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--:-- John Bickley: Welcome to an extra edition of Morning Wire. I'm Daily Wire Editor-in-Chief John Bickley with Georgia Howe. It's Saturday, September 2nd.
--:-- Georgia Howe: [brief pause] Hi, everyone. Today, we're discussing the recent BRICS summit and its implications for US interests.
--:-- John Bickley: Joining us now is former Wall Street financial analyst John Rubino. Hey, John. So last week, the BRICS countries held a summit in which they decided to admit new members, including Saudi Arabia and the United Arab Emirates. How do these actions relate to the broader geopolitical landscape?
--:-- John Rubino: Well, first of all, the BRICS countries played an interesting little game of misdirection there because originally, before the meeting, they announced a gold-backed currency was a possibility, and that got everybody excited. And while we were looking over there, they inducted Saudi Arabia, the United Arab Emirates, and pretty soon, Iran into their group, which is very consequential.
--:-- Georgia Howe: [brief pause] That's a great point. The BRICS countries have been gaining traction, and it's not just about the economic implications. It's also about the geopolitical implications. Can you explain that a bit more?
--:-- John Rubino: The backdrop to that is that the U.S., by virtue of having the dollar as the world's reserve currency, is by far the most powerful financial entity in the world. And instead of being kind of benevolent monetary dictators, we become bullies out there. We weaponize the dollar and our control over the global, for instance, bank clearing system and the other monetary entities like the World Bank and the IMF that we control. So if anybody steps out of line, the U.S. can just kick them out of, for instance, the system that lets their banks trade with other banks around the world.
--:-- Georgia Howe: [brief pause] That's a really interesting point. It sounds like the U.S. has a lot of power, but it also creates a lot of resentment among other countries. Is that fair to say?
--:-- John Rubino: That's exactly right. And that's giving them an incentive to join an organization that offers maybe some protection from what they now see is, you know, a predator roaming around the world doing whatever it wants to to anybody else. So that's why the BRICS organization is gaining some traction right now and why a lot of other countries are lining up to join it because they see it as kind of a version of the old non-aligned country group that sprang up during the Cold War.
--:-- John Bickley: [brief pause] That's a great analogy. The BRICS countries are much more consequential than the old non-aligned group was because they've got Russia and Saudi Arabia now, which are the second and third biggest oil producing countries in the world. Iran is up there on that list. Between China and India, they've got pretty close to half the global population. So this is a serious organization.
--:-- John Rubino: [brief pause] And if they can ever work together in any meaningful way, they can do serious things. So that's why it's such a big deal.
--:-- Georgia Howe: [brief pause] You put a lot of blame on the West, but what would be the alternative approach to handling monetary policy?
--:-- John Rubino: Well, if you've got the world's reserve currency, it should be a neutral thing. In other words, you shouldn't have to make a political statement or join the team in order to use the world's reserve currency. But, you know, today you kind of do. You kind of have to be on the U.S. side if you want to fully function in the dollar-centric world. And that's not the way it should be. The world's reserve currency should be neutral.
--:-- John Bickley: [brief pause] That's a great point. The U.S. has created a lot of incentive for countries to bypass the dollar. In other words, to cut things like bilateral trade deals, where Russia and India trade with each other using their own currencies. And that's only going to increase going forward.
--:-- John Rubino: [brief pause] And that can only be bad for the dollar, because it means there's less demand for dollars out there, which means a lot of the trillions and trillions of dollars that are out there in the world right now are going to come back here and maybe bid up domestic prices, which is inflationary, which is another way of saying the dollar will lose value.
--:-- Georgia Howe: [brief pause] Do you see BRICS being capable of actually creating their own unified currency, or is this going to continue to be what you just described, where the countries work out arrangements between themselves with specific currency deals?
--:-- John Rubino: Well, right now they're doing bilateral deals using their own national currencies. But down the road, you can make the case that them getting together and creating a currency that's just for trade, just within the BRICS countries, and doesn't affect the national currencies of Russia, China, India, etc. That would be very useful because bilateral trade deals aren't always so easy to manage because they end up creating imbalances.
--:-- John Bickley: [brief pause] That's a great point. A unified currency would make it easier for countries to trade with each other without worrying about exchange rates and other issues.
--:-- John Rubino: [brief pause] And if they back it with gold, then it holds its value and will tend to go up versus the dollar over time without the problems that come with a too strong currency. So there are a lot of reasons why something like that would make sense. But it requires the BRICS countries to cooperate on a scale that they've never cooperated before.
--:-- Georgia Howe: [brief pause] That's a big ask. Can you see the BRICS countries succeeding in really diminishing the power of the U.S.?
--:-- John Rubino: Well, two things. One is they can do as much as they really want to do, assuming they can all cooperate, because it's a very powerful coalition that, like I said, has a lot of oil and a lot of other kinds of natural resources that give them financial power. It's not clear they're able to cooperate in ways that really let them take it to its logical extreme.
--:-- John Bickley: [brief pause] That's a good point. The BRICS countries have a lot of potential, but they also have a lot of differences and competing interests.
--:-- John Rubino: [brief pause] Now, the other side of that story is that the dollar is being inflated away by the US. We're taking on way too much debt. We're having to create way too many new dollars in order to cover that debt. And the value of the dollar is going to go down regardless of what the BRICS countries do.
--:-- Georgia Howe: [brief pause] That's a really interesting point. The U.S. is creating a lot of its own problems, and the BRICS countries are just taking advantage of them.
--:-- John Rubino: [brief pause] So we're creating a situation in which a gigantic financial crisis is out there looming and part of that crisis is going to be a falling currency value that leads to some kind of a big currency reset out there in the not-too-distant future where the dollar just doesn't function anymore as a truly useful reserve currency because it's losing value too quickly.
--:-- John Bickley: [brief pause] That's a pretty dire prediction. Do you think the BRICS countries could accelerate that process?
--:-- John Rubino: [brief pause] Yes, they could. If they really get their act together, they could accelerate the process.
--:-- Georgia Howe: [brief pause] That's a really interesting point. The BRICS countries have a lot of power, but they also have a lot of challenges ahead of them.
--:-- John Bickley: [brief pause] Well, let's talk about Russia for a moment. Since the invasion of Ukraine, Russia's become more of an outsider globally with a lot of powerful countries, more united now against them. But in the BRICS group, Russia plays a very important role.
--:-- John Rubino: [brief pause] Well, Russia is a very resource-rich country, and it's a nuclear power. So it's consequential, no matter how you slice it. And with these countries run by dictators, you just never know. You can't make any predictions about what their role is going to be going forward in a group or in the world at large.
--:-- Georgia Howe: [brief pause] That's a really good point. The BRICS countries are unpredictable, and Russia is no exception.
--:-- John Rubino: [brief pause] And you don't know how long Putin is going to be there and who's going to take over after him. So there's no way to predict anything about Russia with any certainty. But they have the tools to be extremely consequential.
--:-- John Bickley: [brief pause] That's a great point. Russia has a lot of power, and it's hard to predict what they'll do next.
--:-- John Rubino: [brief pause] And the fact that they're right there in the middle of the BRICS Coalition demonstrates that they haven't been abandoned by the world. A lot of countries basically see Russia as the victim in the expansion of NATO and the resulting war in Ukraine.
--:-- Georgia Howe: [brief pause] That's a really interesting point. The BRICS countries are taking a different view of Russia than the West is.
--:-- John Rubino: [brief pause] And I think many of the BRICS countries see themselves as victims of this. So Russia could easily be very consequential going forward, even if the U.S. and Germany and Great Britain are still mad at them.
--:-- John Bickley: [brief pause] Well, to say the least, it's a complicated historical moment. John, thank you so much for joining us.
--:-- John Rubino: [brief pause] Thank you for having me.
--:-- Georgia Howe: [brief pause] That was John Rubino, author at Substack and former Wall Street financial analyst, and this has been an extra edition of Morning Wire.
