The French Connection

Some time back, 2011 if my memory serves, I mused that the Almighty Dollar has been New Gold for decades. Despite the 1973 oil embargo, the notion of petrobucks replacing the US buck never materialized. Saudis don't have the nukes and such. Being the globe's reserve currency, the operational equivalent to the yellow metal, has its advantages. Previously discussed in these endeavors.

Well, the mainstream pundits have caught up.

In short: The dollar is the global reserve currency, the bedrock of the world financial system. And that role gives the United States surprising power over what happens in the world even in spheres that would have little to do with finance.

Dollar diplomacy goes back to Taft, as an extension of the Monroe Doctrine, but it has continued to this day. Bretton Woods, post WWII, codified the power of the American Buck. Nixon's removing the US from a gold standard only strengthened the country's hold on international commerce. I doubt that Nixon or his masters quite understood this consequence.

Interestingly, at least to me, is this quote from David Frum (in the Wiki piece):

If you want a classical gold standard, you get chronic deflation punctuated by depressions, as the U.S. did between 1873 and 1934.

That he would even acknowledge the destructiveness of goldbuggery is awesome!

As to his third "system", there's nothing inherently inflationary in fiat currency. As we've seen post Great Recession.

Back to the Irwin piece:

The dollar is by a wide margin the most widely used currency for international trade and for foreign governments, wealthy individuals or corporations looking to park cash.

If folks only had that in the front of their noggins when all that moolah came looking for "no risk" home loans. To be fair, a good deal of German moolah went to pay for Spanish resort condos and timeshares.

I strongly suspect the likes of Kochs would just as soon see the Euro go belly up. One less competitor.