Can the Dollar Outlast the United States

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I think it's reflective of a deep fascination and a deep anxiety in financial markets. On the one hand, the dollar is the dominant global currency, it lubricates foreign exchange transactions and international trade and underpins vast swathes of activity in financial markets around the world. On the other hand, the actions of the United States are ringing alarm bells about its future. The Trump administration and previous administr ations have raised questions about the dollar's value, about the risks associated with holding it and trading with it, and whether there are any viable alternatives. So this week on the big view, we're going to dive back into the dollar. It's what we do at Royce B'reaksing Views. We tap our best sources around the world for fresh insights into the biggest stories in global finance, business and economics. I'm your host, Peter Ferlarson My guest today is the newest contributor to the cottage industry of dollar-based publishing. His book is The Almighty Dollar , Five Hundred Years of the World's Most Powerful Money. And as the title implies, it's a somewhat different look at how the dollar became dominant, and therefore what might happen to it in future. It's written by Brendan Greeley, a columnist and previously reporter for the Financial Times, has also worked for Bloomberg Business Week in The Economist, among others, and is currently completing a PhD in financial history at Princeton University. And he joins me today from Annapolis, Maryland. Brendan Greeley, welcome to the big view. Thank you. I'm excited to be here. So so let's start with a just sort of an obvious question. Um uh as we all know very well, uh the US celebrates its two hundred and fiftieth birthday this year. Uh your book talks about five hundred years of the dollar. So how do you explain the other 2 50 years? Yeah, Alexander Hamilton, when he referred to the dollar, what he was thinking of was uh a big silver coin. And he actually called it the ancient dollar. It was already clear to him that at the time of the founding of America, uh, the the dollar was already uh a global coin with its own history. Uh I I like to say we didn't create the dollar zone, we joined an existing dollar zone. So one of the challenges of writing this book is uh addressing a lot of assumptions we learned from economists. Economists are very good at doing a lot of things. Um, but I don't think that the history of money that we all learned, uh, if we took a course in econom in economics in high school or college, uh, is very useful for telling this story. And one of those assumptions is the assumption of monetary sovereignty. This is just the ability that uh any country has to control its money. And when we trace the the story of the dollar back, we arrive at this problem in 1776, which is that you have a new country. So you would think, under the assumptions of monetary sovereignty, at the very least, new country, it gets to choose its own money. The challenge is we picked as our money a coin uh minted by the Spanish Empire from Mexican and Bolivian silver that had a name with a German derivation. That's problematic, and it's also not an accident. And so now we have to figure out where did that name come from and why of all the possible names and why of all the possible coins, uh did, the United States say, okay, we are going to peg our money to this foreign coin? It's very clear in all the correspondence that you see from the founders, they are pegging the United States dollar to the value of the uh the the a a big silver coin called uh what they would understand as a dollar. It was also known as a piece of eight, what we think of now. Uh and and that story is uh much older uh than the United States. And for me, it's led me to the conclusion that in a lot of ways, and still today, the dollar is much more powerful than the United States. It starts in a silver mine in Bohemia in 1517. And there's a lot of storelly to t to figure out how it is that this coin becomes a global coin, accepted all over the world, as far afield as China, and how this coin washes up on the shores of colonial America. So and that that story, it's there's a big chunk of the book on that, which is uh it's probably the book. Well, half the book, exactly. We um uh there's a lot a lot of interesting detail there, which we may probably don't quite have time to go into because I I guess what I can say is I can hear people saying, Okay, but you're talking about a time when when when money was based on precious metals, right? This was a dollar that was linked to a uh a st it was based on its silver it was a coin it had silver content people people exchanged it on the assumption or in the knowledge secure in the knowledge that it was it was that amount of silver and it was being passed around and the system we have now, obviously, and have had for over a century is is a system of sort of fiat money, you know, where with no digits on a screen that aren't linked back to a precious model. So it's completely different. So so how do you sort of uh how do you kind of account for that transition and and does that mean that what the dollar we have now can you really compare it to to to the silver dollar that you were talking about? Yeah, I think that's a a really important question. And you also used a really important word, which is transition. Um there's a story, again, that we learned from economists about the history of money where uh we used to transact based on coins. Uh, and then we had pieces of paper, they represented the coins, and then the coins went away, and the pieces of paper continued to have value. And now we say that money is a social convention. So sure, money is a social convention, but so is your mortgage. Uh there are lots of financial contracts that we use that we rely on, and money is one of those contracts. Uh when we actually go back into the history of money, we do not have to go back into what John Maynard Keynes called his Babylonian madness. We can just go to uh early America . Um, it's very difficult to find that single moment of transition anywhere where you have a coin and then it turns into a piece of paper or uh some kind of credit on a ledger. What we mostly find in early modern Europe and again in colonial America is coins, paper, promises, ledgers all working together as part of the same system. You had uh, and this was a system that endured uh well into the 20th century. Uh you have uh promissory notes that people wrote out to each other. That's a long tradition that goes back into the twelfth century, uh sort of recognized in English law by the 15th century, uh still recognizable to us in our own lived experience as uh an IOU that we might have written out as a kid, although we don't seem to do that as much anymore. Um uh ledgers, same thing. We would uh you know, a bar uh in colonial America would uh uh r write out uh what people owed it for uh for beer or for cider or for punch. Uh and then you could actually transfer those credits the same way that you were transferring deposits on the balance sheet uh of of a bank. Uh so again, the ledger runs forward to living memory. There's a time when I'm sure you and I could both remember, uh, for our families in particular when we were kids, having an account at the store where we could go in and buy bread or milk on our parents' account without having to have cash. So these are very old forms that never went away. And so for me, what's fascinating is the transition itself. This silver coin was universal in the early modern Atlantic economy. It circulated as legal tender in the United States until the 1850s. The United States was subject to a foreign coin, trying to create representations of that coin in paper and on ledgers. So the details of that trans ition are really important. And it's much more complex and I think much more fascinating than there was a piece of paper it represented a coin and then the coin went away. Well how did this piece of paper have value when the coin went away? It's not magic. And I think it turns out that it's regulation. So when we talk about this uh this system in America that we had, in the early Republican then at the end of the 19th century and through to the depression, what you see is constant att empts by banks to issue bank notes and bank deposits, which represent the value of a silver coin that's coming from Mexico. These banks fail often together. 1899 , 1837, 1857, 1873, 1907, 1932. There are others. You know, we could quibble about uh uh how how many panics were. There were a lot. You we can name them. Uh it's much more frequent occurrence than we have now, bank runs. And so after each panic, what you get is a shocked response and then um the introduction of something we recognize as bank regulation now. So after 1837, states recognized that the banks that they had chartered were not behaving. Um they started reporting better data. This is what the we get the beginning of what we now think of as a call sheet, a bank saying, This is what we have on our books, you can come check. Um states introduced uh the idea of a control over the currency. This is these are these still exist in the United States. Somebody who was responsible for making sure this currency had value. During the Civil War, the Panic of 1857 was still fresh, and you get uh um you know the, United States government, at le orast the Union government, making sure that all banknotes are backed one-to-one by purchases of treasuries. Uh these are again financial arrangements trying to make this more secure. Nineteen oh seven we introduced the Fed. The point of the Federal Reserve was to make sure that um any bank in a panic could get physical dollar notes. It takes over the job from these nationally chartered banks of producing notes. Finally, in 1932, we get federal deposit insurance. Incredibly important. When I think of what makes the dollar valuable , this vast pool of federally insured deposits that no other country or currency union has, I think is the most important thing. So now we've got a scaffolding of regulation, comp trollers, bank reporting, backing by treasuries, deposit insurance that give banknotes value. It's only when this is in place that FDR and that eventually Nixon can in steps take away the gold that sits at the edges of it. So the process, the details of how we got here help us understand why we have money and sorry, why it is that our money works. And they also help us understand why it is that this regulation is so important. We can't just rip away parts of the scaffolding and expect our money to continue Yeah. It's also I mean just just that that's a very very very precise uh uh uh and s and and sort of posit ive of quite a lot of uh panics and regulation. Um I've been working on it for a long time. Yeah, no, well you summarised it well. But but I think just just going back even before that, I think one of the things that I was uh I found interesting uh reading about and I wasn't aware of was also the way in which the framing of the constitu tion yeah actually sort of triggered that move into into banking, right? Into banks issuing dollars. Can you just talk about that a little bit? Yeah, absolutely. Thank you for flagging that. It's really important. I think we take our current system for granted. Um, but it wasn't obvious it was a decision. So uh in colonial America, the the colonies and the provinces, the commonwealths would all all of them eventually figured out best practices and they agreed on best practices for printing their own shilling and then eventually dollar notes. Maryland printed dollars, by the way, well before the revolution. And there were lots of ways to give those value, and they worked. There was an assumption in 19th century histories and even into the early 20th century that these were all horri bly inflationary and unreliable. Not true, Rhode Island, horribly inflationary inflationary and unreliable. Everybody else's money, they sort of came to sort of figure out how it is that you do various financial things to make sure that this money has value. Again, after the revolution, during the Articles of Confederacy, between the Revolution and the Constitution, the brand new states did the same thing. And again, they figured out how to make sure their money had value. The potted history that we usually get of this is we had continental dollars from the Continental Congress. They were inflationary. People didn't want uh this stuff. They gave the money to the banks. That's not really what happened. This stuff worked. States printed their own dollars and shillings. Those dollars and shillings held value because of a a hundred year history of figuring out how to make sure that money issued by a state had value. Constitution comes along. One of the things that the founders absolutely hate, we've got rich evidence of this is the possibility of even lightly inflationary money. So states really liked lightly inflationary money because they were much more worried about making sure they had enough money. They were not worried about inflation. Again, this was not hyperinflationary. It was lightly inflationary the way our money is now. But uh during the Constitution, uh during the convention, um, a ban on making uh legal tender just turned into a ban altogether. So there's this note, there's this sub-clause of the Constitution that's actually hard to understand if you don't know the history that says states may not issue bills of credit. So bills of credit, these were uh shillings and dollars that were issued by the states. The constitution said, sorry, can't do it anymore. We're just not gonna risk this kind of inflation. What they did was they got rid of really useful money that was working, particularly for farmers in these states. So states now have a problem. The Constitution says we cannot print our own bills of credit, we cannot make our own paper money. There's not enough coins in the United States, no domestic source of silver or gold at that point. They've got to do something. So as you point out, incredibly important, they start to charter banks. There are two chartered banks in the United States at the found uh during the time of the Constitution. There are several hundred uh by the panic of 1837. Every state is figuring out what kind of banks does it need? What kind of loans do those banks need to make? Are those loans to merchants or farmers or both? And how do they figure out how to have a circulating currency, both depos its on those banks that people on the ledge of those banks that people can transfer back and forth, and physical bank notes that the banks are issuing. Again, they go through a process figuring out how to make these things uh have value. So in America, the Constitution launched us on this experiment. Um, and traditionally economic history has said we had to do it this way. The other money was inflationary, it was a house cleaning, uh, we had to make sure that we had a currency union. We didn't really have a currency union after that . And for most of the nineteenth century, banks were every bit as problematic as uh the previous state banknotes had been, because as we know, historically banks fail. Bankers take risks. Yeah. Yeah. When the when there was that whole system where the banks had d dollars issued by different banks had different values and all those kind of things. Yeah, absolutely. You know, we refer to that as the Wildcat banking era, and I think that's a little bit of a misnomer because it assumes that uh you know there were just like a few banks on the edges of the system doing crazy things. Like that was the system. Yeah. Every city had its own banks, every state had had its own banks. Interestingly, often within a city or within a state, the banknotes didn't have value. So I spent a lot of time looking at the archives of uh early Republican New Orleans and uh Annabelle, New Orleans. Um, a lot of contracts said in banknotes of this city. So the banknotes um of the city, the different banks of the city they cleared with each other at par. It was only after panic when that became a problem, or and by par I mean they cleared at one-to-one with each other. Um when you were transferring money to another place. So interestingly, again, when you look uh at the view from New Orleans, uh you could get prices on bills of exchange in other cities. This is just a way to pay a debt in another city. So you could they would list prices on bills of exchange in Paris, London, Glasgow, Liverpool, B altimore, Philadelphia, Boston, the East Coast was just as foreign monetarily as ports in Europe . So um just a little divergence here, because I'm just sort of interesting. I was I found myself reading quite a lot of this and thinking about um you know, there's a sort of there's a concept in monetary economics that b people talk about inside money and outside money, right? The sort of this idea essentially that the inside money is is is private liabilities of banks and and and other entities sort of floating around and most of the time it's all okay. But then but but backing all of this is this is outside money which is you know, gold or silver or or kind of you know bonds issued by a government or something like that. I just wonder, I mean, how do you having studied this lengthy history, um I I found myself thinking about that concept quite a lot. I just w I just wonder how you sort of think about it in this context . I left inside and outside of money to the footnotes. Um for two reasons. One is uh, you know, we we could also say exogenous and endogenous money. Um and these are again, the the book is pitched at the lay reader. Hopefully uh economic historians find an argument in there that they can that they can pick apart. But uh uh I I I thought that was too complicated uh to add to a general history. But uh you you you have asked a question that gets to the heart of why money has value. I am uh the the argument that makes the most sense to me, having looked at this broad sweep of history, is that it's almost all inside money. It's almost all credit we create ourselves. Uh, at this point on the ledgers of commercial banks for a long time, uh, it was credit that we created, you know, on bar ledgers or with interpersonal IOU notes or bills of exchange. I think it's important to recognize that even the Fed is creating its own endogenous money. My frustration with the economist version of like how money works is the Fed just makes it its magic it's fiat. I I think fiat in general is not a very helpful phrase because it just drops this veil over how it is that we produce money and it robs us of the ability to actually analyze when it's working and when it's not working. So the Federal Reserve is just a big bank. It's a bank that we chartered to do stuff that we think is important, has social and political goals. Uh, but um , you know, uh it's not doing anything any different than the commercial banks are doing. They have assets on one side of their balance sheet. Those assets are balanced by liabilities on the other side. The liabilities are what we think of as money. Uh the Federal Reserve has a balance sheet, you can look at it. They've got mostly treasuries on the asset side, although a mix of other things. Uh, and then on the liability side, they have physical dollar notes, just like banks used to in the 19th century. They've got deposits, which we think of as reserves, which are really valuable uh as as as money for banks. Banks in turn then hold some of these reserves as assets and then they make loans to you. Those loans are assets. Those assets have liabilities on the other side. You think of those liabilities as deposits. The bank this, is actually really hard for people to grasp if they uh uh uh because of the way we were taught about money. But when the bank makes a loan, credit card loan, mortgage car loan, anything, um, it's not getting that money from anywhere. It is marking up its own balance sheet with brand new deposits. For the purpose of the bank, it's swapping. It's giving you brand new deposits and it's taking your loan as an asset because they know you're going to pay it back. So I think that um it's help ful to start thinking of money as endogenous or inside money, money that's produced through private acts of credit. Now, outside money I think exists and it plays a role. Um, and I think it's when you're talking internation ally. So uh uh in the uh uh in the 19th century, particularly the early nineteenth century, there was outside money. It was a silver dollar. You know, we had to bring it in. It came up through the port of New Orleans mostly. We had to sell stuff to get it. And it was very hard to control the flow of those dollars, and it was very hard to get enough of them. So that served as a reserve for us. Similarly, now in the current system, deposits in American banks, American treas uries, uh reserves at the Fed, they all serve as outside money for the rest of the world. Um, so I don't want to completely abandon the idea of outside money. I do think it's helpful when we think about how money works and how it's produced, particularly domestically, it's all inside money. It's all just private acts of credit that we're working on. Uh uh that, you know, and and and even if those acts of credit are created in a publicly chartered bank, like the Federal Reserve, it's still credit. You have to think of the Federal Reserve as a bank, working within the structure and physical laws of a bank, just like all the private banks we use for our car loans and our mortgages. Yeah. And it and it works most of the time and then occasionally it goes wrong and then you know and then and then we have all kinds of problems. Yeah. But we should think about I mean when it goes wrong is really important. Like you know, when things go wrong, it's it's precisely it's precisely because this financial arrangement that creates money has broken down. A bank's deposits only have m have value because its assets on the other side of the balance sheet have value as well. When those assets become questionable, then the deposits become questionable as well as well . That's why we need intrusive banking regulation and oversight. That's why we need it. We gotta know what's on the asset side of that balance sheet so that the money doesn't disappear suddenly. Yeah. I just want to just just change gears a little bit 'cause I mean there's there's some there's a lot of we could talk for hours about this, but I just want to make sure I capture some of the the things you get to in the book. Um please. Uh so I mean the one thing I found myself uh asking myself reading the book was and I'd be interested in in your view is is sort of do you do you think that having a global currency is a is a good thing for a country? I mean you have a whole section where you write about the Spanish Empire essentially being hollow ed out because of all the vast quantities of silver that it uh that was that were discovered in South America. And there's a sort of an implication here that that you know the US and the dollar may the maybe something similar may may have happened. I just wondered you could sort of flesh that out a bit how you think about it. Yeah, I get this question a lot when people ask me what I do. I say I'm writing about money, uh I'm writing history of the dollar, and they say, How long will the dollar survive? And uh I I don't know. I don't have a good prediction there. I thought my my answer there is very unsatisfactory. It's for a while probably, and we can get into that. But my counter my response is actually would it be such a bad thing? So the transition to uh uh a a weak dollar would be terrible. But one thing we know about the strong dollar is it i it has made exports very difficult for the United States. There are lots of reasons why manufacturing is collapsing in America, but the strong dollar is one of them . Uh uh when we when I started to look at so there's a point of transition in the history that we don't have to get into too deeply, but at some point, uh, you know, the the the the dollar starts as a coin called a Yachemstaller. It comes from a place in Bohemia called Yachemstal that's uh settled and mined by Saxon miners. Uh just means the valley of St. Yachem. Um the coins that come from there are called Yachemstaller, that gets shortened to tallervent.u Eally, in English, we get dollar. Copies and copies and copies of this big silver coin. Eventually, the Spanish Empire discovers silver, um, figures out this brutal way of getting silver out of the ground uh using forced labors and the forced labor in the Andes. Um, and uh but they are forced to adopt the form of this dollar. When they create what we think of as the piece of eight, it's a copy of this this Yachem's dollar, a copy of a copy of a copy of a very of already a very old coin. So when I read about Spain to sort of make this to get this history right, and even travel to Toledo and talked to some uh h historians there, um, it started to s look a lot like Washington, D.C., which I've reported from on and off for about uh 20 years. Uh so one of the there's a theory among economists that Spain over the course of issuing all these of of mining all this silver got what we call Dutch disease. So the Dutch in the uh early 70s discovered natural gas. Uh, what that did was it raised the value of the Dutch Gilder, made it very difficult to export other things. So within a couple of years, you see the growth of natural gas exports and the absolute collapse of shoes and clothing. And the other thing that uh the Dutch used to make uh domestically. So uh the irony is uh this resource, which should be amazing for the country, can actually destroy lots of things. And so the economists in the mid seventies called this Dutch disease. And so we're able to diagnose it all over. Historians, several economic historians, Nuno Palma, for example, have gone back, Marcio Dreilickman, have gone back and looked at uh Spain and sort of looked at the resource that it had, which was silver, um, and seen a lot of the same things. When we look at early modern Toledo, it was a manufacturing hub. They made steel, leather, silk, cloth, all sorts of things, and they exported it all over Europe. Within seventy years of the discovery of silver uh in in in Bolivia, what is now Bolivia and Mexico, all these manufacturing, all this manufacturing in Toledo disappears. Toledo empties out, our register of births, it perishes drops. You get sort of not just a depression, but a collapse. So you have Toledans figuring, trying to figure out like what went wrong. Even at the time, merchants in Toledo said the problem is the silver. The king has such a constant flow of silver that he can constantly borrow whatever he wants. Um, that has made things more expensive. The only thing we do is we ship silver to uh Genoa in return for money that we've borrowed from Genoa. The only industry uh all the capital um is going into lending to the king. The only industry in the entire peninsula is going to Madrid and begging for indulgences from the king. This is starting to sound very familiar. This you know, I what I thought of is when you go ahead. No, no, no. You know what I thought of when I read that passage, um, you know, the only industry is begging favors from the king is when you drive from Dulles International Airport into Washington, D.C., you pass by a highway of all of the contractors that are getting money from the federal government. That's the business of America, getting money from the federal government. And so for me, what I began to realize is I think there's a direct comparison between Spain, Imperial Spain, and modern America, which is that I also think we have Dutch disease. And our Dutch disease is the production of the dollar. We seem to be able to make an unlimited number of treasuries, we seem to make be able to make an unlimited number of domestic private dollars. Everybody all over the world still in this cha otic year of twenty twenty six uh seem to want to hold those assets. Uh and um as a result, our currency is way more expensive than it should be, has been for a long time, very difficult to export from America. Manufacturing is collapsed, and the business of America is begging for indulgences from the sovereign, which has an unlimited ability to issue treasuries and borrow money. Very familiar. I think we have Dutch disease. I think our disease is our commodity is the dollar uh and our ability to produce it, and it's every bit as destructive um domestically, particularly to f to political institutions, um, as uh you know, oil is in other developing countries. Yeah, yeah. I immediately think of um uh there's you know some people in the in and around the Trump administration, specifically Stephen Moran, who was the Trump's uh Donald Trump's uh economic advisor and now on the board of the Federal Reserve, who who kind of expressed it this way, right? Sort of this idea that the this what what what had been described as the exorbitant privilege of the of the US to issue dollars is actually a problem because there's such a burden in terms of uh uh in terms of having to absorb the demand for dollars from the rest of the world and and sort of suggesting various kind of radical ideas about how to how to address that, which he subsequently slightly disavowed. But um it does sort of raise this question a little bit, which comes up quite a lot, particularly when you talk to people outside the US, which is is the US still interested in in defending uh in in having uh uh being being being the sort of the underwriter of this global currency? Are they have they slightly you know it seems like they're ambivalent about it these days, in a way that they may not have been in the past? I think some people are ambivalent about it. First of all, you're absolutely right. Um, I think the most thoughtful criticism of the uh existing monetary regime is coming out of the Trump administration. U I'hm not sure that their prescriptions seem to be effective. They're pretty drastic, but I I I don't think the diagnos I think the diagnosis is correct. Um sometimes I find myself reading Scott Besson's speeches or Stephen Myron's speeches and thinking I, wish we'd had this conversation a long time ago. Wish we'd had this conversation in the 1990s, um, you know, under uh Bill Clinton's strong dollar policy. I I I I really wish that um there were uh uh that everybody was thinking this way so that we could argue at the very least about um how to fix it. I don't I kind of disagree with you. I think I absolutely see the conversation you're seeing. I don't see any popular political constituency behind a weaker dollar or changes to the Fed. I I don't I still don't think the Fed is something that anybody votes on. Uh I I um I I have lots of thoughts about what the Fed could be doing differently, but unfortunately, um, you know, we ran that already uh when Elizabeth Warren ran for president and she didn't have a constituency either. Uh and and so uh I I agree we are having this conversation , but not in a political way. I think we're having it in a technical way. And I I'm still waiting for some entrepreneurial politician to come up with the language of what do we do about the dollar and form a constituency behind it? Donald Trump himself is conflicted. He will one day say the strong dollar is a problem, we need a weaker dollar, we need a Mar-a-Lago accord, like we had the Plaza Accord. Um, but uh, you know it's hard for him to admit that uh that he doesn't want a strong dollar. And I think that there's this like weird um psycholog ical need to know that if we have an awesome country, that awesome country has to have an awesome currency. It's a little bit like every country needs its own domestic air carrier for international flights. Like you don't really need it. You can do it another way. Um, so yes , I I I actually think that I I'm interested in what Steven Myron is saying. I'm interested in what Scott Besson is saying. I'm interested in what Kevin Wars are saying about the Fed. I don't think the Fed its tools are working right now. And part of it is uh the distortions of the dollar and the distortions of having the Fed constantly buy treasuries. Um I don't see the how the politics of it shake out yet. No, I I can see that. I agree with you. I think there's and obviously, you know, and there is a there's a whole a large financial industry that that benefits a lot from having the uh the international dollar. But there is a sense here a little bit that that that also that that it can be you know you could do some things or not do some things that would that would severely undermine the dollar. I mean, um obviously we've we talked a lot on this show about the weaponization of the yeah of the financial system, the use of sanctions and so forth. But also, I mean the other thing is, you know that, the the Fed particularly has underwritten that system with swap lines in crises and stuff like that. And you definitely hear now in closed rooms, uh uh, you know, quietly in your in in Frankfurt and elsewhere, people wondering about is the Fed still going to be w stand provide swap lines in a crisis in a way that we assumed in the past? And what would we do if that was not the case? So you so you can sort of imagine actually a sort of an administrative decision undermining some of the international belief in that dollar that currently exists. Yeah, you asked earlier about this question of uh , you know, can is the dollar then comparable to the dollar now? Um for me, one of the undercurrents that runs through the entire five hundred history, five hundred year history of this book is the um this the inadequacy of our assumptions around about monetary sovereignty. We assume that a country is independent, it has its own independent money. To your point about the swap lines, it's really important to explain that banks abroad can create their own dollars. They do it the way banks in America do. They just mark up their deposits. They mark up new deposits on their balance sheet with dollars. They say this is a dollar, and it kind of works. Anyone can create a dollar. And so the Federal Reserve, so there has been a tacit acceptance of this at the Fed, at the Treasury, in Congress, that this is it's good for other banks to use dollars. And in fact, this tacit acceptance, as you point out, has turned into active support, which is that the Fed will uh uh offer short-term loans, swaps uh with other central banks so that they can protect all of those offshore dollars uh in a crisis. Um I think it's important to point out that uh this doesn't really fit our model of monetary sovereignty. To me, this feels like other people abroad are making dollars and the Fed is getting dragged into their business. And of course, uh, you know, if I were uh a Fed governor, I would say, yes, absolutely protect the swap lines as well. Uh precisely because a collapse in the global dollar system is really bad for America. So um one of the challenges we have right now is that you have in the Trump administration uh groups of people who recognize that the uh the the strong dollar isn't unequivocally good for America. None of us know how to get the transition right. Yeah. Even if we all agreed we're gonna transition away from a strong dollar into a weak dollar, I don't know how you pull uh that tablecloth underneath that table setting and leave the table setting in place. I'm not sure how that works. And the swap lines, I think that's a great question because I don't know how you hint that the Fed swap lines aren't reliable and not have all the dollars in the world suddenly come crashing down. There's a difference. When we talk about swap lines, the treasury has swap lines as well. And the difference that we're starting to see is that uh the the Fed swap lines are apolitical in the sense that if they trust your central bank, the Fed will offer swap lines. If there's a crisis, they'll offer them. No conditions , uh uh no political strings attached. The Treasury swap lines seem to come with conditions. They seem to go to allies. They made it explicit uh during the Argentinian election. If you re-elect Malay, you will get support. The Treasury has a swap line. This is how we're going to do it, or rather support him in the par parliamentary elections. So one of the so it's China also offers swap lines for offshore yuan. One of the things that we know about those uh uh swap lines uh from work done by among others uh Ad iti uh Sasar Buddha at Brown uh is that um there's an understanding among the countries that are getting those swap lines that there are political conditions attached. And so if we start to attach political conditions to these swap lines, all of a sudden the dollar no no longer becomes this um reliable certainty. It becomes a fraught political negotiation. And I think that's going to change the value of the offshore dollar in ways that we can't entirely predict. Again, I I I don't think the strong dollar is good for America necessarily. I don't know how to transition to a weak dollar. I'm not sure how you do it without breaking everything. So um this is really fascinating. I just what just to sort of finish up and just want to throw one thing at you. Um so we had which is really kind of like it's sort of following on from what you're talking about, which is which is sort of how does this end really? Um we had Barry Eichengreen, the the famous Berkeley economist and historian of financial systems on recently The Godfather. The Godfather, exactly. And he's written his history of global currencies. Like there's this idea that all philosophy is just a commentary on Plato . All all economic history is just a commentary on Icongreen. But please continue. Well, there we go. Um so anyway, attaching great great de uh uh even more importance to his words. We so he's done this big study of of of global currencies over the years and stuff, and sort of and and he comes to the conclusion that there are sort of of there are a couple things that that tend to sort of cause these regimes to end, right? There's sort of military overreach, um, there's there's sort of uh institutional decline, uh borrowing too much, uh and then I guess putting that all together is basically just debasement of the currency, basically just sort of undermining the value of the currency. And um I just wonder sort of how you think about the dollar in in in the context of of kind of those things and kind of what might happen there. Or whether you're sort of you almost seem to be arguing that there's this thing called the dollar which which which existed before the US and may will still be around afterward s So I I find myself in the uncomfortable position of disagreeing with Barry Eichengreen, which is which is like disag which is like disagreeing with Willie Nelson about songwriting. How dare you? I think that I so I've read his book. It's an excellent book, uh you know, sort of laying out these changes, these cycles. I think he attaches too much power to sovereign ty and empire. I think when we look at the early dollar, it wasn't spread by an empire. The first Yachim's dollar were spread by basically private Saxon miners. There was no empire behind it. There was no Holy Roman Empire behind it. The Holy Roman Empire hated the early Yachemstaler. The the the the kingdom of Bohemia wasn't behind it. Um it was just a product that was produced by commercial miners. It was supposed to be a dividend for mining investors, and then it spread into the Baltic and it w that was where it became money. That was where it became accepted as a coin that was copied. So I don't think that you can always say that strong empires produce strong money. Empire certainly plays a role. I also think that we don't have enough data to know how strong currencies come and go. There just haven't been that many of them. We can count them on one or two hands, depending on how we're defining it. That N isn't large enough for us to come up with rules. And I think that's where I really disagree. Ray Dali o also has this book about cycles of currency expansion and contraction. And I just don't think it's possible to come up with general rules about currency transist transitions , other than that, we know they happen. So when we look back to other dominant currencies, they all had very different mechanisms. The Dutch Gilder uh was backed one-to-one by coins uh on a on a a basically state bank, the bank of Amsterdam. Uh and the Dutch Gilter, that was deposit money. So you would deposit coins, you got one to one, a hundred percent backing, and you could make transfers on the ledger of this state bank, the Bank of Amsterdam, which made it really useful for clearing bills of exchange from all over the continent. That's one model. Bank of England, completely different model. It it exp it it made loans, it expanded the monetary supply, uh it issued its own notes uh that weren't a hundred percent um you know backed by a hundred percent reserve of of gold, very different monetary regime. And then what you get uh with England, sort of led by the the Bank of England, is uh a surplus regime. England is lending to the rest of the world. It becomes the center of capital markets, but it's also extending credit. United States, very different regime. We are a debtor regime. We are borrowing from the rest of the world. We figured out how to do that in the sixties, seventies uh and eighties uh while making the dollar a dominant currency. I don't know what the next currency regime is going to look like. But I don't think that we can come up with rules that say uh internal indebtedness plus military overreach equals currency collapse. There just aren't enough empires to do that. Uh and um I think it's entirely possible that the dollar could survive America. I I I I I think that uh Euro dollars, uh which are offshore dollars, are really important to other countries because it allows them to take wealth and move it around the world without messing up their domestic economies. Um, if there weren't a dollar right now, a universal offshore dollar, we'd have to invent one. So I don't know. Right now the swap lines are really important, but what if European countries decide to provide their own swap lines to each other? It would look a lot like what we used to call a clearinghouse in the late nineteenth century uh among city banks than when there was no Federal Reserve helping them out. They could help each other out that way. Maybe there could be a dollar that's not tied to America. I think it's easier to imagine that when you think of the dollar as something that arrived in America that we borrowed from abroad and adapted to our own purposes and then like wandered back out into the world again. Again, I think the one way in which I'm very different uh as an economic historian is I'm just super skeptical of the idea of monetary sovereignty. I think it can be won only slowly and difficulty difficult it it can be won only slowly and with great difficulty over time. Um and it's always fraught and uh private actors are always testing the limits of sovereignty and they always want to rip monetary sovereignty away from you. And I think maybe that might happen with the United States. Yeah. Well, uh, Brendan, this is a debate that will doubtless continue for as long as the United States is around and maybe uh for many, many years after that. Maybe afterwards, yeah. And who knows whether we 'll be around to uh to see any of this. But um um you covered a huge amount of ground uh in this this conversation, but uh it's been really fascinating. So thank you very much for uh for taking the time. Wow, I really appreciate it. It's been a fascinating discussion. Thank you uh for reading the book so carefully. I really appreciate it. That's our show this week. Thanks to Brendan for his great insights and that fascinating conversation. And as always, thanks to you. for tuning in This podcast was produced by Oliver Tazich and Pryanov Kiran with the help of Mike Copeland and John Hodge here in the studio in London. You can check out a new episode of the Big View every Tuesday. 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