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Jim Rickards The Future of Global Economics Explained.
Discover the intricate dynamics shaping the future of global economics with our in-depth exploration of the emerging Brics currency. Delve into the geopolitical significance of Russia and China’s collaboration and how it’s reshaping international trade dynamics. Uncover the potential impact on traditional currency markets and the evolution towards a multilateral, multi-country currency union. Join us as we analyze the historical context, geopolitical theories, and economic implications behind this groundbreaking development. Don’t miss out on understanding the Brics currency and its implications for the future of global finance.
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But they’re all talking to each other now what’s the common denominator well it’s basically Russia and China uh China’s a member of two Russia is the only country in the world that’s a member of all three so through pretty simple inference you can say hey Russia
And China are running the show and um it’s very likely that when this thing plays out I’ll talk about the thing real we’re glossing over that when when this new currency plays out that those other countries will join in when you do that uh and I got found a really cool widget
It’s a map of the world that’s blank and you can go country by country and fill in by color just click on it and give it a color and I did that and I was like oh okay here’s the bricks it’s five countries whatever here are the here are
The applicants has another 20 um here’s the SEO few more some of them are members of both uh here’s the ee has a few more again many are members of both uh and you keep going and all of a sudden like a light bulb goes on I said
That that is howford mackinder’s Global Island the what he call the world Island and then this goes back early 20th century first probably greatest geopolitical theorist in history got to read his book if you haven’t read it it’s pretty short but he had this idea of the world Island that is exactly what
They’re building now why is that important other than uh the obvious which is um you know more Collective economic and population Power by the way the output of wheat um piic metric they this dominates the world well uh for one thing if you’re going to have a currency
Union the more countries you have the more likely you are to be successful so why let’s just kind of digress for a second and what are the headlines saying you know again you you correctly said haven’t we been talking about this for 10 years well yeah actually we have but
Um but in the past year what are the headlines um China and Saudi Arabia talking about selling oil for youan um uh Brazil and China do large U multi- uh product currency deal where they accept each other’s currency UAE China same thing um selling oil for Yuan uh Russia
China using Yuan and Rupal as payment methods for whatever they sell to each other you know Russia sells natural resources China sells semiconductors manufactured goods and so forth and there a number of though I don’t have to list them all but there are 10 or 15 of
These the reason um the reason they’ve all fallen short and very few of them have actually come to fruition despite the headlines is when you have two countries and they’re going to trade with each other and accept each other’s currency and you can do that you’re
Limited to what you can do with that currency right and this is why this is why the Russia India thing is starting to break down Russia’s been pumping oil to India India’s been paying in rupees but how much curry do you need I mean what’s what’s Russia going to do all the
Rupees and Russia is starting to Bar they’re like hey we’re up to our eyeballs and rupees let’s we need a better system well um when you have a a multilateral multi country uh currency Union that problem goes away yeah because now Russia sells oil to China China pays in bricks the brick currency
Pays you in Brick but Russia can take the brick and turn around to Argentina and say we’d like to buy or Brazil maybe we like to buy some Embraer aircraft and Brazil gets the brick currency and they can turn around to China say we’ like to
Buy some rice and then China takes Etc and so you’ve solved the Quasi barter problem you’ve solved the problem of what to do with a um a pile of currency that you really can’t use other than certain goods and services but not not everything you want and uh there’s an
Analyst who’s brilliant I read this stuff all the time I’m like man you’re so smart and I just really follow him very very closely and give him a lot of credit but he came out a few few days ago maybe a week and said um he’d heard
About this and he was kind of dismissing he said um you can’t have a currency Union without a um common fiscal policy and I said I don’t want to mention his name but I said uh have you not heard of the Euro um there is no common fiscal policy in Europe don’t
Tell me don’t tell me that Italy has the same fiscal policy as the Netherlands or that Germany has the same fiscal policy as Greece they don’t they do have a central bank that issues the currency has a little bit of gold but not a lot relative to the size of the economy um
But there’s no common fiscal policy and there’s no common bond market to this day there’s no such thing as a bond I’ll call it Euro Bond backed by the full faith and credit of the entire European monetary zound it doesn’t exist you can buy German Bonds in Euros you can buy
Italian Bonds in Euros but you can’t buy a Euro Bond backed by all those countries so they don’t have a common bond market they don’t have a common fiscal policy but they do have a currency Union that’s very successful so now back to the bricks they finally have
The scale they finally solve this um problem which I described which kind of is not when you got two countries you’re not too much further ahead than barter but with 30 countries or 40 countries you’ve solved that problem um so that’s that’s the the background again I want
To just re at the risk of repetition I want to make two points one it’s been 17 years in the making it’s not an overnight thing they replicated the World Bank they replicated the IMF now they’re coming out with a new currency now here’s where here’s where it gets
Really interesting and I tell people um I said if you want to understand this it took me a long time to figure this out I I was just like slaving over it but um I said if you want to understand this you have to stop thinking like an American
You have to start thinking like a Russian this is the kind of thing that pretty much only Russia could come up with so uh what is the brick and by the way I don’t know if they’re going to call it a brick I’m saying brick for convenience
It doesn’t matter what they call it but I just called a brick for for for the time being but they’ll come up with a name who knows the value of the brick is not determined with reference to any other currency it’s determined with reference to Gold by weight of gold now and I
Don’t know the weight they’ll pick one but again it doesn’t matter because the it’s math it’s logic and by the way now um we’re back to Aristotle’s transitive law this is the key this is this unlocks the whole thing because um Aristotle said you know if a equals bals c then a
Equals c the B can drop out it’s not even arithmetic it’s a it’s logic uh it’s called the transit of life I’m I’m certain Aristotle invented if any Greek Scholars no wonder ear Source let me know um so what what the bricks have done is they have dodged the biggest
Bullet the thing that caused Britain Woods ultimately to fail the thing that potentially stands in the way of all this they’ve defined their currency by weight of gold now uh weight of gold has a dollar value right so aals b equals c one brick equals one could be an ounce or kilo it
Doesn’t matter called an ounce one brick equals 1 oun of gold equals today 1970 okay well through the transit of law drop out the be one brick equals 1970 $1,970 but that’s constant I mean that logic works for a moment in time but it’s not fixed because the price of gold
Is going to fluctuate daily or a minute by minute right so what’s going to happen is the dollar gold call it exchange rate the dollar price of gold so the lbma the comx the the London Metals exchange um you know JP Morgan on allocated forward contracts the whole
Huge gold market in dollars is still going to exist in fact uh the bricks want it to exist and if I could just digress for one minute step