TD₿: The Fiat Dollar System is No Privilege: The Burden and Why the U.S. Will Adopt Bitcoin by Ansel Lindner
TL;DR The U.S. having the ability to print the global reserve currency has gone from an "exorbitant privilege" to an "exorbitant burden."
Hey Bitcoiners,
It is often said that the right to print the global reserve currency is an “exorbitant privilege” for the United States of America.
This privilege describes how the U.S. would never have a balance of payment crisis because its imports are priced in its own currency. However, over time this privilege has turned into a burden.
As the international reserve currency, the U.S. has to run a negative net international investment position and massive current account deficits to subsidize the modern-day globalized economy we have today. Oftentimes, this current account deficit can clash with domestic needs. This is often referred to as the Triffin Dilemma.
As a result of the current system, over the course of several decades, the U.S.’s share of global GDP has steadily dropped from ~40% in 1960 to ~15% as of 2020.
In other words, this system has slowly eroded the U.S.’s power and economic influence while our trading partners have grown substantially.
The clearest example of this is China. China has experienced significant growth over the last several decades. Part of the reason is it uses the current system against the U.S. China has the ability today to sell its exports to the U.S. in exchange for dollars, and then China uses those dollars to acquire hard assets and raw materials, strengthening its position on the global stage.
It is evident today that this system is no longer working for the United States. At this point, it is only serving to empower our global competition at our expense.
Ansel Lindner wrote this article that digs into how the current system is a burden to the U.S. and why turning to Bitcoin could be a solution. (09/01/2021)
If history holds true, the global financial system goes through a major restructuring every 30-50 years. It has been since 1971 since our system has gone through any major change.
When that restructuring comes, I believe Bitcoin will be a part of the conversation to bring about a new, more fair financial system and remove this burden on the U.S. of being the issuer of the global reserve currency.
Tick tock next block,
Cory Klippsten
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