I‘m a bit late, but this was a great conversation. I a sense one can maybe summarize: Kindleberger was proven right against Triffin, but with the emerging dominance of the Eurodollar system Friedman‘s more liberal approach of floating currency rates overcame Kindleberger‘s idea of a more collaboratively organized common world currency

All-star group

Good query getting these three giants on Zoom together! Can't wait to read your book Perry, and I was fascinated to find out "Charlie" is your intellectual antecedent of the money view. Had no idea. Perry said crypto got hit first, I'd add ARKK and meme stocks as another place to look when they peaked in March 2021. They lost their "money-ness". I liked Michael's comment at the end on whether the USD will still be dominant in 50 years - "If the US lets it". Super subtle points - one is that the system actually hurts the US so they might want to change it (exorbitant burden not privilege), and two is that US fundamentals are so much stronger than every other country/bloc that their global power will be maintained (and even increase) for the next few decades.

Nixon abandoned the gold standard in 1971 due to a problem in coordinating economic policies. So it was not because the US was financially exhausted by spending on policies to counter communism, such as the Space program, the Great Society program, and the Vietnam War.

Cool.

Heavy Weights

I liked the question pettis asked that we didnt have time for

What drives a "hard stop" on these kinds of discussions? Why not keep it going longer instead of rushing to end? I wanted to hear more but it was like "no, no, we're out of time!" Why?

Why not "build on" Benjamin Graham and inter-sector balance (for sustainable pricing stability)?

The US national debt is more than $33 trillion, with 38% of it held by foreign entities. The US also has $38 trillion in unfunded Medicare liabilities and $17 trillion in unfunded Social Security liabilities. The US dollar is the dominant reserve currency, backed by its perceived strength, allowing the US to print unlimited dollars as long as the world maintains trust in it. The US dollar is the backbone of US power, and any actions that undermine confidence in the currency threaten to destabilize its position of dominance. Each unilateral sanction imposed by the US risks damaging the stability and credibility of the US dollar, leading to dire consequences for the nation's power and influence. The US is the only country actively undermining the strength of the US dollar. The freezing of Russia's $300 billion currency reserve by Western governments may lead countries to reconsider investing their funds in US Treasury bonds and finding ways to reduce their use of the US dollar. A significant portion of US dollars is held outside the US, estimated at 60-70% of all US dollars in circulation, due to its status as the dominant reserve currency and wide use in international trade and finance. The one trillion dollar trade deficit of the US is a consequence of being the reserve currency, as a strong dollar makes it difficult for US businesses to export goods and services while simultaneously making it easier for other countries to sell to the US. Countries are expending resources and labor making goods and shipping them to the US in exchange for green pieces of paper. The US is sending back mostly empty containers. The US budget deficit is $1.38 trillion in 2022 which must be paid for by selling more Treasury bonds. The interest on this debt is greater than the military budget. To pay the interest on its debt, the government sells more Treasury bonds, leading to a cycle of increasing debt. The US printing of dollars has been exporting inflation in other countries for decades, but will eventually increase US inflation. Raising interest rates to fight inflation decreases consumer and business spending, increases the trade deficit, and higher interest payments on government debt. Other countries will respond to the US raising of interest rate by raising their interest rate, risking global recession. The Plaza Accord addressed this issue in the past, but it will be challenging to implement such measures now. A well-run country collects taxes to fund essential services and infrastructure. In the US political system, wealthy corporations and individuals can lobby for tax breaks. The shortfall in funding for the US government has reached $33 trillion. Instead of collecting taxes from wealthy corporations and individuals, the government pays interest to them. Banks hold Treasury bonds for their safety, liquidity, regulatory compliance, and potential profitability. When interest rates on Treasury bonds rise sharply, the decrease in bond values reduces liquidity and makes it harder for banks to raise cash quickly. This causes depositors to lose confidence, triggering a bank run. In response to the current bank run, the government is issuing Treasury bonds to raise funds to compensate depositors for any lost funds. There are $19 trillion in deposits in US banks. The estimated unrealized loss on US banks' financial assets is $1.94 trillion, while the total size of their equity is $2.1 trillion. SVB had taken a $15 billion loss, while their capital is $16 billion. Around 2,315 of the 4,800 banks are currently sitting on assets worth less than their liabilities. It's a systemic issue. A similar issue is being played out with risker Mortgage-Backed Securities (MBS) valued at $12 trillion. The new Bank Term Funding Program (BTFP) helps prevent discounted bondholders from taking losses when they have to sell them urgently. The BTFP accepts discounted bonds at face value to be used as pledges for loans to inject more money into the economy. Risking more inflation. It's a Ponzi scheme. Ponzi scheme cannot taper. We reached the can and there is no more road.