Oct. 1 - Fiscal panics & selfishly erratic monetary policy…the world may still be too reliant on the Dollar to care, but that will change, says Breakingviews.
So let's start today show with a hypothetical question how would a twisted US administration go about destroying its currency. So fiscal panicked threatened default -- question the reliability of the Central Bank. Just how hypothetically is that -- -- -- it's there to explain this is a great beside you and that's opera together today I'm. I mean they they doing over the mechanics spots well unit. It hit the US reserve currency has been as it were a problem. Since the 1970s with the Bretton Woods. Corporate down it was -- -- have you won the John Connally then secretary Treasury Secretary said it's our currency it's your problem. And that was an attitude they could really get away with back that the US dominated the world economy it's true leader cultural leader military leader. True Vietnam was but it an embarrassment but basically it was you know number one and almost anyway with no rivals. Forty years forward it doesn't look quite so just looks exactly. Not dollar still really strong in the sense that he you know a little bit of panic about defaults -- they you know maybe fed not gonna taper what do people do they. -- dollar. Is drug yields down yields are actually down mostly because the Fed decided not to taper push it quickly but I mean even this all this stuff about them. Crisis in the US currency congress -- more ideology than ever and yields certainly see it on the ground. So the dollar remains almost in some ways is strong but. If you were trying to erode confidence what would you do you do exactly what monitoring yeah and then let. -- from the other side and and they -- it's a show we'd we'd been doing quite regularly two -- three years ago -- alternative reserve currencies. You know -- how the Chinese and. As well you know when it. That the financial crisis spur of the Chinese Government. Started to make noises about reviving an idea that really dates from Bretton Woods the south. Which is the idea of a sort of global reserve currencies today they have what's called STR us is really very effective. And in the dollar US government in in in the in the negotiations are redwoods rejected this idea this in the dollar is good enough reserve currency. But it is a practical idea eventually. And Chinese every year they get bigger relative more sophisticated. And more demanding less willing to think oh well the US is our our lifeline of technology and trade. Does the US becoming too complacent is is that is that point coming whether Chinese see the gap and say right complacency is as has reached such. -- level. It's down the routes to. -- but each time -- through enemies. -- it's it's like -- percent of troubled marriage we have another fight and another fight and you keep kiss and makeup but after a while the fight start here -- the confidence. The use of the Chinese. And start to think that. Maybe not. So yes I think the US is becoming too complacent I'm thinking its own internal problems are not really the world problem but finally went when does that pretty -- -- -- who knows. Not this time but then probably not next time. And 11. Fine day you'll find that. And that that. The confidence in the dollar does erode possibly because the legislative impact in past that comes along -- -- deep. It it becomes unavoidable to recognize that the US is an ungovernable country at that point -- dollar collapses but we're not there yet okay. Everett thanks for us indeed you kind of go through that he's on the breaking news website. For more agenda setting a -- what's our US breaking news show every -- twelve things -- -- -- bsc. I'm -- truffle is his choices.