The ‘Imperial Dollar Milkshake Circle’
Emerging markets are responsible for the majority of marginal economic growth and commodity demand growth in the world, since they collectively have a larger population and have far less per-capita commodity usage as a starting point compared to developed markets. Emerging markets also have a lot of dollar-denominated debt, which is lent to them
... See moreLyn Alden • Deep Dive: Emerging Markets
The U.S. housing and banking system was the epicenter of the global financial crisis in 2008, and the Fed used a few rounds of quantitative easing (i.e. expanding the monetary base to buy U.S. government debt and other securities) in the aftermath, which kept its currency relatively weak due to plentiful supply.
When the United States finished its
... See moreLyn Alden • The Global Dollar Short Squeeze
Our report further documents a growing asymmetry in global trade and financial networks. Under the umbrella of a stable dollar-centered IMS, countries have been able to deepen their specialization in trade or finance. For instance, between 2001 and 2023 China and the United States present opposite patterns with China becoming increasingly central
... See morePierre-Olivier Gourinchas • Global Current Account Balances Widen, Reversing Narrowing Trend

Imagine, as an extreme example, that the entire world had to use Swiss francs for its international transactions and commodity purchases. It simply wouldn’t work, because there isn’t enough money supply from that small country for the whole world to use. It’s not liquid enough; there aren’t enough francs.
The current system is running into that
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