(Kitco News) - The U.S.-led West will soon witness the end of the dollar’s preeminent position in international trade, and all of fiat will follow, writes Patrick Barron on behalf of The Mises Institute, which endorses the Austrian school of economics in the tradition of Ludwig von Mises.
Barron says the recent BRICS summit in Johannesburg, South Africa, included “an agreement on a first step toward establishing an alternative international trade settlement system based on commodities, which would certainly include gold.”
He points out that the debasement of the fiat dollar “has lowered its purchasing power to gold by 98 percent since 1971,” and says that the sanctions against Russia following the invasion of Ukraine, including the freezing of Russian-owned assets and their banning from the dollar-based SWIFT interbank settlement system, has accelerated the shift toward an alternative system.
Barron says that the new settlement system for international trade will require settlement in gold,” and that the advantages of this new system “will become obvious to every nation, not just the current BRICS members.” He argues that the social democracies of the developed world, and the U.S. in particular, will find themselves at a disadvantage in a gold-based monetary and trade system. “Nations like the United States, who have huge welfare obligations and who have politically connected industries that do not add to the nation’s capital base, will struggle,” he says. “Having lots of nuclear weapons will be irrelevant, and having bases around the world will be liabilities rather than assets.
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