In the news we read:
“In the first barometer of global condemnation of Russia’s annexation of Crimea, Ukraine and its Western backers persuaded a large majority of countries in the United Nations General Assembly on Thursday to dismiss the annexation as illegal, even as Russia sought to rally world support for the idea of self-determination.” – United Nations General Assembly Vote Isolates Russia – NYTimes.com.
Instead of rambling on like so many about right & wrong and who we think is more at fault over this Ukraine thing – lets cut to the chase.
Nations around the world are lining up and taking sides on what could turn into a huge global economic split. Pictured below is a quick yet incomplete look at how the world is splitting apart.
I think we can assume that the BRICS are siding with Russia. The BRICS are the rising economic world power, a reality that must really threaten western leaders.
I may be jumping ahead, but if the BRICS chose to stand together and pick some other currency, like the Chinese Yuan, as the preferred currency for international trade, the US Dollar would loose its status as the sole world reserve currency.
What would the loss of the US Dollar’s dominance mean to main street America?
Technically speaking it would mean that a big chunk of the world would stop demanding dollars. Lower demand of anything results in lower value. When a currency looses value quickly we experience it as rising prices on consumables like food, fuel, and services. If it happens incredibly fast we call it hyperinflation.
Will we see more inflation if the world splits economically in two?
There’s no way to tell because so much reality is papered over by the central banks and government stimulus.
What worries me is that the world leaders seem hell-bent on taking us there. They will blame each other for the mess – when they are all to blame – and the people will end up footing the bill or worse.
So in the mean time I pray they stand down and find some other way to resolve these differences – and buckle up for a rough ride just in case cool heads don’t prevail.