ZeroHedge Debate Recap: Global Reserve, BRICS, CBDCs, And More

Last night, ZeroHedge kicked off our third live debate to discuss the fate of the U.S. Dollar and whether it will continue to dominate global trade. Our esteemed economic experts vigorously debated the question: Will the Dollar remain the global reserve currency in 2030?

Intros

Making the negative case, Austrian economist Bob Murphy put forth a succinct case why foreigners will continue to ditch the dollar. In simple terms, an abysmal fiscal situation and poor customer service.

“These numbers are astronomical,” said Murphy, adding “It’s happening right now.“

“So yes, I don’t see a non-painful way to change this trajectory. And other things equal, you’re a foreigner and you keep seeing them pile up the debt – you’re going to conclude ‘this is unsustainable, we need to start weaning ourselves off of reliance on this currency.“

Brent “Dollar Milkshake” Johnson countered that — despite the many blunders of the Biden administration — the dollar is stronger than ever with the core driver being the overseas “Eurodollar” market wherein trillions of USD-denominated debt remains outstandin.

“To your point, reserves have fallen. Interest rates have risen. The interest expense is now the highest line-item in the US budget,” said Johnson. “But all that has done is turbocharged the dollar.“

“Despite helicopter money. Despite PPP. Despite numerous bailouts. Despite BTFP. Despite a guy in the White House who really doesn’t know where he’s at. Despite a horrible withdrawal from Afghanistan… you can go on and on about the reasons that the US is in a bad situation and as a result the interest rates are going to rise. But the interest rates rising makes the dollar more attractive.“

BRICS

A heated dispute arose on the viability of BRICS, the burgeoning trade alliance widely viewed as a potential usurper to the USD regime.

While Rabobank’s Michael Every dismissed the alliance’s prospects due to members’ heavy commodity-based economies (with the exception of China’s), economist Jim Rickards pushed back, arguing “the BRICS will surpass the dollar” with the help of Brazil consumer exports and — most crucially — the proposal to link a future BRICS currency to gold:

The pair continued sparring on the question of, “Which is the stronger country: the United States or Russia?”:

Central Bank Digital Currencies (CBDCs)

One day, your checking account may not exist at a private bank but at the Federal Reserve. This is essentially the crux of what differentiates a CBDC from the current digital banking system.

Hitting on a note of agreement, panelists said that — while it’s hard to say when such a transition will officially take place — governments are nudging in this direction already. They agreed on one thing: CBDCs mean more centralized political control.

Bob Murphy, founder of Infineo and senior fellow at The Mises Institute, illustrated the eerie slide to monetary totalitarianism, “I go to the ATM, and the amount that it suggests I want to take out has gone down over time even though that amount purchases less. And so there really is this concerted effort to ween us from using currency — you know — paper.”:

Watch the full debate here and be sure to stay tuned for the next one: