948 sats \ 1 reply \ @elvismercury OP 1 Nov 2023 \ on: _Broken Money_ book club, part 3 bitcoin
When the dollar become the world's reserve currency, the US assumed certain responsibilities:
“And for the United States’ role, they had to maintain somewhat credible institutions and a high degree of division of powers between their central bank and their government so that the dollar would be viewed as a credible currency on a global scale. [...] Starting in 1979 and continuing into the 1980s, the new chairman of the Federal Reserve Paul Volcker raised interest rates to nearly 20% and put the United States into a recession to stabilize the dollar. Both Jimmy Carter and his successor Ronald Reagan supported him in this hawkish action.”
How is the USA's credibility at this point? What factors make a country credible, or not? What would ensue from a loss of credibility?
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0 sats \ 0 replies \ @k00b 3 Nov 2023
How is the USA's credibility at this point?
BRICs is growing and the petrodollar co-conspirators are breaking up with us so probably not great:
The recent rupee-designated oil transaction between India and the United Arab Emirates is not merely a swipe at the petrodollar arrangement that has prevailed since 1973. It is also a signal that the world’s major commodity exporters and importers can try to reduce their dependence on the dollar. If not a new world order, the BRICS expansion is certainly an attempt at an alternative world order, one with a more sympathetic ear for the developing many versus the developed few.
What factors make a country credible, or not?
It's the same factors that make a human credible - honoring commitments, I'd guess. We've been breaking commitments lately:
The West’s proclivity to deploy unilateral financial sanctions, abuse international payments mechanisms, renege on climate finance commitments, and accord scant respect to food security and health imperatives of the Global South during the pandemic are only some of the elements responsible for the growing disenchantment with the prevailing international system.
It's probably not just honoring commitments. As with humans, if you have enough power you can be a total shithead and people will treat you as if you're credible.
What would ensue from a loss of credibility?
Oversaturated with Dalio as I am, loss of world reserve currency status and internal and external disorder.
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