What are BRIC Countries you may ask? Just take the first letter from each of the four countries which, in economic terms, are growing and developing at an accelerated rate…Brazil, Russia, India, and China…and combine them. The BRIC countries are holding a summit meeting in the Russian city of Yekaterinburg to discuss the status of the U.S. dollar as the dominant world currency. China and Russia have already voiced a desire to see it replaced. Since these four countries have major acquisitions of U.S. dollars, the shock factor of their words can be felt in the financial markets and in Congress. "Although China's call for a new reserve currency is premature, it is legitimate," says Shujie Yao, a professor of economics at the School of Contemporary Chinese Studies (University of Nottingham). Brazil has, to a lesser degree, expressed concern and even though India remains less vocal…they are attending the summit. Meanwhile, Russian President Medvedev wanted discussion on the proposal of a “supranational currency”, a world currency in which the vast majority of international transactions take place. These sentiments have recently led to a decline in the dollar against other major currencies. Bottom line, the direction the United States is taking, to boost its financial recovery, is hurting the value of the dollar. Now, let’s couple it with a looming health care plan which is destined to cost more than America can currently (if ever) afford. Printing more money isn’t the answer! China and Russia are already diversifying their currency reserves with those of other countries. The only thing we have going for us…thus far…is that a move away from the dollar would drastically hurt the value of their reserves. Treasury Secretary Timothy Geithner keeps reassuring China that the US will address the rising budget deficits when the economy’s recovery is “in place” and then the Administration will backpedal on spending (literally) hundreds of billions stimulating the economy and trying to salvage a wobbly financial system. Still, China (and Russia) continue to buy gold bullion in large quantities. Throughout history, gold has been the only currency one could ultimately count on…It is the “SUPRANATIONAL CURRENCY”!
Note: If America doesn’t pace itself “other nations” will provide us with a pacemaker.
May God bless America…and may America deserve it!
Zanne Booker 7-28-09