The United States defends its dollar against the de-dollarization of the BRICS

The United States defends its dollar against the de-dollarization of the BRICS

Donald John Trump's policy is good, focusing on trips abroad, he traveled to North Korea to visit the president of Korea, in fact he has been the only president of the United States to set foot on North Korean territory. He took the American troops out of Afghanistan, admitted defeat, maintained the attack on Syria and the attack on Libya, but finally lost because Russia gave all its support to Syria and also to Iran, and the US lost in Syria, telling us that war he inherited from Barack Hussein Obama II. In Bolivia they did carry out a coup from the United States, with Juan Evo Morales Ayma behind, but he did not appear again, and now with President Luis Alberto Arce Catacora and the policy of the economic groups that are behind Donald Trump is lift the economy. They are no longer the free trade agreements of George Walker Bush, even Donald Trump left out that agreement that he wanted to promote Barack Obama with the Pacific countries.

The United States left those treaties, and focused on raising national production so that the economy grew by 4% or 5% and stopping the period during which China displaced it, and for that they lowered income taxes on American companies. So that they would have more profits, from 35% to 26%, for some they lowered it to 11%, and they imposed tariffs and customs taxes on products that entered from outside the United States, especially from Canada, Mexico and Europe, emphasizing products from China so that national producers would not face Chinese competition. And by lowering income taxes, facilitating private investment, and allowing United States companies that are abroad to return to their country to produce what they produce abroad, for example General Motors, which is in Mexico, the intention was for him to return to the United States to produce in his country of origin.

What advantages would they have? On the one hand less taxes on profits, and on the other hand the tariff on foreign vehicles, ensuring that they will not have competition. But with Donald Trump that did not work because the tariffs they imposed on China did not prevent Chinese products from continuing to enter because the US does not have competitive capacity. The deficit with China remained very high, it went from more than 400,000 million dollars to 325,000 million dollars, the deficit remained very high, it went down a little, but China continued flooding the United States with products because what it sells to the United States cannot be replaced for American products, and the United States has a very expensive labor force, the American people paid more for Chinese products with Donald Trump's tariffs, and products continued to enter, and US companies that were abroad such as Cargill or Monsanto were not coming back, they said no. They would continue in China because it is an infinite market, these companies are lifting millions of Chinese people out of poverty and it benefits them because of the good image in the eyes of the Chinese state and because of the great benefits. Why shouldn't we go to the United States where there is a smaller population than in China and where labor is very expensive? Here in China it is cheaper.

Then Trump's plan failed, the United States did not grow 4%, it remained with a small growth until Donald Trump was displaced by Joseph Robinette Biden Jr. What is Joe Biden's policy? War. He forgot to raise domestic production through tariff protection and tax reduction, that did not work with Donald Trump, and what he did was provoke war in Ukraine to stop the Silk Road by provoking a feud between Europe and Russia that It is the bridge that unites China and India with Europe. So that Silk Road project that was going to reach Europe had already entered Italy. The Congress of Italy approved entering the route in 2019 and Germany was going to enter, there was a gas pipeline that was already in the Baltic Sea, the famous Nord Stream in 2011, and it was working to sell gas from Russia directly to Germany, it was an very expensive investment. All of this was obstructed when the war in Ukraine broke out, but they first managed to remove Angela Dorothea Merkel as president in Germany, and they gave the order to the British government to leave the European Union to weaken Europe, and put Europe under pressure.

The departure of the United Kingdom from the European Union affected Germany and France, which are the main European powers, along with the fall of Merkel and the arrival of a new German government with Olaf Scholz more sympathetic to the United States, which made it support the United States. US in the effort to include Ukraine in NATO and provoke Russia, so that Russia would prevent it and the war would break out. The war is convenient for the United States in that sense because it stops that project (China's Silk Road) in its advance to Europe, where Germany, France and Italy were also going to enter. Today that project is obstructed. That is the policy that the US has, that is, let's stop China's advance through its great project that wants to get into Europe, but that project, the Silk Road, is going to continue towards Africa, it will expand by throughout Asia, and even to South America, but for Joe Biden's government it is its only way to stop the project.

In view is the recent conflict between Israel and Palestine since October 7th of this year 2023, another blockage for the advance of the Silk Road through the Middle East towards Africa and the European Mediterranean, since the gas pipelines from Iran, member of the BRICS, pass through Iraq and Syria towards Turkey and Europe, just north of the Israeli conflict. And Iraqi oil pipelines also pass through Syria. What sense does it make for Israel, a great ally of the US, to attack Syria, which is to the north, with the conflict that has arisen with Palestine, which is to the west? Simple: block China's commercial and economic silk route.

What if we win the war? That is the logic of the United States. Then Russia ends up weakened and who knows if it can be attacked while weakened, because Russia has all the minerals in the world, although it is very complicated because Russia would not sit idly by and cause a nuclear war, and the planet ends. Nobody would win. They cannot really occupy Russia but they try to weaken it even with the populist "sanctions", which after reading into European legislation Council Regulation (EU) number 833/2014 of July 31th, 2014, the "sanctions on Russia" they are really sanctions on European companies and European citizens who try to do business with public or private Russian companies. Therefore they are "self-sanctions", since Europe does not have the power to sanction an economic power like Russia.

When the war broke out in Ukraine in the first months, the G7 met, the seven countries that they consider the most developed, being the United States, Japan, Germany, France, the United Kingdom, Italy and Canada. They said publicly that the strategic enemy was China, not Russia. Russia is the immediate enemy with whom we are fighting but the big problem is China, which is the one that is going to displace the West, it has already displaced Europe and is going to displace the United States in a short time, they said so openly, that is, it is a war against China not only against Russia. So Joe Biden's policy is to return to the political-military conflict again with that logic, and also do business because the United States is selling to Europe, it is selling energy after sabotaging the Nord Stream and blaming Russia, but when one sees the economic results of the United States, he sees that it is not growing and what it has generated is great inflation and further loss of competitiveness.

In 2022, inflation in the United States exceeded 6% and China's inflation was between 1.5% and 1.8%, that is, the war is causing more problems on the trade side because inflation rises costs, and where there is competition between China and the United States, the Chinese product has more facilities, because the cost rises less due to inflation, that is, everything they execute has its opposite side. They win by antagonizing Europe with China, stopping the Silk Road and progress with Europe, doing business with weapons and energy, but it has an impact on internal prices that force them to slow down the economy, economic growth by controlling credit, and raising prices interests that are already creating problems for many people who have credits (loans and mortgages).

Some American banks such as Silicon Valley Bank, Silvergate Bank and Signature Bank have also failed, and they are losing competitiveness due to inflation in international trade, so on the one hand they win and on the other they lose, but that is the policy that is in place raised during this government, which will continue until it ends. We do not know if after the US elections in 2024, specifically on November 5th, 2024, a change in national, international, fiscal and economic policy will occur, in any case all this policy has not prevented China from continuing moving forward in the midst of everything we have discussed.

China not only positioned itself as the second power, but also surpassed the European Union and is going after the United States. In the midst of all this, China became the first importing power, China became the first telecommunications power, China established diplomatic relations with a huge number of countries. Only 15 or 16 countries in the world do not have relations with China, but with Taiwan. China has more trade relations than any country, I seem to remember with 125 or 130 countries in the world, with which it has more trade relations than the United States. And it continued to increase its monetary reserve with great economic growth. In the midst of all this, India went from being the 12th economy to being the 5th economy, and will now be the 4th. And after this stormy policy, six governments crossed paths, where the BRICS emerged.

The left political branch rose in South America, the left and progressive force has strengthened integration in South America. Brazil grew enormously, Mexico with a huge economy already displaced Spain last year in 2022 and was placed as the 14th economy, with Spain falling to 15th place. Argentina with great growth..., that is, all these blocks have been formed such as the BRICS, such as the integration of South America and other rival spaces of the United States and Europe. The displacement process of the United States has continued to advance despite this aggressive policy that we have described. I believe that if Donald Trump returns and the economic power groups that support him could return to the policy that they consider most appropriate, which is to increase national production. I think that is their plan, to increase production and try to enable the United States to once again penetrate some markets where it has been displaced by China.

If Trump wins in 2024, I think he will make a very big economic effort, and I get the impression that it will not give him many results due to the problem of competitiveness. That does not mean that it will stop being an aggressive power. The United States by its nature is an aggressor state with any government, whether it is the continuity of the Democrats with Biden or the return of the Republicans with Trump, there are always threats of aggression, especially in Latin America, where I see that they can try to act more because already in Asia with all these actions things have gone badly. The United States no longer has the capacity to confront Iran and what they were going to do with the Arab countries and the Middle East I think they no longer have enough power. They lost in Syria, they lost in Afghanistan, in Iran the Shiites, friends of the Shiites of Iraq and Azerbaijan, are ruling.

Saudi Arabia freed itself from the US and its petrodollars, perhaps the United States will once again seek an alliance with Saudi Arabia but it is very difficult. They already saw where the world is going and there is an entire dynasty ruling, a group of great millionaires linked to oil who are reinserting themselves so as not to perish in this international conflict, and they saw that the United States is not the main thing, but that it is emerging a new world. In the end I think there will be a confrontation with South America, no matter who governs the United States. The US would also obviously make an effort to regain control of Mexico by putting in place a government that is compatible with its interests, but that is complicated because in Mexico even the right-wing governments have always maintained a fairly independent foreign policy, which responds to a tradition, to a national culture, but they can also undermine the government of Andres Manuel Lopez Obrador (AMLO).

We must expect aggressiveness from the US no matter who wins, but with the difference that the group of economic power behind Donald Trump places more emphasis on the internal market than the Democrats. Democrats believe that the solution is to destroy the planet and Republicans believe that internal efforts must also be made to increase production, but behind each one there are groups of economic power. These presidents represent interests, it is not an idea from Donald Trump or an idea from Joe Biden, but rather they are power groups that say "This is the policy that works" or "this other is the policy that works", and that comes into contradictions with its presidents, and sometimes those contradictions are resolved even with assassination, as happened with Abraham Lincoln (1861-1865), James Abram Garfield (1881-1881), William McKinley (1897-1901) and John Fitzgerald Kennedy (1961-1963), or with electoral fraud such as what was done to the Democratic candidate Albert Arnold Gore Jr. (Al Gore) when George W. Bush won in 2000. We must also expect that there will be internal conflicts because around politics they can have contradictions.

Bronson Capital Partners

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