1/🧵
The gold bugs are all excited about the idea of a gold backed currency by the BRICs. This is a situation we see periodically as they try to bring the idea of a currency that is backed by commodities.
1/🧵
The gold bugs are all excited about the idea of a gold backed currency by the BRICs. This is a situation we see periodically as they try to bring the idea of a currency that is backed by commodities.
2/ There are many problems with this idea especially if it is constructed similar to the euro. That currency had some flaws from the beginning. Of course, it was meant to rival the USD.
3/ Then we had the petroyuan which was designed to trade #oil outside the USD. This was the alternative claimed to rival the USD in oil sales.
That didnt have much impact.
We've only known about petroyuan for a few years. It may be too early to call it a dud. Even if petrodollar reigns supreme, it won't be undisputed for much longer.
4/ Charles de Gaulle shows the flaw in commodity backed money. Of course, we also are now, with this idea, introducing counterparty risk to the equation.
5/ Then we need to factor the FOREX risk added into the equation, something that severely affects the debt many of these countries hold.
To read full article:
https://leofinance.io/@taskmaster4450/gold-backed-bric-currency-why-it-wont-happen