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Walter Sobchak, Esq.'s avatar

Professor Tooze: First let me say that I have admired your work a great deal. I enjoyed The Deluge so much that I bought copies and gave them to my friends.

One of the few advantages of old age is that you have seen and heard all of these things before. I remember debates about the role of the US$ going back into the 1960s. IIRC, De Gaulle complained bitterly about the role of the US$ in the 1960s. His minister and later successor, Giscard d'Estaing coined the phrase "exorbitant privilege" to describe that role. The French wanted to go back to the gold standard. Nixon closed the gold window and that talk died away.

The idea of replacing the US$ has always foundered on the question of with what? Gold was the first suggestion. In the 1980s some people claimed that the Yen would replace the US$. Most of the articles about the rise of China were first written then to describe Japan. But that bubble burst in the 1990s and took that idea with it.

A lot of Europeans wanted the Euro to replace the US$. But the mission creep of using the ECB to float the weak sisters in the EU's southern tier, and the sclerosis of the German political class have crippled the ECB. The Euro is has declined significantly against the US$ because the ECB won't raise interest rates for fear of political chaos in Italy. And, Germany having been confronted with the total failure of its energy plan and the discovery that Putin is a gangster, does not know whether to defecate or wind its watch.

Which brings us to China. They would very much like to replace the US$. But, to do that their currency must be freely tradable. They experimented with a tradable currency a couple of years ago and about a TUS$ of their reserves disappeared in a few months. That experiment was halted. It won't be repeated. The Chinese people are very nationalistic and fully support their government, but they are also very attached to their savings and know that their property rights exist only at the whim of the regime. Digital Yuan? No sane person who is not already under the thumb of the CCP is going let them have control over his financial affairs.

Crypto? useful mostly to gamblers, hackers, terrorists, and smugglers, crypto is neither a medium of exchange nor a store of value. If it isn't a currency it can't take the place of a currency. If rising interest rates don't kill crypto soon, the Federal Government is going to have to do it deliberately.

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Fartist's avatar

"The world is multipolar and so is global trade. Western policy must adjust to that." Intellectuals sure like to say this a lot, but it seems a increasingly delusional to me. China is starting to sputter out and all the other emerging markets are not anywhere close to catching up with the west. Seems to me like we are going to be living in a unipolar world for a while to come.

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