59% of global reserves is USD which is down from 71% in 1999.
The West isn’t going to stop using it but given the precariousness of the US/Western economies, a sharp 10-20% reduction by BRICS+ could be catastrophic. Who knows what sovereign would default then, or what the knock-ons would be?
GBP was replaced by USD pegged to Gold. Different scenario to the petrodollar losing its quasi default status, particularly if a commodity-backed currency emerges to compete with USD.
it will 39%< in few yrs DXY dance watch
oil energy pricing in CNY INR BRL direct already many yrs
“Different scenario to the petrodollar losing its quasi default status, particularly if a commodity-backed currency emerges to compete with USD.” - Now that we have seen the reckless driving by fractional banking, how long will it take market participants to regain trust in anyone who claims its currency is fully gold-backed? Would they not end up with #Bitcoin and gettxoutsetinfo?
Very good question! #[6] spoke to Tom Luongo who touched very briefly on this that the BRICS+ could setup some kind of blockchain between them to track international trades and do perhaps monthly settlements in gold. I like Tom’s thinking, it’s quite different to my own but you can see the rationale behind it - https://fountain.fm/episode/14712565206
Speculation so far has been more around a currency backed by a basket of commodities (oil/LNG/rare earths) rather than just gold. Given this is really about international energy trade which BRICS+ are rich in and the petrodollar is based upon, it would seem to me that just using gold alone would give a route for the West to attack whereas if it’s a basket of diverse commodities it’s like fighting a hydra.
I don’t know how they’ll do it (and nor does anyone else) but game theory suggests that for it to work, there’s going to have to be a level of transparency between participants completely unlike the USD. That is probably its biggest hurdle - getting such diverse interests to cooperate without trying to fuck everyone. But if they can overcome it by uniting against USD, well then the West truly is in trouble.
Personally I think Bitcoin becomes a bridge between the two. No way the US backs the dollar with a reserve asset they don’t control, and no way BRICS+ trust it to be their settlement layer when their focus is on physical real world commodities and resources.
It becomes a new Swiss Franc, widely accepted and trusted but only used in some places, probably by those nations who can’t afford to pick a side if a proper West vs BRICS+ bifurcation happens.
I enjoyed listening to the podcast - Tom's take is exciting; unfortunately, there are parts I did not understand as I don't know anything about the "shadow banking system" and its components. I think when it comes to "store of value" that both gold and #Bitcoin are more closely related than either gold bugs or Bitcoin proponents are willing to admit. Bitcoin, however, is vastly superior in terms of storage, payment, and programmability.
He mentions Jeff Snider early on, watch some of his stuff to understand shadow banking and Eurodollar systems. I don’t understand it well either but he’s basically talking about a USD economy outside of The Fed’s purview which has knock-on effects from Fed policy.
Tom puts forward the bull case for The Fed from an Austrian perspective, it grates some Bitcoiners but it’s a useful point to understand their incentives in my view.
Have to consider the politics of JPow’s position too, something Tom does well. On other pods I’ve heard him look at it through a lens with a personal layer of US vs European elites, old vs new money, to the global power struggle that is happening right now.
Also thankyou for taking my recommendation and actually listening to it 😁
#[3] is a good listen but just the idea someone can suggest on #nostr “hey spend 100 minutes listening to this and you’ll get some flavour of the concepts I’m working off” is pretty cool.
Signal is way higher here, I too trust people to guide me on a good use of time 🤙
