Professor Lance Lewis posted an interesting Financial Times article to the Buzz & Banter yesterday: It supports his view that, by publically panning the US dollar, the BRIC nations are demonstrating that they “get it” regarding the dollar's imminent demise.

Yet one must wonder what it is precisely that the BRIC nations "get." It's certainly not the notion, promoted by Professor Lewis and others, that the expansion of the money supply equals currency “debasement.” The record shows that, over the past few months (indeed, over the past few years), few nations have been as active as the BRICs in “debasing” their currencies, at least in this sense. If M2 or M3 growth is any guide, these nations have been “debasing” their currencies more frantically than the US.

The Chinese, for example, have been expanding M2 at a breakneck pace of around 25% in 2009. Aside from “printing money,” Chinese officials have accomplished this monetary expansion (in a way US government officials cannot) by directing state-owned banks to embark on a reckless corporate lending binge designed to counteract the severe economic contraction underway in its export sector. Directed by Chinese authorities -- and flying in the face of rapidly deteriorating creditworthiness -- Chinese banks increased lending in the first quarter of 2009 by almost as much as they did in all of 2008.

Contrary to popular belief, the BRICs aren't worried about the deleterious effects of rapid US money-supply growth. On the contrary, the smarter BRIC officials are actually more worried that the US stimulus may be insufficient, since the health of the export-oriented economies of these nations depends critically upon US domestic demand.

The BRICs jawboning about the US dollar is about something else entirely, and the article is fairly prescient in recognizing this. The posturing has little to do with fundamental currency analysis and everything to do with geopolitical ambition. The BRIC nations want more geopolitical influence, and they're angling to use their reserves at a moment at which they think they have leverage.

Furthermore, they're almost certainly aware that several global economic and political forces presage a decline of BRIC influence in the medium term, and they're trying to take proactive steps to head off this imminent development.