The BRICS 'New Reserve Currency'

This weeks trend: BRICS Currency

According to the Twitter and Reddit experts, the US dollar is going to lose its status as the world’s reserve currency imminently.

Haven’t you heard? The BRICS (Brazil, Russia, Indian, China and South Africa) have hooked up a new deal that will allow them to trade without the need to get the Yanks involved.

It’s been a big news story that these nations now have a larger combined GDP than the G7. What utter bollocks. The real stat is that they have a larger share of global GDP on a purchasing power parity basis. What that does is adjust the actual output of an economy to take out the fact that some are poorer than others.

Fine I guess if you’re an economist wanting to look at details of how an economy is growing or whatever, but if you’re using it to show that one group of countries has more ‘power’ or relevance than another, it’s stupid.

Here are the actual GDP figures on nominal (unadjusted) basis.

And of that BRICS figure, here is the current and projected GDP share between those countries. It’s basically just China.

No only that, but China, India and Brazil combined hold 21% of all US dollar denominated debt, and the BRICS combined have over $5.5 trillion in foreign currency reserves, most of which is in US dollars.

Is it really feasible that they would want the US dollar to collapse?

So yeh. This is dumb. The US dollar isn’t going to collapse or be relegated to backup status anytime soon. And that’s without getting into the issues with a supposed ‘new guard’ that are so broadly different from a cultural perspective.