BRICS and the Realignment of the Global Economy

Patrick Goggins
5 min readJul 14, 2022

The NATO proxy war against Russia in Ukraine has become a fulcrum in the weakening of global Western imperial hegemony, which has largely been unchallenged since the days of the Roman Empire. This is a reprint of a Twitter thread that demonstrates how BRICS, an economic coalition of the global south, led by China, is forcing a realignment of economic power. If history is a teacher, the Western powers will not cede this power peacefully. It is a preview to a potentially catastrophic series of events.

When reading predictions on the collapse of dollar hegemony, it can be hard to grasp what it means in material terms: The USD is going to begin to sink to its true value. But what is its “true value”?

Despite only accounting for about10% of global trade, 85% of global trade settlements are made in USD. This creates a continuous demand for USD above and beyond what would otherwise exist. In this way, the value of the dollar is massively propped up relative to other currencies.

Countries must hold a large portion of their foreign reserves in USD because up until recently, the dollar was required to purchase crude oil on the international market, leading to the emergence of the petrodollar.

This requirement to pay for crude with USD is maintained primarily through a simple agreement: in exchange for depositing their dollars back into banks on Wall Street and Lombard Street, OPEC states are defended militarily by the U.S.

This recycling of petrodollars back into U.S. banks is a key mechanism behind why the U.S. has been able to finance its deficit spending for decades, with no reduction in purchasing power of the dollar. But the foundation of this arrangement is beginning to show cracks.

The cracks in dollar hegemony are materializing in seemingly mundane ways. Those wanting to buy Russian energy now must pay in Russian rubles. China, through its Belt and Road Initiative, is structuring loans in Chinese yuan. It may seem absurd to learn that the world didn’t already operate like this.

The ultimate irony is that this loss of hegemony was precipitated by the U.S. itself earlier this year, when they seized Russia’s dollar reserves, conclusively demonstrating to the rest of the world that the sovereignty [and security] of reserves held in USD is an illusion.

So if the USD is indeed losing value, why is the Euro falling against the USD?

The Euro is currently falling as a result of the EU’s suzerainty to the U.S. in its proxy war with Russia. EU exports are becoming more expensive due to skyrocketing energy costs and governments around the world are rebalancing foreign reserves in anticipation of impending EU turmoil.

However, increased demand for rubles, due mostly to Russia’s new insistence on being paid for petroleum in its own currency, demonstrates that the buoyancy provided to the USD by forcing the EU’s head under water is likely short lived.

What then is the “true” value of the USD? What portion of current demand for dollars is “real”? Some estimates believe this could be as little as 30% of its current value. If so, the cost of imports would more than triple (e.g. a $30k imported vehicle would now cost $100k).

With demand for USD decreasing as foreign reserves shift to more diverse baskets of currencies, the dollar will depreciate. This will start gradually but can easily snowball, especially if triggered by a disruption to the continuity of the U.S. government.

A selloff will rapidly flood foreign exchange markets with USD and crash its price. The Fed may intervene to prevent the entirety of the excess demand from evaporating, but ultimately an equilibrium price will be reached that is founded on real demand for U.S. exports.

The lowered USD may temporarily make U.S. exports more attractive, However, a large number of U.S. exports rely heavily on having inputs of cheap raw materials and labor. And as we already saw, the cost of these imported inputs will dramatically increase as the dollar value falls.

The proxy war in Ukraine is an attempt by the U.S. to use the EU’s economy as a desperate buttress against erosion of the dollar’s hegemony. But ironically, this move will only serve to precipitate a more dramatic collapse, as the U.S. increasingly isolates itself through sanctions.

The true value of currencies in a post-USD hegemony global economy will be determined by the demand for goods/services they produce. So how much will a unit of western labor be valued relative to global south labor once the largest mechanism of imperialist exploitation crumbles?

To afford a washing machine, the average Sri Lankan needs to labor for 4 months. It takes the average person in the U.S. half a week. The U.S.’s new equilibrium point will either involve socialism or it will involve a historic collapse of living standards. There is no third option.

After hundreds of years marked by colonialism and imperialism, we are entering an age in which the unique contributions of individual countries to the global economic web will finally be reflected in their currencies, leading to more just stores of value.

The U.S.’s military protection of OPEC countries of course comes with an important caveat: do NOT under any circumstances try to create an alternative to the petrodollar!

NOTE: This article is a lightly edited copy of a July 13, 2022 Twitter thread written by @bidetmarxman, known as “professional hog groomer.” It is © @bidetmarxman, reprinted here with permission.



Patrick Goggins

Lawyer, writer, musician, bon vivant. Born in Flint, Michigan during the Cuban Missile Crisis.