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5-minute Read

This week, five additional nations have confirmed their intent to join the BRICS alliance, a grouping that includes Brazil, Russia, India, China, and South Africa. Originally formed to bolster economic growth and influence, BRICS has now expanded its ranks to include Saudi Arabia, the UAE, Ethiopia, Iran, and Egypt, with an additional 34 countries expressing interest in joining the club. 

The BRICS alliance, established in 2009, has come a long way since its inception, posing a potential disruptor to global economic competition and control. Initially consisting of Brazil, Russia, India, and China, South Africa joined the group a year later, giving rise to the acronym BRICS. Now, 25 years later, BRICS is positioned to challenge established norms in global trade settlement, the status of the world reserve currency, and the distribution of global power. 

The relevance of BRICS has never been more pronounced, given the intricate dynamics of fiat currencies, global trade, and the escalating tensions between eastern and western nations. Traditionally, the global oil trade has been priced and settled in US dollars, creating a demand for the American currency known as the ‘Petrodollar’ status, unchallenged for half a century. BRICS aims to disrupt this status quo, starting with challenging the supremacy of the US dollar in oil and international trade settlement. The BRICS nations are set to convene in Russia in October, continuing to strategize ways for emerging nations to enhance their influence in global affairs. 

The relevance of BRICS has never been more pronounced, given the intricate dynamics of fiat currencies, global trade, and the escalating tensions between eastern and western nations. Traditionally, the global oil trade has been priced and settled in US dollars, creating a demand for the American currency known as the ‘Petrodollar’ status, unchallenged for half a century. BRICS aims to disrupt this status quo, starting with challenging the supremacy of the US dollar in oil and international trade settlement. The BRICS nations are set to convene in Russia in October, continuing to strategize ways for emerging nations to enhance their influence in global affairs. 

In a noteworthy development in August 2023, the Indian government announced the purchase of one million barrels of UAE oil using the local rupee currency instead of the US dollar. The transaction, facilitated by the Indian Oil Corp., the nation’s flagship oil company, took place with the Abu Dhabi National Oil Company. With the UAE now part of BRICS, the trend of settling oil trade without resorting to US dollars is likely to persist, posing a challenge to the global demand for the American currency. 

In a noteworthy development in August 2023, the Indian government announced the purchase of one million barrels of UAE oil using the local rupee currency instead of the US dollar. The transaction, facilitated by the Indian Oil Corp., the nation’s flagship oil company, took place with the Abu Dhabi National Oil Company. With the UAE now part of BRICS, the trend of settling oil trade without resorting to US dollars is likely to persist, posing a challenge to the global demand for the American currency. 

If BRICS nations persist in moving away from the use of US dollars for international trade settlements, opting instead for local currencies and digital central bank currencies, the United States could face a potential influx of US dollars returning from around the world. This scenario, should it unfold, could trigger inflation at levels that may significantly impact the daily lives of ordinary Americans.

In recent years, the Federal Reserve has engaged in substantial money printing, with over $3 trillion printed in 2020 alone during the pandemic. The combination of continuous monetary expansion and the potential abandonment of the US dollar by nations globally sets the stage for a scenario where the American currency may experience hyperinflation. Such a development could lead to increased prices for goods and services, surpassing the inflation rates witnessed in previous decades, profoundly affecting the lives of everyday Americans. 

If BRICS nations persist in moving away from the use of US dollars for international trade settlements, opting instead for local currencies and digital central bank currencies, the United States could face a potential influx of US dollars returning from around the world. This scenario, should it unfold, could trigger inflation at levels that may significantly impact the daily lives of ordinary Americans.

In recent years, the Federal Reserve has engaged in substantial money printing, with over $3 trillion printed in 2020 alone during the pandemic. The combination of continuous monetary expansion and the potential abandonment of the US dollar by nations globally sets the stage for a scenario where the American currency may experience hyperinflation. Such a development could lead to increased prices for goods and services, surpassing the inflation rates witnessed in previous decades, profoundly affecting the lives of everyday Americans. 

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Views and opinions expressed are those of the authors they are meant for general informational purposes only, and should not be construed or interpreted as a recommendation or solicitation. Reagan Gold Group does not provide investment tax, legal financial planning, estate, planning, or any other personal finance advice. Reagan Gold Group holds no liability for the accuracy, or timeliness of the information provided.

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