Washington has used its dollar as a tool to force other countries to change their policies in line with that of the U.S. or face heavy punishment.
The U.S. Dollar is both dangerous and a threat to international peace and security.
BRICS is being seen as one of the most important organizations to counter this.
PROBLEM: The destruction of the Gold Standard
The Dollar was tied to Gold.
All of the worlds currencies were tied to the Dollar.
The system was stable.
A large amount of money needed for the Vietnam War. Nixon started printing money.
They asked for their Gold back. They did not get the gold back.
The Bretton Woods system came to an end.
Their is nothing backing our money.
PROBLEM: Speculative Monetary Policies
Speculation is the largest form of economic activity today.
S&P Global Ratings and Fitch Ratings are the same rating agencies that move countries between junk; that softly interfere in the democratic processes of countries, topple governments that step out of line and manipulate currencies from behind the scenes.
The BRICS bank will present an alternative to Western monopoly on finance. In any case, the Western financial and banking sectors are on the verge of collapse. The turmoil in Cyprus is but the latest manifestation of this phenomenon.
In the US, Lehman Brothers, a financial services firm and fourth largest investment bank, was allowed to sink in 2008 but Goldman Sachs was saved, primarily because then US Treasury Secretary Henry “Hank” Paulson was former chief executive of Goldman Sachs.
BRICS members say the current global balance of power is unworkable, with institutions such as the WB, the IMF and the United Nations Security Council irrelevant in addressing matters concerning global economics.
World Economic Forum: Credit must be expanded to 103 Trillion.
Credit Expansion will create a boom.
PROBLEM: IMF Structural Adjustment Program requirements
Cut back public spending.
Liberalize their trade and capital market.
Increase exports
SOLUTION: BRICS Bank
This sentiment resonates with leaders of many countries seeking to assert their autonomy and escape the shadow of unipolar hegemony.
Some of the traditionally pro-western Arab states of the Persian Gulf such as Saudi Arabia and the UAE have also realized that the US is not a reliable ally or guarantor of their security. While they are not ready to abandon their relations with Washington any time soon, the BRICS platform provides a compelling alternative to western-dominated partnerships, offering a pathway towards more balanced and mutually beneficial collaboration.
De-Dollarization
BRICS Bank is to provide a collective foreign exchange reserve and funds for financing development projects in order to address the needs of emerging economies.
The two largest economies of the emerging power groups, China and Brazil, agreed to remove nearly half of their trade exchange out of the US dollar zone.
Currently 53% of the world’s central banks hold their reserves in US dollars. This is down from 64% a decade ago. Financial experts believe that once the dollar reserves fall below 50%, it would signal the end of the US dollar as a global reserve currency.
PROBLEM: The Debt-Based fractional reserve system
97% of all money in circulation is created in the form of debt.
Net bank lending must forever increase.
Inflation: Too much money is chasing too few goods (output).
Speculative vs Productive Investments
Banks to share in the risks.
We don’t decide who creates credit and for what. We leave that to some chaps in the bank.
Credit must be put into productive means, instead of non-productive means, inflating the prices only.
It is a tax on the purchasing power on the medium of exchange.
Prices are always going up, so people are getting poorer all the time.
Redistributive tax system
Debt-based money system – All money is created with debt. It distributes money from the poor to the rich.
The Central Banks provide huge safety nets to Private Banks.
Faster the economy grows, the faster the debt grows. After a few years too much debt will lead to people defaulting. Back to square one.
Allows private banks to suck wealth from the economy. As people become poorer, they become more dependent on debt.
Money should not be created as debt.
The banking sector GDP must be 2% to 3% of the country’s GDP.
Decreasing the Standard of Living.
No control over money creation and it’s spending.
Before 2006, Banks needed to hold 32% of reserves.
In 2006, banks could set the amount of reserves they choose.
In 2009, quantitate easing gives settlement banks the Central Bank Reserve Currency for free.
There is no longer a meaningful fractional reserve.
SOLUTION: Decoupling of payment systems from money creation and credit mediation
Bank Bailouts: Let the banks burn.
The banking system cannot be stabilized, because it is built upon faulty financial principles.
We cannot entrust our payment system with private bankers who take risks and then hold us to ransom because they are failing.
Every citizen should have a Digital Wallet sitting on the ledger of the Central Bank.
Governments should spend the money into existence.
