patrick.net

Yesteday BRICS released a comprehensive plan to which its members and applicant members agreed. BRICS is not, in fact, creating any new global currency. Instead, it’s creating an alternative international payments platform, for people buying and selling things across borders, or for when nations trade with each other (to buy weapons, grain, or oil, for three examples).

Right now, everyone must use a common payment settlement system called SWIFT. SWIFT is U.S. created and effectively controlled, even though it is ostensibly privately owned and supposedly located in Belgium. The thought that SWIFT is at all independent is a great gag that everyone at the State Department always guffaws about making them cough champagne up their noses.

For many countries, SWIFT has at least two huge problems. When I say the platform is effectively U.S.-controlled, you can imagine all the implications. Users’ data is supposed to be private, but for some reason everybody thinks the U.S. constantly snoops on where all the money is going to and coming from. (One possibility for why they think that is because Edward Snowden exposed it all in 2013, but I digress again.)

The second, even bigger problem is that the U.S. acts like the spoiled kid at his birthday party, refusing to let the kids he doesn’t like ride the rented pony. In other words, the U.S. forces countries to do things they hate, like teach their kids trans techniques, by threatening to cut them off from SWIFT, or snatching their money as it travels through the collected SWIFT system.

Russia, for example, is cut off from SWIFT under U.S. sanctions. And $300 billion of its money was seized while sitting in a SWIFT clearinghouse bank. The implacable Russians are great poker players, you can’t never tell if they’re at all mad about Biden snatching their $300 billion or exploding their undersea pipelines.

But you can imagine how mad the Russians must be.

The Russians are mad enough to spend their time and money leading a world movement to replace the G-7 and its captive SWIFT system. Which would be horrible for us.

Once BRICS has its own interbanking system, they won’t need to trade in dollars anymore, not unless they need something from the U.S. or from a G-7 country. For complicated reasons, the reduced demand for dollars just from those lost transfers will drastically worsen our debt problem. And maybe more important for BRICS countries, the U.S. won’t be able threaten sanctions to force them to swallow every lunatic social experiment that comes down the liberal U.S. pike.

The BRICS pitched their interbanking system yesterday as a non-threatening “alternative” to SWIFT, rather than any kind of direct competitor. Having choices, they stressed, just improves everyone’s outcomes. But that logic is like claiming that when you parked your taco truck right next to Jose’s taco truck, it is actually better for Jose’s taco trade since diners like different choices of tacos.

Jose is not likely to agree. Jose is likely to go loco. ...

The U.S. could shut this BRICS initiative down easily and immediately. All we need to do is reform SWIFT. If the U.S. stopped using SWIFT to sanction other countries, and SWIFT opened up its system transparently, and the U.S. stopped using SWIFT for spying, then BRICS would be unnecessary.

And everyone would keep trading in dollars.

In other words, we could rescue the dollar. We only need to give up the ‘dirty tricks’ tool we use to force other countries to make their kids sit through drag queen happy hours. But Biden’s neocons won’t try that simple remedy, will they? They’ll let the dollar be destroyed before they give up their economic wonder weapon.