Investment Analyst Warns Successful BRICS Currency Could Hurt US Living Standards – Jon Wolfenbarger, a seasoned investment analyst and the CEO of Bull And Bear Profits, has expressed concerns about the potential impact of a successful BRICS currency on the United States.
In a recent blog post on the Mises Institute’s website, he warned that such a currency could lead to a decline in U.S. living standards and a reduction in the country’s governmental power, similar to what happened to the UK after World War II. Wolfenbarger emphasized that due to the ongoing Russia-Ukraine conflict and China’s economic growth, the BRICS are accelerating their plans to reduce U.S. influence.
With over 30 years of experience in the investment industry, Wolfenbarger has worked as a securities analyst at Allianz Global Investors and as an investment banker at Merrill Lynch and JPMorgan for more than 22 years. Commenting on de-dollarization efforts by the BRICS nations (Brazil, Russia, India, China, and South Africa), he said: “Due to the Russia-Ukraine war and China’s continued economic growth, the BRICS are accelerating plans to take power from the U.S.”
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He discussed a range of initiatives undertaken by the BRICS, such as the establishment of the New Development Bank to provide infrastructure loans, the creation of a Contingent Reserve Arrangement to shield against foreign exchange issues, and the introduction of an alternative payment system to SWIFT.
Additionally, Wolfenbarger provided details on the BRICS’ efforts to develop a reserve asset that is tied to a basket of the currencies of its member countries, with the aim of challenging the International Monetary Fund’s special drawing rights (SDR).
Commenting on whether the U.S. dollar will be dethroned, the investment analyst detailed: “The BRICS countries are unlikely to seriously challenge the king dollar if their only tool is just another fiat currency they can create out of thin air.” He stressed: “The BRICS will have a much better chance if they create a hard currency backed by gold or other commodities like oil.”
“The U.S. has the largest and safest government bond market, no capital controls, and a reputation for enforcing the rule of law. By contrast, the BRICS countries are hardly known for respecting laws or having strong currencies,” Wolfenbarger opined.
“Of course, their competition with the dollar would ultimately end in failure, as Bretton Woods did, if the BRICS countries continue to create money out of thin air to finance their warfare and welfare spending.” Regarding the economic and political impact of a BRICS currency on the U.S. and the USD, the former JPMorgan investment banker noted: “If the BRICS are successful and the U.S. does not change its policies to focus on a stronger dollar, less spending, and peace instead of war, it is possible the dollar will slowly lose its ‘reserve currency’ status.”
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“This would hurt U.S. living standards and lead to less power for the U.S. government, similar to the weakening of the UK after World War II.” “All empires in history have failed, and the U.S. will not likely be an exception — if the BRICS can create a successful hard currency to compete with the dollar,” he opined.
It is widely believed, even by a former White House economist, that the establishment of a prosperous BRICS currency could undermine the hegemony of the US dollar. With the increasing global influence of the BRICS economic alliance, 19 nations have either applied or shown interest in joining.