in recent years much has been discussed about a group of Nations capable of challenging the influential G7 armed with remarkable growth projections and a robust population threatening to alter the global order as we know it this group of Nations is known by a name that has likely reached your ears the bricks but after all what are the bricks why have they gain so much notoriety can they really transform the established Global Order let's explore this right now bricks is an acronym representing a group of five countries Brazil Russia India China and South Africa whose main
common trait is being emerging economies with significant Regional influence however recently the block approved the inclusion of new members these new members are Argentina Ethiopia Iran Egypt Saudi Arabia and the United Arab Emirates who still need to accept the invitation but let's not get ahead of ourselves we'll talk about the new members later since 2009 bricks leaders have been holding annual meetings these conferences cover a variety of topics from economic cooperation to security issues an important milestone for bricks occurred in 2014 when they created the new development Bank NDB also known as the bricks Bank
the purpose of this entity is to finance infrastructure and sustainable devel development projects in bricks countries and other emerging economies with resources not tied to the United States or European countries following this initiative all alarms were sounded in the west are the bricks attempting to challenge the hegemony of the powerful G7 for those who don't know the G7 is an international grouping formed by seven of the top 10 developed economies in the world the United States Canada Germany the United Kingdom France Italy and Japan these nations meet annually to discuss and promote agreements on major
global economic and political issues Additionally the European Union is also represented at G7 meetings although it is not considered an official member but answering the question of whether the bricks can challenge the hegemony of the G7 the answer is yes and no let's start with the less favorable sign the challenge for the bricks is that the G7 is an extremely cohesive geopolitical group all its members except Japan are part of NATO and Japan is one of the main Military Allies of the United States moreover all the countries are liberal democracies have significant historical ties and
except for Japan all G7 countries share a very similar culture furthermore there are numerous interconnected agreements and treaties among G7 members on the other hand within the bricks the situation is different South Africa and Brazil do not have historical ties with any of the members and the cultures of all of them are as distinct as an egg from a chestnut but most concerning is the relationship between China and India as both countries struggle to Eclipse each other's influence in Asia in fact they have a significant territorial conflict in the regions of Akai chin and arunachal
Pradesh and it is not uncommon to see videos of Indian and Chinese soldiers literally clashing in these areas Additionally the political regimes of its members are quite Divergent while China operates under an authoritarian socialist regime Brazil India and South Africa are Republican democracies and Russia resembles more of an autocracy and what about the new members here too challenges reside it is true that Iran has improved its relations with the United Arab Emirates and especially with Saudi Arabia however Iran a Bastion of Shia Islam has geopolitical interests diametrically opposed to those of Saudi Arabia the leader
of the Sunni Islamic block stability within the organization is fragile and all members face difficulties in reaching consensus and achieving the Strategic objectives of the meeting meetings but then if the inclusion of new members further amplifies the discrepancies among brick states why did they allow these new members to join there are two main reasons the first is to strengthen the organization as all new bricks members are leaders in their respective regions which gives significant robustness to the block on the other hand all new members are energy powers and although among the original members there are
major economic powers only Russia and to a lesser extent Brazil are energy powers the others are countries that need to import large quantities of gas and oil and looking at the new members almost all are energy exporters especially of gas and oil therefore what the bricks seek is to ensure their energy Supply in case of conflict with the West another issue with the bricks is that the economies of its members have evolved in very different ways while China experienced spectacular economic growth and became the second largest global economy other members like Brazil and Russia went
through periods of stagnation or recession these disparities can result in Divergent economic priorities and approaches Additionally the lack of cohesion among its members can cause cracks in the organization in the face of adversities for example would Brazil risk facing International sanctions if it overly supports Russia how will India position itself if China attempts to invade Taiwan will all countries support South Africa if a hypothetical kudeta occurs in the country if Saudi Arabia and Iran join the organization what will happen when a new conflict arises between Shia and sunnis in the Middle East it's not clear
how the organization will react in the face of different unexpected events however not all news is bad for the bricks until the new members join the organization the five countries represent 43% of the world's population and over 25% of the global GDP in fact just China or India each have approximately twice the population of the entire G7 but if the entry of new members is confirmed the bricks will represent 30% of global GDP a number not to be overlooked the situation is even more promising for the bricks if when calculating GDP we consider each country's
prices in this case the original bricks block has already surpassed the G7 and GDP at purchasing power parity a remarkable feat if we remember that in 1995 the difference between the two blocks was 28 percentage points this demographic power and emerging economic Force are the ideal scenario to attract more members to the organization in fact more than 40 countries have expressed interest in joining the bricks and 23 have formally applied for membership we previously discussed everything that prevents the bricks from being a unified economic entity and why it's extremely complex for the bricks to Define
some kind of joint political goal in the future however these countries share a superior interest above all they aspire to be independent of the West and to achieve this the bricks have a plan being autonomous from the West is quite complicated if you rely on their interbank connection system the renowned Swift to carry out any monetary transfer it's also challenging if all International transactions even between bricks members are conducted in the currency of the western leader I.E the dollar but what if the bricks could create their own interbank connection system and their own currency to
trade among themselves or with other countries this is the Brick's strategic plan to challenge Western Supremacy undermine the dollar during the 14th bricks Summit held in mid 2022 Russian President Vladimir Putin announced that the bricks countries are planning to launch a new Global Reserve currency the project could benefit from blockchain technology and smart contracts the the currency could transform the Global Financial system if implemented it is not yet defined how this would be executed one possibility is that the currency is used only for international transactions and its value is tied to a combination of the
value of the local currencies of the member countries another alternative is that the currency is backed by a vast reserve of oil the problem is that oil is a resource whose price is extremely unstable and whose value tends to decrease over time as renewable energy gradually replaces black gold in short oil is the opposite of what a currency needs for support a final alternative is that the currency is secured by a large joint gold reserve it is no coincidence that both India and China have been accumulating a significant amount of gold over the years among
the five founding members of the bricks they accumulate over 15% of the world's gold reserves in fact Russia India and China are among the top 10 countries with the largest gold reserves and you might be wondering why the bricks would need to back their new currency with gold or oil if the dollar is not backed by anything well because what keeps the dollar valued is global confidence in the system and the strength of US institutions and now I ask you would you sleep soundly if your savings or those of your company depended on the institutions
of countries like India China Brazil Russia or South Africa I don't know about you but I would have reservations however the bricks decision to use their own currency to trade among themselves and with other countries could have several repercussions for both the United States and the dollar let's see what they are one the reduction in demand for the dollar if brics countries decide to tr trade in their own currencies or a joint currency this would reduce demand for the dollar leading to its devaluation relative to other currencies this would mean that the Federal Reserve of
the United States would have to be more cautious when issuing new money and would have to raise interest rates two an economy with high interest rates means an economy with less economic growth as families would find it more challenging to obtain loans for consumption and companies for investing in their development and expansion three if countries perceive that the use of the dollar is decreasing as a reserve currency they could reduce their own dollar reserves and use other currencies this could further reduce demand for the dollar leading the United States to raise interest rates even more
entering a very dangerous Vicious Circle the problem with all this is that the bricks themselves cannot agree on how to move forward on this matter establish lishing a common currency or agreeing on stable exchange rates among their own currencies would require considerable coordination among bricks countries which as we've seen have very different economies fiscal policies and political structures at the last brick Summit in South Africa the issue of a common currency remained under review and it won't be until next year that the finance Ministers of the member countries will meet again to assess the matter
for now the member countries will limit themselves to trying to use their local currencies more for conducting their trade relations with each other and now that you know all this what do you think can the bricks and their potential new members put an end to the hegemony of the dollar and the G7 well if you believe the bricks have growth potential you might find it interesting to invest in these countries and the best way to do that is with an ETF that replicates the main bricks indices although currently it's easier to find ETFs that jointly
replicate the Chinese Indian and Brazilian markets leaving out Russia due to sanctions in South Africa for being a very small Market an example might be the ishares msci ETF but keep in mind that almost any ETF investing in the bricks will give more weight to China than to the other countries remember that the video is informative and is not an inv investment recommendation if you're still here it shows that you are very resilient and I want to congratulate you for that you deserve all the success in the world to let me know that you stayed
until the end comment until the end when I see your comment I'll give it a heart now I'll leave two videos on your screen that I made exclusively to teach you about the habits of the Rich and I'm sure they will add a lot of value to your life click on one of them and go watch it do it now do it
