The Coming Global Financial Revolution
Russia Is Following the American Playbook
Foreign critics have long chafed at the “exorbitant privilege” of the U.S. dollar as global reserve currency. The U.S. can issue this currency backed by nothing but the “full faith and credit of the United States.” Foreign governments, needing dollars, not only accept them in trade but buy U.S. securities with them, effectively funding the U.S. government and its foreign wars. But no government has been powerful enough to break that arrangement – until now. How did that happen and what will it mean for the U.S. and global economies?
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An arcane but significant outcome of the diminishment of the dollar having the major role in international trade is captured in the notion of the “Triffin Dilemma”. Triffin was the economist who pointed out that reserve currency status required the country whose currency fulfilled that role to provide the money supply for international trade. So, we ran trade deficits meaning that we bought more from foreign countries than they did from us - thus, they were net recipients of dollars. They banked these dollars in their central banks where they were invested in US Treasury securities. Several aspects of this are significant: first, creating this exported money created Federal debt as well as purchasers of this debt, and second it was in a sense a free ride for the American economy in that we did not have to produce anything in exchange for export - just “print” money. Adjusting to these changes will require a period of hardship. My guess is fifteen years. Unfortunately, our society and culture has been de-conditoned for the task. We will have a reset, although, hopefully, not one of Klaus Schwab’s design.
The U.S. Government dos not pay attention to the leading global & local intellect of the Financial world . Iran & Libya , are two examples .Libya was destroyed by GWB during the attack on Iraq. Iran is surviving ,it is the last ? country to fully manage their own currency ; They have their own Banks ,Gold ,etc. Thank God that Ms. Brown is fighting for the "little people ," and Public Banking .Her books should be included in the curriculum of all Financial teachings .