The rise of the BRICS nations – Brazil, Russia, India, China, and South Africa – is causing concern among some experts who warn of the potential economic and geopolitical consequences for the US. Veteran investor and former JPMorgan and Allianz executive, Jon Wolfenbarger, has penned a new article for the Mises Institute, warning that the success of BRICS could ultimately lead to a decline in US living standards and a diminishment of America’s global standing.
Wolfenbarger argues that the US government’s irresponsible economic policies over the decades have left the country vulnerable to the rise of the BRICS nations, which now have the power to dethrone the US as the world’s reserve currency. He notes that throughout history, all empires have eventually failed, and the US is unlikely to be an exception.
The ex-JPMorgan executive writes, “If the BRICS are successful and the US does not change its policies to focus on a stronger dollar, less spending, and peace instead of war, the dollar may slowly lose its ‘reserve currency’ status. This would hurt US living standards and lead to less power for the US government, similar to the weakening of the UK after World War II.”
However, Wolfenbarger acknowledges that the BRICS still have a long way to go if they want to compete with the US dollar seriously. He warns that creating another fiat currency out of thin air won’t work and that the BRICS need to establish a successful hard currency to compete with the dollar.
“The US has the largest and safest government bond market, no capital controls, and a reputation for enforcing the rule of law,” he explains. “By contrast, the BRICS countries are hardly known for respecting laws or having strong currencies.”
Wolfenbarger also notes that the BRICS face a daunting task in convincing non-US entities to abandon the US dollar. “Non-US entities have $12 trillion of US dollar-denominated debt that they need to pay back with dollars, so abandoning the dollar would be incredibly difficult and costly,” he says.
In conclusion, the ex-JPMorgan executive warns that the success of BRICS could lead to serious economic and geopolitical consequences for the US. To avoid this outcome, the US government needs to focus on strengthening the dollar, reducing spending, and promoting peace instead of war. Otherwise, the decline of the US as a global superpower could be inevitable.
