"If you cross the river, you will destroy a great empire."

The age of empire is over.  No country is entirely self-sufficient, and no country is able to support that lack of self-sufficiency through conquest or theft.  All nations must trade and, with that requirement, they must meet as parties to an exchange of value.

It is true that trade is not necessarily fair or equal, but the debate is over the nature of trade; not whether it should exist at all.

This obligation has placed consumers firmly at the centre of markets and world affairs.  Nations may agree to trade but if consumers choose not to buy then such agreements are meaningless.

This is what makes the meeting of Brazil, Russia, China and India – collectively the BRICs – in the Ural Mountain city of Yekaterinburg in Russia, such an archaic anomaly.  The nations have little in common.  India and Brazil are open democracies.  China and Russia are defacto dictatorships.  Russia’s economy depends entirely on global demand for oil.  India and Brazil – although poor – have relatively large internal markets.  China depends on the world’s demand for cheap manufactures to keep their massive population employed.

The only thing that unites them is the delusion that governments can dictate economic policy to consumers; that what they legislate people will buy.

You’d think that the era of the Soviet Union would have taught all these governments – all of whom have experimented with collectivism and all of whom have suffered economic collapse and malaise as a result – that the imposition of state authority limits growth and investment.

The arable land of the ex-Soviet Union was equivalent to that of Canada and the US combined.  Despite this advantage, they produced only half the grain.  In the 1980s, the Soviet Union experimented with “privatising” 4% of their agricultural land.  Within a few years, this 4% was responsible for 25% of Soviet agricultural production.

 “There can be no successful global currency system if the financial instruments that are used are denominated in only one currency. Today this is the case and the currency is the dollar,” said Russian president, Dmitry Medvedev.

The dollar is freely traded, which cannot be said for the BRIC currencies.  This freedom of exchange has very clear results.  “Dollar bonds sold by China earned 11.4 percent in the past year, more than double the 4.6 percent for debt in yuan, JPMorgan Chase & Co. indexes show. Brazil’s US currency bonds returned 3.6 percent as real-based notes lost 4.9 percent, and Russia’s dollar bonds outperformed with a 1.9 percent loss compared with a 7 percent drop in ruble debt,” says Laura Cochrane at Bloomberg News.

Even the $2.8 trillion in reserves that the BRIC nations control is not a strength.  Oil is only valuable if there is demand for the use of that oil and customers are willing and able to pay for it.  Large savings of dollars are only valuable if there is something to buy and the currency maintains its value.

If anything, these reserves are a tremendous boon for the US and their struggling economy.  Each dollar outside of America is a future promise to purchase US-made goods that will have to be redeemed in order to return value to the owner of that dollar.  In other words, money is only as valuable as what you can buy for it.

If the value of that currency depreciates then it improves the fortunes – not of the currency holders – but of the currency buyers.  The British pound has already depreciated, improving the business prospects of UK exporters.  The US dollar declined slightly during the BRIC summit, hopefully causing the assembled leaders a few stomach ulcers.

Iran’s president, Mahmoud Ahmadinejad, speaking at the summit, declared, “It's very evident that the epoch of empire is over, and will never be revived.”

With an economy financed entirely off its oil revenues, the empire he is talking about is his own.