There is hope. Between Republican control of both chambers of Congress and President Donald J. Trump reentering the Oval Office in three weeks, it’s not time to panic. But there needs to be real actions taken to not only raise the debt ceiling but to dramatically cut spending. Unfortunately, the latter may not be in the cards.

The United States is on a collision course with a potential default on its national debt, an event poised to significantly undermine its credit rating and unleash economic turmoil across global markets. This looming crisis is centered around the contentious issue of the debt ceiling, sparking widespread concern among investors, policymakers, and international allies.

The federal debt limit, due to be reinstated on January 1, 2025, sets the stage for a critical financial challenge. With the Treasury Department’s extraordinary measures expected to deplete by mid-2025, there’s an urgent call for Congressional action to either raise or suspend the ceiling to avoid default. Treasury Secretary Janet Yellen has highlighted the gravity of the situation, urging lawmakers to protect the full faith and credit of the United States.

A default would not only question the reliability of U.S. Treasuries, traditionally seen as the bedrock of international finance with zero credit risk, but also lead to a potential sell-off of U.S. securities. Such an event could increase borrowing costs globally and might even push the U.S. into a recession, affecting millions of jobs and household wealth.

This is the path through which de-dollarization can ascend. BRICS nations have diligently been working to usurp the U.S. Dollar with their own currencies. Meanwhile, non-BRICS nations who have relied on the U.S. Dollar are seeking cover. This is why alternative forms of value such as cryptocurrency and precious metals are becoming increasingly popular.

Historically, the U.S. has faced similar scenarios, like in 2011 when political brinkmanship led to a downgrade of the U.S. credit rating by Standard & Poor’s. Although the situation was resolved before reaching default, the mere threat caused economic ripples. The implications of a 2025 default could be far more severe, with Moody’s already signaling a negative outlook on U.S. debt amidst rising deficits and interest rates.

The global economy’s reliance on U.S. economic stability means that any default would have far-reaching effects. Countries with economies tied to the U.S. dollar could see their own financial systems destabilized, and the trust in U.S. financial instruments could wane, leading to a reevaluation of global investment and trade strategies.

In response, some experts advocate for structural reforms to manage U.S. debt more sustainably, while others emphasize the need for immediate, bipartisan action in Congress to avert the crisis. The situation underscores the delicate balance between fiscal policy, political will, and economic stability, highlighting the stakes involved not just for America but for the world’s financial landscape.

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Article generated from corporate media reports.

He went full Beast Mode.

As he posted on Truth Social:

The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER. We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy. They can go find another “sucker!” There is no chance that the BRICS will replace the U.S. Dollar in International Trade, and any Country that tries should wave goodbye to America.

100% tariffs. That’s essentially a death penalty for pretty much any nation that relies on exports because the United States is by far the world’s largest consumer. Critics will say that such tariffs will increase costs for Americans, but they’re missing the point. This isn’t about raising tariffs. It’s about preventing the collapse of the U.S. Dollar.

President Trump just announced that he will impose a 100% tariff on all products from countries that join BRICS or try to replace the U.S. dollar in international trade.

This is about to cause worldwide panic.

AMERICA IS BACK BABY! pic.twitter.com/HR0k3ePoSU

— George (@BehizyTweets) November 30, 2024

De-dollarization has been on the horizon since the Biden regime weaponized SWIFT against Russia following their invasion of Ukraine. But the Ruble only suffered temporarily before becoming stronger than ever. The move prompted many nations to seek a safer alternative; if the United States was willing to use control of international commerce to punish another nation, then an alternative needed to be found.

This move by President Trump changes the calculus completely.

Economist Jim O’Neil, who first coined the term BRICS in 2001, told Reuters the idea BRICS being a genuine global club is “out there with the fairies” and “not feasible.”

“The idea that the BRICS can be some genuine global economic club, it’s obviously a bit out there with the fairies in the same way that the G7 can be, and it’s very disturbing that they see themselves as some kind of alternative global thing, because it’s obviously not feasible,” O’Neill said.

BRICS was first formed in 2009 in the wake of the 2008 global recession and originally had four member states – Brazil, Russia, India, and China. It has grown substantially over the past 20 years, adding South Africa in 2010, and since then has grown to include Iran, Saudi Arabia, the United Arab Emirates, Ethiopia, and Egypt.

According to O’Neil, BRICS as a group has not achieved much over the past 15 years, and added the alliance is more symbolic than anything.

“It seems to me basically to be a symbolic annual gathering where important emerging countries, particularly noisy ones like Russia, but also China, can basically get together and highlight how good it is to be part of something that doesn’t involve the U.S. and that global governance isn’t good enough,” O’Neil said.

The relationship between China and India – the two economic powerhouses of the group – has been mired with disputes over territory over recent years. O’Neil said he would take the alliance seriously when both countries are actually able to work together effectively.

“I will take the BRICS group seriously when I see signs that the two countries that really matter – China and India – are actually really trying to agree on things, rather than effectively trying to confront each other all the time,” O’Neil said.

Tensions could be beginning to ease between China and India, however, after China’s President Xi Jinping and India’s Prime Minister Narendra Modi came to an agreement over the long-running border disputes on Wednesday.

According to the Associated Press, the two leaders met for the first time in five years and this could spell the end of a four-year standoff between their respective militaries along their shared Himylayan border, which China has laid claim to.

“It’s important for both sides to shoulder our international responsibilities, set an example for boosting the strength and unity of the developing countries, and contribute to promoting multi-polarization and democracy in international relations,” Xi said.

India’s Foreign Secretary Vikram Misri told reporters the pact will have a positive impact on regional and global peace and prosperity. However, he did not detail how exactly the border dispute would be resolved, and if the tens of thousands of troops still stationed there would be pulled back.

“The two leaders affirmed that stable, predictable, and amicable bilateral relations between India and China, as two neighbors and the two largest nations on earth, will have a positive impact on regional and global peace and prosperity,” Misri said.

Met President Xi Jinping on the sidelines of the Kazan BRICS Summit.

India-China relations are important for the people of our countries, and for regional and global peace and stability.

Mutual trust, mutual respect and mutual sensitivity will guide bilateral relations. pic.twitter.com/tXfudhAU4b

— Narendra Modi (@narendramodi) October 23, 2024

#WATCH | Prime Minister Narendra Modi holds a bilateral meeting with Chinese President Xi Jinping in Kazan, Russia on the sidelines of the BRICS Summit.

(Source: DD News/ANI) pic.twitter.com/WmGk1AlSwW

— ANI (@ANI) October 23, 2024

#WATCH | Kazan, Russia: During the bilateral meeting with PM Modi, Chinese President Xi Jinping says, "It's my great pleasure to meet you in Kazan. It's the first time for us to have a formal meeting in five years time. Both the people in our two countries and the international… pic.twitter.com/NCUm2DVmQY

— ANI (@ANI) October 23, 2024

Russian President Valdimir Putin seemed confident BRICS would continue to expand, and stated on Wednesday there are over 30 countries currently wanting to join BRICS, according to a report from DP International.

“It would undoubtedly be wrong to ignore the unprecedented interest of the countries of the Global South and east in strengthening their contacts with BRICS,” Putin said.

The summit’s agenda is breaking away from Western-led financial institutions, reducing the reliance on the U.S. dollar and the influence of the SWIFT system. Putin reportedly wants stronger financial bonds between the members.

Putin said Wednesday the U.S. dollar is being used as a weapon, adding he does not reject using the dollar but feels forced to look for an alternative, because Russia is not able to work with U.S. dollars.

“The [U.S.] dollar is used as a weapon, it is true and we see that. I think it is a great mistake by those who do it, since the use of the dollar, which is still the most important tool in global finance, and its use as a political tool undermines trust in this currency, thereby reducing its capabilities. We are not the ones who do that. It’s others. We are not rejecting the dollar or fighting against it, but if they don’t let us work with it, what else should we do? We should seek other alternatives and this is exactly what we do,” Putin said.

JUST IN: Russian President Putin says it's a "great mistake" to use the US dollar as a weapon. pic.twitter.com/4J3KU1Z6U7

— BRICS News (@BRICSinfo) October 23, 2024

Ulrich Schmid, professor of Russian studies at the University of St. Gallen in Switzerland, told France 24’s Eve Irvine the West should not overestimate the significance of the BRICS summit because the member states have clashing agendas, making any real progress slow.

“We do have very diverging agendas among the member states. So, for instance, Russia and Iran are extremely interested to create alternative trade platforms, alternative payment systems to evade the heavy sanctions they’re under … At the same time we have other countries who are just in favor of multilateral world orders, such as Brazil or India, and they at the same time want to continue to have very good relations also with Western countries, including the United States,” Schmid said.

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As Statista’s Felix Richter reports, the expansion of BRICS beyond founding members Brazil, Russia, India and China as well as South Africa, which joined in 2010, aims to strengthen its influence as a global economic and political force, providing a counterweight to the G7 and other Western-led institutions.

The group seeks to promote a more multipolar world, reducing the dominance of the United States and its allies.

Speaking on the expansion of the BRICS, South African president Cyril Ramaphosa said at a press briefing last year: “We shared our vision of BRICS as a champion of the needs and concerns of the peoples of the Global South. These include the need for beneficial economic growth, sustainable development and reform of multilateral systems.”

As Richter shows in the chart below, the new, expanded BRICS represent roughly 45 percent of the world’s population and 35 percent of global GDP when measured at purchasing power parity.

You will find more infographics at Statista

With the addition of Iran and the United Arab Emirates, the bloc has grown its combined oil production by nearly 50 percent and now accounts for almost 30 percent of global oil output, according to the Energy Institute.

In terms of exports, the group’s footprint is relatively small.

Last year, its nine members accounted for just 22 percent of global merchandise exports, with China alone accounting for nearly two thirds of the bloc’s exports.

Speaking of China: despite all claims of BRICS being “an equal partnership of countries that have differing views but have a shared vision for a better world,” as South Africa’s president Cyril Ramaphosa put it last year, it’s hard to ignore China’s outsized role within the group, both in terms of economic and political power.

Measured at purchasing power parity, China’s GDP is larger than the combined GDP of the remaining eight BRICS members, making it hard to imagine the country not wielding that power in negotiations within the bloc.

According to Gromen, the writing has been on the wall for decades but only in the past couple of years has the culmination of our economic trajectory been made clear.

“What Janet Yellen’s telling you, what Jake Sullivan is telling you, what the Department of Defense is telling you is that it’s a national security interest to get out of the Treasury export business and to get into the stuff export business again,” Gromen said. “But we can’t do that without a much weaker dollar, and the arbiter of that is going to be the price of gold. You’re seeing U.S. Treasury Secretary Janet Yellen throw 40 years of economic orthodoxy in the trash.”

His projections, which have been among the most accurate as they pertain to the Treasury, precious metals, and cryptocurrencies, paint a dark picture for the dollar but a rosy one for those whose wealth is backed to some extent by physical gold and silver.

Jonathan Rose, CEO of Genesis Gold Group, reacted to the price projections Gromen is on record as targeting. Specifically, Rose believes Gromen may be correct with his price target of $7,000-$15,000 per ounce.

“We’ve seen some ‘pie in the sky’ projections lately that have gold and silver going up tenfold, but I’m hesitant to believe in such incredible gains,” Rose said. “Luke’s targets of 2x to 5x are not only realistic but could very well be spot on, especially if BRICS nations continue their push to replace the U.S. Dollar.”

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Gromen believes the dollar system is dying but does not believe it’s going to be completely usurped by BRICS’ machinations. He believes the U.S. Dollar will remain the world reserve currency but that it will get re-priced in the near future.

This puts physical precious metals in a strong position, according to Rose.

“Whether the U.S. Dollar gets devalued or if it gets replaced altogether, most economists agree the logical way to store wealth is with gold and silver,” he said. “We want to help Americans protect their money today but more importantly we want them ready for the long-term.”

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