BRICS News: USD Going Down, Gold Up

In this week's article by Patrick Barron, representing The Mises Institute, he suggests that the U.S.-led Western world is approaching a shift away from the dollar's dominance in global trade. The recent BRICS summit discussed establishing an alternative trade settlement system based on commodities like gold. Barron argues that this shift reflects an ideological battle between Keynesian economics and the gold standard, with gold expected to prevail.

He asserts that despite the end of Bretton Woods in 1971, gold hasn't been proven inferior to fiat currency. Barron connects fiat currency debasement to issues like wars, welfare expansion, and currency devaluation. He highlights that the erosion of the dollar's value against gold since 1971 and sanctions against Russia have accelerated this shift.

The author contends that introducing gold into trade would expose the flaws of Keynesian economics and promote production over aggregate demand. He believes the new gold-based trade settlement system would prevent manipulation and encourage sound economic practices.

Barron argues that nations with heavy welfare obligations and politically connected industries will struggle in a gold-based system. He predicts that the gold settlement system will eventually replace internal monetary systems, rendering fiat currencies obsolete.

The BRICS summit's discussions about local currencies and payment systems, especially with Russia assuming the chairmanship, could lead to a de-dollarization announcement or a gold-backed trade currency. These developments could challenge the U.S. dollar's petrodollar status and its global monetary dominance.

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