Date: 08/25/2023
Author: Mr. X
There are plenty of articles on social media saying that the dollar is on its last legs because of the expansion of BRICS. Saudi Arabia, the United Arab Emirates, Iran, Egypt, Ethiopia, and Argentina are all ready to join the trading bloc. Together, BRICS+ will compromise about half of the world’s population and more than a third of GDP.
Yet this isn’t exactly NATO. The loose trading bloc contains India and China – two powers that can best be described as rivals, not allies. The two countries are still fighting an unarmed (but occasionally deadly) battle over disputed territory on the mountainous border. China is suffering from a slowing economy and high youth unemployment, and its inevitable rise to global preminance looks far more questionable. In fact, it may have already peaked. India is not taking orders from the West, but it is clearly moving closer to NATO when it comes to security policy.
South Africa is in economic and political turmoil. Argentina just voted for a libertarian who wants to make the American dollar an official currency and scrap the peso – and while he may not win the final round, that suggests people aren’t exactly eager to start an economic war with El Norte. Iran is still battling sanctions. Saudi Arabia and the UAE are looking strong, but the former is facing social unrest that usually accompanies the move towards economic liberalism. It’s unclear if the Saudi leadership can maintain its authoritarian system while still welcoming global investment and going on a global shopping spree for premier sports and entertainment properties. China is also doing very little to help Russia militarily, while the West is sending a never-ending flow of weapons and materials to Kyiv.
In contrast, the United States has avoided the recession many have been predicting. NATO is stronger now than it has ever been, and it is growing more united. Ukraine’s counteroffensive has hardly been overwhelmingly, but Russia is showing signs of manpower strain as Kyiv begins to recapture territory. Vladimir Putin is still reluctant to mobilize forces, evidently unsure of how much domestic support he can count on.
The dollar is getting stronger as the Federal Reserve continues to hike interest rates. While most of the world is facing runaway inflation – with the possible exception of deflation in China – inflation in the United States is slowing. Russia just had to drastically hike interest rates to contain the collapse of the ruble. Meanwhile, Russia and India abandoned efforts in May to settle trade in rupees.
Yes, from a diplomatic point of view, the multipolar world is mobilizing against Washington. However, the Western core is more united than it has been since the Cold War – and it now has the enthusiastic support of most of the former Iron Curtain. In Asia, Japan, the Philippines, South Korea, and the Pacific elements of the Anglosphere are all moving to contain China. Europe seems comfortable with American leadership, even American dominance, and the euro no longer looks like a threat to the dollar. The United States should be concerned about “losing” Saudi Arabia, but beyond that, the collapse of the dollar looks wildly overstated. BRICS+ is good propaganda – but until China is willing to help out Russia militarily, it’s not worth taking seriously. And a group in which China and India are supposed to be on the same side just doesn’t pass the laugh test.
Mr. X is an investment analyst working in the Washington DC area who specializes in the intersection of business and public policy. After fifteen years working in politics, he writes on a classified basis for RogueInvesting.com to bring you news on what those with power are debating, planning, and doing
