The Brics will expand, admitting 6 new members: Saudi Arabia: the world's 2nd largest oil producer, The United Arab Emirates, the world's 7th largest oil producer, Iran, the world's 8th largest oil producer, Ethiopia: a treasure trove of gold, platinum, copper and natural gas, and Argentina, another treasure trove of natural resources and Egypt: politically a dominant player in the Middle East.
US economists are falling all over themselves trying to downplay the significance of this move. These are not huge countries by GDP. There still is no common currency. True and True.
But the days when oil is settled in dollars are over. That is a huge deal. In fact that was the stabilizing basis at Bretton Woods for making the dollar the world's reserve currency. Since then a huge eurodollar debt market has evolved and that is not going away. But the need for the world's largest economies to buy our debt as a repository for dollars needed in the oil - and commodity trades is over.
So who will buy our massive debt? The United States Federal Reserve Bank. That's who.
That makes us Japan.
Not today. Not tomorrow. But very soon.
And just as significantly, this move make China a formidable global power as they now have outsized control over the global energy supply. Because not only do they have an influence over the oil markets, but they also control the rare earth markets that are necessary for the chips used in electric energy.
So get ready - over time - for expensive energy in a world that is already moving towards out of control inflation.
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