Worldwide Revival

Pushed on 09/08/2023

It is August 7, 2023 and we have been accustomed for a few decades to the neoliberal hymns regularly sung by the choir of globalists from Davos Forum and by various esoteric groups of darkness. 

As if the global agora was not saturated enough with incantatory songs of the neoliberals, here are new verses distilling us a new and additional song: The BRICS will create an alternative currency to the American dollar (USD).

However, since the development in the sixties of the theory of Optimal Currency Area (OCA) by Robert Mundell and Marcus Fleming, humanity must resign itself to an unavoidable conclusion: money and the Central Bank which manages the money are consubstantial with a specific country.

So the BRICS will never create money because the BRICS are not a country.

Let us take the perfect mobility of people and capital within the currency area. China would like to relocate 300 million Chinese to Siberia but you can clearly see that Russia would not want to hear about it. Let’s not talk about the criterion of optimality relating to the public budget because Russia and China certainly have no intention of transferring each year, 2% of their GDP for example to the other BRICS countries in order to correct the differences in competitiveness. So impossible for the BRICS to have a new currency (more exactly, a single currency managed by a single Central Bank).

Given the impossibility for the BRICS to have a single currency managed by a unique Central Bank, one would be tempted to consider the hypothesis of a common currency (the BRICS countries use the same currency but each country keeps its own Central Bank. All Central Banks issue the same currency). Economic history shows that all attempts of a common currency have failed and once again, the cause is always the non-respect of the Mundell-Fleming optimality criteria which causes the zone to explode when it is repeatedly solicited by asymmetric shocks. We have before our eyes a case of a common currency at the moment: the Euro zone. An examination of the Eurozone Target 2 balances shows that because of differences in competitiveness, the core of Europe (Germany, Luxembourg, Holland) accumulates an increasing claim on the periphery of Europe (Italy, Greece, Spain , Portugal, Ireland). Currently the Bundesbank holds a Target 2 claim of almost 1000 billion EUR on the Central Banks of the periphery of Europe. This is a rotten claim that will eventually be paid by Germany itself because the debtors that are the other Central Banks of the Euro zone are insolvent. To make these insolvent debtors able to pay, Germany must correct the competitiveness gap by transferring 30% to 40% of its GDP each year to the least competitive countries in the Euro zone! This is impossible and eventually, the Euro zone will naturally explode. If the experience of a common currency is so painful and chaotic when it is made between countries of the same civilization (although Slovakia, Croatia and Slovenia are rather of Slavic civilization), we immediately understand that the BRICS countries, all of which are from different civilizations, must abandon any dream of a common currency.

Aware of this impossibility for the BRICS to collectively lock themselves into a single currency managed by a single Central Bank or to dream about having a common currency issued by many Central Banks, economists are proposing a hybrid solution that we will briefly recall before establishing its illusory nature.

The popular solution considered by many economists is the following:

1/ Each BRICS country actually keeps its national currency. Russia has its Ruble (RUB), China keeps its Yuan (CNY), South Africa keeps its Rand (ZAR), Brazil keeps its Real (BRL), India keeps its Rupee (INR) and each new member of the BRICS keeps its current national currency.

2/ A “BRICS Central Bank” is created. We call it BRICSBANK for simplicity purpose. Then each BRICS member country brings BRICSBANK a stock of gold. For example, country “A” brings a ton of gold to BRICSBANK and in return BRICSBANK credits the account opened by country “A” in its books, for an amount of 1 billion BRICSOR. So here is created the new currency of the BRICS, the BRICSOR which will henceforth be used by the member countries of the BRICS, to trade between them. This BRICSOR is fully pledged on gold as you can see. On its assets side, BRICSBANK holds 1 ton of gold and on its liabilities side BRICSBANK has registered in the account of the gold depositary country which is called “A”, 1 billion of BRICSOR. Country “A” therefore holds the new currency which it can use to buy from any BRICS country. So country “A” manages its own national currency, but each time it exports to another BRICS country, it earns new BRICSORs and its account held at BRICSBANK keeps filling up with BRICSORs. Conversely, when country “A” imports from another BRICS member country, it pays with the BRICSORs it holds at BRICSBANK and its account at BRICSBANK will therefore see the amount of BRICSORs reduced.

And now everything is for the best since the international reserve currency, BRICSOR, is entirely covered by gold deposited in the cellars of BRICSBANK.

Now that we have told the whole beautiful story, you already see the big flaw because this story is actually very old. This story was told to humanity in July 1944, during the creation of the international monetary system that the BRICS today contest. Yes this story is exactly that of an international trade carried out in American Dollar (USD) but a USD entirely guaranteed by gold! And one fine day, August 15, 1971, Richard Nixon discovers what kindergarten children know: the supply of gold on the planet is limited and the United States will never have enough gold to cover all the amounts of USD that the countries of the world need to trade internationally. So Nixon simply states that from now on, the United States will issue USD out of nowhere and not backed by gold.

So back to our BRICSOR. Initially, everything will work well, until many member countries of BRICS become emerging economies. Imagine, for example, 1 billion Sub-Saharan Africans gradually emerging from underdevelopment after joining the BRICS. Then the demand for BRICSOR to trade will become such that BRICSBANK will do exactly like Richard Nixon: issue BRICSOR out of thin air, without any counterpart in gold stock. And here is an old friend that you recognize and who is called credit! In the current monetary system, this old friend that is credit is carried by the issuing country of the currency which is used in international trade, that is to say that to carry this credit, the United States let their public budget deficit slip away to absolutely staggering heights. And who is financing this public budget deficit? The rest of the world ! And why is the Rest of the World financing? Because the United States has the military strength to forcibly confiscate energy and mineral resources in various parts of the world in order to finance itself for free.

When we add to the current BRICS countries the long list of new candidates (only Afghanistan and its Taliban are missing), we see that the differences in competitiveness between countries within the BRICS will be so gigantic that very quickly, the question of issuing BRICSOR out of nowhere (not backed by gold) will arise. And who is going to make budgetary transfers to support the weak competitiveness of BRICSOR structural borrowing countries? To this question, the Mundel-Fleming triangle answers that the scaffolding will collapse! And asymmetric shocks will accelerate this collapse.

So what is left as a possible solution to the BRICS?

It is the monetary platform that manages a portfolio of national currencies. For simplicity let’s call this monetary platform PLATBRICS. PLATBRICS must have a legal personality identical to that of a public multinational corporation whose shareholders are the BRICS member states. PLATBRICS must be managed on the community principle of “one country, one vote”. PLATBRICS chooses a portfolio of currencies, depending on the quality of the economy of the country issuing such currencies. When a country “A” for example looks for a currency, its intention is precise: this currency must be able to enable it, if necessary, to buy goods and services in the country issuing the currency concerned. From this, the currency portfolio that PLATBRICS will choose is obvious. All BRICS member countries and potential BRICS candidates can easily buy many goods and services produced in Russia or China, if they hold Rubles (RU) or Yuan (CNY). Therefore, PLATBRICS primarily retains the RU and the CNY in its currency portfolio. The Rupee might be looked down upon by Russia and China as these two countries do not necessarily have significant goods and services to acquire from India. On the other hand, the long list of potential BRICS candidates, especially African countries, have hosts of goods and services that they could acquire in India with INR. So for this reason, PLATBRICS will also admit INR in its currency wallet. The same reason leads PLATBRICS to also admit the Brazilian Real BRL because many countries would gladly buy Embraer aircraft with BRL. PLATBRICS must also have the nature of a Bank, that is to say that PLATBRICS must keep in its books, a BRL account, a CNY account, a RU account and an INR account for each country that adheres to the BRICS. When country “A” which is a BRICS member exports to another BRICS member country, one of its accounts held at PLATBRICS is credited. For example, the amount of CNY or RU held by country “A” in the PLATBRICS books increases. And conversely when country “A” imports from another BRICS member country then one of its accounts held at PLATBRICS is debited. For example, the amount of BRL or INR held by country “A” in the books of PLATBRICS decreases.

Principle of international centrality: The central bank of country “A”, member of BRICS does not hold any account in a central bank of another member country of BRICS. The Central Bank of country “A” holds its accounts only with PLATBRICS. This must be a written rule adopted by each country that wants to join the BRICS.

Principle of local centrality: The commercial banks of country “A”, member of BRICS do not hold any accounts in the commercial banks of other member countries of BRICS. Similarly, the commercial banks of country “A” member of BRICS do not hold any accounts in the central banks of other member countries of BRICS. The commercial banks of country “A” hold their accounts only with the Central Bank of country “A”.

With the two principles of centrality, all the foreign exchange reserves of country “A”, member of the BRICS are only in the books of PLATBRICS. It is PLATBRICS which holds the cumulative total of all the foreign exchange reserves of all the BRICS countries and it is only PLATBRICS which holds accounts in the Central Banks of Russia, Brazil, China and India.

You have understood the usefulness of the two principles of centrality. With these two principles of centrality, it is never again possible to seize the assets held by country “A”. Suppose China is angry with country “A”. The CNY holdings of country “A” are recorded in the books of PLATBRICS. Country “A” is a creditor of PLATBRICS and not of China. And it is PLATBRICS that holds an account with the Chinese Central Bank containing the CNY belonging to several BRICS countries. So China cannot seize the assets of PLATBRICS, which is a legal person quite distinct from country “A”. This resolves the geostrategic question of seizing assets that prompted the BRICS to engage in the search for alternatives to the USD. And if China goes to the General Assembly of PLATBRICS shareholders to propose the seizure of CNY assets held by country “A” at PLATBRICS, China will have to face the principle of voting by “one country, one vote”.

And how are the stark differences in competitiveness going to be resolved? Countries unable to export to provide their PLATBRICS’ accounts with deposits in RU, CNY, INR, BRL will need to negotiate individual credits bilaterally with holders of RU, CNY, INR or BRL. At least debtors and creditors will be well known and it will be up to each creditor to assess the conditions of its loan. This is a new monetary system that does not make the weight of the system bear on a single country.

What about currency exchange transactions? They take place on a single centralized market which is PLATBRICS. No more crazy currency speculation disconnected from transactions on real economic goods and services. The value of each currency at PLATBRICS will therefore result directly from the real economy.

You have already understood that if a global platform similar to PLATBRICS had been added during the Bretton Woods agreements, Russia would never have had its currencies confiscated because it would have been simply impossible. The two principles of centrality automatically eliminate speculative foreign exchange transactions that are disconnected from the production of goods and services. It will be up to each country to ensure that its central bank diligently processes currency transfer requests from local commercial banks.

In addition to the PLATBRICS Platform, the countries that join the BRICS must adopt at least the following criteria to be validated by any candidate:

Commercial subsidiarity criterion: any BRICS member country that sells or buys must first buy or sell within BRICS and must only trade outside BRICS if there are insufficient customers or suppliers within BRICS. This criterion will make it possible to filter and automatically reject unserious candidates. This criterion will also shatter the mad neoliberalism of the Davos Forum globalists.

Criterion of civilizational convergence No. 1: any member country of the BRICS must necessarily adopt a national law which guarantees the individual, the freedom to practice the religion of his choice.

Criterion of civilizational convergence N°2: any BRICS member country must adopt a national law to ban homosexuality, transgender movements, LGBT movements and abortion.

Of course, with the fulfillment of the dream shown by GOD to Nebuchadnezzar in the Book of Daniel, the Church, Body of the LORD JESUS ​​CHRIST will finally constitute this long-awaited single world global empire and it is then that the Born Again Christians will be able to establish a single currency and a single Central Bank over the whole earth.

Shalom to all the peoples of the earth.

Rev. Apostle Joseph TOUBI

    Tel: +237 677 780 345