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Niall Ferguson: Resentment of dollar's dominance is old hat
The Dollar's Demise May Come Gradually, But Not Suddenly
By Niall Ferguson
Bloomberg News
Sunday, April 23, 2023
"Every night," the president mused, "I ask myself why every country needs to trade in the dollar. ... Who decided it was the dollar after the disappearance of the gold standard? ... Today, countries have to chase after dollars to export, when they could be exporting in their own currencies."
The president in question was Luiz Inacio Lula da Silva of Brazil, and the venue was the New Development Bank in Shanghai on April 13.
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There was a great deal of interest in this latest news about Lula when I visited Sao Paulo last week. To me, however, the striking thing was how un-new it was. Lula's words immediately brought to my mind the musings of another president more than half a century ago:
"The convention whereby the dollar is given a transcendent value as an international currency no longer rests on its initial base. ... The fact that many states accept dollars ... in order to make up for the deficits of American balance of payments, has enabled the United States to be indebted to foreign countries free of charge. Indeed, what they owe those countries, they pay ... in dollars that they themselves can issue as they wish. ... This unilateral facility attributed to America has helped spread the idea that the dollar is an impartial, international [means] of exchange, whereas it is a means of credit appropriated to one state."
The speaker then was President Charles de Gaulle of France, and the date was Feb. 4, 1965. It was de Gaulle's broadside against the dollar that prompted his finance minister, Valery Giscard d'Estaing, to coin the memorable phrase "exorbitant privilege," which encapsulated the French complaint.
Being fed up with the dominance of the mighty dollar is, in other words, old hat.
Indeed, it is such a recurrent theme of financial journalism that one can identify cycles in the use of the phrase "exorbitant privilege." ...
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