The US may be approaching a turning point in its dominant economic leadership of the world, as Russia, India, China and the other BRICS nations are steadily becoming more assertive in seeking greater influence in global affairs. Per the International Monetary Fund in late 2014, the US has now been eclipsed by China as the world’s #1 economy. With America’s leading post-WWII partner, Europe, in economic stagnation and its lead Asian ally Japan now in continuing contraction, the new and game-changing geopolitical alliance of the higher-growth BRICS may lead to a ‘tectonic shift’ of global influence away from the US dollar as the lynchpin ‘reserve currency’ for the settlement of most international payments.
Since 1944, the US has benefitted enormously from the dollar’s status as the sole global ‘reserve currency.’ This has greatly facilitated America’s funding of its deficits from abroad, and it has also provided support for its global economic and political objectives. Over the past ten years, China has steadily sought to have its currency, the yuan, also enter the world stage as a reserve currency. China and its new allies have also recently established the new $100 Billion BRICS Development Bank and other similar institutions to compete with the US-dominated IMF and World Bank.
While the dollar currently continues to surge in global value as a ‘safe haven’ investment, there are many signs that the handwriting is on the wall for global currency shifts ahead. From China to Russia to India to Ukraine to Switzerland to Greece to Iran to Saudi Arabia and to new regimes in the Middle East, the US may be facing potential developments with both long-time allies and adversaries which could displace the US and the dollar from their solo lead role in international finance. The US has steadily resisted this shift for decades, because allowing the world to bypass the dollar could have profound implications for US influence in the world, as well as in the daily lives of Americans through higher prices for imported goods. [Read Entire Article at Thomson Reuters Expert Witness Services]