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."
Re:Bad News for USD (Score:4, Interesting)
More like you *have* to buy treasuries for a month otherwise your dollars lose 3% of their value due to inflation. India and China would love to get loans of Reals. Hamburger futures are going up in value.
Re:Bad News for USD (Score:5, Interesting)
In more practical terms, the dollar loses it's importance to the world. Remember the '70's (if you're old enough) when the oil producing countries decided that they wouldn't accept the dollar as payment for their products. They wanted something real to back up the payments. Gold.
All by itself, this erosion of faith in the dollar wouldn't mean diddly. But, this is just a streamlet which feeds a good sized river. One day, the dollar won't even be accepted in half the countries of the world. "Your green money is no good here, white man - go exchange it for real money, then we'll barter!"
Which Brazilian currency are they going to use? (Score:2, Interesting)
Given that Brazil when it revalues their currency switches between "cruzado" and "cruzerio" (and most recently "real", short for "cruzerio real") on an almost clockwork basis, invariably involving a devaluation of 1,000:1 or some other ridiculous figure like that, were they planning on using Cruzados or Cruzerios to exchange, and how many truckloads of whatever they use will it take to make a Rand, Ruble, Yuan, or Rupee?
Re:Bad News for USD (Score:4, Interesting)
That's nonsense. Inflation means that your money will be worth less tomorrow, so you can't generate savings to start a new business - nobody WANTS your money for labor/tools/whatever.
You are completely disregarding the fact that USA had deflation throughout the 19 century and past WWII, when prices were falling naturally due to the currency that was gaining in value and people had higher and higher standards of living. However past WWII the problem was that government saw the increase in economic activity as an invitation for more inflation (money printing), while in 19 century they did not have fiat in the first place, so they couldn't devalue the currency.
In 19 century the bread people bought a year ago cost MORE than one they bought year from then, and it was good for general welfare (which is what USA Constitution promotes, not personal, but general welfare, and general welfare implies stronger currency).
Re:Bad News for USD (Score:3, Interesting)
Ah no. Iceland regularly used multi-currency loans for subsidizing everything from mortgages, to personal loans, to business loans and so on. Most people and businesses who lost everything, was due to the fact that the icelandic currency could no longer compete with having 5 different splits in the amount due. Nothing like making payments in yen, dollars, euro's pounds and yuan's right?
This year (Score:5, Interesting)
but the BRICS by themselves are unlikely to to be able to drive that change.
However a recent Bloomberg article pointed out that China is now Germany's #1 client, replacing the US which has held that position almost since WW2. Considering that China's growth has "slowed" to a mere 9.7% per year, it won't be long at all before they are the largest economy in the world and we will have to do as China says. Another interesting side note is that all those German imports - precision factory machinery, BMW's and other cars, electronics, etc require energy to run. China's demand for oil is about to explode, at a time where we may be nearing peak oil. This is going to be very, very interesting.
The other side of the coin is that the US dollar as the world currency reserve means that the US is in a very special situation. The US is the only country in the world that can print US dollars. Every other country needs to trade valuable goods and services to obtain one US dollar with which to purchase commodities. The US can simply print it, and in fact this is what it has been doing for a while now. However the minute the US stops being the world reserve currency the US no longer can print its way to importing vital commodities. It will have to earn them like everyone else. Historical data shows that every country that loses status as the world's reserve currency (recent example, the British Pound pre WW2) undergoes severe economic distress. Americans are in denial of this, but irresponsible monetary policy always has consequences. A big hint is the Euro at 1.44 (as if the Euro were in great shape) and the Canadian dollar at 1.04 - not to mention all the other currencies. People don't want US dollars anymore, thanks to Ben and his buddies.
Re:Bad News for USD (Score:5, Interesting)
The US is always giving someone the finger. It's called "US foreign policy". Recently the US tacked on a clause to a treaty with my country that guaranteed immunity from prosecution for war crimes for US citizens while in this country. My country rejected the treaty.
Then you wonder why people hate you, and why things like 9/11 happen. How about learning to live with the rest of the planet, instead of trying to tell it what to do all the time? The US is certainly not an example to follow - its economy stinks, they're not world leaders in anything (except perhaps waste produced per capita), its empty promises of freedom and democracy have been raped and usurped by its own self serving politicians, its human rights record is appalling, its warmongering is not tolerable. What's to like about the US? You can keep it.
Archimedes called from Syracuse... (Score:5, Interesting)
You take tungsten, slightly less dense than gold, and a lot cheaper, mix it with a small amount of a more dense but more expensive metal to get up to the right density, then mix and plate it with about 50% gold. Very difficult to detect if you do it right, and costs a little over half the price of real gold.
Look, Archimedes called and he wants his density method for counterfeit detection back. The method you describe may be sufficient to sell fake bullion to Ethiopia [google.com], where it seems that you don't even need to get the density right, but it will not fool any serious gold trader.
The problem is not density alone, hardness is fundamental, because practical methods to identify metals today are based on speed of sound [bamr.co.za] in the metal.
Ultrasonic thickness measuring equipment is the best way to detect fake metals, it works in a principle similar to the traditional "ringing sound" method for detecting fakes. Gold coins and bullion have a precisely defined thickness, if you use an ultrasonic transducer to measure it and get a wrong result it's a fake. And, of course, the transition inside the bar from gold to tungsten is trivially detected [youtube.com] when you have the proper equipment, which you surely have if you are trading in large amounts of gold.
In an "arms race" scenario, technology definitely works against the counterfeiters. It's much harder and more expensive to create a gold-coated tungsten bar than to detect it.
Re:Archimedes called from Syracuse... (Score:5, Interesting)
1. You wouldn't collect SS if you were a committed Randian because your principles would stop you. Like every one of her fictional characters would refuse to collect.
2. SS doesn't steal your money. It forces you to invest it in the safest available investment, US debt, that returns about 50% interest. That also invests in running your country, which keeps all your investments safe.
If you're really just committed to grabbing as much money as you can, without any actual consistent principles, then you can do as Ayn Rand did. If you're willing to leave the majority of old people with losses instead of gains in their retirement investments, then you can get rid of Social Security. Congratulations! You're a reckless greedmonger, the kind that steered our country and its millions of old people into the grinding poverty of the Great Depression. AKA "Randian". Even if Ayn Rand herself was not. She was merely a hypocrite and a fiction writer.