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There is no shortage of jokes about how economists might have predicted nine of the last five recessions or how their S&P 500 forecasts are often even less reliable than the weatherman’s.
But their accuracy is probably in the hundreds versus none when it comes to the dollar’s collapse. Every time someone claims that the dollar’s hegemony is ending, it turns out to be premature.
It will eventually happen, but the indications do not suggest it will be soon. The reasons are the same as always: the United States’s military and economic superiority over the rest of the world.
Some have suggested that coordination among the BRICS group could speed things up, but this does not seem likely based on what we heard at last week’s three-day summit in Kazan.
The event generated a great deal of media buzz, not least because it brought together representatives from more than 30 countries, six international organizations, and even more nations eager to join.
In reality, however, there was not much concrete discussion of current geopolitical problems or of any specific plans to restructure the global financial system to replace the U.S. dollar.
There were typical calls to de-escalate Ukraine and the Middle East conflicts, but no real action was taken. How can they expect to achieve that goal if the parties involved aren’t willing to stop fighting?
On the second point, the final declaration stressed the need to reform the international financial system while promoting the use of national currencies for transactions.
The countries agreed to discuss the creation of an independent infrastructure for cross-border payments, a BRICS Clear depository, and the development of an independent reinsurance system.
But it’s unclear when this will happen—maybe in a few months or years. Given the risk of secondary sanctions, it’s probably the latter. In short, the collapse of the dollar is still far off.
In the end, many statements and calls for action were made, but nothing has been signed. Everything is still under discussion and could be just words on paper. More concrete measures are needed.
