WILL THE UPCOMING BRICS+ MEETING IN AUGUST BECOME KNOWN AS BRETTON WOODS.2
July 14, 2023 3 Comments
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This WordPress.com site is dedicated to independent working class politics. Contact me at briangreen@theplanningmotive.com
July 14, 2023 3 Comments
THEPLANNINGMOTIVE.COM 
1.why can’t the currency be based on food & oil?
2.how come any currency ratio be as high as 1:10 to 1:100?why can’t exchange ratio be like dollar/euro or 1:1?
Hi. A basket of goods acting as a currency is not my area of expertise as I have always dismissed this notion as unimportant, just as I dismissed Sraffa as an unimportant economist influenced by material balance planning emanating from the USSR. But this much I know, silver then gold were chosen because they were the ideal money material. It take a lot of labour to mine and refine gold, so a small quantity of gold contained a lot of value and because it was a noble metal it did not rust away. In addition, unlike today, besides jewelry, it had little or no industrial uses. Now if you take a basket of today’s commodities, say oil, oil has many use values. In addition its price varies with demand and supply. In fact oil is very price sensitive to changes in demand and supply. And of course there are many grades of oil whereas investment grade gold must be at least 995 fine. Food is out of the question because its production is subject to the weather. I believe the BRICS were entertaining a basket based on gold, oil, gas, copper and iron ore because they dominated the global production for these commodities.
Ratios are important. The new currency is not born naked. Its value will arise out of the weighted values of the regional currencies formed by the BRICS+ countries. It will thus have an exchange rate against the dollar, which can then price gold. If the convertibility of this new currency is set too tightly against gold, meaning its is over-valued, it will discourage new gold production. It will follow in the footsteps of Bretton Woods where the actual cost of producing new gold globally was likely to have been higher than $35 an ounce. The USA got away with this for a time because the natural economy in South Africa from which the gold miners were drawn as migrant labourers, subsidized the wages paid by the gold mines allowing them to be profitable. For example the women left behind built their own homes from local materials, grew much of what they ate, collected firewood to cook and so on and so forth. This all began to breakdown in the late 1960s because of overcrowding in the homelands which led to soil erosion and the subsequent loss of food, material and so on.
I am working on the assumption that the new currency will be based on regional currencies tied to gold, but unlike Bretton Woods convertibility will not be carried out via the Renminbi acting as the Dollar before it, but via the new currency itself. This means convertibility will vary between the regional currencies. For example if the South African Rand is worth one tenth of the new currency and 100 of the new currency is worth one ounce of gold, the convertibility of the Rand would be one thousandth of an ounce. If the Rand strengthened against the new currency then everything being equal, one Rand would be worth more gold.
I hope this helps.
It is hard to see that whatever emerges from the BRICS meeting will be anything other than some sort of accounting tool that may help to facilitate trade between these countries. From what I can gather each country would still retain their own currency and would adjust it according to circumstances.I do not think there is enough political cohesion between themselves to undertake anything more involved.The creation of the Euro was preceded by a long political process which has really barely ,if at all, begun amongst these countries.I would just like to make a point about de-dollarization.It seems that for a good part of the left this process is imbued with special progressive powers.While it may help to reduce the power of American imperialism( obviously a good thing) it is not in and of itself a step towards socialism.