MONITOR RESERVES

“My view at this point was, you know, I'm not trusting this economy anymore. All right. They need to dollarize and get rid of their currency altogether. I wrote a short op-ed to that effect. Meanwhile, Mark wrote a paper as well. Do you want to talk about that for a second, Mark?”

“Basically, in my view, Argentina is a country that overborrowed domestically. The central bank ended up monetizing the debt, causing hyperinflation. They borrowed excessively abroad to finance themselves. The markets gave it to them. Don't ask me why, but the markets did. And then it serially defaults. So at the core of Argentina's problem is excessive borrowing. And that's the issue that needs to be tackled.”

“Steven and Mark join us today to discuss whether dollar dominance is here to stay. You guys have a nice paper co-authored. It's the reason we're here really together to talk today. It's called Dollar Dominance is Here to Stay for the Forseeable Future. The real issue for global economy is how and why. And we'll provide a link to that in the show notes.”

“I didn't do much pressing. Obviously, the US doesn't intervene in foreign exchange markets. One still had to manage the meager foreign exchange holdings of the US, SDR transactions with other countries when they wanted to. We kind of got out of the credit stabilization business. There was Mexico in the mid-90s, there was Uruguay subsequently in the early 2000s, but it became difficult to do such operations.”

“I agree with Mark that the plans for dollarizing have been put aside, mainly because they don't have the dollars to do it. They're focusing on stabilizing the economy, which is the right way to go. And my view is if they succeed in stabilizing the economy, then that's when they should dollarize in order to preclude another fallback into chaos.”