Fighting inflation to maintain the 'exorbinant privilege'

[blazespinnaker]

Federal Reserve Bank of Dallas President Richard Fisher said the dollar is likely to remain the world's top currency in central bank reserves because of U.S. growth rates and success in containing inflation.

..

Federal Reserve Bank of Dallas President Richard Fisher said the dollar is likely to remain the world's top currency in central bank reserves because of U.S. growth rates and success in containing inflation.


The US has a very fortunate position in the world economy as the reserve currency. To let inflation run rampant would be to put that position at risk, which would be to a very very great detriment to the US standard of living.

[Finster]

Re: Fighting inflation to maintain the 'exorbinant privilege'

Federal Reserve Bank of Dallas President Richard Fisher said the dollar is likely to remain the world's top currency in central bank reserves because of U.S. growth rates and success in containing inflation.

..

Federal Reserve Bank of Dallas President Richard Fisher said the dollar is likely to remain the world's top currency in central bank reserves because of U.S. growth rates and success in containing inflation.

Oh my. We should rephrase that last clause as "...success in containing official inflation statistics...".

The US has a very fortunate position in the world economy as the reserve currency. To let inflation run rampant would be to put that position at risk, which would be to a very very great detriment to the US standard of living.

What do you mean by "the reserve currency"? No other currencies are employed in reserves? And how does that status impact the US standard of living? So letting inflation run rampant would not be a detriment to the US standard of living as long as reserve status is unaffected?

[jk]

Re: Fighting inflation to maintain the 'exorbinant privilege'

The US has a very fortunate position in the world economy as the reserve currency. To let inflation run rampant would be to put that position at risk, which would be to a very very great detriment to the US standard of living.

blaze, this is just a repost of your "the fed will defend the dollar" thread. and i, for one, am still not sold on the idea. the fed talks a strong anti-inflation game so that it can refrain from actually raising rates. as the housing slump deepends expect the anti-inflation rhetoric to take a back seat to rate cuts. [i was going to correct my typo of "deepends," but then i decided i kind of liked it.]

the reserve status of the dollar, expressed most importantly in the fact that u.s. external debts are denominated in u.s. dollars and not some other currency, is of tremendous value to the u.s. the loss of that status, which is now occurring in slow motion, will be a tremendous blow to the u.s. i would guess that the first stage of the process, in which the dollar is relegated to being one of several competing and coexisting reserve assets, might extend over a period of the next 5 years. then i could imagine a new reserve currency [the gold-backed yuan?] emerging over the following 5 years. just guesses on the time lines, but beliefs about the processes themselves.

[blazespinnaker]

Re: Fighting inflation to maintain the 'exorbinant privilege'

Oh my. We should rephrase that last clause as "...success in containing official inflation statistics...".



What do you mean by "the reserve currency"? No other currencies are employed in reserves? And how does that status impact the US standard of living? So letting inflation run rampant would not be a detriment to the US standard of living as long as reserve status is unaffected?

http://www.google.com/search?hl=en&s...ege%22&spell=1

[blazespinnaker]

Re: Fighting inflation to maintain the 'exorbinant privilege'

If you can, catch the video on Bloomberg where Fisher talkes about this, it should be up right now, however it doesn't always last that long in rotation unfortunately.