Here's something that is going a bit under reported that I think you all should be aware of; the BRICS ministerial meeting that was held in Russia earlier today. As you can tell from the headline above, 22 countries were represented at the meeting during which they discussed a range of topics including; global governance, coordinated policy to combat cLiMaTe ChAnGe, cooperating to create robust energy systems across BRICS nations, humanitarian efforts in relation to the war in Palestine, and underscoring "the importance of the enhanced use of local currencies in trade and financial transactions between the BRICS countries", among many other things.

As it pertains to the beat of this newsletter, the discussions about "enhanced use of local currencies in trade and financial transactions between the BRICS countries" is the most important part of the discussion. These comments represent a continuation of a theme that we've been following for years; de-dollarization by countries who are fed up with the petrodollar system and the fact that it gives the US somewhat of a free ride considering the fact that it drives demand for dollars and US treasuries.

This meeting is particularly interesting because Saudi Arabia is a participant of the meeting after officially joining BRICS earlier this year. The strength of the petrodollar is contingent on the strength of the relationship between the US and Saudi Arabia. The current administration has made a lot of missteps over the course of Joe Biden's presidency which have turned Saudi Arabia toward the arms of the BRICS nations. Everything from the draining of the SPR in an attempt to drive oil prices lower to threatening the sovereign nation if they didn't increase oil production in 2022 when inflation was getting out of hand in an attempt to accentuate the draining of the SPR to mispronouncing his name at a global summit.

On top of all of this, it isn't hard to believe that Saudi Arabia saw how quickly Western nations moved to freeze the US treasuries held by Russia and decided they need to begin diversifying away from Western controlled monetary rails. Especially considering the hyper-politicized atmosphere in the US. Is it insane to think that the left would reignite the controversy around Jamal Khashoggi to justify sanctions against Saudi Arabia? I don't think so.

Yesterday marked the 50th anniversary of the petrodollar system. If Saudi Arabia is truly contemplating diversifying away from their exposure to the US by working with other BRICS nations to lead the world further down the path of a multi-polar reality it will be a big blow to the dollar and its status as reserve currency of the world and be somewhat of a poetic ending to the petrodollar system. A half century of privileged fuckery.

There were rumors spreading on X last week that the US and Saudi Arabia had until yesterday to re-up their "contract" which recognizes and upholds the petrodollar system, but I've done some digging and haven't been able to confirm whether an actual contract exists and, if it does, that it officially ended yesterday. As of right now I'm filing that under: bad info on X until proven otherwise.

Regardless of whether or not that contract actually exists or not is still inconsequential to the meeting that was held in Russia earlier today. The BRICS nations seem to be hellbent on transitioning away from settling their transactions in dollars and instead relying on their local currencies. This would mean less demand for dollars and US treasuries, which would most likely mean more money printing and debt issuance here in the US. That would make the inflation and debt problem that is spiraling out of control even more untenable.

With all of that said, I think it is important for me to be clear here. This is in no way an endorsement of the moves by the BRICS nations. I am simply observing what they seem to be doing. And if they are doing what they seem to be doing I think they are making a massive mistake.

If you think the world run a petrodollar system is bad. The world run on a BRICS currency isn't going to be any better and will most likely be worse from the standpoint of currency stability. To think that 1.) the BRICS nations won't get caught in a dick measuring contests from a geopolitical standpoint and 2.) will be able to manage their currencies responsibly is terribly naive. China and India are currently clashing at their border. Africans are becoming more dismayed with China by the day as the ramifications of the Belt and Road initiative become more obvious. Brazil is a country in political disarray. South Africa is also experiencing political instability. A BRICS currency is doomed to failure from the get-go.

If any of the individual nations within BRICS (and outside of BRICS) were thinking clearly they would be transitioning to a monetary system that is controlled by no one country or coalition of countries. They would adopt bitcoin as their monetary network of choice and avoid the headache of attempting to coordinate geopolitical and monetary affairs amongst a group of countries who can't be trusted.

I do believe the world is headed toward a multi-polar future. The optimal outcome for the multi-polar world is a system in which each nation is able to control their financial future at the monetary level by utilizing a currency that can be controlled by no one. Each country may have its own problems financially, politically or socially but those problems should be isolated to the individual country and not a coalition of countries who are hitching their wagons together via a monetary system that they attempt to co-parent.

The countries who will benefit the most over the next decade are those who recognize the infeasibility of such a co-parented monetary system and adopt bitcoin instead. I hope the US is one of these countries.

Final thought...

The terrible 2s are here.