The collapse of the Russian ruble and the Chinese yuan shows why a potential BRICS currency is not a threat to the U.S. dollar’s status as the world’s reserve currency, Breitbart Economics Editor John Carney told Fox Business host Larry Kudlow Friday.
As the BRICS countries of Brazil, Russia, India, China, and South Africa prepare to meet next week in Johannesburg, the currencies of two of its members are falling fast.
“I would bail out of that club if I were Brazil and India,” Carney quipped.
When asked if BRICS is a threat to the dollar, Carney shot back, “Absolutely not. And what we’re seeing in the collapse of the ruble and the collapse of China’s currency is the rest of the world wants nothing to do with these controlled economy currencies.”
Carney told Kudlow that China is now intervening to prop up the yuan rather than devalue it like they typically do “because they don’t want it to crash too much.”
“Look, the Chinese economy is in a lot of trouble,” he continued. “Their unemployment rate is so high that they’ve stopped talking about it. They’re concealing what the youth unemployment rate is. It got up to 21 percent, probably going higher because so many people are graduating.”
As Carney reported in Tuesday’s Breitbart Business Digest:
The jobless rate for China’s young, between the ages of 16 and 24, has been rising steadily for six months. In June it officially hit 21.3 percent, up from 12.2 percent before the pandemic. The unemployment rate was expected to climb even higher as millions of graduates hit the job market in the coming months.
China’s authorities have responded by suspending the publication of data on youth unemployment. Like the old riddle which posits that a tree falling in the forest cannot make a sound if there is no one there to hear it, youth unemployment in China presumably cannot continue to rise if there is no one counting it.
Although this particular application is new, this is really just the latest version of a not uncommon response by China’s authorities to inconvenient facts: conceal them.
This week brought more bad economic news for China when the country’s giant property development company Evergrande declared bankruptcy on Thursday.
Though Russia’s oil-based economy has remained resilient in spite of the sanctions imposed on it since the start of the war with Ukraine, the Russian ruble has crashed in value.
“The ruble is falling because nobody needs the ruble,” Carney explained. “We have so many sanctions on that country that all around the world who needs a ruble? The Chinese don’t want rubles. They’re saying pay us in oil basically.”
“Does anybody invest in Russia, though, anymore?” Kudlow asked.
“It’s very hard to invest,” Carney replied. “Some people tried to go long [on] Russia on the idea that the war would end very quickly. The prolonged war means prolonged sanctions, which means it’s very risky, very hard to invest there.”