Can This Dethrone the US Dollar? What You Need to Know About the New Financial Currency System
Can This Dethrone the US Dollar? What You Need to Know About the New Financial Currency System
On July 15, 2024 By Awake-In-3D
Learn why this new Alternative Financial System is creating a game-changing currency framework focused on gold and oil.
The US Dollar, and the global fiat currency system it maintains, wield immense financial power and control over the world. Few dare to challenge this formidable financial fortress.
That said, the BRICS Alliance is actively building a new, Alternative Financial System right before our eyes.
This innovative system, with its unique focus and sound design, aims to compete with and challenge the 100-year global dominance of the US Dollar and the entire fiat currency system.
The BRICS Alliance is harnessing their collective economic power, emphasizing physical resource-backed currency stability, and reducing dependency on debt. They are aggressively accumulating gold and increasingly settling trades in their local currencies.
This shift redefines the global financial landscape and disrupts the longstanding USD hegemony and the global fiat currency system as a whole.
In This Article
Formidable Strength of the US Dollar-Based System: Analyzes the entrenched power and influence of the USD.
Emergence of the Alternative Global Financial System: Examines the rise of the BRICS alliance and its new financial framework.
Structural Strength and Stability of BRICS: Details the foundational pillars of the BRICS financial system.
Energy as the Financial Backbone: Explores the role of energy resources in the new financial order.
The Formidable Strength of the Current US Dollar-Based Financial System
The US dollar (USD) has long stood as a pillar of global financial power. It is the world’s primary reserve currency, with 80% of global foreign exchange transactions involving the USD.
The dollar’s dominance is supported by several key factors:
Reserve Currency Status: The USD’s role as the primary reserve currency means that central banks around the world hold vast reserves of dollars, underpinning global trade and finance.
Global Financial Systems: The USD dominates global financial systems like SWIFT, Eurodollar markets, and derivative and petrodollar markets. These systems facilitate international trade and investment, reinforcing the dollar’s central role.
Federal Reserve’s Influence: The Federal Reserve, with its exclusive power to print USD, maintains control over global liquidity. This unique position allows the US to manage economic crises and influence global financial markets effectively.
Debt and Print Cycle: The USD’s strength is bolstered by its ability to be printed and lent into existence. This “debt and print” cycle creates a dependency on the dollar for liquidity, entrenching its dominance.
Despite its imperfections, the USD remains today as an insurmountable fortress of financial power and control. Its influence permeates every corner of the global economy, making it difficult to challenge.
Emergence of the Alternative Global Financial System
In a world dominated by the USD, the BRICS alliance is developing an alternative global financial system.
This system, designed to circumvent the limitations and risks of the fiat currency framework, leverages local currencies and gold for trade settlements. The BRICS nations aim to reduce the volatility and dependency associated with fiat currencies, creating a robust financial framework.
Local Currencies and Gold: The BRICS financial system emphasizes trade settlements in local currencies and gold. This reduces the risk of currency fluctuations and dependence on the USD.
Resource-Backed Stability: The BRICS countries are rich in natural resources, particularly energy. By linking their financial system to tangible assets like gold and oil, they provide a more stable and reliable economic foundation.
Reduced Debt Dependency: The alternative system minimizes reliance on debt for liquidity, contrasting with the USD’s “debt and print” cycle. This approach fosters financial discipline and sustainability.
Structural Strength and Stability of BRICS
The strength of the BRICS financial system lies in its emphasis on resource-backed stability and reduced debt dependency. By settling trades in local currencies and gold, the BRICS nations mitigate the risks posed by currency fluctuations and external economic pressures.
This approach fosters financial discipline and long-term sustainability, positioning the BRICS system as a viable competitor to the USD.
Energy as the Financial Backbone
Energy resources, especially oil, play a crucial role in the BRICS financial strategy.
With rising global energy demand, particularly from populous nations like China and India, the preference for settling oil transactions in gold or local currencies is growing. This trend not only undermines the dollar’s dominance in global trade but also enhances the stability and resilience of the BRICS financial system.
Challenges to USD Dominance
Despite the dollar’s entrenched position, several factors indicate that the BRICS alternative global financial system could pose a significant challenge:
Global Distrust in the USD: Actions like the weaponization of the USD against countries like Russia have eroded trust in the dollar as a neutral reserve asset. This distrust fuels the search for alternatives.
Shifts in Trade Practices: An increasing number of countries are conducting trade outside the USD framework. For instance, in 2023, 20% of global oil sales were settled in currencies other than the USD, reflecting a significant shift in trade practices.
Accumulation of Gold: Since the 2008 Global Financial Crisis, many central banks, particularly in BRICS nations, have been accumulating gold, moving away from USD-denominated assets. This trend is bolstered by the Bank of International Settlements’ recent recognition of gold as a tier-one asset.
The Long-Term Vision
The BRICS alliance’s vision extends beyond mere competition with the USD. It aims to create a more balanced and equitable global financial system, reducing the disproportionate influence of any single currency.
By leveraging their collective economic power and resource wealth, the BRICS nations are laying the groundwork for a resilient and self-sufficient financial ecosystem.
The Bottom Line
The US dollar’s long-standing dominance is facing a formidable challenge from the BRICS alliance and its alternative global financial system.
Built on the principles of resource-backed stability, reduced debt dependency, and strategic use of local currencies and gold, the BRICS system represents a significant shift in the global financial landscape.
As the world moves towards a more balanced and equitable financial order, the question remains: will the enduring value of gold and energy resources redefine the future of global finance, potentially at the expense of the USD’s supremacy?
Only time will tell.
Contributing Article: https://vongreyerz.gold/is-the-usd-really-too-big-to-fail
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