We and many commentators lament the USD dominance that allows it to conduct its global financial wars, and leverage this power to impose a global FATCA dragnet via sanctions. While this is the reality of the world today, how did this come to be? It wasn’t by accident. The history of how this came about is a fascinating one with an ironic twist.
Thought I would share this recent NPR @planetmoney podcast called….
The Dollar At The Center Of The World
John Maynard Keynes vs the almost unknown Treasury official, Harry Dexter White
As World War 2 was ending, world leaders realized they had a problem. Countries no longer knew how to trade with each other. Their economies were devastated. So representatives from 44 nations gathered in the small town of Bretton Woods, New Hampshire to come up with the solution.
It came down to two different plans put forward by two very different men. One was the most famous economist in the world. A British aristocrat. The other was an American that no one remembers. But it was the American that won the day and put the U.S. dollar right in the middle of world trade.
Today on the show, how the US won. The story involves a carefully laid trap, late night dancing and copious amounts of alcohol.
Ironical that Harry Dexter White may have been a Soviet spy.
Very interesting. Thanks for posting this.
The BRICs have a trading problem. They’re using a currency, the US dollar, whose country actively works against their own interests. If that wasn’t enough, the US dollar, is now becoming a real pain in the neck to use with measures like FATCA passed by the US Congress. The BRICs and others are also at risk of the US Government mandating huge fines because we didn’t use the US dollar the way the US government wants us to. In other words trading with countries the US has applied sanctions, while at the same time we’re not breaking the laws of our own country, the US government fines our companies, banks and extradites our citizens. The cost of using the US dollar is going up and becoming unpredictable.
In the past using the US dollar was free and predictable to use. Now we have regulatory costs (FATCA), fines by the US Government, unpredictable whims of the US Government, and our citizens are at risk of extradition to the US.
And the US wonders why the BRICs have just set up their own version of the World Bank / IMF? And currency swaps are being signed up by the Chinese to use the RMB?
The guys at Planet Money do interesting podcasts and I thought this one especially merits highlighting given the current situation where we see moves towards a Renminbi exchange to avoid the cost of the USD. Australia and New Zealand are the most recent examples of government to government agreements to speed this along. Also, Companies on their own are making some of these changes to lower foreign-exchange risk.
What role does FATCA and other sanction and penalty actions like we have seen with BNP accelerate this trend? Well I guess time will tell.
What still mystifies me about Planet Money, is that for some unfathomable reason, after 4 years in gestation, they continue to miss the biggest global tax regulatory story of the century. FATCA begeting GATCA. Maybe they are waiting for the unintended consequences to be written about in a book 20 years from now called “How the US lost Dollar Dominance” Overuse of Financial sanctions and FATCA would certainly merit more than one chapter.
Good points. CNN’s Fareed Zakaria had some good comments on GPS on Sunday about the BRICS and the challenge to American dominance, but I don’t see it available online yet..
@Just Me Says – Here’s the linked for Zakaria’s BRIC bank story.
Interesting video posted about two weeks ago with CCTV interviewing a guy from the Cato Institute.
Thanks for that video. That is Daniel Mitchel who runs this blog..
@Just Me – Thanks.
Here’s the story about the two American born Israeli soldiers killed in Gaza.
Sorry these Americans paid the ultimate price for allegiance to another country. This is much worse than CBT. Sad.