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The Fate of the Dollar
An exploration of the great financial crisis of our time.
Hardcover
Published March 1, 1980
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October 2, 2013
A History of The Dollar in the 20th Century would be a more accurate title for this book, for only the final ten percent of its pages speculate—-unsuccessfully—-about its fate.
After 375 pages of chatty quotes from retired monetary system jugglers we learn that the fate is . . . well . . . uncertain.
The first 90 percent of the book is tough-going for the non-economist, for Mayer—-obviously conversant in the jargon of economists—-makes little concession to the uninitiated. Example: “Given the persistence of the liquidity deficit, the question was whether the United States was faced with what the Articles of the IMF called ‘a fundamental disequilibrium’ or whether the balance could be righted by ‘adjustment’ and should be financed until those adjustments took effect.”
(And that example was retrieved by merely stabbing a page and paragraph at random. They are that plentiful.)
The upshot?
a. Mayer thinks lots of presidential administrations since 1900 have blundered in managing the value of the dollar versus other currencies of the world, but none so badly as that of Jimmy Carter.
b. Three interrelated factors have converged to create a serious problem for the dollar:
(1) The U.S. dollar has become the “reserve currency” of the world. If a company in Iceland wants to buy oil from Saudi Arabia, the Saudis want payment in an internationally acceptable currency. That currency has been the dollar. Mayer says (in 1979) the rest of the world holds more dollars than United States does.
(2) Since money is created largely by banks at the instant of their clients’ borrowing (via the fractional reserve monetary expansion system. Google it here: http://en.wikipedia.org/wiki/Fraction...), any bank—-even a bank in London or Berlin—-can create dollars by writing a check in dollars for the requested amount. About 80 percent of those borrowed dollars did not exist until the check was written or computer entry was made. This expands the money supply and inflates the dollar. Worse . . .
(3) Computer technology and instant international communication have given rise to high speed overnight borrowing, thus accelerating the pace of overseas dollar creation.
Thus the United States has lost control of its money supply.
Mayer speculates, as do some of the many experts he quotes, that if some other currency, or even some internationally agreed-upon contrivance that behaves like currency, were to replace the dollar as the world’s reserve currency, it might be a good thing for the U.S. dollar.
In 2013, some experts are still saying the same thing.
After 375 pages of chatty quotes from retired monetary system jugglers we learn that the fate is . . . well . . . uncertain.
The first 90 percent of the book is tough-going for the non-economist, for Mayer—-obviously conversant in the jargon of economists—-makes little concession to the uninitiated. Example: “Given the persistence of the liquidity deficit, the question was whether the United States was faced with what the Articles of the IMF called ‘a fundamental disequilibrium’ or whether the balance could be righted by ‘adjustment’ and should be financed until those adjustments took effect.”
(And that example was retrieved by merely stabbing a page and paragraph at random. They are that plentiful.)
The upshot?
a. Mayer thinks lots of presidential administrations since 1900 have blundered in managing the value of the dollar versus other currencies of the world, but none so badly as that of Jimmy Carter.
b. Three interrelated factors have converged to create a serious problem for the dollar:
(1) The U.S. dollar has become the “reserve currency” of the world. If a company in Iceland wants to buy oil from Saudi Arabia, the Saudis want payment in an internationally acceptable currency. That currency has been the dollar. Mayer says (in 1979) the rest of the world holds more dollars than United States does.
(2) Since money is created largely by banks at the instant of their clients’ borrowing (via the fractional reserve monetary expansion system. Google it here: http://en.wikipedia.org/wiki/Fraction...), any bank—-even a bank in London or Berlin—-can create dollars by writing a check in dollars for the requested amount. About 80 percent of those borrowed dollars did not exist until the check was written or computer entry was made. This expands the money supply and inflates the dollar. Worse . . .
(3) Computer technology and instant international communication have given rise to high speed overnight borrowing, thus accelerating the pace of overseas dollar creation.
Thus the United States has lost control of its money supply.
Mayer speculates, as do some of the many experts he quotes, that if some other currency, or even some internationally agreed-upon contrivance that behaves like currency, were to replace the dollar as the world’s reserve currency, it might be a good thing for the U.S. dollar.
In 2013, some experts are still saying the same thing.
Displaying 1 of 1 review