The five BRICS nations, Brazil, Russia, India, China and South Africa, make up over 40% of the world's population and account for nearly 30% of the world’s GDP. They also own over $1.5 trillion of U.S. debt which is nearly one fourth of total foreign debt holders. As the trade war escalates many are worried that these countries could “weaponize” their large holdings of U.S. debt and sell off at a moment’s notice, ultimately threatening the stability of the U.S. financial system. Learn more in this episode of USMR Market Insights with Coy Wells.
Are We at Risk for a Massive U.S. Treasury Sell-Off? – Video Transcription
Coy Wells: 00:00
Since the last recession of 2008 and the housing crisis of 2010 we've seen a slow separation away from the United States. One of the first moves in this migration took place in 2010 with the Alliance of the BRICS nations an acronym for Brazil, Russia, India, China, and later the addition of South Africa. Out of this alliance we saw the support and development of the AIIB Bank or Asian Infrastructure Investment Bank several years later around 2014. These countries were very close in regards to economic development and their goal was to establish an equitable, democratic, and multi-polar world order. What is unique about these countries is that in landmass they cover roughly 25% of the world and a little over 40% of the world's population. With that you can see that the alliance would allow them to increase their political cooperation in ways of swaying the United States on major trade and negotiations in a much larger scale.
The other thing about these countries is that each of them is very healthy from a standpoint of natural resources that they can tap into at any point in time. Each country also holds a significant amount of U.S. Treasury bonds, China being the largest holder in the world at around 1.1 trillion, Brazil coming in at 4th place at about 311 billion, India at 13th place at around 152 billion, and Russia holding around 96 billion; until their most recent purchase and sell off of around 84% of their entire holdings putting them at around 14 billion. The amount of treasury bonds these countries hold could pose a systemic risk to the United States in the long run. Globally countries are currently on guard with the United States and they are aware that the United States historically tends to fall into a recession every 8 to 10 years and a recession tends to take place when the economy is peaking. The indicators currently inside the United States is that we are peaking with the Federal Reserve announcing an inverted yield curve and now them lowering interest rates, the writing's on the wall for most who can understand simple economics.
I urge you to take action today by picking up U.S. money Reserve's latest report: In Debt and Out of Time. It has a lot of detailed and in-depth information, so please click on the link below or call the number on your screen to get your copy. If you find this information useful we encourage you to Like and Share this video. If you're watching us from YouTube, subscribe to our channel so you don't miss a single episode. I'm U.S. Money Reserve's Coy Wells and thank you for watching Market Insights.