Another OF Follow-Up

Specifically, following up on this.  OF is touting a new book, Multicurrency Mercantilism.  Just what the Hells that's supposed to mean, I don't know.  I haven't read the book (And frankly I don't intend to.  I seriously think it would be a waste of time as set out below.), but I've read enough synopses to know it's a proposal for a basket-of-currencies trade system.  What the "mercantilism" part of that is about I have no clue, given mercantilism is about maximizing exports and minimizing imports, and if you define it any other way, you're just playing Humpty-Dumpty and claiming words mean what you say they mean.  So what's in the basket?  BRICS of course.

And this makes no FUCKING sense from an economic point of view because none of these five worthies can afford to be a reserve currency.  The reason US manufacturing and exports are the way they are is because Harry Dexter White "won" the Battle of Bretton Woods over John Maynard Keynes in 1944.  The British Pound had been the world's currency, but the UK was in too rough a shape to carry that anymore, so Keynes proposed an international monetary unit, the "bancor".  It would not be a sovereign currency but rather would be a trade currency controlled by a clearinghouse created by multilateral treaty.  White couldn't abide that because MURICA! and rammed through the Yankee Dollar as the new reserve currency.

The problem with being the world's reserve currency is that everyone needs your currency for closing their trade deals, which means there's a demand for your currency that far exceeds your own needs, which means your currency is overvalued, which in turn means everything you produce (which of necessity is denominated in your currency) is overpriced, and you're at a gross trading disadvantage.  Ultimately, this makes it difficult to export much of anything (or even for your citizens to consume domestic products instead of imported ones), but it hits manufacturing especially hard, and that sector starts waving bye-bye.  Steve Keen does a quick synopsis here, and there are plenty of additional sources you can go to.

UK manufacturing was wrecked not by so-shul-izm but by being priced out of the market by its reserve currency.  And the UK floundered about, unable to identify what the problems were and not being able to fix anything because the real solutions were off the table courtesy Tories, LibDem precursors, and "moderate" Labour.  The US followed lock step, less the third political party.  When Maggoty Trencher came on the scene, like the good neoclassical neoliberal she was, she misidentified the problems, blamed the wrong causes, and implemented the wrong solutions.  And The Blessed St. Ronnie Ray-Gunz followed suit.  And here we all are.

Which is a long way of saying the BRICS are in no position to pull this off.  All five are dependent on exports and can't afford to have their currencies strengthen against everyone else's.  Without petro exports, Russia and Saudi Arabia would dry up and blow away.  Without cheap manufacturing exports, India and China would do the same, India far quicker.  Brazil is mostly exporting raw materials, but it has for less resilience to such a punch in the face.  They can't get there from here.

So what is the deal?  I don't know, but I do have an idea that all the puzzle pieces I know about fit into.  China is the embodiment of the long game.  Usually this has just been an excuse to do nothing, but occasionally it has meant China was waiting for everyone else to finish blowing their own feet off and perhaps helping a bit with their aim.  I think this may be one of those occasional occasions.  It is obvious we are on the cusp of a very different world, and I think China has seen it for awhile.  I think they see this as a way to undermine their rivals.  They want Russia and India to go all the way with reserve currencies just to watch their export economies get torpedoed amidships, while China maintains its "soft" peg to US$ (i.e. "constriction band" to protect exports to the US).  KSA has to dance to the tune China calls, or China will up its ante with Iran.  And Brazil is so owned by China that it's violating international law to cut Amazon forest to grow soybeans for export to China.  And if none of this works out, well China knows it can start over at square one because it's done it so many times.

So what is OF trying to prove?  Remember, OF is now a talking head for the Chinese Global Television Network and is spitting CCP and PRC propaganda.  If the BRICS basket is a part of Chinese trade strategy, OF's promoting it would make sense.  And a plan that promotes Chinese exports at the expense of all the others is certainly mercantilist.