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Thread: BRICS nations agree to use local currencies instead of US dollar

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    BRICS nations agree to use local currencies instead of US dollar

    SANYA: Brazil, Russia, India, China and South Africa - the BRICS group of fastest growing economies - Thursday signed an agreement to use their own currencies instead of the predominant US dollar in issuing credit or grants to each other.

    BRICS credit: Local currencies to replace dollar - Economic Times

    I posted this not because I lament the fall of the US dollar nor because I think it's anyone's "fault," but rather as a sign of the times. I do believe that the time is coming when the world will stop using the US dollar as a reserve currency. However, I don't think it will be a sudden shift. I think that it will happen gradually, over the next 10-15 years. This story is just one of the earliest pieces of that change.

    The global economy is changing, and the US would be better off accepting that fact and trying to manage a smooth transition to an international economy based on a basket of currencies, rather than clinging to the idea of the US dollar as the world's sole reserve currency. That just isn't realistic.

    I don't think it's because the US dollar is an unstable currency, or that any policy-makers in the US have done anything wrong...it's just that there are now a lot more good currencies to choose from. We're no longer the only large economy in the world, and we should welcome the fact that many of the world's poor are climbing out of poverty by growing their nations' economies.

    This shift to a more internationalist economy, rather than a US-dominated global economy, will have many ramifications. For Americans who are worried about that transition, I think it's a double-edged sword. Yes, there will be some negative consequences for the US: for example, our gasoline will become much more expensive and prices will be even more volatile than they are now. However, there will also be some positive effects: Our trade deficit will shrink or disappear, our exports will become much more competitive, alternative energy will become much more economically feasible, and the US will stop living beyond its means (either by choice or by necessity).
    Last edited by Kandahar; 04-17-11 at 06:08 AM.
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    Re: BRICS nations agree to use local currencies instead of US dollar

    Quote Originally Posted by Kandahar View Post
    I posted this not because I lament the fall of the US dollar nor because I think it's anyone's "fault," but rather as a sign of the times. I do believe that the time is coming when the world will stop using the US dollar as a reserve currency. However, I don't think it will be a sudden shift. I think that it will happen gradually, over the next 10-15 years. This story is just one of the earliest pieces of that change.

    The global economy is changing, and the US would be better off accepting that fact and trying to manage a smooth transition to an international economy based on a basket of currencies, rather than clinging to the idea of the US dollar as the world's sole reserve currency. That just isn't realistic.

    I don't think it's because the US dollar is an unstable currency, or that any policy-makers in the US have done anything wrong...it's just that there are now a lot more good currencies to choose from. We're no longer the only large economy in the world, and we should welcome the fact that many of the world's poor are climbing out of poverty by growing their nations' economies.

    This shift to a more internationalist economy, rather than a US-dominated global economy, will have many ramifications. For Americans who are worried about that transition, I think it's a double-edged sword. Yes, there will be some negative consequences for the US: for example, our gasoline will become much more expensive and prices will be even more volatile than they are now. However, there will also be some positive effects: Our trade deficit will shrink or disappear, our exports will become much more competitive, alternative energy will become much more economically feasible, and the US will stop living beyond its means (either by choice or by necessity).
    It's very simple. As our debt increases, our dollar decreases in value. What right minded nation is going to accept debt from the US, when the payback, including interest, amounts to less value than the principle was to begin with? That's pretty much it, in a nutshell.
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    Re: BRICS nations agree to use local currencies instead of US dollar

    Quote Originally Posted by danarhea View Post
    It's very simple. As our debt increases, our dollar decreases in value. What right minded nation is going to accept debt from the US, when the payback, including interest, amounts to less value than the principle was to begin with? That's pretty much it, in a nutshell.
    Inflation in the US is very low or non-existent, and will remain very low in the long-term future. In fact, inflation of the US dollar is far lower than that of *any* of the BRICS currencies. It's not that the US has done anything wrong, it's that a lot of other nations are starting to do things right, and they want to use their new economic clout to pursue policies more favorable to them. That's certainly understandable. The position of the US dollar as the world's sole reserve currency was never sustainable, and we should welcome the fact that other formerly-poor countries have developed their economies enough to make the US dollar's position untenable.
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    Re: BRICS nations agree to use local currencies instead of US dollar

    Quote"SANYA: Brazil, Russia, India, China and South Africa - the BRICS group of fastest growing economies - Thursday signed an agreement to use their own currencies instead of the predominant US dollar in issuing credit or grants to each other."End Quote

    If you percieved that some business was facing imminent bankruptcy, wouldn't you quickly cash all their checks you were holding and not accept any more. Do you think thoughts along this line might be in the forefront of the BRICS's nations? Try not to accumulate any more of that "fiat paper!" Following the same thought as regards supply and demand, this will reduce the demand for the USDollar and ergo reduce the value. Is this just a little too simple for all that high tech complicated financial mumbo jumbo that seems to come from the sweet smellin' end of the gastro intestional tract, but has great simlarities to the emanations from the foul smelling end. If it looks like, smells like and feels like dodo, it is not necesary to swallow some to make a knowledgeable conclusion. Don't you think?

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