We should probably be watching the BRICS nations closely
Based on my understanding of macro economics, the 3-D game of geopolitics probably hinges on the sustainability of the U.S.’s ’Magic Printing Press.’
As a freshman at The University of Alabama, I took Econ 101 and 102 and, believe it or not, did quite well in these classes. Alas, I changed majors multiple times and ended up graduating from Troy University with a degree in political science.
Even after I abandoned my formal economics education, the subject continued to interest me and I’ve tried to increase my knowledge via self-education.
With my admittedly-limited economics credentials stipulated, I’ve reached the conclusion macro and micro economic realities probably explain most of the geo-political chess moves occurring behind the proverbial curtain.
More specifically, I believe protecting the reserve status of the U.S. dollar (aka “the petrodollar”) has long been the “most important thing” to America’s real leaders in government and the Deep State.
Another way to express this thought is that the ability to “print” as many dollars as needed makes possible ever-expanding government. Put differently, if America didn’t have access to this Magic Printing Press, America (and the world) would be dramatically different.
Covid showed us the importance of the Printing Press …
I read somewhere that the price tag for the Covid response might be as high as $16 trillion.
As it turns out, the U.S. Treasury didn’t have a “Pandemic Rainy Day Fund” of $16 trillion, which means the Treasury - working with the Fed and the global public debt markets - had to conjure up vast quantities of money to pay these bills (which might be paid off in, say, one thousand years).
But the Magic Printing Press was needed before Covid …
The U.S. printing press doesn’t just cover emergency pandemic expenses, it also funds the Military Industrial Complex and expenses related to multiple wars (or “interventions”), plus mundane expenses like government salaries, pensions and overhead, Medicare, Medicaid, Obamacare, vaccine research and development, 100 welfare and crony subsidy programs … plus jet fuel for Air Force One, the post office and NPR.
In short, funding these budgetary line items required a mind-boggling amount of money yesterday and today. However, this economic figure will be massively higher next year and exponentially higher when my second grade son graduates from high school in 10 years.
As they used to say …
Once upon a time, chain-smoking, whiskey-swilling muckraking journalists started any investigation with the maxim “follow the money.”
Well, I’ve just illustrated where sky-scraper stacks of greenbacks (or, today, computer digits) actually come from … and why so much more of it will be needed in the future.
This prologue gets me to the point of today’s article, which could be stated thusly:
If any nations (who might not be particularly enamored by the way America’s been “leading” the world) wanted to harpoon America’s influence, what they’d probably do (or would have to do) is scuttle Uncle Sam’s Magic Printing Press.
My education in political science and economics has led me to form a couple of key conclusions. Namely …
“Power = Money.” Or, if one prefers:
“Money = Power.” Plus:
“The Magic Printing Press = “An unlimited supply of money” … which = “Unlimited Power.”
Which brings me to the BRICS’ nations …
Earlier today, I read a fascinating and, to me, persuasive analysis by an author who argues that increasing numbers of world governments are, right now, well underway on a project that could supplant America’s long-unchallenged power by, effectively, scuttling America’s Magic Printing Press.
The author, Peter Hanseler of VoiceofRussia.com, says the most important trend of recent years is the growth of the BRICS nations, nations led by people who may be becoming increasingly fed up with the way they believe America’s abused its “exorbitant privilege,” a privilege that allows America to print as much money as it needs and dictate to the rest of the world that they have to trade in U.S. dollars.
The author points out that the traditional BRICS nations (Brazil, Russia, India, China and South Africa) have growing and/or huge populations, possess all the world’s key natural resources … and the number of nations who are becoming a part of the BRICs “alliance” is growing and will probably continue to grow.
Significantly, these nations are increasingly abandoning the dollar as their only trade currency.
Key excerpts from the article:
Note: Emphasis added by me.
“It is of existential importance for the USA that international trade, especially commodity trade, is conducted in US dollars.”
“The US dollar as a global trading currency means that practically all countries have to hold US dollars in reserve in order to be able to settle their trade invoices. This makes the US dollar a reserve currency.”
“… However, the USA has been abusing this privilege for decades. Whenever a country implements something that the US does not like, it is cut off from the US dollar.”
“… as all US dollar transactions go through the US … the consequences for the country concerned are catastrophic, as it is effectively banned from the commodities trade.”
“… French President Giscard d’Estaing rightly described the petrodollar in the 1970s as an ‘exorbitant privilege’, as it leads to the automatic refinancing of the USA.”
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Per the author, America has used its reserve currency privilege to punish nations by freezing dollar-denominated assets. He also also states America may be moving forward with aims to confiscate (steal) any dollars used by nations that aren’t following the policy guidelines favored by America’s rulers.
For example, America sought to punish Russia for its war with Ukraine (and, before that for allegedly “hacking the 2016 presidential election”) by imposing dollar sanctions.
As smarter voices predicted, these sanctions probably backfired as this simply made Russia even more eager to trade in rubles or the currencies of other BRICS’ trading partners. More importantly, this sent the message that, if a nation doesn’t play ball with America, America might simply steal this nation’s dollar-denominated money.
The work-around for this possible threat/sanction is for more nations to increase the amount of economic transactions the U.S. government can’t confiscate or freeze. This, as the author convincingly shows, is already happening.
The author further notes that America’s government is now spending $1 trillion a year in interest payments to service existing debt. (According to the author, these annual debt payments are larger than the entire national debt America had accumulated in the first 200-plus years of its existence.)
By themselves, healthcare outlays might
break the printing press …
It seems to me any former Econ 101 student would realize that outlays for healthcare might, by themselves, be more than the Magic Printing Press can cover.
That is, since Covid and the (definitely-not-safe) “vaccines,” far more people are having to spend far more money on myriad life-altering and ultra-expensive medical treatments. But it’s really not private citizens who are paying most of those bills … it’s the government.
And these expenses don’t include America’s greatest healthcare crisis (and a real epidemic) - the massive increase in obesity, which is now endemic in children and young adults.
The government (and Big Pharma) response to these life-long chronic diseases (notably diabetes) is to get more citizens on more prescription drugs … many, for the rest of their lives.
While many people might not realize this, someone has to pay for these prescriptions, doctors’ visits and hospital admissions which, in a world where real inflation is exploding, are not going to decrease in price.
The dooms day scenario for Uncle Sam is if many more nations and institutional investors quit buying the bonds and T-bills that make possible all these prescriptions.
If the dollar ceases to be the world reserve currency and/or these financing instruments lose their popularity with many more investors, interest rates will sky-rocket which will mean interest on the debt might be … $5 trillion/year.
In geo-politics, military might = real power
If the BRICS nations succeed in killing the dollar as the world’s reserve currency, America would also find it much harder to fund the Military Industrial Complex.
One of the eye-opening graphs in Mr. Hanseler’s article shows how much money all the nations in the world collectively spend on national defense. According to this graph, America’s “share of world military expenditure” is 39 percent!
It’s not the fact America can print a trillion dollars in a couple of weeks that explains our nation’s great power, it’s the fact this money buys the world’s largest military (with the second largest military spender not even close).
That is, America couldn’t pay the light bills at military bases in more than 100 nations if it couldn’t print money as needed.
This might not matter if America never used its military might to “intervene” in other nations or to bully or threaten certain nations, but history (especially recent history) shows that America is not shy about using its military might to “influence” other nations.
(Also, many nations might appreciate the “economic boost” these military bases give their local economies. Plus, every international military base provides an opportunity for corrupt leaders to get their cut of America’s “national defense” spending).
Putin doesn’t like these ever-expanding military bases …
If one accepts Putin’s rationale, Russia invaded Ukraine because it was afraid NATO (led by the U.S.) was getting far too close to Russia’s borders.
If, for example, Russia was leery of NATO and America’s continued military expansion, one geo-political chess move might be to weaken the military capability of this alliance.
Hypothetically, this goal could be achieved by throwing a monkey wrench into the gears of America’s Magic Printing Press.
Expanding the size and influence of the BRICS nations - and convincing more nations that dollar-dependancy is not in their long-term self-interest - might also help achieve this goal, which, if achieved, would probably qualify as a geo-political world-changer.
Conclusion …
My guess is that 98 percent of America citizens aren’t paying attention to trends involving the BRICS nations or the status of the dollar as the reserve currency.
But the world’s real leaders and the people playing cut-throat 3D chess certainly are.
I’m no economics expert, but my Spider Sense tells me that growing numbers of nations are perhaps conspiring to kill America’s Magic Printing Press.
3-D chess is far more complex than one-dimensional chess. So these players must also understand that if America can no longer print infinite amounts of money, not only will America’s economy likely explode (or implode), the world economy might implode with it.
Still, I think some leaders have already concluded they can get along fine - and maybe even come out better - without trading with the dollar.
Speaking for myself, I’m going to keep watching evolving developments of BRICS nations with keen interest.
What happens in these nations might not affect what happens in my life, but these developments probably will influence the micro and macro-economic lives of my children.
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(Since I don’t have access to a Magic Printing Press, I have to depend on paid Substack subscriptions and Ko-Fi donations to pay the bills. As always, all donations are greatly appreciated. I hope everyone has a great weekend!)
The famous Ko-Fi link:
It's never a bad idea to wait an hour after I send out one of my stories and then go click on it from my Substack website. This gives me enough time to fix all the typos that suddenly jump out to me after the stories already been sent. In six minutes, I've already made at least six corrections ... and I'll keep finding more I'm sure.
I have a copy-editor partner, Annie, our sweet little dog. But I think Annie just skims the text and then barks, "Ruff!" (which means, "it's good to go.").
Vast majority have no clue what is truly transpiring. The Covid dollars and the M/I complex manufacturing is keeping the ballon on high! Goal is to not have it crash in 2024!