Morning Wire XX
[0] Last week, the BRICS countries, Brazil, Russia, India, China, and South Africa agreed to expand their membership and potentially move toward more bilateral trade deals that would bypass the U .S. and the dollar.
[1] In this episode, we discuss what took place during that three -day summit and their broader implications for U .S. interests.
[2] I'm DailyWire, editor -in -chief John Bickley, with Georgia Howe.
[3] It's Saturday, September 2nd, and this is an extra edition of Morning Wire.
[4] Joining us now is former Wall Street financial analyst John Rabino.
[5] Hey John.
[6] So last week, the BRICS countries held a summit in which they decided to admit new members, including Saudi Arabia and the United Arab Emirates.
[7] How do these actions relate to the broader geopolitical landscape?
[8] Well, first of all, the BRICS countries played an interesting little game of misdirection there because originally before the meeting, they announced a gold -backed currency was a possibility.
[9] And that got everybody excited.
[10] And while we were looking over there, they inducted Saudi Arabia, the United Arab Emirates, and pretty soon, Iran, into their group, which is very consequential.
[11] Now the backdrop to that is that the U .S., by virtue of having the dollar is the world's reserve currency, is by far the most powerful financial entity in the world.
[12] And instead of being kind of benevolent monetary dictators, we become bullies out there.
[13] We weaponize the dollar and our control over the global, for instance, bank clearing system and the other monetary entities like the World Bank and the IMF that we control.
[14] So if anybody steps out of line, the U .S. can just kick them out of, for instance, the system that lets their banks trade with other banks around the world.
[15] or, you know, in the case of Russia, when the Ukraine thing happened, we confiscated a bunch of Russia's foreign exchange reserves.
[16] So the rest of the world is looking at this and thinking, wow, am I next?
[17] And that's giving them an incentive to join an organization that offers maybe some protection from what they now see is, you know, a predator roaming around the world, doing whatever it wants to to anybody else.
[18] So that's why the bricks, organization is gaining some traction right now and why a lot of other countries are lining up to join it, because they see it as kind of a version of the old non -aligned country group that sprang up during the Cold War.
[19] They didn't want to be associated with the Soviet Union or the U .S. And there were quite a few of them.
[20] They were consequential.
[21] Well, the bricks, you know, just on paper, the BRICS countries are much more consequential than the old non -aligned group was because they've got Russia and Saudi Arabia now, which are the second and third biggest oil -producing countries in the world.
[22] Iran is up there on that list.
[23] Between China and India, they've got pretty close to half the global population.
[24] So this is a serious organization.
[25] And if they can ever work together in any meaningful way, they can do serious things.
[26] So that's why it's such a big deal.
[27] So you put a lot of blame here on the West.
[28] But what would be the alternative approach to handling monetary policy?
[29] Well, if you've got the world's reserve currency, it should be a neutral thing.
[30] In other words, you shouldn't have to make a political statement or join a team in order to use the world's reserve currency.
[31] But today, you kind of do.
[32] You kind of have to be on the U .S. side if you want to fully function in the dollar -centric world.
[33] And that's not the way it should be, the world's reserve currency should be neutral.
[34] And that's where we screwed up.
[35] We made it not neutral.
[36] We made it a weapon of U .S. foreign policy.
[37] I mean, the dollar is still an incredibly important currency in the world.
[38] The U .S. financial markets are the deepest and the most liquid.
[39] So the U .S. as a monetary power is not going to go away, but we've created a lot of incentive out there for countries to bypass the dollar.
[40] In other words, to cut things like like bilateral trade deals, where Russia and India trade with each other using their own currencies.
[41] And that's only going to increase going forward.
[42] And that can only be bad for the dollar because it means there's less demand for dollars out there, which means a lot of the trillions and trillions of dollars that are out there in the world right now are going to come back here and maybe bid up domestic prices, which is inflationary, which is another way of saying the dollar will lose value.
[43] So we've kind of brought this on our sense.
[44] and we've started this process that is a kind of a feedback loop that leads to a weaker dollar over time.
[45] Do you see Bricks being capable of actually creating their own unified currency, or is this going to continue to be what you just described, where the countries work out arrangements between themselves with specific currency deals?
[46] Right now, they're doing bilateral deals using their own national currencies, but down the road you can make the case that them getting together and creating a currency that's just for trade, just within the BRICS countries, and doesn't affect the national currencies of Russia, China, India, et cetera, that would be very useful because bilateral trade deals aren't always so easy to manage because they end up creating imbalances.
[47] One country will have too much of the other country's currency and won't know what to do with it, but with a common currency, that's not an issue.
[48] And if they back it with gold, then it holds it.
[49] value and will tend to go up versus the dollar over time without the problems that come with a too strong currency.
[50] So there are a lot of reasons why something like that would make sense, but it requires the BRICS countries to cooperate on a scale that they've never cooperated before.
[51] So it's not clear that it's a doable thing with, say, Saudi Arabia and Iran and Brazil and lots of other countries like that in one group, all doing the same thing.
[52] That's not necessarily ever going to happen, it's not easy to do, but if they could find a way to do it, and the U .S. is giving them a lot of incentive to do it, but if they can find a way, there's a lot of value in that kind of a concept.
[53] Right, and the expansion of that group just makes it more complicated.
[54] In your opinion, how likely is it that Brick's countries succeed in really diminishing the power of the U .S.?
[55] Well, two things.
[56] One is they can do as much as they really want to do, assuming they can all cooperate, because it's a very powerful code.
[57] that, like I said, has a lot of oil and a lot of other kinds of natural resources that give them financial power.
[58] It's not clear they're able to cooperate in ways that really let them take it to its logical extreme.
[59] Now, the other side of that story is that the dollar is being inflated away by the U .S. We're taking on way too much debt.
[60] We're having to create way too many new dollars in order to cover that debt.
[61] And the value of the dollar is going to go down regardless of what the BRICS country is.
[62] do.
[63] So we're creating a situation, the U .S., in which a gigantic financial crisis is out there looming and part of that crisis is going to be a falling currency value that leads to some kind of a big currency reset out there in the not too distant future where the dollar just doesn't function anymore as a truly useful reserve currency because it's losing value too quickly.
[64] So that's happening independent of the BRICS countries.
[65] But the BRICS countries could accelerate the process if they really get their act together now focusing on russia since the invasion of ukraine russia's become more of an outsider globally with a lot of powerful countries more united now against them but in the bricks group russia plays a very important role how do you see russia influencing the group's future with the western world well russian is a very resource rich country and it's a nuclear power so it's consequential no matter how you slice And, you know, with these countries run by dictators, you just never know.
[66] You can't make any predictions about what their role is going to be going forward in a group or in the world at large.
[67] And you don't know how long Putin is going to be there and who's going to take over after him.
[68] So there's no way to predict anything about Russia with any certainty.
[69] But they have the tools to be extremely consequential.
[70] And the fact that they're right there in the middle of the Brooks Coalition demonstrates that they haven't been abandoned by the world, A lot of countries basically see Russia as the victim in the expansion of NATO and the resulting war in Ukraine, and they see themselves as the next country after Russia to be picked on by the West.
[71] So I don't think Russia has been abandoned.
[72] I think the countries that are standing against them right now, you know, the U .S. and basically NATO and a few other countries have an ulterior motive, which is to expand the power of NATO.
[73] And I think many of the BRICS countries see themselves as victims of this.
[74] So Russia could easily be very consequential going forward, even if the U .S. and Germany and Great Britain are still mad at them.
[75] What to say the least, it's a complicated historical moment.
[76] John, thank you so much for joining us.
[77] That was John Rubino, author at Substack and former Wall Street Financial Analyst, and this has been an extra edition of Morning Wire.