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Saturday, August 09, 2025

9: India

Kalkiism: The Economic And Spiritual Blueprint For An Age Of Abundance
The Last Age: Lord Kalki, Prophecy, and the Final War for Peace
The Protocol of Greatness (novel)
A Reorganized UN: Built From Ground Up
The Drum Report: Markets, Tariffs, and the Man in the Basement (novel)
World War III Is Unnecessary
Grounded Greatness: The Case For Smart Surface Transit In Future Cities
The Garden Of Last Debates (novel)
Deported (novel)
Empty Country (novel)
Trump’s Default: The Mist Of Empire (novel)

The 20% Growth Revolution: Nepal’s Path to Prosperity Through Kalkiism
Rethinking Trade: A Blueprint for a Just and Thriving Global Economy
The $500 Billion Pivot: How the India-US Alliance Can Reshape Global Trade
Trump’s Trade War
Peace For Taiwan Is Possible
Formula For Peace In Ukraine
A 2T Cut
Are We Frozen in Time?: Tech Progress, Social Stagnation
The Last Age of War, The First Age of Peace: Lord Kalki, Prophecies, and the Path to Global Redemption
AOC 2028: : The Future of American Progressivism

Talking With Hélène Rey The international role of the dollar and more ........... My old teacher Charlie Kindleberger used to tell his students that anyone who spends too much time thinking about international money goes mad. It’s a subtle topic, one in which it’s all too easy to mistake mysticism for wisdom. ........... these new tariff deals, or so-called deals between the US and Europe, I think a lot of it is seen to be probably not enforceable anyway, because all these investments that have been promised are supposedly done by the private sector. There's no way that it can be properly enforced. .......... what is important for us in Europe, I think, is that the optics have not been great in the sense that the European Commission is seen as having been a bit subservient to Trump. And I think that's not good for the sovereignty of Europe. Plus, obviously, with Trump, you never know when it stops, right? Because things are being constantly revisited. We don't know. There's still a lot of uncertainty about what may or may not happen with these deals. But overwhelmingly in Europe, one of our main concerns is Ukraine. And that weighs on everything. ............ tariffs should strengthen the dollar. It's actually gotten substantially weaker. .............

Trump has ushered into macroeconomic policy an incredible amount of uncertainty

..................... the constant attacks on institutions of the United States, which are undermining the credibility of the currency ............ the constant attack of this administration on the traditional institutions underpinning U.S. long-term growth and U.S. strength in innovation, in technology, such as the attack on universities, but also on the financial side—the attack on the Federal Reserve. All this, I think, is extremely serious and I think is really leading to a reassessment in the rest of the world of the dollar as a currency that one can fully trust. .................. after the so-called Liberation Day tariff announcement, we have seen something very unusual for a world reserve currency. We have seen that the dollar has gone down at the same time as equity markets are going down and also the US yields are going up. Usually we see the opposite co-movements when there is global turmoil or a massive uncertainty in world markets because usually the US dollar is seen as the safe haven. So we do see people wanting liquidity in dollars, and that props up the dollar exchange rate and we see the yields going down ............. there's a lot of debt which is issued in dollars. Obviously it's also a banking currency. If we look at countries pegging their exchange rate towards another currency, most countries would be pegging vis-à-vis the dollar. The commodities markets are also in dollars. And the reserves of all the central banks are mostly held in dollars. .......... the “medium of exchange.” It's a little bit like how we have a handyman coming later this afternoon. We're not going to ask him to fix our lights in return for a lecture on economics. I sell whatever it is I have to offer for dollars and use the dollars to pay the handyman. And the dollar kind of plays that role between currencies. ........... And yes, exorbitant privilege. So that's a famous phrase, usually misattributed to Charles de Gaulle. ......... Everyone wants dollar liquidity and therefore the US could always issue short-term liquidity US treasuries that the rest of the world wanted and use this money to buy risky assets, to buy companies in Europe, in particular. So to buy assets that would earn a higher return and then refinance at cheap rates because they were issuing this liquidity that everybody wanted. ........... if the US purchases companies in Japan or equities in Europe, these are the external assets of the United States. It earns returns on these external assets. And we compared the return on the external assets to the returns on the liabilities that the US pays and a lot of the liabilities of the US are going to be these US treasuries that the rest of the world is happy to hold. And so there is an excess return that the US has on its external assets compared to external liabilities and this is what, with Pierre-Olivier, we called the exorbitant privilege and we put a number on it. ............. when money is flowing in and everybody thinks you're a great place to invest and then all of a sudden they kind of change their minds and the inflow of capital just dries up. Companies can't refinance, the government sometimes can't refinance and terrible things happen. That's what happened to Greece. It's what happened to a large extent to Spain and Portugal in 2010. It typically happens in Latin American countries. And the United States has always been immune from that. And what you're saying is that this is a really big deal. .......................... “Why don't I consider that I should use the Malaysian ringgit as international currency, or even the Swiss franc as an international currency?” If a lot of people are using the dollar, then deviating from that equilibrium is going to be very costly for any individual country or any individual player. So this is why it’s kind of stable. ............ It is true that there's something like $800 billion of $100 bills circulating around the world being used by criminals. Although there's quite a few large denominations of euro notes now playing that role too. .......... when the Argentine peso drops they have a lot of debt in dollars and assets in pesos and their balance sheets get much worse and this is an important part of a financial crisis. When the US dollar drops, we have a lot of debts in dollars and a lot of assets that are in other currencies. So our balance sheet actually improves. The special role of the dollar kind of insulates us and has made us a safe haven. ............... like when we speak a common language. If everybody speaks English, then we are not going to deviate from speaking English because, you know, it's hard to learn another language. ........... the role of the dollar as an international currency and the role of English as an international language, saying that they're very parallel. And we are, of course, speaking neither in French nor in Mandarin, but in English. ............ Jerome Powell and Christine Lagarde have basically, if I'm getting that right, the same job and oversee comparable sized economies, but somehow Powell matters a lot more. ............ we do not see for the moment anything that looks like an abrupt rebalancing of portfolios and essentially massive capital flight out of dollar assets. We don't see that. For that to happen, we would have to have a credible alternative; another credible currency in which large amounts of capital flows could fly into. And we don't have that. .............

the euro comes second, but it's a relatively distant second.

.......... The RMB is absolutely not integrated in world financial markets. So it's very, very distant in terms of any statistics for the RMB compared to the euro and the dollar. ................. And then Mario Draghi says three words: “we will do whatever it takes and it will be enough.” And he didn't get the authority to say that. And in fact, they never actually did put up any money, but that kind of ended the crisis. Amazing thing. .............. if you add up all the issuance of debt that we have had at the European Union level, it's up to a bit more than one trillion dollars, or not that much more. While if you take, for example, the US Treasury markets, it's already like 30 trillion dollars. .............. a lot of the credit card transactions in Europe, for example, they go almost systematically through American companies: Visa, MasterCard, PayPal, Apple Pay, and others—they are dominating the credit card payments. And that's considered less and less acceptable in the euro area............ This is also the role that sterling played during the gold standard period before Bretton Woods. ............ one of the most unstable periods in monetary history, which is the interwar period where you had portfolio shifts between sterling, dollar, Deutsche mark, French franc, et cetera. ........... I was actually invited to write a paper about the risks of a collapse of the international role of the dollar in 1980. .....................

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Kalkiism: The Economic And Spiritual Blueprint For An Age Of Abundance
The Last Age: Lord Kalki, Prophecy, and the Final War for Peace
The Protocol of Greatness (novel)
A Reorganized UN: Built From Ground Up
The Drum Report: Markets, Tariffs, and the Man in the Basement (novel)
World War III Is Unnecessary
Grounded Greatness: The Case For Smart Surface Transit In Future Cities
The Garden Of Last Debates (novel)
Deported (novel)
Empty Country (novel)
Trump’s Default: The Mist Of Empire (novel)

The 20% Growth Revolution: Nepal’s Path to Prosperity Through Kalkiism
Rethinking Trade: A Blueprint for a Just and Thriving Global Economy
The $500 Billion Pivot: How the India-US Alliance Can Reshape Global Trade
Trump’s Trade War
Peace For Taiwan Is Possible
Formula For Peace In Ukraine
A 2T Cut
Are We Frozen in Time?: Tech Progress, Social Stagnation
The Last Age of War, The First Age of Peace: Lord Kalki, Prophecies, and the Path to Global Redemption
AOC 2028: : The Future of American Progressivism

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