The Emergence of Russia, China , India and Brazil

Russian President Vladimir Putin's challenge to the US dollar is particularly worrisome. He emphasizes the inherent unfairness of the current system, which relies almost entirely on the dollar and which has an extremely negative effect on many smaller countries’ economies and financial reserves.

"There can be only one answer to this challenge," he said. "The creation of several world currencies and several financial centers."

Already, in the last few months, Norway , Iran , Syria , UAE, Kuwait , and Venezuela have announced that they are either cutting back on their US Dollar reserves or converting from the greenback to the euro or a "basket of currencies".

Dollar hegemony is at the very center of American power, and yet, the downturn is visible everywhere. If the dollar loses its place as the world’s "reserve currency"; the US will have to pay-down its monstrous current account deficit and live within its means. America will lose the ability to simply print fiat money and use it in exchange for valuable resources and manufactured goods.

Russia ’s power is mushrooming. Its GDP is leaping ahead at 8% per annum and by 2020 Russia will be among the five biggest economies in the world. It now has the third largest Forex reserves in the world and it is gradually moving away from the anemic dollar to euros and rubles.

Russia has also overtaken Saudi Arabia as the world’s leading supplier of petroleum. It produces 13% of the world’s daily output and has the world’s largest reserves of natural gas. In fact, Putin has worked energetically to create the world’s first Natural Gas cartel—an alliance between Russia , Qatar , Iran and Algeria . The group could potentially control 40% of the world’s remaining natural gas and set prices as it sees fit.

Putin represents the emerging-market economies of China , India and Brazil . These 4 nations will progressively overtake the "old order". Last year 60% of the world's output was produced outside the G-7 countries. According to Goldman Sachs, by 2050 Brazil , Russia , India and China will be the world's leading economies.

The transition from "superpower rule" is already underway.

[Excerpt of an article by Mike Whitney. ICH]