America-- No One Is in Charge

Over the past few days Joe Biden has been strutting about the world stage, pretending to be president of the United States.

Naturally, all good Americans hold their breath when Biden engages one of these staged performances. It’s bad enough that Biden consistently embarrasses himself with his mumbling and fumbling, his errors and misstatements. When he gets up before the international press corps and makes a fool of himself, he embarrasses America. The only question in viewers’ minds was, how much?

Of course, if you want to be thankful for little things, feel good that the press briefing was not conducted by his thoroughly incompetent press secretary. 

Aside from the fact that Biden trotted out the thoroughly discredited notion that other countries have more inflation than we do, he took the occasion of a pathetic press conference to trash our Supreme Court. Disdaining and criticizing America’s political institutions does not bespeak patriotic fervor. It does not show pride in America’s Constitution. It signifies the basest tendency to politicize everything.

Then again, if you were about to be handed a major shellacking by America’s voters, you would not feel too much pride in your country either.

Anyway, among Biden’s major achievements during his foray into international politics was clearing the way for Finland and Sweden to join Nato. Beyond that, Biden pledged to fight Russia in the Ukraine war, and to fight to the last Ukrainian. In that he received the wholehearted support of the assorted midgets who belong to the G-7 and Nato.

Anyway, Biden is apparently in charge of Western policy toward the Russian war against Ukraine. How has that one been working out? Apparently, not too well, unless you feel that losing a war of attrition is a good thing. The media has not been reporting very much progress-- with the exception, yesterday, of something that was happening on Snake Island-- and that suggests that the war has not been going well.

Anyway, during his press conference Biden bragged about the brilliant diplomatic coup he had effected, whereby he had united the world against the big bad Russians. Of course, if you believe that, you will believe anything.

As it happened, at the very moment that the G-7 was meeting, another meeting was taking place, that among the nations called the BRICS nations. It comprised Brazil, Russia, India, China and South Africa. One notes that Argentina and Iran have recently proposed entry into the alliance. 

So, Biden united the world, with the exception of the world’s largest countries. In truth, and this does not merely appear on Biden’s account, the world is now becoming bifurcated between the West and the Rest. Economically, the West is currently bigger than the rest and the American dollar still holds sway as the world’s reserve currency, the currency in which people transact international business. 

And yet, since the Biden administration decided to pretend to be tough by weaponizing the dollar in the war against Russia, BRICS nations, in particular, have been hard at work setting up an alternative currency, based, not of the faith and credit of the American government, but on commodities.

One understands, because everyone says it, that the alternative is not ready for prime time. But that does not mean that the leaders of the BRICS nations are not hard at work bringing it to pass.

So, when you are listing the achievements of the Biden presidency, which is about to go down in history as an unmitigated catastrophe, don’t fail to list the fact that now Russia is circumventing Western sanctions by selling coal to India and by being paid in yuan. So much for dollar dominance. So much for our alliance with India.

Yesterday, Reuters reported:

India's biggest cement producer, UltraTech Cement (ULTC.NS), is importing a cargo of Russian coal and paying using Chinese yuan, according to an Indian customs document reviewed by Reuters, a rare payment method that traders say could become more common.

UltraTech is bringing in 157,000 tonnes of coal from Russian producer SUEK that loaded on the bulk carrier MV Mangas from the Russian Far East port of Vanino, the document showed. It cites an invoice dated June 5 that values the cargo at 172,652,900 yuan ($25.81 million).

Two trade sources familiar with the matter said the cargo's sale was arranged by SUEK's Dubai-based unit, adding that other companies have also placed orders for Russian coal using yuan payments.

The increasing use of the yuan to settle payments could help insulate Moscow from the effects of western sanctions imposed on Russia over its invasion of Ukraine and bolster Beijing's push to further internationalise the currency and chip away at the dominance of the U.S. dollar in global trade….

"This move is significant. I have never heard any Indian entity paying in yuan for international trade in the last 25 years of my career. This is basically circumventing the USD (U.S. dollar)," a Singapore-based currency trader said.

I have included some details, because I am sure that you want to know the details. It is small, by comparison with the rest of international trade, but we do well to see the direction things are moving and now worry ourselves about whether they have actually reached the goal. Remember the tortoise and the hare?

If you would like to have a larger perspective, read what Philip Pilkington wrote for the Unherd:

Last week at one of the BRICS forums President Putin announced that Russia, alongside China and other BRICS nations, was getting ready to launch a new global reserve currency made up of a basket of BRICS currencies. If successful, such a reserve currency would be a direct threat to the currently dominant US dollar.

It is difficult not to read the two stories as part of the same general arc. Iran and Argentina are jumping on the bandwagon because they sense an opportunity to build an alternative alliance to Western-led globalisation. Meanwhile, the other BRICS members are inviting them on board because they smell blood because they see large economic weaknesses being exposed by the quick collapse of the Western sanctions against Russia.

Could a new trade bloc with its own reserve currency be a threat to the West and to US dollar dominance? Almost certainly. In their current form the BRICS make up around 31.5% of world GDP when adjusted on a purchasing power parity basis. With Iran and Argentina added, this rises to 33% of world GDP. This is a huge potential trade bloc, and 33% of global GDP is certainly enough to justify a reserve currency.

But beyond this, the potential for synergies between the countries is enormous. Taken together, the expanded BRICS countries currently produce around 26% of global oil output and 50% of iron ore production used to make steel. They produce around 40% of global corn production and 46% of global wheat production. If these were all traded in the new reserve currency, it would instantly become a cornerstone of the world economy.

On a good day we would consider this to be a consequential challenge. We would also consider it to be a fallout from the ill-considered policies affected by the Biden administration and the Western world.

On a bad day we would consider that most Americans are suffering from political anxiety. They are feeling as though they are caught on a ship that is being captained by Joe Biden. The feeling that no one is really in charge, that Biden’s backup is the even more inept Kamala Harris, undermines national confidence. 

If you are not feeling anxious about the fact that America no longer has a captain in charge, you are missing the point. If you are comforted that the Biden administration is seriously diverse, you are blinding yourself to the fact that we are heading straight for the iceberg.