Tick Talk

BRIC Nations: Buddy, Can You Spare a New Reserve Currency?

Neena, Excellent insights. Thank you. A new reserve currency was suggested at the G-20 and was shot down. Therefore, the next question is unity. Will BRIC organize to act? Yes. They just did. The historical citations by Mad Hedge Fund are irrelevant for one reason: The U.S. has never deliberately betrayed the trust of foreign buyers of U.S. treasuries to this magnitude.

Because the U.S. willfully debased its currency by increasing the supply of the medium in which its debts are denominated, it literally robbed treasury bond holders. This tactic is a political and financial tactic and the offense that broke the BRICs back - hence the summit. As inflation proceeds, all permanent relations between debtors and creditors becomes catostrophic chaos and almost meaningless. A debauched currency is the surest sign of a crippled society and a new, even deadlier government regime.

The U.S. has lost the trust of BRIC nations and U.S. citizens. Both groups will be wise to remember this treachery and fortify themselves against future harm.