Countries Are Ditching the US Dollar
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Let's talk about bricks. Nope, not the preferred building material of the third little pig. I'm talking about the team of countries that could possibly cause the death of the dollar, all while ushering in the end of life as we know it. Should be a pretty fun episode. That's crazy. I'm panicking. Now, before we get your quarters in a roll, that's just what the news and crypto bros would like you to think. But heck of a tease, huh? So today, let's talk about bricks, baby. Let's talk about you, NB.

and me, let's talk about all the good things and the bad things that may be, if we're gonna be real. And just a heads up, lots of cover, so strap in. Now, before we dive in, you see that like and subscribe button on your screen there? Gonna need you to push it, push it real good. Add some salt and pepper to our little channel.

♪ Push it, push it real good ♪ - If you didn't already know, BRICS is an acronym that represents the economic coalition of Brazil, Russia, India, China, South Africa, plus some other less important friends who are trying to create a monetary alternative to relying on the US and our dollar. But before we get into what that means for us, let's take a moment to set the scene with a little social studies lesson. Think of it like an episode of Drunk History minus the drunk. So guess just history.

Until the 1800s, each country had their own central bank that essentially based the value of their currency on how much gold they had. For example, let's say country A and country B both have 100 gold bars. They print money that represents the gold they own. So if country A prints 100 bills, then one bill equals one gold bar. But if country B prints 200 bills, then the value of their gold doesn't change,

but the value of the paper bills does. 100 gold bars, 200 bills, you do the math. Each bill is worth half a gold bar. Then we've got country C that suggested everyone go to an overpriced brunch, but they print zero money and always accidentally leave their gold at home. It's not cool, Ashley, with two Es. I know you have Cash App. - You ever call me a liar again?

I'm coming for you. Anyway, the system of each country having their own gold and printing their own money had a real good run for a while, but a couple of world wars, one and two namely, messed everything up. So in 1944 AD, 44 countries decided the fix was to tie all global currencies to the US dollar, which would still be backed by gold. This was called the gold standard, which coincidentally is what I call finding the perfect banana at a grocery store.

Firm, but no trace of green. But in 1971, the world's confidence in the dollar started dropping, leading to other countries making a run on the US gold reserve. Hence, President Nixon came along and dropped the gold standard like a bad zen habit. It's probably time in his defense. At that point, we switched to a confidence-based currency system, also known as fiat currency.

where each country's money is valued based on the global confidence in that country. And let me remind you, most countries measure their currency off of the US dollar, because we still got that RIS, baby. Then in 1975, there was a global recession, and the US, UK, Italy, France, Japan, and West Germany formed the G6 to stabilize the world economy. No big deal. And what could this ominous abbreviation stand for? Apparently just Group of Six.

End of brainstorm. Simple, efficient, clear. I like it. Canada then joined in 76 and Russia joined in 97 before getting kicked out in 2014. Always awkward kicking someone out of the group chat. But in our defense, Russia had an android and probably nuclear weapons. We don't know.

Nyet with those green texts. Nyet. So let's recap. G6 to G7 to G8 back to G7. Now, G7 includes some of the largest and most influential members of the International Monetary Fund, the IMF, and the World Bank, which both distribute money to developing countries. They still meet annually to coordinate policies, influence the world economy, and have a rousing game of bocce ball. One would assume. So everything with the G7 was fine and dandy, but then some things began to change. Enter G7.

BRICS. The first person to use the acronym BRIC was economist Jim O'Neill in 2001. He expected that Brazil, Russia, India, and China would eventually overtake the G8 countries in GDP growth. Fast forward to 2009, and we're in the middle of another global recession, and Russia calls its own G7 of sorts with the BRIC countries. Their meeting agenda? Talk about how to break the global economy away from dependence on the U.S. dollar.

Side note, not long after, South Africa joined the party, making it bricks. And let's just say when they joined, things got plural. It's a...

Play on words. Then in 2022, BRICS announced their plan to challenge the U.S. and their precious dollar by creating a new global currency that would be backed by gold and other precious metals. This would give countries a different option to the dollar when trading and therefore reinforce this new money's purchasing power. In turn, it would shift the world economy away from being centered on the U.S. And if you know one thing about America, it's that we love being the center of attention and we will throw a tantrum on why not.

So if all this has been going on for the last couple of decades, why are we hearing about it now? Well, in October of 2024, Russia hosts the annual BRICS summit. And this garners a lot of attention because they've expanded the invite list. Iran, Egypt, Ethiopia, and the oil giants, Saudi Arabia and the UAE, all got an evite. The most shocking part? The dress code. Equestrian cash. Shirt optional.

Who let Putin be in charge of the dress code? What do we... No. Two requirements. Fully shirted, no horses. All right, let's keep this profesh. I love the Evite, though. Did he make that in Canva? Completely free of charge. The main topic of conversation, of course, the new BRICS currency.

So why is the summit a bigger deal this year? Well, BRICS countries currently outpace G7 countries when it comes to GDP purchasing power parity. That's GDP PPP, aka P3. So what's this P3 all about? Well, it adjusts for what money can actually buy in different countries and tells us how rich a country really feels based on local prices, not just the exchange rates. And when you look at this metric, the BRICS countries are 37% of the global P3 and the G7 countries are only 30%.

Plus, BRICS countries make up 42% of the world's population, which is a lot. So yeah, this could be a big deal, but what does it mean for you? That's a great question. And another great question is, why are you still overpaying for your cell phone plan? You know that Telo, a sponsor of today's episode, will cut down how much you spend on that cell phone. They've got great coverage, and they've got plans ranging from as low as $5 all the way up to $25 for unlimited everything.

They've even got a pay-as-you-go international roaming plan that's got you covered in over 250 countries, just in case you ever get an e-vite to a fancy international summit. And I'll give you one more reason. You can get five bucks off your first month of Unlimited when you go to tello.com slash george or just click the link in the description below. Another sponsor of today's episode is Delete Me. Do you hate that you have no idea whether your information is safe? Or if some sneaky sociopath just bought all of your personal data through some data broker simply so they can make your life miserable and watch the world burn?

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Go to join delete me.com/george to get 20% off any of their plans or just click the link in the description below and probably clear your browser history just in case. Okay, back to BRICS. If BRICS pulls off this de-dollarization scheme, a lot of trade that currently happens with the dollar would now be either split with BRICS currency or taken over by it. So in theory, it could eventually make the US stock market less attractive to investors, which would gradually incentivize investors to put their money elsewhere.

The problem with that is, if there isn't as much demand for the US dollar, it would worsen inflation, which last I checked, not the gold. - No thank you. - And with the BRICS currency expected to be backed by gold, it's a great opportunity to fearmonger about what that could do to the dollar and thusly give gold salespeople a great opportunity to pocket a lot of cash. And here's another potential impact.

The US for decades now has been using the dollar like a big stick when it comes to foreign affairs. And BRICS could now create their own big stick, which could hurt America's leverage. And adding to that leverage problem, BRICS set up something called the New Development Bank, NDB, back in 2014, which is a rival to the IMF and the World Bank, which is the pool of funds that can be loaned to developing countries. So if the NDB picked up steam and BRICS gained more influence over developing countries, the world could see a shift away from Western ideas like...

Democracy, which is kind of what America runs on. That and Duncan, of course. Equal parts. Equal parts democracy and Duncan. We have IBS issues, is what I'm saying. America as a whole. My tummy hurts.

Now, all of this hasn't been an issue yet, but eventually the NDB may be a BFD. Big financial deal. It's a family-friendly show. What'd you think I was gonna say? So all of this might sound kind of scary, but I'm just gonna tell you right now, I'm not concerned. And here's why. BRICS works from a consensus, meaning that all countries have to agree in order for any policies to get put into place. So that's getting 10 different countries on three different continents...

with 10 different cultures, ideologies, and needs to all agree on what they should do with their money. You can't even get 10 friends to agree on where to go for dinner, and those stakes are a lot lower than an entire economic system. Now, hypothetically, could all 10 countries agree that they don't want the U.S. to be dominant? Sure. But also, a lot of these countries depend on the U.S. for trade, not to mention the collective $2.4 billion in annual foreign aid the U.S. sends to them.

So taking down the dollar and the US economy would be a double-edged sword for bricks if you smell what I'm stepping in. You know what mama said, don't bite the hand that feeds you. And that was the last time I bit my mom.

Too much information? That's what I thought. Plus, compared to other currencies, the U.S. dollar has remained real strong. Just last year in 2023, the Council on Foreign Relations said, quote, the U.S. dollar is still king today despite recent challenges. In addition to accounting for the majority of global reserves, the dollar remains the currency of choice for international trade. End quote, end scene, no notes. Meaning there's a lot of ground to cover for other currencies to even get within spitting distance of the U.S. dollar. It's kind of like the Olympics.

Do other countries win? Sure, but they don't come close to the amount of metals that we have. We love winning. What can I say? Shout out, Simone. Now, if BRICS started using their own currency instead of the dollar for something like oil, that would be a different story. But for the near term, my magic eight ball says, don't count on it. And here's another reason I'm not concerned. Remember the economist, Jim O'Neill, who fathered the BRICS idea? Well, he wrote a follow-up article on the BRICS movement titled, 20 Years On, The BRICS

have disappointed. That is a rough headline coming from the father of the BRICS movement, and we can all agree there's not much worse than a disappointed father. He's not mad, he's just disappointed.

I just wanted to be proud of me. That just felt, wow, like it got personal. He goes on to say that BRICS countries have diverse economies and often conflicting interests, which makes getting anything done pretty tough, making their existential threat more like a hypothetical concern. So yes, you're going to hear about how scary this could be, and there's a lot of people looking to cash in on that fear. But what you need to do is not a whole lot.

And

and facts. And if you want a level-headed take on the economy, watch this next conversation I had with Dave Ramsey or click the link in the description below. Thanks for watching. We'll see you next time. She's a bricks down out house down out