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Here's Who Really Benefits From The Dominance Of The U.S. Dollar

Odd Lots

07:13 min | 3 years ago

Here's Who Really Benefits From The Dominance Of The U.S. Dollar

"So Tracy. I hate to say that brought this whole crisis. There has been sort of one John of article or one genre of discussion. And I've never really been comfortable with. And that is people making really big picture forecasts or statements about sort of the future of the world. I Yeah I mean it feels like a little bit early to be jumping to discussing the second order effects right like there's so much to talk about right now as these things are actually unfolded. Yeah exactly and of course one of the big questions that's out there and that everyone wants you on and I'm GonNa give it to and I've written about it and I've talked about. It is what happens was sort of globalisation. What happens with future of the dollar the US's Preeminent role in the global financial system? We sort of talked about it a little bit with Adam to talk about it with other Other people as well and it's of course incredibly intriguing to discuss we still We just don't know anything. Yeah I think that's true and it definitely falls into one of those sort of big picture. Things that people are talking about at the moment. And it's something that we've sort of discussed on various episodes before right. Dollar dominance has definitely been a theme for the past year or so on our show. You little skeptical when I was like all. I don't think we should have these big picture. Future conversations. You seem a little skeptical of my now. I get it I mean. I don't think anyone really knows at the moment so a lot of it is speculation but also markets are always looking so I kind of get why people are naturally template to be looking at the big picture topics true. Yeah I guess you'd have to do so anyway. We're not going to make a big. We're not trying to make a big forecast here today. But as we talk about globalization as we talk about the dollar I do think it is useful to at least understand how it got to the current system what the current setup is. And what's actually yeah? Basically understand the the current world order and how we got her. Yeah I think that's a great idea and the dollar is so much a heart of the global financial system that we sort of take for granted. But it's definitely worthwhile to step back for a second and things like all. How did we get into a position? Where emerging markets are all like rushing to issue billions of dollars worth of dollar denominated debt? How did we get to a position? Where all of trade finances basically denominated in dollars. Why has that happened right exactly right and you know. There's a lot of misconceptions about all of this. How TRADE WORKS. Who benefits from the strong dollar or who benefits from the dollar permanent role we often hear of. Us ability to issue dollars as a privilege. But it's not. It's not really that a clear. We talked about this a little bit recently on an episode with met climb but the sort of the preference of different actors within the global economy regarding current arrangement is not as as clean as one might one might right and there is an argument that POPs up every once in a while but having the dollar so enmeshed in the financial system can actually be a negative for the US. And we've seen that crop recently with you know people talk about the Fed being the world's central banker does that sort of constrain. What it can do at times like this even before then so yeah definitely worth talking up okay. So today we are going to talk about that and we have a recent get. We actually talked about talk with him. Several weeks ago about Municipal debt when he is the CO author of a recent essay titled the Class Politics of the dollar system for the website. Phenomenal world is Yaacov Fagin. He's the associate director of the future. Capitalism program at the Berggruen Institute. And we're GONNA talk about how we got to this a the state how the dollar got to the state who really benefits from it. Who gets hurt from it and what it really means to preserve it so knockoff. Thank you very much for joining us. I should note that your co author. Dominick make it unfortunately today by glad we have you. What are you? Start by telling us what you The big picture of what your goal was with his essay. The class all its dollar system in sort of this essay was kind of a really long time coming And I really the person the two peop- The three people. I should probably think the most for kind of this happened are dominic who kind of got us to. Right. It's And the James Institute obviously for publishing yet but there's also someone else in the background of this essay. Is Nils Gilman? Who is my boss at the Berggruen Institute in over the years I've worked with him. We've had this very long conversation about we know. Why does the world use the dollar? And why is it a problem and he you know he's not specialist in international finance and this stuff is really technical and I spent like quite a long time kind of in a conversation with him like kind of pouring this stuff out right eventually told me you need to write this essay up right. You need to write an essay that just gives a literature review essentially of this kind of point of view of what the dollar system is politically. And why it's not necessarily you know very clear cut America versus the world story and so eventually this got written up right and that's the kind of story we're trying to tell is. It's very hard to pin down a national interest in the world that's hybrid as Perry Languid. Say Right it's a world in which there is a private system that's yearly inter mediating on an international level an a national in the system in which nations are essentially creating public goods called units of account right and that this international system mediates this hierarchy is of these units of account just as much as national power dynamics do so lucas through useless. Then talk about. The political system are around the dollar. What is that exactly? So argument is that it's actually class. Right is almost a or at least like social stratification as a kind of Meta politics right that the dollar is actually pretty good for a large cross section of people no matter what their position in the global value chain or where they're located and it's pretty bad for another other across sections again without considering international boundaries. That they are. It's pretty bad for a lot of people no matter where they're located or what part of the global value chain there

United States Berggruen Institute Tracy National Power John Trade FED Yaacov Fagin Perry Languid Adam Associate Director Nils Gilman Dominick James Institute Dominic America Lucas