Geopolitical Research

Will the expected launch of a Gold-backed Currency (new gold standard?) by the BRICS usher in the end of the USD?

Many commentators are making bold predictions about the demise of the USD or the end of the USD hegemony. But many things are open and much will depend on the US retaliation and the response of the BRICS next month.

For the 1st time since the end of WW2 a large number of nations in the non-Western world is uniting behind a new currency project. Many say it is to “unseat“ the USD. This is the popular narrative, but our independent research shows the following:

a) Main objective of the BRICS is De-Risking from the West - the healthy Emerging Markets are worried about the collapse of the West's huge asset bubbles, massive debt and the demise of our over-printed paper currencies. Their economies are overtaking the G7 in size, but all their trade and their savings are nominated in the USD and other G7 currencies. That is a great risk to their economic stability and increasingly national security

b) China's main objective is a Gradual De-Dollarisation Process of their "reserves". Beijing's main concern is "stability". Given the growing risks of the Western financial system, China and other emerging nations see these objective only attainable with a currency outside under their own control.

c) Much of the non-Western world is not seeking actively to destroy the USD, it is rather about the preservation of their stability .. at a time that their economies have become too big to remain bound to the USD and G7 policies.

d) An attack on the USD only if necessary. I have ascertained that while the BRICS need a stable and orderly adjustment process (a gradual increase of the role of their local currencies and the BRICS gold currency in their economies - an somewhat understandable need), they are preparing to go to monetary war if necessary. They are reserving a "killer option" should open hostilities be unavoidable or forced upon them.

Because of expected retaliation, BRICS have moved to a multi-pronged strategy that includes the use of their existing currencies and decentralised crypto currencies (Bitcoin) in order to diffuse the Western retaliations. Ambiguity and back-ups were introduced after President Biden hit them hard last year with preemptive measures.

In fact with much of their debt issued in USD and much of their assets and savings in USD the BRICS it is not in the best interest of the BRICS to see a rapid decline in the USD value.

d) A matter of trust: The non-Western world is not primarily seeking a confrontation with Washington. They have rather lost trust in the West's handling of their currencies (they are printing ever more money to finance their growing deficits) and need an alternative.

In a nutshell: Contrary to the spectacular claims so many experts are making about the desired imminent collapse of the USD, I expect a much more gradual process. It is in everybody's interest. Furthermore, although China is rising, the BRICS are no where near capable to replace the USD nor leadership the USA provides. It is easy to criticise Washington and indeed much wrongdoing or abuse took place, but the USA is still the most benevolent superpower humanity has had so far. Any other super power would have done the same as Washington, probably worse.

Independent Global Geopolitical Macroeconomic Research - Made in Switzerland.

Economist Christian Takushi explains why world leaders are paying close attention to Chile at the moment.

CS has passed the point of no return. A likely controlled failure offers policy makers an opportunity to engineer a sector consolidation and a contained credit squeeze that could ease inflation pressures. That would allow for an earlier pivot by the FED and ECB.

Christian Takushi talks about inflation in 2023 and the outlook for this decade 

Even if inflation would normalise down to 4% by 2025 the cumulative impact of inflation during 2022-2025 could have destroyed more than 20% of the purchasing power of peoples' savings. It is a massive wealth destruction, but also a wealth transfer that benefits indebted governments and households.   

Independent Balanced Global Geopolitical Macroeconomic Research by Macro Economist Christian Takushi - 12 Jan 2023 - Switzerland  

If you want to have instant access to Takushi's independent research you can write to [email protected]  

Disclaimer:  No part of this opinion should be construed as investment advice. This opinion is based on the current state of our analysis, which builds on several working hypotheses. As more data is available our working hypotheses are continually re-tested and if necessary we will adjust our analysis.  

This Channel has been designed to provide additional complimentary information to our newsletter subscribers. 

By October 2022 Berlin & Paris had ascertained that Western Europe really has no friends at all. 

Five things of strategic importance that consensus is overlooking and media barely reporting about. 

Disclaimer:  No part of this opinion should be construed as investment advice. This opinion is based on the current state of our analysis, which builds on several working hypotheses, available information and our own analysis. As more data is available our working hypotheses are continually re-tested and if necessary we will adjust our analysis. We do not work with conspiracy theories nor informers/insiders.  

Independent Balanced Global Geopolitical Macroeconomic Research by Macro Economist Christian Takushi - Dec 2022 in Switzerland

If the FED sand ECB were really serious about fighting inflation, they would be holding key interest rates at 5 to 7% (USA) or 2 to 4% (EU) respectively. They don’t want to do it, because they are so indebted, they need as much inflation and zero interest rates as possible. They talk instead about eventually raising interest rates by some mini steps later this or next year. Nevertheless policy markets have several options people should not underestimate - one of them is to shock markets with a massive hike, in order to stimulate soon after. The problem is that this would come at the expense of risk assets.

Any late policy reaction would result in a shock to markets and especially developing nations as they would be facing a strong USD and a liquidity/funding squeeze