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BRICS+ of Gold

Jim Rickards, an esteemed American investment banker and author with expertise in finance and precious metals, recently brought to light an intriguing prediction regarding the BRICS+ countries:

“I recently revealed that the so-called “BRICS+” countries will announce the creation of a new currency at its annual leaders’ summit conference on August 22–24. This will be the biggest upheaval in international finance since 1971 … the world is unprepared for this geopolitical shock wave. It appears likely that the new BRICS+ currency will be linked to a weight of gold. This plays to the strengths of BRICS+ members Russia and China. These countries are the two largest gold producers in the world, and are ranked sixth and seventh respectively among the 100 nations with gold reserves.”

Understanding BRICS+

BRICS+ is a group of states consisting of Brazil, Russia, India, China, and South Africa. “BRIC” was coined in 2001 for fast-growing, potentially dominant forces in the global economy by 2050. South Africa’s later inclusion expanded it to BRICS+.

Over 17 years, BRICS+ has endeavoured to become a counterbalance to western hegemony. Its institutions like the New Development Bank (NDB) and Contingent Reserve Arrangement are alternatives to the World Bank and the IMF.

This alliance boasts:

  • Combined economic influence and abundant resources
  • Seven countries in the membership queue, with 13-14 awaiting consideration

Come August, Saudi Arabia’s inclusion will mark:

  • 50% of the global population within BRICS+
  • 30% of global landmass
  • 54% of global GDP
  • Two top oil producers: Russia and Saudi Arabia
  • 15%-20% of global gold reserves.

Moreover, an amalgamation involving the Eurasian Economic Union and Shanghai Cooperation Organisation seems on the horizon.

After their first formal meeting in 2009, BRICS+ asserted the necessity for “a stable, predictable, and diversified international monetary system.” Rickards postulates that BRICS+ is gearing up to unveil its currency.

BRICS+ Currency

Recently, Rickards gave a fascinating interview on the YouTube channel Wealthion. In this interview, he was adamant that the BRICS+ currency, (which he termed a BRIC, for convenience), “is not a gold standard”. 

“The value of the BRIC is not determined with reference to any other currency. It is determined with reference to gold, by weight of gold”.

The implication of the BRICS+ currency being tied to a weight of gold means that, regardless of anything else going on financially and economically in the world:

1 unit of BRICS+ currency = specified weight in gold

Trade between 50% of the world’s population will transition to BRICS+ currency, which will be defined in gold, so half the world’s trade will be transacted in BRICS+ currency.

Gold’s Unwavering Stature

Warren Buffet, an investment giant, once opined on gold: “Gold…has two significant shortcomings, being neither of much use nor procreative.”

Despite Buffet’s scepticism, gold’s reputation as a store of value has persisted for 5,000 years. He is missing the point of gold. Gold is not an investment, it is real money, unlike the 600 odd fiat currencies in the history of the world that have gone to zero.

Gold fulfills money’s 6 characteristics:

  • Durability
  • Portability
  • Divisibility
  • Uniformity
  • Limited Supply
  • Acceptability.

BRICS+’ gold linkage suggests, in the medium to long term, a potential for spikes in gold demand and the nominal currency price of gold.

A Waning USD?

Let’s take a look at the world’s current world currency, the U.S. dollar. The USD does not fulfill the attributes of money.

The U.S. dollar’s decline is palpable. In 1913, when the US Federal Reserve was established, the fixed price of gold was US$20.67. President Nixon infamously broke the gold peg that was US$35 in 1971. Today, gold hovers around $1,914 per ounce. The dollar’s worth is now 1.8% of what it was in 1971, a staggering 98% fall over 52 years.

Rickards’ analysis paints a bleak dollar future, in contrast to the BRICS+: “This is a bet that the dollar is going to collapse against you over time. I think that’s a very good bet … this is not a three-month forecast … you want to launch this new currency and you say hey long term the dollar is going to collapse in terms of gold. I’ll hook my horse to this wagon called gold by weight, and I’ll just reap the benefits.”

Libertarian Lens

The essential question for libertarians is “What can we do, so that we and our families survive and thrive?”

As Murray Rothbard insightfully shared, “I see a great future for gold and silver coins as the currency people may increasingly turn to when paper currencies begin to disintegrate.”

Allowing for one year’s living costs in cash, keep spare gold in hand (not as ETFs or in banks, which carry counterparty risks).  Then, you have a store of value that has well and truly proven itself over millennia. 

Gold never takes its promises lightly.

Don’t Pay the Pied Piper

More than anything, government is incompetent. It is staffed by people who, by and large, have been or would be unsuccessful in the private sector – whether the receptionist at your local motor registration office or the Prime Minister of Australia.

Ultimately, we are aware of this. However, thanks in part to television programs such as The West Wing and House of Cards, we simultaneously believe the government is comprised of savant-level masters of psychoanalysis and manipulation.

THE MARKETPLACE OF GOVERNMENT

Perhaps one of the biggest tactical failings of libertarians and anarchists is the tendency to view the government as one cohesive and comprehensive entity. While it is true that most Western governments are behemoths, they are not homogenous. Rather, they are comprised of a number of disparate departments competing for their slice of tax revenue. 

Good leaders should be able to admit their faults and avoid acting on emotion

Both libertarians and authoritarians like to think that government departments work in tandem, sharing relevant information and working together to overcome an obstacle or bring down the ‘bad guy’.

While they do undoubtedly work together at times, we should all be very hesitant to assume that is typical. Often, it is in the interests of the self-serving bureaucrats who lead various government departments to work against other departments. 

What is better for the Department of Foreign Affairs and Trade (DFAT) than to prove the incompetence of the Department of Home Affairs? If you were a self-serving bureaucrat at DFAT, you could leverage that to demand more scope, which means more funding, a bigger empire, and perhaps more money in your pocket.

INCOMPETENCE BEFORE CONSPIRACY

Whenever we are presented with government inconsistencies, we should always consider incompetence before conspiracy. That is not to say that government conspiracies do not exist, but the level of expertise required to pull off many of the conspiracies posited is something that is simply not possible for the incompetent people who have comprised our governments for many decades.

When attempting to determine the likelihood of a conspiracy theory being true, it is always worth examining:

  1. The number of co-conspirators required.
  2. The profit or benefit for the conspirators.
  3. The use of unfalsifiable statements and arguments.
  4. The deliberate misinterpretation of events.
  5. The excessive use of baseless arguments.
  6. The number of assumptions required.
  7. The false messiah.

It is true that most Western governments are behemoths, they are not homogenous. 

THERE BUT FOR THE GRACE OF GOD GO I 

Even when we look at recent Covid tyranny, the most likely culprit is old-fashioned pride. While homegrown tyrants like Dan Andrews and Mark McGowan do not deserve to ride off into the sunset of retirement without facing the accountability of the people, that does not mean they were motivated by a global conspiracy to imprison their own constituents and usher in a social-credit-style system at the behest of the World Economic Forum (WEF). Occam’s razor dictates that their real fault was the inability to detach their own pride and ego from the policy they prescribed. We all find it difficult to reverse our instinctive position and admit that we were wrong. 

This does not excuse tyranny; good leaders should be able to admit their faults and avoid acting on emotion, but it is important we recognise the banal origins of tyrannical behaviour. We are all capable of extreme tyranny.

THE RABBIT HOLE

All this is to say that there are some conspiracy theories out there that are ridiculous, yet refuse to die. Flat earth, reptilians, QAnon and fake moon landings are just a few that immediately come to mind. These theories are not only completely ridiculous, but dangerous. They serve to ideologically neutralise those who believe them: instead of directing their investigation towards actual, observable corrupt government and corporate institutions, they are too busy chasing shadows, fighting imaginary adversaries and worshiping false messiahs.

What have any of these conspiracy theorists actually accomplished? Have they created a thinktank that has shaped public policy? Have they run a successful candidate? Have they meaningfully gained influence and shaped culture? Have they captured a single reptilian? Have they found real evidence demonstrating the earth is flat? Have they proven anything? All they have achieved is increased sales of their “natural remedies” they advertise.

Julian Assange and Edward Snowden showcased actual government corruption and exposed real conspiracies in their entirety. Meanwhile, when it comes to grifters like Ricardo Bossi or Q, the revelation is always “just around the corner”.

Challenging narratives and thinking critically isn’t just about calling out corporatist media propaganda and government corruption, but also the grifters within our own movements.

Liberty and National Borders

Libertarianism is all about the freedom of individuals from coercion. Libertarians believe the proper role of government is defined by JS Mill’s harm principle: ‘The only purpose for which power can be rightfully exercised over any member of a civilised community, against his will, is to prevent harm to others.’

Within a country this is relatively straightforward – reductions in tax and increases in liberty are supported, increases in tax and reductions in liberty are opposed.

But things can get complicated when it involves matters outside the country. How is libertarianism affected by national borders? Can it apply to relationships between sovereign states?

To what extent should Australian libertarians seek to oppose coercion in other countries?

In his 1801 inaugural address, US President Thomas Jefferson declared that the US should consider its external military alliances to be temporary arrangements of convenience to be abandoned or reversed according to the national interest. Citing the Farewell Address of George Washington as his inspiration, Jefferson described the doctrine as “peace, commerce, and honest friendship with all nations—entangling alliances with none.”

Thomas Jefferson. 2nd President of the United States. Author of the Washington Doctrine of Unstable Alliances.

Known as the Washington Doctrine of Unstable Alliances, this thinking dominated US foreign policy right up to the Second World War. And although America now has longstanding alliances with many countries, including Australia, the doctrine remains influential in some political circles.

In particular, many libertarians support it. In their view, a country should not invest blood and treasure in squabbles beyond the country’s borders unless there is a clear threat to the country and its ability to engage in trade and commerce. It should certainly not maintain military capabilities in excess of what is needed to defend the country.

This is rationalised in terms of libertarian values. History has repeatedly shown that a standing army is a threat to liberty. Moreover, maintaining a military force capable of more than simply defending the country is expensive, necessitating higher taxes than if the Washington Doctrine applied.

They point to wars such as Vietnam, Iraq and Afghanistan, where it is difficult to show any enduring benefits from military involvement by America or Australia. They also criticise current support for Ukraine’s fight against Russia’s invasion.

Ukraine’s ambassador to Australia, Vasyl Myroshnychenko, inspects an Australian Bushmaster armoured vehicle

There is a problem with this thinking though: nationalism and national sovereignty are actually collectivist concepts. They are not libertarian and, Jefferson’s other qualities notwithstanding, neither is the Washington doctrine.

What that means is there is no libertarian justification for doing nothing about coercion merely because it is occurring in another country.

Coercion should always be our concern, wherever it occurs.

That does not necessarily mean rushing military aid to those subject to coercion in other countries. There are many reasons why that might not be possible, practical or advisable. But it is perfectly legitimate for libertarians to consider whether there is anything they can do, militarily or otherwise.

Some interventions have made a major difference. But for America’s entry into the Second World War, for example, Germany and Japan would have imposed their dreadful dictatorships on most of the world. But for America’s intervention in Korea, the people in the south would now be suffering the same miserable fate as those in the north. And but for Australia’s intervention in East Timor, the country would be suffering under Indonesia’s heavy-handed military rule, now obvious in West Papua.

Australian Peacekeeping Handover of East Timor

There are also some current examples to consider. One of the consequences of the climate change panic, for example, is that around 40,000 children in the Democratic Republic of Congo work in appallingly inhumane, slave-like conditions in cobalt mines. The cobalt is used in lithium-ion batteries required by electric vehicles.

In China, the government has imprisoned more than a million Uyghurs since 2017 and subjected those not detained to intense surveillance, religious restrictions, forced labour, and forced sterilisations. Forced labour is used to produce solar products.

It is estimated that China has 98 percent of the world’s manufacturing capacity for photovoltaic ingots; 97 percent for photovoltaic wafers; 81 percent for solar cells; and 77 percent for solar modules. Many of the largest global producers of photovoltaic ingots and wafers, solar cells, and solar modules directly source polysilicon from entities believed to use forced labour in its production.

Even a boycott of products associated with such coercion would be more consistent with libertarian values than doing nothing based on the “no entangling alliances” idea.  

JS Mill was also an advocate of utilitarianism in addition to classical liberalism. This philosophy, generally attributed to Jeremy Bentham, is often summarised as seeking the greatest good for the greatest number.  For libertarians, it should mean the greatest liberty for the greatest number.

Geopolitics and The Non-Aggression Principle

For an example of how libertarians philosophically wrestle, behold this exchange between the Arizona Libertarians and Australian Brett Lombardi:

It is eloquent in its brevity: realpolitik confronting Rothbardian idealism.

One of the foundational concepts of libertarianism is the Non-Aggression Principle. Put simply, this is the idea that violence and coercion between parties should be avoided, and that people should act cooperatively and in harmony. 

It has mainly been applied to situations between individuals. But what about non-aggression between nation states, the geopolitical sphere?

Enter libertarian heavyweight, Murray Rothbard:

In National Defence and The Theory of Externalities, he wrote:

“For the libertarian, the key to foreign policy is the defence of the homeland against aggression. The State should protect the citizens, keep the peace, and defend person and property from attack.”

Straightforward enough, it seems. But what is ‘homeland’?

Let’s put the Rothbardians to the test with a series of scenarios, asking whether each is a violation of the Non-Aggression Principle:

The Chinese Navy sails to Venice Beach, California, with amphibious craft landing and troops shooting people. I’m sure we can agree this violates the Non-Aggression Principle.

What if US surveillance determined in advance that the Chinese were coming and warned them not to enter the 12 nautical miles of US territorial waters? The Chinese ignore and enter, then the US engage the aggressor at 11.9 nautical miles? Is this a Chinese or US violation?

What about at the US exclusive economic zone boundary of 200 nautical miles? If US engages, is this a violation?

Libertarians must be practical and realistic in geopolitics to achieve electoral success.

Rothbard doesn’t say what the ‘homeland’ is but would probably pick one of these boundaries.

But we can test this further:

In 1893, US agents and businessmen mounted a successful coup against the Kingdom of Hawaii, asserting that their investment and private property rights were under threat. The US “annexed” Hawaii in 1898 as a territory. Did the US violate?

Then in 1941, Japan bombed this territory. Hawaii wasn’t even a state of the US at the time of the Pearl Harbour attack. Were the US defending their ‘homeland’ when it used anti-aircraft fire against the Japanese, or were they in continued violation of the Non-Aggression Principle because of their prior military-backed coup?

What if the Chinese today invaded Guam or American Samoa, both mere territories as Hawaii was? Would this be a violation? Both locations are closer to China than the US. Where does US ‘homeland’ end?

Rothbard doesn’t define the extent of the US homeland, but I suspect he might regard these territories as empire-building and so in violation of the Non-Aggression Principle.

He heavily criticised Gulf War I as an example of creeping empires in The Case For Radical Idealism:

“In foreign affairs, the libertarian sees the danger and evil of the U.S. launching an aggressive war against Iraq. This is why the true lovers of liberty should condemn the Bush Administration’s war, and make it crystal clear that, in their libertarian view, it is a criminal war of imperialist aggression.”

In that vein: 

What about the joint US-Australian Military Surveillance Base at Pine Gap, Northern Territory? Among its many purposes, this base is used by the US to determine whether Guam and American Samoa are under threat of attack. In an age of intercontinental missiles taking only 30 minutes to reach their targets, can the US defend this base as a defence of its homeland?

If the Chinese bombed Darwin’s Robertson Barricks at which 2,500 US marines are based on the invitation of Australia, does the US violate the Non-Aggression Principle by defending those US marines and Australian soldiers?

– If China ‘annexed’ Taiwan, would that be a violation of the Non-Aggression Principle? If so, is it really the view of libertarians in Arizona that libertarians should merely shrug our shoulders?

Rothbard shunned territorial pre-emption yet these are realpolitik situations. I think this is a huge Rothbardian blind-spot.

Should the British have waited for Napoleon to land on the beaches of Dover? Should the Australians have met the Japanese at Cooktown rather than Kokoda? At what point should the British RAF have engaged the raiding Luftwaffe? Over Canterbury, Calais or Cologne?

Even if we just define ‘homeland’ as current national borders, there is still much to challenge us about Rothbard. For instance, in For a New Liberty: The Libertarian Manifesto, he elaborates on the type of impermissible intervention:

“A non-interventionist policy means that America does not interfere militarily, politically or covertly in the affairs of the other nations.”

Rothbard refined this further, in War, Peace and The State:

“War, then, even a just defensive war, is only proper when the exercise of violence is rigorously limited to the individual criminals themselves. We may judge for ourselves how many wars or conflicts in history have met this criterion.”

So, Rothbardian libertarians such as those in Arizona argue that defence of the homeland against aggression is permitted but that defence cannot extend to preventative measures and defensive force may only be aimed at individual war criminals!

How a commander would know, in the heat of battle, the identity of a war criminal in advance of a war crimes tribunal is beyond me.

None of these expressions of libertarianism give me much confidence that, when applied, practical benefits will result. And yet the entire point of libertarian philosophy is to spawn policies which work to unleash human flourishing. 

More realism and less idealism, I say.

In this regard, I am not a Rothbardian idealist. I prefer the view of leading realpolitik libertarians like David Boaz, Executive Vice President of the Cato Institute who wrote:

One of the foundational concepts of libertarianism is the Non-Aggression Principle.

“Libertarians should be realistic about the world. Some level of military and intelligence capability is necessary for national defence and to secure the freedoms that libertarians cherish.”

And Nick Gillespie, Editor-At-Large, Reason Magazine who offered:

“Libertarians are not pacifists. We recognise that the state has a role in national defence. The key is to ensure that this role is strictly limited to protecting the country from external threats and does not devolve into unnecessary interventions.”

Or this from Cato Institute’s, Julian Sanchez:

“Libertarians should recognise that there may be cases where limited and well-defined military intervention can be justified on humanitarian grounds, such as preventing genocide.”

Let me marshal further libertarian opinion to counter Rothbard. Here, leading US libertarian Senator Rand Paul:

“While a strict non-interventionist foreign policy may have its merits, there can be instances where limited government intervention is necessary to protect the nation’s security and interest.”

And Brian Doherty, Senior Editor at Reason Magazine, who penned:

“While avoiding unnecessary conflicts is crucial, libertarians should acknowledge the importance of maintaining a credible defense to deter potential aggressors and protect individual rights from external threats.”

Yet further still, perhaps more gently, even leading libertarian philosopher and Rothbard rival, Robert Nozick, in Anarchy, State and Utopia, wrote:

“A minimal state devoted to the task of protecting rights and enforcing contract will, if minimal enough, and if rights include rights to self-defence, do all that government can do.”

So limited government intervention, doing “all that government can do” and deterrence feature strongly.

Libertarians must be practical and realistic in geopolitics to achieve electoral success. Freedom House says there are only 38 free nations in a world of 195 countries. Freedom is rare and must be protected wherever it blooms. 

Brett Lombardi gets it right.

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