Local Currencies To Replace Dollar For 5 Countries' Dealings 519
An anonymous reader writes "Brazil, Russia, India, China and South Africa — the BRICS group of fastest growing economies — signed an agreement to use their own currencies instead of the predominant US dollar in issuing credit or grants to each other. The world does need a new financial architecture, but the BRICS by themselves are unlikely to be able to drive that change."
Bad News for USD (Score:5, Insightful)
US debt - why should the rest of the world pay 4 i (Score:1, Insightful)
The volume of trade between the brics may not be a lot now - but in the next few years it will only go up, and USD will lose its hallowed status. The USD has a residual value because it is a global default currency - and as countries unwind their position, the real value of USD will be apparent (esp. with the huge debt in the US).
So BRICs using local currencies is good. It will isolate them from the stupid US policies, and prevent the brics from bearing the burden of the US debt.
Time Americans realized that you cant just attack some country cos it has oil - and then expect the rest of the world to bear your debt.
Re:Bad News for USD (Score:5, Insightful)
The dollar is kept artificially high in value due to international trade. The current status quo kind of subsidizes the US way of life.
The US has had the ability to influence and bargain what are essentially one way "free trade " agreements. This is all about to come to an end.
The dollar will drop somewhat on Monday and unless something big happens within 10- 15 years the US will eventually become like Germany in 1923.
Not to sound like chicken little but Americans should prepare for the worst, international currency and economic policy is changing with less regard taken for preserving US$ backed wealth than you would think.
Internationally, Ghadaffi was pushing for a gold backed currency (US gold reserves are actually quite small and has had counterfeiting problems) the problem with this is that to keep the same amount of paper money in circulation gold would be valued at almost $20,000 an oz. To counter this we would need to set back $$$ values and circulation to levels seen pre WWII.
Re:Bad News for USD (Score:5, Insightful)
This is VERY bad news to an already weakened dollar.
The dollar has been overvalued for decades, and look at the result: manufacturing jobs have moved overseas, and a vastly negative trade balance. With an over valued currency, It's simply cheaper to import something than to produce it locally.
A high exchange rate doesn't make a currency strong anyway, long term stability and low inflation are more important.
BRICS unable to change it my ass (Score:4, Insightful)
If you really go down to it, there is nothing real left backing the financial and monetary values and papers right now. They are SO inflated and complicated that, one top hedge fund manager said on cnn, even he himself doesnt know the exact composition of the fund he was managing. However this fund too, is taken as a real fiscal value, and is also considered as a backer of monetary value of the country it is being traded in.
water vapor. if you erase that water vapor and overinflated stocks, you will see that nothing remains backing the money of most countries like switzerland, britain, usa.
whereas this BRIC alliance that the summary so gleefully drops down, actually PRODUCES value. they have solid backing for their money. contrary to the others, you can actually buy solid products and services with that money from those countries.
Once there is traction behind these, and the water vapor of the established financial scourge in the west is ignored, everything easily will change.
really. china produces most of the world's products now. so, what ? some investment bank from wall street, is going to threaten china ? oh boy. what will happen if china says 'give me yuan' ?
Re:Bad News for USD (Score:2, Insightful)
With an over valued currency, It's simply cheaper to import something than to produce it locally.
Ignorance is a bliss.
If a worthless currency was such a great thing for economy, Zimbabwe would have ruled the world, Argentina would have been up there with it, USSR would have dominated, Weimar Republic of Germany would have drowned the world in its currency.
NO. It's not the 'overvalued' currency that drives manufacturing jobs overseas. It's WEAK currency coupled with government regulations that destroy incentive to save capital and invest it in local economy, it's all the shit that drives prices up - printing and borrowing and rules that create asset bubbles and minimum wage laws (yes, even that), and all the social obligations that destroy jobs.
If you are from USA, you should freaking know that the biggest growth years for it were in 19 century, beginning of 20th and just after WWII, and it was when the currency was the strongest, not the weakest, it was when the country had money that was APPRECIATING in value, not devaluing.
The Japanese have taken to heart Bernanke's ideas that inflating currency is good for economy - too bad for them, they lost the nineties and it's still not over for them.
Strong currency is preferable when you must buy natural resources to churn out consumer goods. It's preferable if you want stable prices (even prices that are falling, like USA had in 19 century). With falling prices you also have falling wages, which is what production prefers.
With falling prices you have cheaper costs of production, so you can produce more. And it is great for the internal economy and it works for the manufacturer as well, as he gets the benefit of a good exchange rate.
Race to the lowest currency value is a race to the bottom - when nobody can afford anything, because of inflation and worse yet, because in such an environment it is impossible to generate savings and thus capital in order to have any increase in new production capacity.
--
One good thing that will come out of this financial and economic disaster will be a return to a sound currency. It will be backed by gold probably, but most importantly nobody will want to accept fiat that is just being printed at a whim of a politician, who is just buying votes with 'free money'.
hahahahaha ... (Score:4, Insightful)
in case you are not yet aware, china is the BIGGEST market on the planet, and one of its cards in his hand, is this. noone can ignore the market that is china and be set.
Yeah! ... The Almighty buck is no more! (Score:3, Insightful)
As someone sitting in India, I love this move. Sure my paycheck is going to suffer once they start cashing in all the dollars from their reserves and the rupee strengthens. But as a long term measure this is just absolutely required.
The dollar jumped to the forefront of all this because (IMHO) they managed to ensure OPEC only sells using dollars. But if Russia, China, Brazil and (hopefully) Iran starts selling things in other currencies, US loses the critical ability to just print out more dollars to pay off their deficits or the bring down the world economy just to get out of jail free. Which is what China's aiming for, I guess. And Manmohan Singh was one of the most famous finance ministers in India, responsible for the economic liberalization of the 90s, I guess he knows what he's doing as well.
The fall of the dollar is a big deal for the developing world.
Re:Bad News for USD (Score:5, Insightful)
Call on line 1. Something about an excluded middle.
Re:BRICS unable to change it my ass (Score:2, Insightful)
In any discussion of revamping the reserve currency, there's only one question that you need to ask:
Is the entity behind the currency willing to do what it takes to preserve the financial system?
Money talks, and bullshit walks. Do you think China is going to send billions of Yuan to Europe during a crisis? Fuck no. Their currency doesn't even float because their government is too chickenshit to expose their currency to the real market.
Russia, Brazil, South Africa, India, China - 4 out of 5 of those countries don't have functioning property rights regimes. I'm assuming South Africa does, but who cares about them - their biggest contributor to the world economy is a diamond monopoly that artificially inflates diamond prices.
What about the Euro? Anyone? Anyone?
These sort of articles are pathetic. Being n-1 has some substantial advantages, but it has substantial disadvantages as well. The choice of a reserve currency is a political as well as a financial decision. A bunch of countries getting together to denominate their loans in their respective local currencies isn't a new regime. It's not even a common market. It's a bunch of bilateral trade agreements. Come back when they start talking about a uniform way of handling disputes and enforcing rulings.
Re:Bad News for USD (Score:5, Insightful)
Re:Bad News for USD (Score:4, Insightful)
Yes, deflation is the best thing that happens to economy. You have never observed deflation - which is literally contraction of monetary supply.
Money must be valuable, otherwise it drives investment capital out and with that go the jobs. Yes, deflation is the best thing for economy from point of view of consumers as well - they get the benefit of saying: today I bought some bread. It was CHEAPER than a year ago.
Deflation is only the enemy of the state officials who rely on inflation to wipe out their ever increasing debts, because they can't stop consuming and they like to give free money to corporations and to voters for obvious reasons.
Welcome to the economics.
Re:Yeah! ... The Almighty buck is no more! (Score:5, Insightful)
Your opinion is wrong: OPEC sells in dollars because that is the world's reserve currency. America has retained it's dominance this long because everything is denominated in dollars at some level. It doesn't seem to be just your misunderstanding, the second indiatimes link makes the same mistake:
Reserve currencies are created exactly by fiat: this is how the dollar was chosen at Bretton Woods. Everything else is backwards: the dollar is the most traded, circulated and accepted currency in the world precisely because it is the international reserve.
This move by BRICs does look like the first step towards expanding special drawing rights and replacing the dollar with a weighted basket of currencies.
Re:Bad News for USD (Score:3, Insightful)
Deflation is generally regarded by economists as an econonic disaster (which you would know if you actually studied economics).
- Keynesians to economics is what astrologists are to Astronomy, so shut up about 'economists' who are on the government/system payroll.
If you want to see a real economist, look no further than my sig.
Why buy today, when you can buy something cheaper tomorrow? or even cheaper the day after that?
- yeah, because this is such a terrible thing that a TV or a computer that you are buying today will be worth half of the price a year from now.
But that is EXACTLY what happens, yet people buy things anyway, because you only have ONE LIFE, you do not wait to buy food, clothing, energy, rent and consumer goods for the next life, because it might be cheaper that time.
Modern day Japan is a case study in the stagnation that arises from slowly falling prices
- WTF? Japan SHOULD have deflation, instead it prints so many yen, that they counterbalance the effect of the necessarily falling prices by ever increasing monetary supply.
Japanese government, just like any other government on this planet right now is in the same Keynesian trap. Too bad for them.
no one wants to spend because everything is cheaper tomorrow
- this is nonsense. People are buying less only because they have less purchasing power.
Japanese would be buying PLENTY if they didn't collectively decide to subsidize the US consumer by printing its own currency to match the US dollar.
-
This place (/.) is filled with economic ignorance, it's discouraging.
Re:Bad News for USD (Score:5, Insightful)
The less the rest of the world uses the US dollar, the worse it becomes for the USA. This is actually a serious issue for the USA.
Analogy: in Zimbabwe when Mugabe printed lots of Zimbabwe dollars, he was basically taxing everyone who held Zimbabwe dollars. He transferred wealth from them to him and his cronies (who I assume got some of it). The rest of the world mostly didn't care or laughed because they didn't use Zimbabwe dollars.
The rest of the world however is living in USA's "Zimbabwe" because petroleum, grain, CPUs, country-sized loans and lots of other stuff are all in US dollars. Many countries hold billions or trillions in US dollars to trade stuff with each other.
So in the past the US could create money at will and thus "tax" the rest of the world ( everyone who holds net positive amounts of US dollars including net creditors[1]). They could spend the created money on big projects and pay (or owe) the rest of the world in US dollars for oil, food, toys etc. As long as they didn't over do it, nobody seemed to notice or care.
Recently the US created trillions of US dollars (google for Federal Reserve trillions) but rather than the money going into making most of the USA richer, those trillions went to bail-out cronies who lost/siphoned/wasted trillions in the first place.
The rest of the world is probably starting to notice that created trillions whether directly or indirectly, hence they are switching from the US dollar. They cannot switch too fast because if they start a panic, their billions or more in US dollars could become worth even less.
[1] Take China as an example. The USA owes China trillions. Foolish people think that means the USA is screwed. But imagine if Hasbro owed their suppliers millions in Monopoly money. Who really is screwed here? Creating US dollars in computers is a lot cheaper than printing Monopoly money ;).
The USA is only screwed if China says, you can't owe us in US dollars any more. It has to be paid in Euro or RMB.
So this news is certainly bad for the USA.
Re:Yeah! ... The Almighty buck is no more! (Score:2, Insightful)
As someone who seems to like what was done, for a reason which makes no sense, you should really go read the article again.
It doesn't change trade.
It doesn't change anything when they're NOT dealing with BRICS countries.
It doesn't change the banks liabilities side.
It only restricts how they can make loans (banks assets side) to other BRICS countries.
That's it. It's the most toothless "reform" ever. It's so toothless, it doesn't actually do ANYTHING, EXCEPT expose them to more interest/exchange rate risk when dealing with other BRICS countries.
LOL. So before you go celebrating, you should first read what they actually did, and then study what this actually means.
You essentially just celebrated the marginal weakening of your banking system, as they can now, no longer, ensure that their liabilities and assets are matched, in any fashion. However, I say marginal, because it's likely that NONE of their liabilities are held in BRICS foreign denominated loans. So... at best, nothing has changed. At worst, they just exposed you to more risk.
So... Enjoy your now more convoluted economy! K TNX BAI!
Re:Bad News for USD (Score:5, Insightful)
I have studied it, albeit years ago.
Two reasons to do this: first, they retain more control over monetary and fiscal policy by not using another commodity, be it gold or USD, particularly if the value of the commodity (USD) doesn't appear that it will be as stable in the future as it has been. If they really believed in this advantage or the weakness of the USD, they would have gone in more than what they have. Although perhaps it is testing the waters.
The second, probably bigger issue, is pride. This group of five economicallly small nations could stand up to the big bully on the global scene.
Oh that is easy (Score:4, Insightful)
Trade to be done in non-us dollars. That will hurt the US very very badly.
The oldest man just died recently, at 114 years of age. This means that he was born before 1900. When he was born and for a long time in his life, the British still had an empire. You wanna bet they didn't trade or loan money in USD? Who would use money from some backwards place filled with barbarous people with barely any history?
And then, the world changed. The US rose up to be the new super power. Pact Britannica, replaced by Pact USA. Not british warschips but American carriers patrolled the oceans, protecting trade... as long as it followed their rule. It is not without coincidence that oil is traded in dollars and some dare suggest that America's wrat was raised when certain oil producing countries dared consider trading in Euro's instead of dollars. Look it up and see just how many seconds it took for the US to declare the leaders in power a danger to western civilization.
All true? Partly. It is not like Saddam did not do plenty else to cause upset. Maybe it was just the straw that broke the camels back or one of the many straws already on the back. Who knows.
What is important here is that this old man saw the world change, saw certainties wiped away AND then replaced by new certainties. Many above post that US dollars are just the way things are. Yes, they are. For as long as they have been alive at least. But there are those who knew different realities in their youth, realities that seemed just as sure and to be able to last forever. Go ahead, travel back to the 1897 and declare the british empire will crumble in London. Don't worry if your timemachine can't travel forwards in time, I don't think you are going to need a return trip.
The BRICS countries are HUGE together and have tasted the downside of US dominance. Together they control more then half the world population. More resources then anyone else, more production then anyone else, more market then anyone else. And they realize this and are stirring. Should the US be worried? About as worried as the brits pre-WW1 should have been before the pound. Once the symbol of stability, now toilet paper.
And the brits didn't learn, they still cling to their ideas of empire and that the pound will beat everything else. That is why they didn't join the Euro and still beat themselves on the chest about it despite mass unemployment and mass debt that is tearing their society apart from the inside.
Is trade in another currency then dollars going to hurt the US? Yes and no. Yes because a lot of the value of the dollar hangs on the fact that it is used by everyone for trade. If this changes, a LOT of dollars will appear on the market because the need to have a huge pile in reserve to buy stuff (like oil) will disappear. Simply put, Holland needs a pile of dollars now if it wants to buy oil and a healthy reserve for emergency purchases whatever they might be. If oil trade changes to Euro's, then it doesn't need a pile of dollars anymore and even its reserves can go down since it already holds Euro's in reserve. That will lower the perceived value of dollars and might bring it down to the real value.
If the perceived value of the dollar now is equal to the real value, then the US won't be hurt. Nobody really knows but many doubt it is. On the other hand, IF the US "collapses" it could stop being the world police man, go back on itself and save a fortune on its military budget. If the dollar is worth less, then importing makes far less sense, US might start producing on its own shores again.
US bankers and the superrich won't like it. But the people of the US might be better off.
The game is coming to an end (Score:4, Insightful)
You see, in a normal world if I printed up some paper and tried to use it to buy goods and services from you, nobody would take it. But if you tax people in that paper, and you take measures that people owe you debt denominated in that paper, and you start out with a commodity (like gold) and switch it out for certificates of promise, and then paper later on. Then you can force something that's worthless to have value. (Of course, none of this stuff can be done without the force of law to pounce the crap out of people)
In a way, this is how all fiat money works. But since the US was the world reserve currency, we had the additional ability to print money more recklessly than in other places. That is, and get away with it without causing the US to become a banana republic. I think a lot of other countries are getting fed up with that (if not jealous), which is why the game is coming to an end.
Pile of bullshit. (Score:5, Insightful)
Brazil: Only major BRICS trading partner is China. Is major trading partner with US, Japan, Eurozone.
Russia: Only major BRICS trading partner is China. Is major trading partner with US, Eurozone.
India: Only major BRICS trading partner is China. Is major trading partner with US, Eurozone.
China: No BRICS states among its major trading partners. Is major trading partner with US, Japan, Eurozone.
South Africa: Only major BRICS trading partner is China. Is major trading partner with US, Japan, Eurozone.
So, the only BRICS that's an important trading partner from the perspective of any of the other BRICS is China, and none of the other BRICS are important trading partners from the Chinese perspective. That means the only BRICS currency of any real importance in inter-BRICS economic activity is the Chinese renminbi.
And what are the major characteristics of the renminbi? It neither freely floats nor is freely convertible, which means it's unusable as a reserve currency. Further, since the major components of its currency basket are the dollar, euro, and yen, any general move to the renminbi from those currencies would require China to buy them to maintain the "managed float".
Oh, and the agreement is only about credit and grants, not use in trade, which makes it particularly pointless. None of these countries are major investors in each other, or likely to be anytime soon. Is the Chinese government going to stop building plants in China to start building them in India? Really?
Re:Bad News for USD (Score:3, Insightful)
Re:Bad News for USD (Score:5, Insightful)
Try this... (Score:5, Insightful)
India and China alone are over ONE THIRD of humanity.
Now, when that one third of humanity gives loans to itself (C-I, I-C) it is no longer dependent on the current or the future state of US economy, nor does it have a reason to care about possible changes it may create there.
Where will this become apparent? Fungible assets that they spend more than anyone else - like food and fuel.
They take out a loan from each other to import goods, pay goods in dollars because they have to, which influences the dollar value in a positive sense (it goes up or it doesn't go down, but since everyone else is trading in dollars it is usually invisible) - but now, the price of their loans does not increase with the amount of grain or oil they import.
As a bonus, both economies being outsourcing centers for the US economy, the positive influence their importing makes on the dollar now makes the dollars they are paid in more valuable - while their interest rates and other costs of loan don't go up along with the value of the dollar.
Bonus points if the exporter country is the lender at the same time. Like say... Russia for grain/oil/coal.
A smaller economy/country would probably not have that much of a positive effect, but we ARE talking India and China here. And Russia.
And 2.5 billion people can eat a lot of food and burn a lot of fuel.
Re:Try this... (Score:4, Insightful)
Ups! Should have added "regarding that particular action". No... wait... I DID add that.
when that one third of humanity gives loans to itself
And you should read a bit more carefully... Where exactly did I say "US has no affect"?
Granted... might be a bit hard to read the type on Slashdot while on horseback, but still...
Who said anything about "banks"? We are talking central financial institution of one country issuing a loan or grant to another country. At best it is A bank, or as the article puts it "our designated banks".
We're not talking commercial banking here - these are governments handing out loans to each other through the banks that are effectively extensions of their respective treasuries.
But that is besides the point.
The point is, they can give out a loan/grant in local not_directly_dependent_on_the_dollar currency to each other (let's call it loan A), which they can use to cover their loan from their local bank(s)/financial_authorityTM to get the dollars to buy goods they need. Call that the loan B.
That way, even though their loan B doesn't cover them from exchange rate risks directly, the loan B itself is covered by the loan A which does all the risk covering.
They do this reciprocally and they are both covered.
The article even states "this will not affect trade". This policy regards only loans made by banks, to entities in a BRICS country.
One, no it does not state that second part. It states "an agreement...in issuing credit or grants to each other."
You seem to be thinking that all trading EVER is done only between companies - and it is not. Governments CAN trade too.
Particularly in things like food and fuel which they are obligated to keep national reserves of.
Two, try thinking about it rationally. Would a cheap loan of great quantities of money to a country have an effect on the trade that country does? Hell yeah it would! They just found a huge pile of money. They're not going to use it as toilet paper. They're going to spend it. How do you do that? Ding! You buy stuff!
What would the absence of directly visible effect in such a case mean? Well, that might mean that there really is no effect on the trade cause they are trading with fairies OR that the effect is being masked somewhere in the chain.
Where would that masking take place? In the part where they would otherwise influence the value of the dollar in a positive manner, which would in turn influence their budgets in negative manner through increased costs of the loan.
They are practically saying it out loud - only it is politi-talk.
The rest of your response is babbling nonsense, and from what I can tell its still about trade, and is mostly addressed by the above. Are you sure you studied this at university?
Don't be silly! Who studies common sense and reading between the lines in university?
I mean, clearly, you didn't. Right?
Or you would pick up on the fact that I am not waving the banner of my extensive bachel [wikipedia.org]
Re:Bad News for USD (Score:5, Insightful)
, not space flight (rocked the moon)
Err... how long ago was that? And looking around, we're going to not have any form of space program pretty soon. We're down to leasing use of Russian capsules to actually get people in space now. Hell, we aren't even able to replicate the aging technology that got us to the Moon in the first place. As a space nerd, these are very depressing times.
May I reiterate? We need Russian technology and approval to get a human in space! Sounds like we're winning, no?
We won the space battle, but completely lost the space war.
Thank god too, because who wants the responsibility of helping the whole goddamned world.
Vast swaths of the world (I'm thinking South America especially) would be very happy if the U.S. never "helped" it. Actually many of the problems we're today "fixing" were caused by us in the first place. U.S. foreign policy is very much damage control over past U.S. foreign policy.
I'm an American, and I'm not particularly anti-American, I just don't think that we're really the best at anything anymore. I find "exceptionalism" to be a bit odd, what are we really exceptional at? Metrics that matter? Education, not too exceptional. Health, not really that much better off than the rest of the "first world". Standard of living, we're so-so. Technology, falling all the time. Crime, I suppose we're exceptional in a bad way there. Etc... All exceptionalism means is hubris and the lack of ability to learn from more successful countries.
America should STRIVE to be better, and not just sit around claiming it is, empirically we aren't.
But then again I've always been suspicious of patriotism. How can we be "#1" when most of the world also claims that the land and people within their fictional borders are also "#1". Most patriotism boils down to the simple tautology "America is the best because we do everything better. We do everything better because America is the best!".
I like my country. Its terribly flawed, and growing more flawed every day. I'm deeply ashamed of some of our actions, and embarrassed for some of our people. Our government isn't something to really be proud of. Our respect and empathy for the average American (i.e. anyone not in our club) is deplorable and depressing. Our public debate is less mature than that which can be heard in a 3rd grade playground. Our institutions and infrastructure is decaying, and now much worse than other first world countries. Our government looks out for the rich at the expense of the other 90% of the population. We're barely literate. We're morbidly obese. We commit war-time atrocities and torture people.
I like my country and would like it to be better. We can live up to our ideals. But if we just sit around patting each other on the back for the accidental features of our birth, we're really not going to get anywhere, and will probably continue down of downward spiral.
Liking something is also admitting its faults, and striving to make it better. Blind pride is stupidity and generally only leads to decline.
That said, I will always hold my friends and family above any grand concept of "America". I more view myself as a citizen of the desert southwest than an American, really. Proximity breads importance, distance mere abstractness. What does "America" really even mean? We don't share a universal ideal, a universal value system, a universal culture. We somewhat share a language, but that's rapidly changing, and we will be fully bilingual by the time I die.
Re:Bad News for USD (Score:4, Insightful)
I definitely agree that the US should not spend so much on the military.
But I'll just share an anecdote on a little game we played called Guns and Butter in history class back when I was in high school. Students were grouped up into teams and the teams were assigned resource profiles which were simple, but broadly analogous to various countries of the world, middling economies with no oil, high economies with little/no oil, middling economies with a some oil, low economies with lots of oil.
During each round, each team could allocate their resources to quality of living, improving their economy, or building a military. They could also negotiate with other countries and trade resources in whatever bargain they could strike.
There were no goals assigned, each country gets to decide for themselves what they wanted to do. My team was assigned the US. The highest amount of resources, and highest amount of military to start.
We quickly decided internally that our goal was to develop the most prosperity. We bought oil as needed, but mainly poured all resources into our economy on every turn, and even traded a little of our military resource away for some oil to increase our prosperity even further(prosperity is increased through economic resource, and some oil, and will in turn increase economic output slightly in future turns). Of course, we kept some of the military resources we started with, which should be more than enough since the rest of the world had virtually no military to speak of at the start of the game. We were one of only 2 countries that started off with enough military resources to fire a nuclear strike that would obliterate any country foolish enough to pick a fight.
As the game unfolded, the oil-rich nations bonded together into a parallel of OPEC. This was troubling to us, since this limited our growth potential. It was interesting how quickly this happened given that these kids had probably never even heard of OPEC, but recognized that it dramatically increased the value of their oil in trade when they all collectively set prices. Nevertheless, we kept right on with pouring everything into increased prosperity. We were quickly shut out by the oil alliance because they didn't want us to succeed, and were jealous that we had already started off with so much. But we just bought oil from 2 middling nations instead and we had enough for our purposes.
The middling nations pretty much kept to themselves, just cutting a handful of trade deals. Eventually the oil nations, while still incredibly poor, and individually weak, had amassed a significant military in the aggregate. But that still meant that the first to attack us would get nuked by us and drop out of the game. So we weren't too concerned. They even roped in a few middling nations towards the end, and we lost one of our oil contracts. This cut into our prosperity initiative since we weren't getting enough oil to improve on each turn. None of the other countries would deal with us to avoid getting burned on their own contracts with the powerful oil alliance. But we knew our goal and just invested in prosperity on every other turn when we saved up enough oil.
Then the nukes launched. The oil alliance had grown so incredibly paranoid of our power that their ultimate goal for the entire game was to take us down. One of the poor nations had volunteered to be the sacrificial lamb that kept building up military(with the assistance of the alliance) to the exclusion of all else, until they could fire a nuke.
We were aghast, we'd lost all of our progress in the game. We had been entirely peaceful, and aside from 2 oil contracts were complete isolationists. We sighed and fired our 1 nuke back. It was all we had left of our military since it was the highest possible deterrent and we didn't need conventional military arms for conquest. In the end, the small oil country was vaporized, and the US was nearly wiped out, and the useless remains were conquered by an oil nation on the following turn. The end of the game came