Personal finance expert and best-selling author Dave Ramsey has dismissed de-dollarization concerns and the prospects of a BRICS currency, the Chinese yuan, or the Russian ruble displacing the U.S. dollar in international trade. “They don’t have the muscle to take down the dollar,” he stressed.
Dave Ramsey on De-Dollarization and Challenges From Alternative Currencies
Personal finance guru and Ramsey Solutions CEO Dave Ramsey answered a question about de-dollarization in an episode of “The Dave Ramsey Show,” aired last week. Ramsey is an eight-time national best-selling author who sold more than 11 million copies. A self-proclaimed personal money management expert, he calls himself “America’s trusted voice on money.”
Zack from Alabama asked him:
I’m reading more and more about de-dollarization and countries moving away from the U.S. dollar as their basis of international trade. Will this affect the strength of the dollar, and should I be concerned about how I’m saving and investing as a result of this?
Ramsey began by telling the Alabama man that he is “spending too much time on the internet” and has gotten into a conspiracy theory about the demise of the U.S. dollar. Regarding countries moving away from the USD for international trade, Ramsey said China, Russia, and Brazil “are the three main players in this.”
He stressed, “They already don’t use the U.S. dollar as their basis of international trade,” emphasizing that all three countries have their own currencies and “there’s a conversion rate” between each of those currencies and the U.S. dollar. The self-proclaimed personal finance guru opined: “The three largest countries … are talking about bringing in some of the oil countries in the Middle East … they’re trying to come up with one currency that they all use.” The BRICS nations (Brazil, Russia, India, China, and South Africa) are working to create a common currency that will reduce their reliance on the USD.
Ramsey noted that the new, common currency they come up with would be used for international trade and “converted back and forth to dollars much like Europe did with the euro which, by the way, kind of didn’t work.” He added: “These countries — if they did all agree to use one currency, it would be much like when Europe went to the euro and then that’s going to exchange for the dollar back and forth.”
He continued:
Are those countries going to be able to devalue the dollar by doing that? No. Because while they do take up a lot of land mass, they do not take up a lot of the gross domestic product (GDP) of the world.
“The United States still is the vast majority of the gross domestic product of the world, still. China’s is big, Russia is basically horrible, and Brazil is in a failed economy, like times 10, and it’s tiny as far as economics go,” he continued. “When you put them all together, they don’t have the muscle to take down the dollar. They just don’t, mathematically. It’s arithmetic. They just don’t have it.”
Ramsey further said: “Now, what they are going to do if they all do put it together, it’s not a de-dollarization. It’s not doing away with the dollar. They’ve created their own currency. They’re still going to have to trade with the 800-pound gorilla which be us, and you’re going to have to trade with us in dollars, so whatever little currency you create over there in your little fantasy world that you live in, you still going to have to trade it for dollars, so it’s not going to take down the dollar.”
Mocking the size of Brazil, Ramsey said: “When you look at the math, it’s humorous.” As for Russia, he said that it’s “a huge land mass” but “their economic production is pitiful.” In conclusion, Ramsey said:
Am I worried about this? Absolutely not. Absolutely zero, because Russia is pitiful and China has no labor force.
Noting that China’s “labor force is aging out because they stopped having babies legally,” Ramsey stressed: “They have no young labor force coming on.”
Many people do not share Ramsey’s view, warning that a common BRICS currency could erode the U.S. dollar’s dominance. Among them is a former White House economist, who recently said that if the BRICS uses only its common currency for international trade, “they would remove an impediment that now thwarts their efforts to escape dollar hegemony.” A Swedish university professor has cautioned that Saudi Arabia joining the BRICS group would accelerate the use of the Chinese yuan as a trading currency. A former Morgan Stanley economist expects the world to evolve from a unipolar reserve currency world to a tripolar world — with the U.S. dollar, the Chinese yuan, and the euro as dominant currencies.
Do you agree with Dave Ramsey about de-dollarization and that a BRICS currency or the Chinese yuan cannot erode the U.S. dollar’s dominance? Let us know in the comments section below.
