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Local Currencies To Replace Dollar For 5 Countries' Dealings

timothy posted more than 3 years ago | from the small-green-pieces-of-paper dept.

The Almighty Buck 519

An anonymous reader writes "Brazil, Russia, India, China and South Africa — the BRICS group of fastest growing economies — signed an agreement to use their own currencies instead of the predominant US dollar in issuing credit or grants to each other. The world does need a new financial architecture, but the BRICS by themselves are unlikely to be able to drive that change."

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Spacebucks. (1)

Vegan Cyclist (1650427) | more than 3 years ago | (#35845660)

I think Spaceballs got it right.

Bad News for USD (5, Insightful)

hinesbrad (1923872) | more than 3 years ago | (#35845684)

This is VERY bad news to an already weakened dollar.

Re:Bad News for USD (3, Informative)

phantomfive (622387) | more than 3 years ago | (#35845714)

In practical terms it's not. As the articles mention, this only applies to loans, not to trade. Think about it, who ever wanted a loan of Brazilian Reales? Trade is where the real action happens, and it will still happen in dollars. If this has an effect on the dollar, it will be because of investor fear, not because of any real change in the fundamentals.

People trade in dollars because it is so liquid in terms of finance options. As one example, if you are Korean, you can send a shipment of parts to Peru in exchange for dollars. Then, since you don't have to pay your suppliers for a month, you can buy treasuries or something for a month, then at the end, sell them. You've thus made a few percentage in the interim. It isn't always so easy to find something to invest in other currencies, thus the dollar has a competitive advantage. This is why the BRICS are unable to move away easily from the dollar.

Re:Bad News for USD (4, Interesting)

benjamindees (441808) | more than 3 years ago | (#35845752)

More like you *have* to buy treasuries for a month otherwise your dollars lose 3% of their value due to inflation. India and China would love to get loans of Reals. Hamburger futures are going up in value.

Re:Bad News for USD (1)

lee1026 (876806) | more than 3 years ago | (#35845930)

Considering that Brazil have had lots of hyperinflation in the past, and that the Real is seeing very high inflation right now, inflation is the last reason why you would want to hold Reals instead of dollars.

Re:Bad News for USD (2)

a_n_d_e_r_s (136412) | more than 3 years ago | (#35845792)

Trade is between companies not nations.

Companies that trade between those countries will probably start to use national currencies. Because when they get their money they want to invest them in their local economy. However since these countries - for now - represent a small part of the world economy in trade, it will not be a big problem for the dollar.

I wonder if BRICS had not done this had not the US given BRICS the finger in WIPO and started the ACTA treaty outside WIPO ?

Re:Bad News for USD (1)

Mashiki (184564) | more than 3 years ago | (#35845822)

Well you can ask Iceland how using multiple non-localized currencies worked for them for loans. Total economic collapse is never fun, especially when your currency is no longer valued enough to cover even the interest.

Re:Bad News for USD (1)

Anonymous Coward | more than 3 years ago | (#35845894)

Umm No,

Iceland had local and state owned banks with reserves of gold and cash on hand. The banking industry was well controlled.

It was the introduction of international banking corps, the reduced the reserve rates and loosened financial laws that allowed the country to be looted by international traders using the US dollar.

  It only took 3 years from the time the laws were changed until the country went bankrupt.

Re:Bad News for USD (2, Interesting)

Mashiki (184564) | more than 3 years ago | (#35846182)

Ah no. Iceland regularly used multi-currency loans for subsidizing everything from mortgages, to personal loans, to business loans and so on. Most people and businesses who lost everything, was due to the fact that the icelandic currency could no longer compete with having 5 different splits in the amount due. Nothing like making payments in yen, dollars, euro's pounds and yuan's right?

Re:Bad News for USD (0)

Anonymous Coward | more than 3 years ago | (#35845944)

When will people learn that "investor fear" is a fundamental?

Re:Bad News for USD (5, Interesting)

Runaway1956 (1322357) | more than 3 years ago | (#35845996)

In more practical terms, the dollar loses it's importance to the world. Remember the '70's (if you're old enough) when the oil producing countries decided that they wouldn't accept the dollar as payment for their products. They wanted something real to back up the payments. Gold.

All by itself, this erosion of faith in the dollar wouldn't mean diddly. But, this is just a streamlet which feeds a good sized river. One day, the dollar won't even be accepted in half the countries of the world. "Your green money is no good here, white man - go exchange it for real money, then we'll barter!"

Re:Bad News for USD (5, Insightful)

TheLink (130905) | more than 3 years ago | (#35846162)

The less the rest of the world uses the US dollar, the worse it becomes for the USA. This is actually a serious issue for the USA.

Analogy: in Zimbabwe when Mugabe printed lots of Zimbabwe dollars, he was basically taxing everyone who held Zimbabwe dollars. He transferred wealth from them to him and his cronies (who I assume got some of it). The rest of the world mostly didn't care or laughed because they didn't use Zimbabwe dollars.

The rest of the world however is living in USA's "Zimbabwe" because petroleum, grain, CPUs, country-sized loans and lots of other stuff are all in US dollars. Many countries hold billions or trillions in US dollars to trade stuff with each other.

So in the past the US could create money at will and thus "tax" the rest of the world ( everyone who holds net positive amounts of US dollars including net creditors[1]). They could spend the created money on big projects and pay (or owe) the rest of the world in US dollars for oil, food, toys etc. As long as they didn't over do it, nobody seemed to notice or care.

Recently the US created trillions of US dollars (google for Federal Reserve trillions) but rather than the money going into making most of the USA richer, those trillions went to bail-out cronies who lost/siphoned/wasted trillions in the first place.

The rest of the world is probably starting to notice that created trillions whether directly or indirectly, hence they are switching from the US dollar. They cannot switch too fast because if they start a panic, their billions or more in US dollars could become worth even less.

[1] Take China as an example. The USA owes China trillions. Foolish people think that means the USA is screwed. But imagine if Hasbro owed their suppliers millions in Monopoly money. Who really is screwed here? Creating US dollars in computers is a lot cheaper than printing Monopoly money ;).

The USA is only screwed if China says, you can't owe us in US dollars any more. It has to be paid in Euro or RMB.

So this news is certainly bad for the USA.

Re:Bad News for USD (2)

definate (876684) | more than 3 years ago | (#35846164)

Interesting, though this doesn't mean much. Trade will still be in USD, it's just loans will only be made in their own currencies. Even more so, it will only be made in their respective currencies WHEN dealing with each other. Though, you can see why they limited it to "only when dealing with each other", since China would be forced to drop $1 trillion of its USD assets. Which would be hilarious... chaotic, but still hilarious.

This seems less of a "lets get rid of the USD" and more of a "lets stop our banks from being exposed to external interest rate risk, but only when we're dealing with each other, lets not go crazy now". The idea behind this change, I am in favour of, the idea of it being implemented by government, I'm not.

First of all, when dealing with loans to other countries, it doesn't change anything. Since all of these countries aren't particularly awesome currencies to lend in anyway, it's not a big deal. Off the top of my head, the biggest finance markets are America, UK, and everything else is much smaller.

So effectively if they had made it such that they couldn't lend or borrow in BRICS currencies, then they'd have taken away the interest rate/exchange rate risk, or more so, they'd have shifted it to default risk.

But they haven't done that, they only made this restriction on the asset side, which does... absolutely fucking nothing. Except, it does expose them to the possibility of forcing their banks into more risky positions, given they took on foreign denominated liabilities. They would be restricted from ever issuing foreign denominated assets, in an attempt to match them, and reduce the exchange/interest rate risk.

This really seems like a "we meant to make reasonable reform, till we realized that this would totally fuck us, and the world, so we just made it nonsense reform, which we can show our constituents, and hopefully get re-elected".

It doesn't change much, and the only changes it does make, only hurts it in many situations.

Can anyone (WHO HAS STUDIED THIS TOPIC AT A UNIVERSITY) shed some light on possible reasons for doing this?

Re:Bad News for USD (5, Insightful)

Anonymous Coward | more than 3 years ago | (#35845762)

The dollar is kept artificially high in value due to international trade. The current status quo kind of subsidizes the US way of life.

The US has had the ability to influence and bargain what are essentially one way "free trade " agreements. This is all about to come to an end.

  The dollar will drop somewhat on Monday and unless something big happens within 10- 15 years the US will eventually become like Germany in 1923.
Not to sound like chicken little but Americans should prepare for the worst, international currency and economic policy is changing with less regard taken for preserving US$ backed wealth than you would think.

Internationally, Ghadaffi was pushing for a gold backed currency (US gold reserves are actually quite small and has had counterfeiting problems) the problem with this is that to keep the same amount of paper money in circulation gold would be valued at almost $20,000 an oz. To counter this we would need to set back $$$ values and circulation to levels seen pre WWII.

Re:Bad News for USD (5, Insightful)

rve (4436) | more than 3 years ago | (#35845786)

This is VERY bad news to an already weakened dollar.

The dollar has been overvalued for decades, and look at the result: manufacturing jobs have moved overseas, and a vastly negative trade balance. With an over valued currency, It's simply cheaper to import something than to produce it locally.

A high exchange rate doesn't make a currency strong anyway, long term stability and low inflation are more important.

Re:Bad News for USD (2, Insightful)

roman_mir (125474) | more than 3 years ago | (#35845852)

With an over valued currency, It's simply cheaper to import something than to produce it locally.

Ignorance is a bliss.

If a worthless currency was such a great thing for economy, Zimbabwe would have ruled the world, Argentina would have been up there with it, USSR would have dominated, Weimar Republic of Germany would have drowned the world in its currency.

NO. It's not the 'overvalued' currency that drives manufacturing jobs overseas. It's WEAK currency coupled with government regulations that destroy incentive to save capital and invest it in local economy, it's all the shit that drives prices up - printing and borrowing and rules that create asset bubbles and minimum wage laws (yes, even that), and all the social obligations that destroy jobs.

If you are from USA, you should freaking know that the biggest growth years for it were in 19 century, beginning of 20th and just after WWII, and it was when the currency was the strongest, not the weakest, it was when the country had money that was APPRECIATING in value, not devaluing.

The Japanese have taken to heart Bernanke's ideas that inflating currency is good for economy - too bad for them, they lost the nineties and it's still not over for them.

Strong currency is preferable when you must buy natural resources to churn out consumer goods. It's preferable if you want stable prices (even prices that are falling, like USA had in 19 century). With falling prices you also have falling wages, which is what production prefers.

With falling prices you have cheaper costs of production, so you can produce more. And it is great for the internal economy and it works for the manufacturer as well, as he gets the benefit of a good exchange rate.

Race to the lowest currency value is a race to the bottom - when nobody can afford anything, because of inflation and worse yet, because in such an environment it is impossible to generate savings and thus capital in order to have any increase in new production capacity.

--
One good thing that will come out of this financial and economic disaster will be a return to a sound currency. It will be backed by gold probably, but most importantly nobody will want to accept fiat that is just being printed at a whim of a politician, who is just buying votes with 'free money'.

Re:Bad News for USD (5, Insightful)

Hognoxious (631665) | more than 3 years ago | (#35845882)

Call on line 1. Something about an excluded middle.

Re:Bad News for USD (1)

Lehk228 (705449) | more than 3 years ago | (#35845964)

Are you seriously arguing that deflation is a good thing rather than an economy destroying disaster?

Ignorance is a bliss.

you must be happy as hell

Re:Bad News for USD (4, Insightful)

roman_mir (125474) | more than 3 years ago | (#35846034)

Yes, deflation is the best thing that happens to economy. You have never observed deflation - which is literally contraction of monetary supply.

Money must be valuable, otherwise it drives investment capital out and with that go the jobs. Yes, deflation is the best thing for economy from point of view of consumers as well - they get the benefit of saying: today I bought some bread. It was CHEAPER than a year ago.

Deflation is only the enemy of the state officials who rely on inflation to wipe out their ever increasing debts, because they can't stop consuming and they like to give free money to corporations and to voters for obvious reasons.

Welcome to the economics.

Re:Bad News for USD (0)

Anonymous Coward | more than 3 years ago | (#35846104)

Deflation is generally regarded by economists as an econonic disaster (which you would know if you actually studied economics).

Why buy today, when you can buy something cheaper tomorrow? or even cheaper the day after that?

Modern day Japan is a case study in the stagnation that arises from slowly falling prices: no one wants to spend because everything is cheaper tomorrow. No one wants to borrow because their debts increase (in real terms) even if the interest rate is 0%.

It's a recipe for stagnation.

Re:Bad News for USD (3, Insightful)

roman_mir (125474) | more than 3 years ago | (#35846132)

Deflation is generally regarded by economists as an econonic disaster (which you would know if you actually studied economics).

- Keynesians to economics is what astrologists are to Astronomy, so shut up about 'economists' who are on the government/system payroll.

If you want to see a real economist, look no further than my sig.

Why buy today, when you can buy something cheaper tomorrow? or even cheaper the day after that?

- yeah, because this is such a terrible thing that a TV or a computer that you are buying today will be worth half of the price a year from now.

But that is EXACTLY what happens, yet people buy things anyway, because you only have ONE LIFE, you do not wait to buy food, clothing, energy, rent and consumer goods for the next life, because it might be cheaper that time.

Modern day Japan is a case study in the stagnation that arises from slowly falling prices

- WTF? Japan SHOULD have deflation, instead it prints so many yen, that they counterbalance the effect of the necessarily falling prices by ever increasing monetary supply.

Japanese government, just like any other government on this planet right now is in the same Keynesian trap. Too bad for them.

no one wants to spend because everything is cheaper tomorrow

- this is nonsense. People are buying less only because they have less purchasing power.

Japanese would be buying PLENTY if they didn't collectively decide to subsidize the US consumer by printing its own currency to match the US dollar.
-

This place (/.) is filled with economic ignorance, it's discouraging.

Re:Bad News for USD (1)

Anonymous Coward | more than 3 years ago | (#35846226)

Deflation is generally regarded by economists as an econonic disaster (which you would know if you actually studied economics).

- Keynesians to economics is what astrologists are to Astronomy, so shut up about 'economists' who are on the government/system payroll.

If you want to see a real economist, look no further than my sig.

I think your definition of 'real economist' is circular. Last time I checked, economics wasn't a settled field, and the deflation was still a bad thing. You just sound like a fundamentalist with an axe to grind.

WTW when the prices of some things may decline (e.g. computers), when there is a fall in prices generally/across the board (i.e. the definition of deflation) then consumers will tend to stop spending. As consumer consumption is 50-70% of modern economies, this is a bad thing. The Japanese are certainly not buying more, and instead the government is trying to inflate the economy via 0% interest rates and government spending.

But when you have a spending gap, loose monetary policy is like "pushing on a string". Until negative interest rates are invented, no one wants to borrow because the value of your debt increases even though you do absolutely nothing. With consumers minimising consumption (and increasing savings) you have an ever increasing savings/investment imbalance in the economy (excessive savings, and no investment). That translates into a huge trade surplus (I-S)+(G-T) = (X-M).

But hey, please feel free to deny reality because you have some pre-conceived politcal notion that deflation is "good". Maybe you should go edit the world's economics texts whilst you're at it? Until you win a Nobel prize for economics, your rather unorthadox views on deflation are just that - unothadox.

Re:Bad News for USD (2)

Sique (173459) | more than 3 years ago | (#35846108)

Deflation means, that no one will be motivated to invest any money - it will be more worth next week and buy more. Deflation means that all investions will put off as long as possible. So deflation is actually bad for an economy.

Re:Bad News for USD (3, Interesting)

roman_mir (125474) | more than 3 years ago | (#35846144)

That's nonsense. Inflation means that your money will be worth less tomorrow, so you can't generate savings to start a new business - nobody WANTS your money for labor/tools/whatever.

You are completely disregarding the fact that USA had deflation throughout the 19 century and past WWII, when prices were falling naturally due to the currency that was gaining in value and people had higher and higher standards of living. However past WWII the problem was that government saw the increase in economic activity as an invitation for more inflation (money printing), while in 19 century they did not have fiat in the first place, so they couldn't devalue the currency.

In 19 century the bread people bought a year ago cost MORE than one they bought year from then, and it was good for general welfare (which is what USA Constitution promotes, not personal, but general welfare, and general welfare implies stronger currency).

Re:Bad News for USD (1)

Noughmad (1044096) | more than 3 years ago | (#35846122)

With deflation, there is no incentive for spending/investing. I hope I don't have to explain why that is bad for the economy.

Re:Bad News for USD (2)

roman_mir (125474) | more than 3 years ago | (#35846158)

What the hell are you all smoking?

19 century USA had PLENTY of incentive for spending/investing, yet the money appreciated by a factor of 2.

Past 1913 the money value fell by a factor of 100.

Who is investing into US economy NOW? I certainly do not.

As to spending - it's not about spending, it's about your purchasing power. If you can buy more tomorrow with the same money, you are better off, but you do not stop spending today - you still need food and clothing and shelter and goods.

Who DOES NOT buy TV or a computer because it will cost less if they wait for 2 years? Yet things in real free market oriented industries do fall in price and people still do buy them.

This entire argument is nonsense, and it's taught to you in your useless economics classes and schools by government driven propaganda machine, because the ONLY entity that actually truly suffers from falling prices and appreciating currency is the biggest debtor - government, which can't stop taking credit but can't and doesn't want to pay it back in real money.

Re:Bad News for USD (1)

Anonymous Coward | more than 3 years ago | (#35846156)

Deflation is an economic disaster. See every recession before the Federal Reserve was established. And the Great Depression, for that matter, where the Fed acted to try to defend the dollar instead of expanding the money supply, causing banks to fail and deflation. The gold standard had lots of problems, and monetary collapse that coincides with each recession was the biggest. That's why we have a Federal Reserve and that's why we haven't seen real deflation since the Depression. Fed economists do not want to repeat the mistake of trying to prevent a gold outflow (i.e., a currency devaluation in the gold-standard era) during a potential monetary collapse. That's why Bernanke opened up the monetary flood gates during the 2008 monetary crisis. No inflation to speak of yet--why? Because there were strong deflationary pressures threatening to cause economic collapse and these continue. Easy money may be like morphine, but you don't get addicted if you're actually in pain. Prices are sticky downward, especially wages, and general deflation would result in massive layoffs. Since money would be more valuable, less would be needed to buy things and businesses and individuals (either unemployed or working for less) would fail to make their fixed interest payments, now much more expensive due to the rise in value of the money. Money literally disappears from the economy during deflation. Where does it go? People who are receiving fixed payments get the money and hold it because if they don't spend it, it will be worth more tomorrow. It's an upside down world to those of us who expect a regular, small amount of inflation each year, necessary to lubricate the wheels of a growing economy with a growing population. Roman, you need to look at the disastrous depressions of the 19th century before you go off about the gold standard and how great it would be to have deflation. We had a significant amount of deflation once in the 20th century, and most folks believe that was more than enough. Or do you argue that the Depression was a sign of good monetary policy?
   

Re:Bad News for USD (2)

roman_mir (125474) | more than 3 years ago | (#35846228)

See every recession before the Federal Reserve was established.

- booms caused by misplaced wealth and then fixed by busts? Yeah, must have been a real disaster, since the actual wealth of the USA people has risen so drastically over the 19 century.

Wealth - production. Machines, clothing, food, shelter, quality of life, everything that was created in 19 century despite the local booms and busts.

And the Great Depression, for that matter, where the Fed acted to try to defend the dollar instead of expanding the money supply, causing banks to fail and deflation.

- you are high.

1. The 1920 recession was caused by quick expansion of monetary base starting in 1913. The recession was severe, the unemployment was huge. This recession was fixed by Harding, who cut gov't spending and credit misplacement by 70%.

2. The 1929 recession was caused by the huge increase in monetary supply shortly before that, when the Fed decided to prop up the UK Pound.

This recession was quickly turned into the Depression by government, which decided not to use the example of the 1921, but instead decided to spend its way out of that (thank Keynesian shamanism for that.)

In any case, that depression only ended once WWII ended and government stopped its spending and credit could be restored to the private sector. Of-course it helped plenty that USA was the pretty much the only country with mostly intact infrastructure.

The Fed was printing from the very beginning and it continues now and it does not stop. The notion that it is an 'independent' bank is BS., it's just to throw sand into your eyes, to pretend it will cut the Congress off and won't buy the T-Bills at the whim of the politicians. That is obviously BS as well. Their mandate is also BS - stable prices? My ass. The dollar last value by a factor of 100 since the Fed was established.

The USD lost 75% of value just since 2003, when gold was 350/ounce, cotton was 50/pound, now it's 1400/ounce and 200/pound. The ration of 1:7 stays, but in dollars you can only buy 1/4 of the stuff. So that's a 75% drop in just 8 years. It's ridiculous to say that the Fed is keeping with its mandate, it is clearly BS.

That's why we have a Federal Reserve and that's why we haven't seen real deflation since the Depression

- well, you can't have deflation in FIAT CURRENCY in an expansionary currency environment.

However in GOLD the prices of consumer goods are falling, which tells you that there is deflation in consumer goods, and it's good, and it's the reason there are now over 8 billion people on the planet - cheaper and cheaper everything (just not in fiat).

That's why Bernanke opened up the monetary flood gates during the 2008 monetary crisis. No inflation to speak of yet--why?

- because you are blind.

The inflation is expansion of monetary supply.
You are talking about price increases, which is a later symptom of inflation (later for the consumer nations, not for producer nations, who see commodity prices rise immediately and thus have quick price hikes in their goods as well, thus China had 15-25% inflation in actual prices over the last year.)

USA is NOT a producer nation, it is a consumer nation, which by the status of US dollar being the 'reserve' (like gold actually is, US dollar is based on nothing, thus it's a flawed idea that it can be a reserve), so as a consumer nation, which keeps printing and borrowing and is subsidized by the world, where it exports its inflation, obviously the prices are not rising as quickly as they do elsewhere.

However you are saying you are not seeing price hikes? Really? You do not visit food stores, gas pumps? You don't buy clothing?

Well, just wait until this summer, you'll finally see it.

Because there were strong deflationary pressures threatening to cause economic collapse and these continue.

- yes. In terms of GOLD there is deflation. But you do not have gold as legal tender, so you don't see deflation, which would be WONDERFUL for consumers. You see inflation, which is what your government is creating by printing every new dollar.

Prices are sticky downward, especially wages

- that's a completely different question. USA has high unemployment precisely because it is inflating its currency, it's killing savings, so capital investments are moving outside and that means jobs are leaving.

This is happening because US has huge gov't created inflation, bail outs, stimulus, etc. and very high income taxes and regulations that do not help to keep the investment inside the country. They DO NOT HELP.

Since money would be more valuable, less would be needed to buy things and businesses and individuals (either unemployed or working for less) would fail to make their fixed interest payments

- Oh, definitely those in high debt will suffer more in deflation. However that's the pressure to have less debt and to generate savings. That's the reason you have inflation - your government does not want to PAY its debts in any way shape or form (well, no government wants to do that.)

People who are receiving fixed payments get the money and hold it because if they don't spend it, it will be worth more tomorrow.

- a bunch of propaganda BS. USA had falling prices in 19 century and today prices still fall in different categories (electronics) year to year, people are still buying, because they want to buy (or, like in cases with food/energy/shelter/clothing/medications, they must buy.)

Or do you argue that the Depression was a sign of good monetary policy?

- you are assuming I buy your premise that the Great Depression was caused by anything BUT inflation (printing of dollars by US Fed.)

That's what depression was caused by - government spending and money printing, so, whoever you are, Anonymous Coward, you can't make a false argument and pretend I am for it and then say I am basing my conclusions on your false arguments, or whatever it is you are doing there, it doesn't work.

Grow a penis, get a user name.

Re:Bad News for USD (1)

diamondmagic (877411) | more than 3 years ago | (#35846072)

Uh, of course deflation is good, if the credit markets know about it (otherwise then, yes, deflation causes defaults). I mean really, HELLO THERE, EARTH TO PARENT, the GP just laid out all the points on why inflation is bad. Are you gonna take issue with any of them or not? Name just one country that was wiped out by deflation -- It doesn't happen, it can't happen, unless you actually physically steal the currency to deflate it. Inflation on the other hand is cheap, easy, and ACTUALLY DOES WIPE OUT COUNTRIES - Weimar Germany, Japan, Zimbabwe.

Re:Bad News for USD (0)

Anonymous Coward | more than 3 years ago | (#35846202)

The USA was wiped out by deflation in the Great Depression. Banks failed, loans got called in. For example, my grandfather had to pay off his mortgage or lose his house and business because the banks were out of money, thanks to deflation. This was happening everywhere. The country wallowed for years, thanks to another bout of deflation in the late 30s. Please get a clue.

Re:Bad News for USD (1)

TheLink (130905) | more than 3 years ago | (#35846224)

Inflation is just another way for Governments/Banks to tax people with net positive amounts of the inflated currency.

Imagine if everyone was buying, selling, borrowing or lending in "xtokens". And I was the only person who could create xtokens.

Whenever I create xtokens, everyone else becomes poorer (except those who owe amounts of xtokens). But those who owe large amounts of xtokens and can actually repay have to keep in mind that while they do become less poor, their income is in xtokens, and may not grow as fast as inflation increases their costs. So their cash flow could drop to nothing.

As long as the rest of the world uses trillions of US dollars, the USA can create US dollars and make themselves richer than the rest of the world.

So inflation was/is certainly a good thing for the USA. Because by inflating they keep getting richer than the rest of the world - there is always a lag between the US creating money and the rest of world noticing that stuff somehow should be priced higher and then adjusting their price lists ;).

But guess what happens when the rest of the world stops using US dollars? If more and more countries start doing what these 5 countries are doing, the USA can say bye bye to their "make money fast" scheme.

Ignorance is bliss, till the train hits you.

Re:Bad News for USD (1)

roman_mir (125474) | more than 3 years ago | (#35846236)

Yes, this is why US government is treating this fella [slashdot.org] like a criminal, and even a 'terrorist', because he is proposing a competing currency, which is based on actual money - gold and silver.

The US Fed is the actual counterfeiter, yet this guy may go to jail for 15 years and be fined millions of dollars.

Re:Bad News for USD (1)

Anonymous Coward | more than 3 years ago | (#35846230)

Even monetarists (especially monetarists) think deflation is a catastrophe, not just Keynesians. In fact, any sane economist thinks deflation is a disaster. What are your credentials, Roman? 'Cause your arguments read like a 14 year old who just found the Ludwig von Mises Institute website yesterday and has been downing Red Bulls and chortling about government interference in the economy ever since.

Re:Bad News for USD (2)

roman_mir (125474) | more than 3 years ago | (#35846244)

, any sane economist thinks deflation is a disaster.

- we know everything about your 'sane economists'. Those same people who thought that financial stocks were a 'great investment' just before the 2008 crash, those same people who thought that the housing bubble and the Internet bubble before that were healthy economic growth and who believe that CPI actually shows real inflation numbers.

What are your credentials, Roman

- I actually have enough on this very site, with plenty of comments left over the years that predicted this exact outcome - US dollar losing its status as a reserve currency, gold going up in value, while US economy spiraling down the hyper-inflationary drain.

What are YOUR credentials, Anonymous Coward?

Re:Bad News for USD (4, Insightful)

Fractal Dice (696349) | more than 3 years ago | (#35845928)

One could argue that the dollar *is* what the US manufactures. Since it's been used as the world's reserve currency, printing dollars has behaved essentially like mining gold would have a hundred years ago.

Re:Bad News for USD (0)

Anonymous Coward | more than 3 years ago | (#35846106)

Over valued currency is the great myth that corporations like to blame for everything. Currency value isn't the issue it's the lifestyle of the workers in the country. It's far easier for people in countries like China to work for dollars a day than it is in the US where most own cars and live in fairly large comfortable houses with lots of possessions like TVs. When corporations claim the dollar is over valued they are actually saying workers in the US live too well so they need to go to countries where workers can be treated less fairly. Also when they say America can't compete that's "French" for workers are too well paid. They are shortsighted and speaking out of blind greed. The problem is they have stripped the buying power of the strongest consumer market in the world. The irony is now they want to build up the workers in foreign countries so they can buy the products that Americans are loosing their ability to buy. The US got strong not when people were dirt poor and couldn't aford nice things it got rich and powerful when it had a strong middle class that could buy the products that were being made. Greed took over from reason and the rich saw a major source of income from stealing from the middle class. Wages have been dropping since the 80s. In the 60s and 70s families lived well off one income. In the 80s they started to need two incomes and now even with two incomes most are struggling. How long before we have to repeal child labor laws just so families can aford to feed themselves? We've lost nearly a 100 years of progress with no end in sight for the decline.

Stagflation hitting the USA in 3 ... 2 ... 1 ... (1)

Colin Smith (2679) | more than 3 years ago | (#35846126)

I think I predicted this here on /. in 07/08, earlier? i'll have to google. Taken a bit longer than expected, but economies are like oil tankers. 11/12 is going to be real painful for the ordinary Joe. You now have the choice of more recession or inflation (Hint, TPTB'll pick inflation). Stockmarket's flying though, to da moon.

This has been on the cards since 2000 and you can blame the Federal Reserve and it's owners JPM and GS.

Note, the shit won't *really* hit the fan till oil is priced in other currencies. Gotta keep those Saudis happy.
 

US debt - why should the rest of the world pay 4 i (1, Insightful)

Anonymous Coward | more than 3 years ago | (#35845708)

The volume of trade between the brics may not be a lot now - but in the next few years it will only go up, and USD will lose its hallowed status. The USD has a residual value because it is a global default currency - and as countries unwind their position, the real value of USD will be apparent (esp. with the huge debt in the US).

So BRICs using local currencies is good. It will isolate them from the stupid US policies, and prevent the brics from bearing the burden of the US debt.

Time Americans realized that you cant just attack some country cos it has oil - and then expect the rest of the world to bear your debt.

Re:US debt - why should the rest of the world pay (1, Flamebait)

hairyfeet (841228) | more than 3 years ago | (#35846002)

Frankly it ain't the USA that needs to be worried....it is everybody else. remember what happened when Germany went tits up in the 20s? Something about taking Poland? So what do you think will happen when the largest military in the world can't hand out local bread and circuses? Why we'll just take yours!

And the bitch is? With the right leader unlike the crazy Austrian we'll pull it off too and you know how? Deals baby! Watch how easy it would be: Oh Putin want to be president for life? How about having the USSR back? We know you miss the old days, well its yours baby! We won't say a word pal, enjoy...just don't say nothing about what we do in OUR backyard, kay? Russia down

Hey China! Our buddies in the east! Hey you know that whole Taiwan thing? Roll the tanks baby, it is ALL yours. Oh and as long as you keep the trade up Africa? help thyself buddy. China down.

So what do the USA get for our dealing? Why North and South America, of course! The United Continent of America has a REAL nice ring to it, don't ya think? All those nice oil sands up north, all those resources down south, Lebensraum here we come!

And honestly who would stop us if China and Russia agreed to sit this one out? Germany? Will be too busy shitting their pants at the USSR on their doorstep, especially with the USA out of NATO. The UK? They are an island, Wolfpacks showed how to fix THAT problem. They have...what? 1 Aircraft carrier? We got 11, no problem! France? Italy? oh they'll bitch, but who cares.

As for getting the American people behind it? Do the same trick the Austrian used, lots of "bread and jobs" along with a false flag or two. Wouldn't be hard to paint Chavez and a few others to be the new devils.

So for all those "Yay America is gonna fall" types? be careful what you wish for, because Germany got to be the asshole twice last century, and before those in power go silently into that good night I have a feeling it will be the USA's turn. Frankly it wouldn't take long at $10 a gallon gas and 40% unemployment to get Americans to sign off on just about anything. you already have some serious hatred of foreigners building up with the lax border and H1-Bs, really wouldn't be hard to direct that hatred at a chosen target. Scary thought, isn't it?

Re:US debt - why should the rest of the world pay (0)

Anonymous Coward | more than 3 years ago | (#35846088)

Frankly it ain't the USA that needs to be worried....it is everybody else. remember what happened when Germany went tits up in the 20s? Something about taking Poland?

Good, then I will just have to wait 25 more years to see the fall of USA (hint: remember what happened to Germany in 1945).

Re:US debt - why should the rest of the world pay (1)

Splab (574204) | more than 3 years ago | (#35846138)

Erm, no. First of all, China and Russia are by no means friends, the only place close to China where they can feasibly expand is Russia.

Also, throughout history no one has managed to keep a country occupied, the local residents has historically always fought the invaders, yes it might be "interesting times" for a while, but there is no way they would be able to do anything meaningful.

The US wont go into war, if the US tries to fight everyone a delegate from China will approach the US in the same manner the US approached the UK just before they lost their colonies. Back then the US pointed out that if the UK went into war they would default their loans, suddenly the UK had no real power. If the US started to threaten everyone China would just default the US loans - this would kill the dollar, which would halt all export to the US, including food, try waging war without food...

Re:US debt - why should the rest of the world pay (0)

Anonymous Coward | more than 3 years ago | (#35846242)

remember what happened when Germany went tits up

Let's see: we ended up with a destroyed country, divided between several invader alliances and even decades after reunion the country is smaller than before.

Don't you think your "allies" would all come running once you've spread your military too thin and run down your economy after years of war? They'll decide to "help democracy" and portrait themselves as saviours for decades to come. Nothing like creating a nice little diversion to make people forget you just annexed a few countries they might be miffed about.

I wonder who will get the west coast? China might like it. Why would they be content with a tiny speck of dirt like Taiwan? Russia will likely go for Alaska. Canada will get a few northern states as reparations. Nobody would want Texas so they'll finally secede. Mexico might snag Arizona and New Mexico. Who'll be interested in Hawaii? Could be turned into a decent international military base.

Yea, good luck with that.

OPEC have tried this (-1)

Anonymous Coward | more than 3 years ago | (#35845732)

The OPEC countries have tried this at least twice. They where forced to back down before they could even begin, by threats from USA.

I don't think USA would dare try to threaten Russia or Brazil into obedience. But India and South Africa is likely to endure a lot of bullying, perhaps even a military invasion.

Re:OPEC have tried this (1)

unity100 (970058) | more than 3 years ago | (#35845804)

hahahaha. invading india, a 1 billion country, with nuclear weapons, ally of russia, china ? ......

Re:OPEC have tried this (0)

Anonymous Coward | more than 3 years ago | (#35845810)

Don't they also have one of the larger armies in the world? Sure, they're outnumbered by the US military, but you don't just ignore a large military force.

Re:OPEC have tried this (1)

unity100 (970058) | more than 3 years ago | (#35845820)

yes they are quite large. even proposal of an invasion of india is hilarious. leave aside their military power, but, noone would allow that on any ground.

Re:OPEC have tried this (1)

SharpFang (651121) | more than 3 years ago | (#35845932)

Oh, but India DOES have WMD. ;)

Re:OPEC have tried this (1)

unity100 (970058) | more than 3 years ago | (#35845960)

and ?

Re:OPEC have tried this (2)

darth dickinson (169021) | more than 3 years ago | (#35845832)

Not to mention they'd immediately pull all our tech support and offshored coders, and *then* where would we be?

Re:OPEC have tried this (0)

Anonymous Coward | more than 3 years ago | (#35845986)

Um, why would they do that? The amount of back doors...

Re:OPEC have tried this (2)

Semptimilius (917640) | more than 3 years ago | (#35845974)

India is not an ally of China. There are huge land disputes, troops at the borders, etc. China has entered behind the scenes in the Kashmir dispute between India and Pakistan as well. (I believe part of it is building railroads in disputes areas.) China is also attempting to contain India in the Indian ocean too, with deals for ports to protect Chinese trade routes. Competition for resources can see these two at each other's throats in the future. (Large populations, proximity, clashing zones of influence.)

The BRIC alliance (South Africa is peanuts and just in there as the token African country) is much more pragmatic than Western media like to portray it. It's really these countries trying to wrest away some international power away from the West, and they know they can't do it individually.

The US is closer to being an ally to both India and China than the latter two are to each other.

Re:OPEC have tried this (1)

unity100 (970058) | more than 3 years ago | (#35845992)

those land disputes and kashmir issue is a remainder of the 1950s and mao era. it is 2011 now. they linger, and will linger on. however, there are bigger mechanics of life than land as of 2011, and all know it. this is why there is a BRIC bloc, including I and C.

alliances, are pragmatic.

Re:OPEC have tried this (0)

Anonymous Coward | more than 3 years ago | (#35845854)

Not only did you suggest a country with a billion who actually produces real goods AND is nuclear armed can be bullied, China is aslo BRICS. Do you seriously think South Africa is going to give a shit about a dying economy when latching onto India and China will be a bonanza?

See : Australia's present economic boom generated by selling real shit to BRIC

Health Blog (-1, Offtopic)

gskhangura (2043576) | more than 3 years ago | (#35845736)

nice . I appreciate it. Okay. Thanx. http:/// [http] www.totalhealthathome.com/

Re:Health Blog (0)

Anonymous Coward | more than 3 years ago | (#35845756)

BAHAHAHAHA Stupid spammer can't even post a link properly!!!

Re:Health Blog (0)

Anonymous Coward | more than 3 years ago | (#35845766)

You fail at spamming, sir. How do you feel about the BRICS situation?

a href="http:// www.totalhealthathome.com"Health B (-1, Offtopic)

gskhangura (2043576) | more than 3 years ago | (#35845764)

Health Blog [totalhealthathome.com]

Re:a href="http:// www.totalhealthathome.com"Healt (1)

Killall -9 Bash (622952) | more than 3 years ago | (#35845954)

Getting it right the 2nd time makes it much less fail.

Great news (1)

Anonymous Coward | more than 3 years ago | (#35845770)

One lesson from the mid-1990s Asian financial crisis was that since the US dollar is the de-facto world currency, countries needed to hold large amounts of US currency as a hedge against speculators and currency fluctuations (an alternate lesson was to impose capital controls). The move amongst the BRICS to trade in their own currencies will mean a reduction of the holdings of US currencies by the countries involved (which is what the US public seem to desire), which in turn will make it easier for them to revalue their currencies (because it won't be effectively destroying the value of their US currency holdings) -- which is another thing that the US public seems to desire.

So it seems like a win-win for all countries.

Re:Great news (0)

Anonymous Coward | more than 3 years ago | (#35845908)

The move amongst the BRICS to trade in their own currencies

What move to trade in their own currencies? I see no mention of such a thing in teh artical.

We need a readily available currency for everyone (0)

Anonymous Coward | more than 3 years ago | (#35845782)

The only sensible solution is to replace currency with leaves. It's probably the only hope the US has of repaying it's debts.

Re:We need a readily available currency for everyo (1)

MichaelSmith (789609) | more than 3 years ago | (#35845892)

But what will you do about the over supply of leaves?

Re:We need a readily available currency for everyo (1)

Ciggy (692030) | more than 3 years ago | (#35846188)

Simples:

When the going rate is something like three deciduous forests to buy "one ship's peanut, to obviate the problem and effectively revalue to the leaf...embark on an extensive defoliation campaign and...burn down all the forests" [DA, HHGTTG, 1978] or use something like Agent Orange...

BRICS unable to change it my ass (4, Insightful)

unity100 (970058) | more than 3 years ago | (#35845798)

ENTIRE modern financial structure depends on trust. That's that. Void papers and monies backed by various privately owned central banks or private investment firms had been the perpetrator of this trust system so far. And all the world obliged by it.

If you really go down to it, there is nothing real left backing the financial and monetary values and papers right now. They are SO inflated and complicated that, one top hedge fund manager said on cnn, even he himself doesnt know the exact composition of the fund he was managing. However this fund too, is taken as a real fiscal value, and is also considered as a backer of monetary value of the country it is being traded in.

water vapor. if you erase that water vapor and overinflated stocks, you will see that nothing remains backing the money of most countries like switzerland, britain, usa.

whereas this BRIC alliance that the summary so gleefully drops down, actually PRODUCES value. they have solid backing for their money. contrary to the others, you can actually buy solid products and services with that money from those countries.

Once there is traction behind these, and the water vapor of the established financial scourge in the west is ignored, everything easily will change.

really. china produces most of the world's products now. so, what ? some investment bank from wall street, is going to threaten china ? oh boy. what will happen if china says 'give me yuan' ?

Re:BRICS unable to change it my ass (1)

Anonymous Coward | more than 3 years ago | (#35845840)

oh boy. what will happen if china says 'give me yuan'

We repatriate our manufacturing and China's economy goes to hell?

hahahahaha ... (3, Insightful)

unity100 (970058) | more than 3 years ago | (#35845862)

"repatriate" your manufacturing ... WHERE will you sell your products to ? europe ? china ? russia ? india ? all the while where china produces the same product for dimes ? with its 1.5 billion population ?

in case you are not yet aware, china is the BIGGEST market on the planet, and one of its cards in his hand, is this. noone can ignore the market that is china and be set.

Re:hahahahaha ... (1)

Jane Q. Public (1010737) | more than 3 years ago | (#35846086)

"'repatriate' your manufacturing ... WHERE will you sell your products to ?"

You missed the point entirely. We will sell the products to OURSELVES. While at the same time enjoying the income from manufacturing them, too.

"Bringing home" our base of manufacturing -- even for just domestic goods, not exports -- would do wonders for our economy. Yes, they might be a bit more expensive than if manufactured in China. But that extra money goes back into OUR economy, which makes a world of difference.

And as a nice side effect, out children's toys will no longer contain lead or zinc and arsenic... our children's formulas will no longer contain melamine.

My sister's dog started having serious health problems, including intestinal bleeding. Turned out the DOG FOOD she was buying contained ingredients from China that had been "supplemented" with melamine to appear as though they were more nutritious than they actually were... the same motivation that caused that Chinese company to put it in babies' formula.

I say it is long past time to cut off China's "most favored nation" trading status with the US, and bring the manufacturing of domestic goods back home. They haven't been doing us any favors in return! On the contrary, now that they have a little money they have begun to swagger a bit and try to throw their weight around, and make demands. I call BS. If they want to order the US around, I say let them do completely without the US for a while, and see how far they get. I predict it won't be very damned far.

Re:hahahahaha ... (2)

Jane Q. Public (1010737) | more than 3 years ago | (#35846096)

I should add that it would be ridiculously simple to accomplish this: all we would have to do is start taxing the sh*t out of corporations that outsource across borders.

Domestic corporations that outsource are leeches on the economy. They enjoy the benefits of being in the US, but they don't give anything back. I think that's pretty much the definition of a leech.

Re:hahahahaha ... (1)

Ice Tiger (10883) | more than 3 years ago | (#35846210)

Even easier, just buy US products and not ones made in China because that is the only way production will move back to the US.

So once you've made the choice to boycott imports from China you just have to persuade the rest of your citizens to do the same and everything else will follow.

Re:hahahahaha ... (1)

buzzzz (767841) | more than 3 years ago | (#35846250)

You missed the point entirely. We will sell the products to OURSELVES. While at the same time enjoying the income from manufacturing them, too.

This is a stupid argument. The US Economy consists of 1.8 Trillion Dollars in exports vs 2.5 Trillion in imports. Thats 42% of the economy in exports. On top of that nearly 40% of the total income of all US Businesses (and by extension of the employees and shareholders) is based on their foreign investments and sales. So if US closes themselves off US will lose 40% of its total economic output. If you reduce your imports by 50% you will also hurt your exports gained after years of negotiations for free trade. Not only will everything in the US be "slightly expensive" millions of people who work in the export industry will lose their jobs and pay more for locally manufactured goods. And yes, outsourcing or labor export/import is also a way trade. In all, trade benifts the US. Reducing trade will cost big in terms of jobs and standard of living. Saying that get all manufacturing home will fix things ignores exports completely and is downright stupid. More so, when the US markets are growing at 2-4% a year while developing markets are growing at 10% an year meaning in the next few decades the potential for exports in many many times higher than the savings from imports. Trade and economics are not a zero sum game. Even for the mostly technical crowd here at slashdot, think of the major revenue loss Microsoft, Google, IBM, Apple etc. will have if they are hit with tit-for-tat duties in taxes in foreign countries that make them less competitive.

Re:BRICS unable to change it my ass (1)

Ice Tiger (10883) | more than 3 years ago | (#35845888)

LOL, who is going to do that exactly? All the CEOs who outsourced it in the first place as they jet off to their tax havens whilst the US ship sinks? :)

i don't understand what you are trying to say (1)

circletimessquare (444983) | more than 3 years ago | (#35845880)

financial chicanery is something that only happens in the west?

genuine economic activity only happens outside the west?

the us dollar has weakened, so it makes sense to look at other currencies for transactions. if those other currencies also weaken, well then you look around again for the next safest currency

that's the beginning and end of the entire story here

currently, the chinese real estate market is overheating. some say china could go through the same bust followed by anemia that japan has suffered since its real estate market tanked in 1990. or maybe it won't. either way, the yuan looks safest right now, but that is subject to change. just like any other currency, including the dollar

we are entering an era which is more fluid financially, so people will be trading in all sorts of currencies, depending on various perceptions of strength, that should shift over time. nothing pro- or anti-western about it. stop trying to inject politics into a subject matter which is pretty bloodless and simple: "what's the safest currency?" when they think about that, they think relative stability, nothing more

Re:i don't understand what you are trying to say (1)

unity100 (970058) | more than 3 years ago | (#35845934)

your understanding of the economic situation is too funny.

american financial market has not only been inflated 610x or so its value, but also these nonexistent, fraudulent papers have been traded to entire world countries.

this is the reason behind the 2008 crisis. and this is the source of the disparage. compared to that, yes, we can say real economic value only happens outside usa.

and the mechanic that provided that, is this :

http://www.thedailyshow.com/watch/wed-march-17-2010/in-dodd-we-trust [thedailyshow.com]

Re:i don't understand what you are trying to say (4, Informative)

circletimessquare (444983) | more than 3 years ago | (#35845958)

the american economy suffered a burst bubble from an overheated real estate market in 2008. it might be a long painful recovery

but if it gets your political inclinations excited to derive deeper portents, have at it

people trade in the currency that is seen most stable RELATIVELY. some background: as the 2008 crisis began, people began to flee the dollar. then, as the crisis began to ripple across the rest of the world, some places wound up weaker than the usa, and people began to return the dollar. why? not because the dollar was stable, but because the dollar was RELATIVELY stable compared to the problems in many other places, like europe

currently, the yuan is probably the most stable currency, but china has plenty of exposure to potential problems that could blow up worse than the usa. then the dollar might again be the most RELATIVELY stable currency, or not, or some other currency. i don't know. neither do you

Re:i don't understand what you are trying to say (1)

unity100 (970058) | more than 3 years ago | (#35845982)

it wasnt anything related to real estate market. even if the houses that were bought from 600,000 are now valued at 300,000, THEY ARE STILL THERE. they did not vanish.

mortgage backed securities were inflated, then incorporated into more papers which were inflated up to 60x their value, and then shown to government as financial assets of 61x.

despite having 1x actual assets, they showed their assets as 61x.

THEN THEY GOT PERMISSION FROM GOVERNMENT TO LEND MONEY TO PEOPLE 610x OVER THOSE ASSETS, as per the financial regulations.

in short, they lent 609x units of money THEY DID NOT HAVE.

people built factories with those lent funds. they invested. reinvested. bought stocks. lended. governments, corporations. and in 2008, it turned out that THAT 609x INITIAL FUNDS WERE NOT THERE AT ALL. but all the transactions, investments that were done by using the funds lent, are still there.

this is what they mean with 'poisoning' of the world's assets. noone knows how much of what they have was acquired with water vapor, and everyone is hesitant to trade with anyone else.

it is appalling that your knowledge of the situation is moronically shallow. yeah. it was some 1 million mortgaged houses, each 300-600,000 k apiece, that sank the ENTIRE WORLD ECONOMY. china builds that many houses in a year ....

morondom.

Re:i don't understand what you are trying to say (1)

osu-neko (2604) | more than 3 years ago | (#35846036)

lol... I'm not sure which is more amusing, your ridiculously over-simplified analysis of the financial crisis, or the fact that you call someone else's understanding shallow while relating it.

Re:i don't understand what you are trying to say (1)

Rakishi (759894) | more than 3 years ago | (#35846062)

By the very definition of the term you cannot loan money you do not have. However you can loan money that you in turn borrowed from someone else. Which can become rather bad when that someone else wants their money back. That's how all finance and banking works. It has worked that way for a long time and works that way everywhere.

Re:i don't understand what you are trying to say (0)

Anonymous Coward | more than 3 years ago | (#35846184)

By the very definition of the term you cannot loan money you do not have.

Oh my brother, you really really do not understand how banking works...

Re:i don't understand what you are trying to say (1)

AK Marc (707885) | more than 3 years ago | (#35846200)

The yuan is stable because it isn't used internationally at all. It's artificially stabilized by the Chinese government.

Re:BRICS unable to change it my ass (2, Insightful)

mveloso (325617) | more than 3 years ago | (#35845900)

In any discussion of revamping the reserve currency, there's only one question that you need to ask:

Is the entity behind the currency willing to do what it takes to preserve the financial system?

Money talks, and bullshit walks. Do you think China is going to send billions of Yuan to Europe during a crisis? Fuck no. Their currency doesn't even float because their government is too chickenshit to expose their currency to the real market.

Russia, Brazil, South Africa, India, China - 4 out of 5 of those countries don't have functioning property rights regimes. I'm assuming South Africa does, but who cares about them - their biggest contributor to the world economy is a diamond monopoly that artificially inflates diamond prices.

What about the Euro? Anyone? Anyone?

These sort of articles are pathetic. Being n-1 has some substantial advantages, but it has substantial disadvantages as well. The choice of a reserve currency is a political as well as a financial decision. A bunch of countries getting together to denominate their loans in their respective local currencies isn't a new regime. It's not even a common market. It's a bunch of bilateral trade agreements. Come back when they start talking about a uniform way of handling disputes and enforcing rulings.

Re:BRICS unable to change it my ass (1)

unity100 (970058) | more than 3 years ago | (#35845926)

Money talks, and bullshit walks. Do you think China is going to send billions of Yuan to Europe during a crisis? Fuck no. Their currency doesn't even float because their government is too chickenshit to expose their currency to the real market.

let me tell you what will happen : china will send yuan to europe, will keep it fixed rate, and everything will work because china is a mega market that is 1.5 billion itself.

it can easily define what happens with its market alone. the biggest market and the biggest growing potential market in regard to size on the planet, is china.

what about the euro, anyone, anyone, WHAT ? as of this moment, euro is not only a more stable currency than the nonexistent dollar, but also its backers are stronger than the water vapor that backs dollar in wall street. at least, its existence is not being maintained by printing money.

really, what was the purpose of your post ?

your problem seems to be with 'enforcing rulings' -> they ARE enforcing rulings. they are NOT enforcing the rulings that the filth behind wall street wants them to enforce. this is the gist of the article.

Buy your Guinness with Yuan? (1)

PolygamousRanchKid (1290638) | more than 3 years ago | (#35845998)

Do you think China is going to send billions of Yuan to Europe during a crisis?

Well, right now, they would find some happy takers in Ireland, Greece and Portugal . . .

Re:BRICS unable to change it my ass (1)

osu-neko (2604) | more than 3 years ago | (#35846064)

... I'm assuming South Africa does, but who cares about them - their biggest contributor to the world economy is a diamond monopoly that artificially inflates diamond prices.

lol... that's pretty funny if you meant it as a joke. It's pretty pathetic if you believe it. The US government wasn't so reluctant to piss of the South African government during apartheid because we needed their diamonds to keep our military-industrial complex going. There are far more important minerals we get from them (and for many years, exclusively from them, although these days China has eclipsed South Africa in the rare minerals area).

Re:BRICS unable to change it my ass (2)

Jane Q. Public (1010737) | more than 3 years ago | (#35846050)

"ENTIRE modern financial structure depends on trust. That's that."

Precisely! Yay! A voice of reason among the mumbling of the crowd.

As long as the "world economy" continues to rely on what we in the west call "fiat money" -- that is, money that is not backed by anything tangible, and is only "valued" by its relation to the money of other nations -- then the "world economy" will remain on a shaky basis, national economies will be vulnerable to other nations with malicious intent, and national economies will fail.

Until a genuine monetary standard is put back in place -- it doesn't have to be gold -- this will continue to be the case. Keynesian economics lost all credibility many decades ago. Keynesian economics just doesn't work. The only thing it has done well has been to allow governments and their corporate friends to steal the common man blind.

Re:BRICS unable to change it my ass (1)

Sique (173459) | more than 3 years ago | (#35846190)

The problem is that basing money on a 'real value' is also fiat money. Because you never know if the real value is actually a real long term value. Basing money on land property? What if the real estate market crashes and people move away to better jobs somewhere else? Basing money on a mineral? What if the mineral goes out of fashion because there are no real uses anymore? Basing money on something that the economy creates? What if said economy crashes because there is an overproduction of said product?

In the end every money is fiat money. Taking out a single entity from an economy and basing your entire monetary system on it just overvalues the entity and creates exactly the virtual value you so bitter decry.

Re:BRICS unable to change it my ass (1)

Jane Q. Public (1010737) | more than 3 years ago | (#35846232)

"The problem is that basing money on a 'real value' is also fiat money. Because you never know if the real value is actually a real long term value."

Except that history proves otherwise. For just one example, monetary value in the Western Colonies (and subsequently the United States) was nearly flat for 300 years, barring a few bumps around wartime. And I do mean nearly flat. We are talking about effectively zero inflation.

But when the Fed was created, money took a sharp drop in value. When the gold standard was "mostly" abolished, it took a further drop. When Nixon entirely eliminated it within the US, it dropped even further, and when the very last vestiges of any gold standard were finally eliminated by the international bankers (who for a while had still imposed an external standard to the exchange rate), the value of the dollar went into a steady dive and is still diving.

After 300 years of flat money value, gradual elimination of the gold standard over the last 100 years has reduced the value of the dollar to about 4 cents. You can see the money value start to drop faster at precisely the times when each of those changes took place. It's not exactly something hard to prove.

The value of money in the U.S. never, after any of those changes, ever approached its old value again. Inflation has been the "rule", spurred on by Keynesian economic policies.

It is true that you might want to be careful what you decide to use as a standard... but it is very clear that standards are necessary to economic stability.

N.W.O (0)

Anonymous Coward | more than 3 years ago | (#35845800)

This is just the start to the New World Order and one currency to control the masses.

Re:N.W.O (1)

SharpFang (651121) | more than 3 years ago | (#35845950)

Actually, this sounds like a pretty solid blow to the N.W.O.
Not only the currency consolidation falls apart, people and governments become aware of what shitty idea it is.

Bad news for BRIC (1)

Anonymous Coward | more than 3 years ago | (#35845844)

The USD is in bad shape, but compared to the yen or the ruble? give me a break, go look at the last 20 years of those currencies and ask if you want to trade in them.

Re:Bad news for BRIC (1)

Anonymous Coward | more than 3 years ago | (#35846006)

Here have this parcel , it contains ear plugs, a blindfold and a little American flag for you to wave.

No worries fellow Americans! (1, Troll)

Concerned Onlooker (473481) | more than 3 years ago | (#35845868)

Not to worry. The multi-national corporations, so highly revered by many Americans, will survive just fine by simply moving operations completely out of the US and into whatever country suits them. So, it's not all grim!

Yeah! ... The Almighty buck is no more! (2, Insightful)

Gopal.V (532678) | more than 3 years ago | (#35845872)

As someone sitting in India, I love this move. Sure my paycheck is going to suffer once they start cashing in all the dollars from their reserves and the rupee strengthens. But as a long term measure this is just absolutely required.

The dollar jumped to the forefront of all this because (IMHO) they managed to ensure OPEC only sells using dollars. But if Russia, China, Brazil and (hopefully) Iran starts selling things in other currencies, US loses the critical ability to just print out more dollars to pay off their deficits or the bring down the world economy just to get out of jail free. Which is what China's aiming for, I guess. And Manmohan Singh was one of the most famous finance ministers in India, responsible for the economic liberalization of the 90s, I guess he knows what he's doing as well.

The fall of the dollar is a big deal for the developing world.

Re:Yeah! ... The Almighty buck is no more! (1)

jvillain (546827) | more than 3 years ago | (#35846042)

As the value of the Rupee increases importing items like food and fuel will become cheaper. This will decrease your inflation rate. That will mean India can keep interest rates lower helping to drive economic growth.

On the other had the US is swamped in debt, the great printing press of QE2 is about to to be turned off, the hedge funds are bailing out of Tbills at the same time that the BRIC countries are giving a big thumbs down to the dollar. The US government is intentional trying to deflate the US dollar for political rather than economic reasons meaning inflation will be driven up in the US whether they have growth or not. In order to cover that inflation interest rates are going to have to start rising which is going to make supporting all that debt even more difficult. Mean while rising interest rates will slow the economy further deflating the dollar more in a deadly spiral.

So whose problems would you rather have? And isn't it time to end the insane farm subsidies the US and Europe couldn't bear to part with when they were borrowing like crazy? For 20 years they tried to end them and then gave up. I bet you could get a deal done in a weekend now.

Re:Yeah! ... The Almighty buck is no more! (4, Insightful)

smallfries (601545) | more than 3 years ago | (#35846130)

The dollar jumped to the forefront of all this because (IMHO) they managed to ensure OPEC only sells using dollars.

Your opinion is wrong: OPEC sells in dollars because that is the world's reserve currency. America has retained it's dominance this long because everything is denominated in dollars at some level. It doesn't seem to be just your misunderstanding, the second indiatimes link makes the same mistake:

Reserve currencies are not created by fiat; they emerge from historical forces of trade and investment. The dollar is the world's favourite currency because it is simply the most traded, circulated and accepted currency in the world. Brics or others hoping to supplant the dollar will have to develop large and deep markets, first within their own national economies and then across the world for bonds in those currencies.

Reserve currencies are created exactly by fiat: this is how the dollar was chosen at Bretton Woods. Everything else is backwards: the dollar is the most traded, circulated and accepted currency in the world precisely because it is the international reserve.

This move by BRICs does look like the first step towards expanding special drawing rights and replacing the dollar with a weighted basket of currencies.

Re:Yeah! ... The Almighty buck is no more! (1, Insightful)

definate (876684) | more than 3 years ago | (#35846194)

As someone who seems to like what was done, for a reason which makes no sense, you should really go read the article again.

It doesn't change trade.

It doesn't change anything when they're NOT dealing with BRICS countries.

It doesn't change the banks liabilities side.

It only restricts how they can make loans (banks assets side) to other BRICS countries.

That's it. It's the most toothless "reform" ever. It's so toothless, it doesn't actually do ANYTHING, EXCEPT expose them to more interest/exchange rate risk when dealing with other BRICS countries.

LOL. So before you go celebrating, you should first read what they actually did, and then study what this actually means.

You essentially just celebrated the marginal weakening of your banking system, as they can now, no longer, ensure that their liabilities and assets are matched, in any fashion. However, I say marginal, because it's likely that NONE of their liabilities are held in BRICS foreign denominated loans. So... at best, nothing has changed. At worst, they just exposed you to more risk.

So... Enjoy your now more convoluted economy! K TNX BAI!

Which Brazilian currency are they going to use? (1, Interesting)

waddgodd (34934) | more than 3 years ago | (#35846026)

Given that Brazil when it revalues their currency switches between "cruzado" and "cruzerio" (and most recently "real", short for "cruzerio real") on an almost clockwork basis, invariably involving a devaluation of 1,000:1 or some other ridiculous figure like that, were they planning on using Cruzados or Cruzerios to exchange, and how many truckloads of whatever they use will it take to make a Rand, Ruble, Yuan, or Rupee?

Is this another NAFTA-type con? (1)

Tasha26 (1613349) | more than 3 years ago | (#35846052)

I'm not an Economist. Can someone in that field think 5-10 steps ahead and tell me whether this is a good or bad thing?

Re:Is this another NAFTA-type con? (0)

Anonymous Coward | more than 3 years ago | (#35846146)

It is a good thing for the BRICS, since it decouples their economies a little from the double digit Dollar inflation that they are experiencing. If you are not a BRICS member, then it doesn't matter much. It is similar to the European economic union using the Euro for trade between their member countries.

This is not a surprise ... (2)

thephydes (727739) | more than 3 years ago | (#35846140)

and is a sign of the future I think. The $US has been declining for some time - well the underlying economy has - , and the recent GFC did nothing so stem the tide.
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