61 sats \ 2 replies \ @blocktock 24 Aug 2023 \ on: BRICS Okay I was wrong! - http://infobrics.org/ bitcoin
Don't expect BRICS or any widely-used competing political currency to be a success for at least the next 5 years.
The relative outperformance of other widely-held currencies is not typically seen until after a war ends, and a "winner" is decided. That is when the "loser" takes the hit in purchasing powder. Until then countries will do their utmost to support their currencies against one another. We're likely still in that stage.
Here is the pound's purchasing power (as the reserve currency) against the dollar (1939-1945 was WWII):
Its a nice narrative (war ends an empire currency) but its faulty. There were a number of other wars prior to ww2 almost regularly every 30 years, so what made ww2 different? It wasnt a war that ended pounds dominance, it was the relative advantage the us had in manufacturing and access to resources . that's what was built in ww2 that killed the pound. People wanted usd to buy us goods. Us had a relative advantage that gave it the upper hand.
Think of it this way, why would the pound drip because of a war when the uk won? That's not what made it drop.
There may be a war to defend the us, but that's not the reason the us is losing dominance.
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I agree with your analysis. However my point is that the relative outperformance or largest devaluation only happens once a war has concluded and all parties are aligned on who gets to define and how to define the new monetary standard for the next ~30 years.
Speculating that the BRICS alliance is going to eat into the dollar's prominence as early as next year is very far-fetched IMO. Especially when the currency doesn't even exist as of today. Not to mention the fact the vast majority of worldwide debt remains denominated in dollars, thereby retaining demand for it.
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