For decades, the U.S. has carried out an important role on the global stage. But, as it turns out, other players have been waiting in the wings for a chance at their time in the spotlight.
Russian President Vladimir Putin was in Sochi in the fall to address an international forum, according to a report in the South China Morning Post. At that event, he reportedly pledged to increase security and economic cooperation with China while denouncing “Western elites.”
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As Russia and China continue to strengthen their alliance, along with the other so-called BRICS nations (now including Saudi Arabia, Iran, Egypt, the United Arab Emirates, Ethiopia and Argentina), many Americans are wondering whether there’s about to be a global power shift.
Many observers see these developments as potentially “catastrophic” for the U.S. economy. Among them is Kevin from Nashville, who called into The Ramsey Show for advice about how to plan for the worst-case scenario.
What is BRICS and why is it seen as a threat?
BRICS came together in 2009 as an informal association of countries that regularly discuss trade, economic co-operation and security issues. Some in the West see it as intended to confront U.S.- and Europe-orbiting multilateral organizations like NATO and the G7.
Prior to the August summit, Saudi Arabia’s Finance Minister, Mohammed Al-Jadaan, had publicly stated that his nation was considering dropping the U.S. dollar as the currency it uses for trading oil, the country’s primary and most valuable natural resource.
If Saudi Arabia drops the dollar, Kevin theorized to hosts Dave Ramsey and Jade Warshaw, that “all the nations holding Treasury bonds to buy oil from the Saudis (would) ditch their dollars” by selling the bonds.
Thus, trillions worth of U.S. dollars would “come home,” as Kevin put it, effectively increasing the domestic money supply and creating conditions for “catastrophic inflation.”
The question he posed to Ramsey was: How likely is this to happen? And if it does, how do you prepare for the total destruction of the U.S. economy?
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BRICS won’t destroy the US
Kevin’s call came before it was announced that Saudi Arabia had been invited to join BRICS, but even then Ramsey was confident that the move wouldn’t lead to the country dropping the U.S. dollar immediately.
As he told his listeners, “the Saudis are probably way too smart to think they’re going to undermine the U.S. economy.” These countries, which represent 40% of the global population, are reliant on the U.S. economy and its vast consumer market, Ramsey argued, so destroying the U.S. would destroy BRICS in the process.
Secondly, “the idea that you can get all those communists to line up and not shoot each other is gonna be humorous,” he quipped.
There is some evidence that the BRICS nations are making progress in replacing the dollar in their trade deals. The European Bank for Reconstruction and Development noted that the share of Russia’s imports invoiced in yuan increased by 17 percentage points in 2022 — a significant increase to be sure, but perhaps expected in the wake of numerous global sanctions related to Russia’s war in Ukraine. And as for abandoning the dollar completely globally, Ramsey believes that’s unlikely to happen in our lifetimes.
Ramsey went on to say that he doesn’t have “a meteorite plan.”
“I don’t have a plan for apocalypse like you’re talking about,” he said, addressing his guest. “What you would have then is a total economic and governmental collapse, and the only plan then that works is bottled water and bullets.”
Under such conditions, in which the economy as we know it ceases to exist and the government and its laws no longer have any control over society, your money would mean nothing, Ramsey said. You couldn’t even find a safe haven in gold because “no one trades gold bars in the middle of a collapsed economy.”
What they do is shoot you for your property, he said.
Control the controllables
However, he continued, all this catastrophe planning is a waste of physical and emotional energy. A better strategy, according to Ramsey and Warshaw, is to focus on controlling the controllables.
You can’t control what Saudi Arabia or the BRICS nations do, so there’s no sense in worrying about it. Instead, keep your focus on what is in your control, such as how much you spend, save and invest.
It’s understandable to be afraid of worst-case scenarios, but taking your eye off of your own financial health out of fear of the apocalypse is only going to reduce the likelihood that you experience your best-case scenario.
Source : Yahoo Finance