LaRouche On Brazil-Russia Plans To Dump The Dollar

: "That's The Most Stupid Thing That Can Be Done"

Brazilian Finance Minister Guido Mantega announced today that Brazil intends to buy $10 billion worth of SDR-interest-bearing IMF bonds, whenever the IMF issues those planned SDR bonds, as long as the interest rates is adequate, and if Brazil agrees with the revisions being made at this time of the IMF's "New Arrangements to Borrow" facility. Mantega hyped this a proof of how great Brazil is doing, that, in the midst of the worst international financial crisis since WWII, it is preparing to loan to the IMF, instead of borrowing from it. Mantega said this was Brazil's contribution to the April G-20 decision to expand IMF funding by $500 billion, for the crisis.

Brazilian President Lula da Silva told Reuters that this purchase "gives us the moral authority to keep pushing for the changes that are needed at the IMF. Brazil could not be left out."

The decision was promoted by Bloomberg wireservice as part of the move by the Brazil-Russia-India-China group (BRIC) against the dollar, linking it to a Russian decision to buy a similar amount of IMF bonds, and statements today by the First Deputy Chairman of Russia's Central Bank Alexei Ulyukayev that Russia will cut its share of U.S. Treasuries "because a window of opportunity for working with other instruments is opening." Russia will move gradually, Ulyukayev said, by shifting from Treasuries as they mature. About 30% of Russia's reserves are in Treasuries. The BRIC meets next week, in tandem with the Shanghai Cooperation Organization gathering in Yekaterinburg, Russia.

Mantega, for his part, said in the press conference announcing the IMF loan decision, that Brazil has no interest in weakening the dollar, since that raises the value of its real, and screws up exports. But, he added, Brazil wants other currencies also behind international transactions.

When briefed on these statements, leading economist Lyndon LaRouche declared them "very foolish moves. They will do nothing but damage—like taking a suicide pill."

In fact, LaRouche added, "Breaking from the dollar would be clinically insane, the most stupid thing that can be done. Such a proposal can only come from people who lack the courage or the intelligence to accept my proposals for global economic reform—because such a break from the dollar will lead to the whole world disintegrating."