The elimination of the dollar and the move to a gold backed reserve currency was the key focus at the BRIC conference that was held on April 14th in China.
The key to understanding the summit may be found in the joint statement, which refers to “the inadequacies and deficiencies of the existing international monetary and financial system….” Without question, this statement is about eliminating the U.S. dollar as the global reserve currency. Therefore, the BRIC countries are asking for “the reform and improvement of the international monetary system, with a broad-based international reserve currency system providing stability and certainty.” – Financial Sense
Besides the regular BRIC nations (Brazil, Russia, India, and China), South Africa was also invited to the conference to discuss current problems with international monetary and financial systems. In fact, these nations have been working together since the credit crisis of 2008 to find a replacement for the dollar as the world’s reserve currency, and have already instituted bi-lateral trade in certain commodities using currencies other than the dollar for payment.
The dollar has been the primary reserve currency for world trade since its agreements tied to oil (petro-dollars) took shape in 1945, and reinforced again in the 1970’s after removing itself from the gold standard. Since that time, the US debt has escalated, and the money supply has skyrocketed. Unfortunately, the monetary policies of the US government and Federal Reserve have created many of the problems globally because they are considered the reserve currency, and the lifeblood of all nations is oil.
The BRIC conference that took place on Thursday is not the first to address the removal of the dollar as the world’s reserve currency, but the nations involved may be the strongest voice to implement the changing of the guard. Europe is still in crisis with several EU nations experiencing financial collapse, and the Euro doesn’t have the strength at this time to take the position away from the US. This is why oil nations, along with the relatively strong BRIC countries, are putting their backing to a gold based currency which will help curb much of the inflation that the dollar is forcing onto the world.
Gold, and gold backed currencies have historically been the most sound money in trade and transactions. Every fiat currency in history has eventually devalued into worthlessness, and there are several examples of this in the 20th century alone.
Since Brazil, Russia, India, and China have some of the strongest economies taking place after the global credit crisis of 2008, the chances of them moving away permanently from the dollar in the near future are more likely than not. Especially since all of these countries have been buying massive amounts of gold in reserve over the past few years, and have the means to create and back a new sound global currency.
Elimination of the dollar in the global economy is only a matter of time, and the April 14th BRIC conference that took place to discuss its end, and the creation of a new gold backed currency, should be a warning to Americans to prepare soon for a change to our financial system.