The U.S. dollar stands at the crossroads of a new financial order as the BRICS alliance is looking to launch a new currency. The present objective of BRICS is to dethrone the U.S. dollar and make the new currency the world’s reserve status. BRICS is advancing in its mission to challenge the U.S. dollar by convincing developing countries to end reliance on the greenback.
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The bloc remains successful as close to 41 countries have expressed interest to trade in the new BRICS currency. The development could put a strain on the U.S. economy as the greenback would have no means to fund its deficit. While the debt ceiling crisis is yet to be resolved, the burden of a ‘BRICS currency success’ will take a toll on the American economy.
If BRICS Currency Becomes Successful, U.S. Economy Could Reach Hyperinflation
Heritage Foundation economist E. J. Antoni warned that the U.S. dollar is on the brink of losing its reserve currency status. Antoni explained that if developing countries ditch the dollar and trade in BRICS currency, the debt ceiling crisis could worsen.
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The economist rang the warning bells saying that if America fails to fund its deficit, seven decades of deficits could flood the U.S. economy. He said that if such a situation arises, the U.S. economy might fall into hyperinflation where prices of all commodities would skyrocket.
“Losing reserve currency status would mean 70 years of deficits flooding back to the U.S. All competing with existing dollars held domestically to buy goods and services. That’s a hyperinflation scenario. It also means we could no longer export inflation abroad. So we’d bear the full cost of future inflation ourselves,” he said to the Daily Caller.
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Read here to know how many financial sectors in the U.S. could be hit if BRICS launch their new currency. BRICS is an acronym for Brazil, Russia, India, China, and South Africa. The bloc will decide on the formation of a new currency in the next summit in Johannesburg in August.