BRICS is offering an alternative to present economic system.

 ALTERNATIVE, NOT REPLACEMENT

19 GOVERNMENT HEADS MEET IN KAZAN  

The 2024 BRICS meeting in now underway in Kazan, Russia. It is expected to run through the end of the week. While many describe this as a threat to the U.S. dollar supremacy, it really is not an attempt to replace the dollar as much as to offer an alternative. Both economic systems could operative cooperatively if there was a desire for that to happen. The reality is that the present system is failing and it will fail with or without a BRICS alternative. It is failing because of irresponsible debt and spending by most of the western powers. We witnessed the first signs with the 2008 debt collapse and now the ingredients are far more serious and the debts are now unsustainable. We can expect that we will be offered some sort of reset that will make everyone a lot poorer.

The world has strayed far off the path of economic solvency and honesty. 2 +2 still can only result in 4 and no one can spend themselves into prosperity. There are limits to debt and fiscal irresponsibility. The present system has lasted because there is no alternative, all money is now fiat and unbacked and no government engages in balanced budgets. 

In the 1930's the economic debate was between the Keynesian and the Austrian School of economics. The Austrians believed that money was to be an asset that was represented by currency and could be exchanged for goods and services. That governments should have a balanced budget and should not manipulate the economy by debasing the currency. This is of course a simplified explanation.

Keynesian's believed that money did not need to be backed by anything, fiat currency, and the economy could be controlled by raising and lowering interest rates. They in effect changed money from being an asset into being an instrument of government debt. They believed in running deficits to stimulate the economy and raising interest rates to suppress overheating.

Keynesian policy was adopted by Europe and the United States and our currency also became an instrument of government debt rather than an asset. Of course we see that the stimulation through deficits is never slowed by decreased spending. The theory has failed because there is no restraint on government deficits.

The New Democrats have embraced the "Modern Monetary Theory", which believes that deficits and debt are not relevant nor to be considered. The plan is to control all aspects of the economy by government spending and taxes.

With this theory they can spend on social programs without restraint, debt, deficits and even interest, as far as the government is concerned, would be eliminated. They also believe that to restrain the economy from overheating, taxes, licenses, fees etc would be raised to restrain inflation and also to target the wealthy to achieve income equality and social justice. They also propose to adopt Asset Taxes, starting with the very wealthy, but as one could imagine it would soon apply to anyone with assets.

This theory is without simple common sense and attempts to defy the laws of simple economics and human nature. Implementing such a policy would destroy the economy in short order. Their policies would force people to shift assets from paper to hard currency and simply shut down much private economic activity.

Of course, that is precisely their goal, no private economy, it would be a 100% Government controlled economy which would lead to an economy like Venezuela or Cuba.

I suspect that these policies will culminate in a worldwide economic crisis unprecedented in history.  It is not a question of if, but when, and it appears we are now in the beginning of an economic collapse in the western world.

It may be possible to escape such a crisis but it would take recognition of the errors and a plan to remedy this irresponsibility. It would cause much pain, but it could be less than a total collapse.