Did Anything Dramatic Happen at the BRICS Summit? Maybe

The buildup to the August BRICS summit was quite something. Predictions of what would be announced ranged from an announcement of a new gold backed BRICS+ currency and the end of the petrodollar to the view that nothing of substance would come out of the summit.

So, what is our take here? First, there was no announcement of not only any new gold backed BRICS+ currency, but not even any kind of new BRICS+ currency. There was talk of using BRICS national currencies more for trade which is nothing new.  There was talk about studying the issue of a new BRICS currency going forward. So this was also nothing new from the BRICS and not a dramatic announcement. 

On the other hand, BRICS did announce six new members will be joining the BRICS in January 2024 including both Iran and Saudi Arabia. So was this announcement a dramatic game changer? Maybe, depending upon what happens next year. How energy is priced is for sure a key component of how the present monetary system works. The decades long petrodollar agreement whereby the Saudis agree to price and sell oil in US dollars definitely provides strong support and global demand for US dollars. As things unfold, if that agreement goes away and the largest global oil exporters (aside from the US) no longer price and sell oil in US dollars, we may have a potential game changer on our hands. It's what we will monitor here over the next year.

One lesson to take from how this summit played out versus how it was built up is that the norm is that things rarely change quickly in the global monetary system. It's just not how things happen unless some kind of dramatic unexpected black swan event happens suddenly. We have long reported that here, even as many dates have come and gone where forecasts that "the monetary system will be turned upside down" did not pan out. Does this mean that cannot happen? Of course not. There are many systemic risks (that we have documented here on this blog) that can arise at any time to destabilize the system. This BRICS summit however was not such an event in terms of any immediate major shock or impact on global markets. We'll see if Saudi Arabia joining BRICS leads to something more dramatic over the next year.

As various analysts react to the summit, we'll post some links below over time. For now, there is nothing upcoming we are aware of to report on related to major monetary system change, so we'll return to just monitoring events here.

Official Summit Declaration

Item #45 (bold and underline is mine)

"We task our Finance Ministers and/or Central Bank Governors, as appropriate, to consider the issue of local currencies, payment instruments and platforms and report back to us by the next Summit." (scheduled to be held in October 2024 in Russia)

The six new members to what I guess will be called BRICS+ are Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. This article says some analysts facetiously suggested a new name of BRICS + OPEC.

Analyst Reaction to BRICS Summit:

Jim Rickards - Here is a link to the last public article from Jim as the BRICS summit began and here is a link to his latest article reviewing what happened at the summit and what he sees going forward. Although BRICS did not announce a new gold linked currency at the August summit, Jim remains convinced that is still their long range plan with the inclusion of Saudi Arabia as a new BRICS member being a first step in the plan. New article 9-6-23 -- The Dream is Dead.

Alisdair Macleod is a gold market analyst who has been writing all year that the BRICS would announce a new gold backed currency at the summit which would then trigger a major global loss of confidence in all fiat currencies including the US dollar. In this new audio interview, he acknowledges that his prediction did not pan out and goes on to offer his thoughts on why. Basically, he believes China prefers not to move forward with a separate BRICS+ currency at this time. He still believes a gold back BRICS+ currency will eventually emerge.

Willem Middelkoop - In this new interview on Kitco, analyst and financial system author Willem Middelkoop offers his take on things.

Silk Road Briefing Article

This article in Silk Road Briefing suggests any common BRICS+ currency will not happen soon and only possibly after other events listed in the article take place. The article does claim that a potential name for an eventual common currency has been chosen however (the R5).

Global Times (Chinese Publication) 

This article in Global Times quotes an anonymous "insider" as follows making it clear what the long term goal is for the BRICS.

"people are witnessing the twilight of the petrodollar"       . . . .

"The selling of US dollars and US Treasuries will be accelerated," the insider noted.

Business Insider  - BRICS Leaders Appear to Disagree on a Common Currency

Kinesis & Indonesia Launch New Gold Backed Digital Currency Alternative

While no news came out of the BRICS Summit concerning a new gold backed currency, in their latest weekly video update, Kinesis spokesperson Andrew Maguire reports the Vice President of Indonesia has now officially launched it's gold (and silver) backed digital currency alternative to the full population of Indonesia (PosPayGold -use Google to translate to english). Maguire also hinted that more government partnerships involving digital gold and silver backed currencies are in the works in the future. We'll monitor that here in the coming year.

Will Something Dramatic Happen At the BRICS Summit in August?

With very little happening to suggest any major change in the global monetary system for quite some time, I have not written much here on the topic. That's because we have spent years here documenting the risks to the system and offering input from a variety of leading experts around the world on how to potentially reform or replace the existing monetary system. In the past several years we have noted the ongoing political stalemate between those who view the world from a "globalist" perspective and those who view the world from a "nationalist" perspective. Our analysis here is that they have been locked in somewhat of a stalemate in terms of gaining enough political leverage to push forward their agendas for the future. Since each side has a different agenda for how the monetary system should work, the outcome of that battle could very well impact the monetary system. However, at this time, it appears that battle will just continue until the 2024 US elections. If one side or the other gains leverage in those elections, we might see some significant changes. But it is also possible that the elections will just end up with divided government once again. That tends to negate any significant change coming from political policy changes. So for now, no change on that front from the perspective of our analysis here.

There is however an event upcoming in August (the BRICS Summit) that many are eagerly watching with the view that something dramatic may be announced that could impact the monetary system. Some are forecasting that a new BRICS+ currency will be announced and that it may be tied in some way to gold. There are various speculations on how gold might be involved. Jim Rickards (an expert we follow here and get some input from) has written an article recently talking about how he sees this playing out. He believes that a new BRICS+ currency will likely be tied to a specific weight of gold (rather than fixing a set exchange rate between the currency and gold) whenever it is announced. Jim also sent me a link to this interesting article which he says is a good read on this topic.

There is some intrigue ahead of this summit to be held in August. In the past few days, articles are appearing that seem to put out conflicting statements and signals from various BRICS nation officials as to what will actually happen in August. Fortune put out this article quoting the VP of the BRICS New Development Bank as follows:

“The development of anything alternative is more a medium to long term ambition,” he said. “There is no suggestion right now to creates a BRICS currency.”

Soon after this article comes out, articles like this one carried on Kitco appeared quoting a Russian official as saying the BRICS will in fact announce a new "gold backed" BRICS currency system. Other non mainstream media sources are also reporting this citing the Russian backed RT (Russia Today) media as "official" confirmation. So far, no western media outlets I have found are confirming this story coming out of Russia. 

Obviously, a new BRICS+ currency backed in some way by gold has the potential to be a significant event in terms of what we follow here. If it does happen, how markets react to that event needs to be monitored to see if it is viewed as significant or not. It's appropriate to try and understand what will actually happen in August and keep an eye on it.

So, what is going on here? Why are we seeing clearly contradicting statements from various BRICS officials coming out like this ahead of the August summit? We cannot know, we can only speculate as to the reason. Here is a short bullet point list of some possible explanations:

-BRICS officials are not properly coordinated and are putting out conflicting statements due to poor communications between them

-the BRICS do plan to make a new currency announcement, but want to shock and surprise the markets so as to try and hurt the US dollar as much as possible by surprise

-BRICS nations are truly conflicted about whether to move forward with this kind of announcement right now. They do plan to do something like this eventually, but not all members are on board with moving forward at the August summit

-Russia is putting out it's statement because it has the most incentive to try and hurt the US dollar given it's conflict with the West in the Ukraine. So, they hope to try and force this announcement at the August summit by putting out this statement ahead of the summit

-western media want to downplay any announcement of such a new currency to try and negate any negative impact on the US dollar as part of the ongoing conflict with Russia in the Ukraine

Fortunately, we won't have to wait too long to find out what will really be announced and how much impact it will have. The main point to make in our analysis here is that you must view these monetary system battles as part of the much bigger political war ongoing between the nationalists and the globalists. The present globalist US dollar based monetary system of course does not want to see anything seriously disrupt that system. The nationalists see disruption of the US dollar based system as a key part of their strategy to upset the globalist hold on the global monetary system. So, in our view here, you should follow this from that perspective to better understand what is actually going on. We'll follow it here and report what happens after the summit.

Other side note: In our world today, we see people sharply divided on many important issues. In the monetary system realm, those who see the present fiat US dollar based system as corrupt and close to failing believe we are on the cusp of major change that will see a return of gold to the system one way or another. Those who are what is called the "mainstream view" don't see this happening and assume the present system will continue into the future with just various tweaks to the system (such as CBDC's issued by central banks) gradually in the years ahead. Both views acknowledge there is always a risk of systemic failure opening the door for some kind  of major monetary system change (which is what we monitor here). But they have vastly different ideas on what should reform or replace the current system. With that in mind, I am linking below to an interesting recent interview between Andrew Maguire and Danielle DiMartino Booth. Andrew Maguire is a well known icon for advocating for the gold and silver markets and Danielle DiMartino Booth is a former official at the Dallas Texas branch of the Federal Reserve. So they come from very different perspectives as this interview illustrates, but they also agree on some points. DiMartino Booth has become an outspoken critic of Fed policy on many issues.

Civil Discussion on key Monetary System Issues

First, congratulations to Andrew Maguire for conducting an interview like this. Here we have a civil and thoughtful discussion of some of the key issues we see today related to the monetary system. So often what we see is different sides only pushing out their talking points in a echo chamber fashion without even listening to another point of view. This discussion is not like that which is why I am featuring it here. Having covered this topic for many years, I am well aware of the divergence of views between those who view a "sound money" system as being important and the need include gold as part of the system for public trust and confidence on the one hand. On the other hand is the view that the fiat US dollar based system is entrenched so deeply it is not going to be disrupted for a long time unless a catastrophic collapse of the present system happens (something both sides concede is possible). So here in this interview I think we see a real honest discussion centered around that divergence of views well worth listening to. In our view here, we need more of this kind of exchange of ideas and respect for different views across all aspects of society.  So we applaud this example of a civil discussion about issues that are certainly very important and will likely decide how the future of the monetary system unfolds. In August we will find out if anything along these lines is imminent or not.

Added notes related to the August BRICS Summit 7-19-23:

News reports indicate Russian leader Putin will not attend the Summit in person (Lavrov will instead) but will attend via video phone conference. 

Jim Rickards publishes this article again pointing to this BRICS summit as an important event in terms of potential its future impact on the global monetary system.

Added notes related to the August BRICS Summit 7-21-23:

Reuters reports the discussion for a new BRICS currency is not on the agenda for the upcoming summit in August.  However, the South China Morning Post quotes the President of South Africa assuring the President of Brazil that a BRICS currency discussion is on the agenda.

Added note related to the August Summit 7-22-23:

In this new interview, Jim Rickards addresses the conflicting statements from various BRICS officials about what will be on the summit agenda in August. Jim's comments in this interview are very interesting. 

Added note related to the August Summit 8-14-23:

In this interview, gold dealer Andy Schectman offers his thoughts on the upcoming BRICS summit and the future afterwards.

Just a little over a week ahead of the summit, there continues to be a wide variety of views on exactly what will be announced at the August summit. The two keys we will watch here are what new countries join the BRICS (especially if Saudi Arabia is one of them) and what is announced in regards to some kind of new BRICS+ payment currency system. The views on that last one are all over the board ahead of the summit.

Added note related to the August Summit 8-16-23:

In this new article, former Goldman Sachs economist Jim O'Neill says nothing of significance impacting the US dollar or monetary system will come out of the BRICS August Summit.

Added note related to the BRICS August Summit in progress 8-23-23:

The AP reports that discussions are being held to decide about adding new BRICS members including Saudi Arabia. This is a key we are watching here. So far no mention of a new BRICS+ currency being close to implementation in news reports from the Summit. We'll review the Summit after it concludes to try and determine if anything dramatic happened or not.

Added note related to the BRICS August Summit in progress 8-24-23:

Iran and Saudi Arabia are among 6 nations set to join China and Russia in the BRICS economic bloc | AP News

AP reports that Six Nations Including Saudi Arabia and Iran will become members of BRICS starting in January 2024. We do view this as potentially significant news which could impact the present dollar based monetary system depending upon what follows next. We'll review it after the summit concludes. Some expected an immediate impact on markets this week, but it appears if any impact emerges, it will happen over time.

Where Are We?

Not much has changed so not much has been posted here in terms of where things may be headed for monetary system reform or (even more dramatic) monetary system failure requiring some kind of new "restart" monetary system. 

Everything posted here for years is pretty much still valid today. All the monetary system risks listed and explained mostly still exist and if anything are riskier than ever. All kinds of various proposals to reform the system or replace it with a new system have been offered and many documented here on this blog. For years, I got direct input from a variety of leading experts from around the world on these issues. Virtually all of them agreed with the risks that exist to the present monetary system. Many of them offered a variety of ideas on the best ways to fix the system going forward. None of these reforms have gotten any traction anywhere as far as I know. 

So, Where Are We Today and why are we where we are?

The best answer I can give is that we are still clinging to a wobbly debt based monetary system administered by central banks using national fiat currencies. Debt levels never imagined possible are now accepted as routine and business as usual. The world seems to accept that all this debt will not be paid off unless it is paid off with currencies that continue to lose significant purchasing power over time. So long as governments and central banks can continue to create money with computers and people keep accepting it for use in business and trade, business as usual does just go on and on and on.

Having followed this for years, I can attest that almost everyone accepts the above analysis as true. All kinds of official warnings have been issued related to the risks that exist to the current monetary system, so it's not that no one realizes the risks exist. 

So why does nothing change?

All I can offer here is my own opinion and speculation based on covering this in some detail for a long time. The global political stalemate between two very powerful factions appears to remain in full force. There are two basic forward looking political agendas or ideas on how the future should look. Both sides are unwilling to compromise and are determined to eventually prevail. So long as this condition continues, the most likely scenario is that every possible effort will be made to prop up and sustain the current unstable (and quite corrupt in many cases) system. I believe the reason for this is because both sides in the larger global power struggle understand that whatever happens to the monetary system impacts every person on earth in their daily lives. If the system fails and that results in major human suffering on a global scale, most of the world population is going to be very angry and looking for who to blame for this total disruption of their ability to plan and conduct their lives freely. No one on either side of this power struggle can really be sure who will get the blame. So neither side has an incentive to see it fail because of the risk their side will get the blame and will suffer complete loss of power and influence for a long time (probably for generations). So the stakes are enormous for both sides.

Thus, whatever has to be done to keep the existing massive debt based system afloat continues to be done unless one side or the other thinks they can leverage a system failure to the advantage of their side. That's my take on it.

So, when will that come to an end?

That is the Trillion dollar question that apparently no one can answer. Everyone knows it cannot go on forever. No one knows when it might fail dramatically. So, politicians and officials on both sides of the major power struggle are spending their time and effort trying to spin whatever talking points they can out to the public to try and insure the other side will get blamed when the system does fail. That's the objective now on both sides. No actual efforts at compromise or genuine solution finding are in play at all as best I can tell. 

So, what does the average person do in a world like this?

There is not much of anything the average person can do to impact what policy makers and officials decide to do in my opinion. They are going to make decisions based upon whatever they think will advance their cause (their side) and provide them with political power to shape the future agenda. Certainly people should vote and express their views as they feel led to do so. But in reality, there is no evidence I see to suggest policy makers will pay attention to any of that other than needing people's votes to be in power. Once they get their votes, they will go back to ignoring them in terms of their policy making as I view the situation. 

Here is what I would offer for the average person to do in bullet point form in this kind of world:

-stay as informed as possible about what is actually happening by looking at many various forms of media sources. Follow them over time to establish which information sources are more credible based on what actually happens, not what you prefer to happen or want to believe. There is massive misinformation and disinformation in circulation from all directions. Time usually tells what information is more credible. 

-try to be a responsible adult focused on doing the best you can to take care of yourself and your family so as to be as prepared as possible for whatever the future may bring. Try to stay informed on the big picture, but don't over stress about it.

-reduce debt as much as possible, build up an emergency savings fund if possible, add some amount of precious metals to your savings to better diversify against a potential systemic failure.

-be a person of honesty and integrity and kindness to everyone in your circle of influence. The world is badly divided and there are people who don't mind trying to capitalize on that to gain wealth or power. While people will always disagree on important issues, there is no reason they cannot make an effort to get along and work together whenever possible. A couple of major common goals should be human freedom and a decent standard of living for everyone. People of genuine good will with those key goals can usually find ways to work together despite differences.

I'll continue to monitor events. If I become aware of something new that could involve a major change in the monetary system (either a planned change or an unplanned systemic failure) I will post it here as always. For now, the global power struggle and political stalemate continues until it doesn't -- and no one knows when it will end as far as I know. It is possible we could see some closure on the political front by the 2024 US elections. The monetary system remains at risk of some level of failure at virtually any time.

Is There Anything That Could Disrupt the Current Monetary System? - Update

We have noted that the ongoing movement by the BRICS nations to not only bypass using the US dollar but to actively promote an alternative currency is the thing to monitor in terms of anything that could potentially disrupt our present US dollar centered monetary system. It is assumed this process would unfold over a long term, but the US sanctions and weaponization of the dollar have created a sense of urgency to get more serious about De-Dollarization, especially for the BRICS nations and now nations like Saudi Arabia and Mexico.

Below are a couple of links to new articles discussing that issue. 

Russian Official - BRICS Nations working on Fundamentally New Currency (a partially gold backed one)

7 Signs that Global De-Dollarization Has Shifted into Overdrive

At the same time that US weaponization of the US dollar and SWIFT system have created an urgency to bypass the dollar globally, the US Federal Reserve is trying to fight stubborn inflation and now a potential banking instability at the same time. Meanwhile, the US is deadlocked over  raising the debt ceiling limit. That battle is expected to extend up to the point in time the debt ceiling would be reached this summer. In addition, we have OPEC announcing oil supply cuts apparently designed to put upward pressure on energy prices and by extension, inflation. So a lot of points of stress on the system at this time. It is certainly time to monitor events closely on several different fronts.

Added note 4-11-2023: In this new article, Jim Rickards comments on how the process of de-dollarization has clearly sped up lately and is likely to continue to do so due to US weaponization of the dollar in the form of sanctions against nations it does not like. Once you start using money and the monetary system as a form of weapon to punish those who are deemed to be "bad guys", trust in the entire dollar based system starts breaking down. After all, who decides who is worthy of getting to use their money and who isn't (who are the good guys and who are the bad guys)? To many people around the world, the US government appears to think anyone who does not want to support US dollar hegemony is a "bad guy." This creates more urgency to use something other the dollars which can be seized or banned from use at any time.

4-17-2023: US Treasury Secretary States What We Have Reported Here - US Sanctions Threaten Dollar Hegemony  She appears to think the tradeoff is worth it, confirming why many people around the world view the US as seeing itself as the judge of who is a "good guy" and who is a "bad guy".

The Banking System - Some Things to Know

Readers here know that this blog has followed events related to our monetary system for many years in an effort to monitor any events that might lead to some kind of disruption to the present monetary system whether that be major reform or a completely new monetary system. 

Extensive effort has been made here to provide the best quality information on this topic we can find. On the right side of the blog are links to many various systemic risks that have been identified over the years. Another link leads you to several different proposals or ideas on how to reform or remake the present monetary system. These come from some of the best experts (in my opinion) in the world on this topic. So all that archived information remains available and free to access for anyone who wants to use it.

Now we have a new set of issues arising with banks around the world and including in the US. By now, everyone knows a couple of large US banks failed and the FDIC and Federal Reserve have intervened in an effort to maintain public trust in the banking system. So, it is natural to ask the question -- Is this problem going to worsen and become a systemic risk to the entire monetary system?

We cannot answer that question here. We have advised readers that systemic risks like this are present all the time and at any time one or more of the risks could result in a failure of the present system. This most recent situation simply serves to remind us of that fact. It's too early to tell if this event will worsen and trigger a major crisis leading to major problems with the present system. Our advice here is to monitor events closely and if possible review your own banking situation to see if or how you could be impacted.

The best thing we can do here is to just try to provide some reliable basic information in an effort to help readers assess things. With that in mind, below is a bullet point list of information with that goal in mind.

-Some banks are experiencing problems with liquidity (having enough ready cash to meet funding requirements such as depositor payments and withdrawals). 

-Some banks are struggling because the rapid rise in interest rates has caused some of their investments in things that have an inverse relationship with interest rates to drop in current market value. For example, government bonds drop in value when interest rates rise. So long as the bank does not need to liquidate the bonds to meet cash demand requirements from depositors, they don't have to sell the bonds and take a loss.

-If for any reason cash demand requirements from depositors exceeds available ready liquid cash, then banks have a problem. They could be forced to sell their long term investments at a loss to raise the needed cash.

-The Federal Reserve, recognizing this problem, created a program to allow banks needing cash to sell their bonds to the Fed for full market value even though their current market value has dropped below what they paid for the bonds (because interest rates have risen).

-The FDIC insures each individual bank deposit account up to $250,000, however they do not insure any amount over $250,000 unless the bank involved is deemed to be a "systemic risk" if it fails. This means many smaller regional banks do not currently have protection above the $250,000 amount since they would not be viewed as "systemic risks" to the entire banking system. Congress is discussing this situation right now per this article on CNBC.

Given the facts above, obviously anyone who has a bank account needs to understand the above information and review their bank to assess what level of risk it may have at this time. One tool I did find that may be helpful is found on this link for iBanknet. This web page allows you to search individual banks where you can find a link to their Balance Sheet information.  You may have to enter a code to prove you are not a computer bot first. 

Once you find your bank and go to the link showing the Balance Sheet information, you can then review the assets and liabilities the bank has. It will give an idea of what kind of risks that particular bank may or may not have at this time. The data is pretty current on the banks I looked at.

A couple of other information resources you may find of value or interesting to read are linked below.

If we find credible information regarding the impact of this situation on the overall banking system and/or the monetary system, we'll post it here. (note: Central Banks take global liquidity action)

Recent Update/Discussion on the Banking Issues from Jim Rickards

Alisdair Macleod - Banking Chaos

Dr. Warren Coats (former IMF) - Econ 101 and Bank Runs

Jim Rickards - The Fed Finally Broke Something

Conclusion: It's impossible for anyone to really predict how this situation will play out. Our entire system is fully based on public trust and confidence both in the monetary institutions they rely on and also the currencies issued by various governments. So long as the public maintains trust in that, it is easier to operate a more stable system. If public trust is eroded too much, it becomes much harder to operate a stable system. Each person has to assess for themselves what level of public trust exists at any given point in time. No one can 100% sure what human behavior/reaction will be when problems arise in any system.