going on now is a jostling for better position at the table for the next Plaza-Accord (Bretton Woods) type of renegotiation to re-globalize trade in a more multipolar currency format
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