The BRICS currency was created for geopolitical reasons when the neocons transformed the SWIFT system into an economic weapon and even threatened China with the same fate if they supported Russia. Once this occurred, the neocons turned the entire world’s monetary system into a weapon of war. This is why we have BRICS; it had nothing to do with killing the dollar or backing their currency with gold.
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Many hoped for an official announcement regarding a gold-backed currency, which failed to materialize. A gold-backed currency would be massively deflationary. The money supply could not expand with the population or in times of need without new discoveries. Just because a currency is backed by gold does not eliminate inflation or deflation. The gold discoveries of the 19th century in California, Alaska, and Australia caused significant economic upheaval, followed by wars. The fact that gold was the currency did not prevent inflation.
Spain defaulted seven times. The gold and silver they brought back from the New World led to massive inflation in Europe. Those who preach that a gold standard is the solution lack an understanding of history. They blame “fiat currency,” as if eliminating it will solve all problems. There were booms and busts throughout ancient times long before paper money existed. All currency is fiat, even when it is gold. I have shown that Southern India routinely imitated Roman gold coins because they held a premium over gold—this is fiat. Northern India and the Kushan Empire issued their own coinage primarily because they traded more with China. Southern India used imitation Roman gold coins for about 250 years, confirming that the Roman coinage was worth more than its metal content.
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» All currency is fiat, even when it is gold. Just because a currency is
backed by gold does not eliminate inflation or deflation. «
Many hoped for an official announcement regarding a gold-backed currency, which failed to materialize. A gold-backed currency would be massively deflationary. The money supply could not expand with the population or in times of need without new discoveries. Just because a currency is backed by gold does not eliminate inflation or deflation. The gold discoveries of the 19th century in California, Alaska, and Australia caused significant economic upheaval, followed by wars. The fact that gold was the currency did not prevent inflation.
Spain defaulted seven times. The gold and silver they brought back from the New World led to massive inflation in Europe. Those who preach that a gold standard is the solution lack an understanding of history. They blame “fiat currency,” as if eliminating it will solve all problems. There were booms and busts throughout ancient times long before paper money existed. All currency is fiat, even when it is gold. I have shown that Southern India routinely imitated Roman gold coins because they held a premium over gold—this is fiat. Northern India and the Kushan Empire issued their own coinage primarily because they traded more with China. Southern India used imitation Roman gold coins for about 250 years, confirming that the Roman coinage was worth more than its metal content.
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» The purchasing power of gold fluctuated at all times. The value of a currency is determined
by the productive capacity of its people, not by its gold reserves. «
Similar claims were made about the Euro, which also did not work out well. Why? The value of a currency is determined by the productive capacity of its people, not by its gold reserves. Japan and Germany lost the war yet rose to the top of the economic hierarchy because their populations were productive. The United States has the largest consumer-based economy, which means that everyone needs to sell their products here, requiring transactions in dollars. The US is also strong militarily, which further supports the currency's foundation.
It is time to abandon these outdated economic theories, remnants from the 18th and 19th centuries. The economy has evolved since then. The neocons are destroying the dollar and undermining the future of the United States. When we lose another one of their endless wars, financial capital will shift from New York to Beijing. Just as war diminished Britain, so will it diminish the dollar and the United States.