Ask Prof Wolff: The Future After De-Dollarization

this is Richard Wolff from democracy at work responding to another ask Prof wolf question from our patreon community and this one comes from J Matson J Matson wants us to talk about dedolarization and in particular what this decline of the U.S dollars role in the world what it means both in the short run and the longer Run for the United States and indeed for the world economy because dollarization is the word we use for the role that the dollar has played for most of the last 75 years as the world's number one dominant currency if you are interested in the story of that decline of the dollar then please take a look at the links below to other videos we have produced that go into that in some detail here I simply need to note that particularly in the last couple of decades and even more so in the last few years that decline has accelerated more and more of the World's Trade more and more of the world's investment more and more of the reserves held by central banks around the world are held no longer in dollars but in gold and other currencies that reality is called dedolarization and I want to focus here on what some of the consequences are having your currency as the world's currency conferred all kinds of gains for the United States economy it meant for example that we could pull in the produce of the world the French wine the Japanese automobile the Technologies uh produced in Scandinavia or China and so on and so on and in exchange we gave them dollars little green pieces of paper which mostly they turned around and lent back to the United States government so that they would make interest on their Holdings of dollars this was wonderful for the United States government allowing the United States government to borrow more money than any country in the world we are the world's largest debtor partly because the dollar plays that role it would be harder for the United States government to borrow if it weren't for the role of the dollar in the world the ability of the United States to weaponize the Dollar's role to sanction countries Cuba Iran Russia everyone involved now in the Ukraine war on the Russian side directly or indirectly gave the United States enormous power in the world the D dollarization is taking all that away and that is going to mean short-term pain in the United States you're not going to be able to wield power the way you once did the American Empire of which the Dollar's globalization was a key part is therefore weakening as we have seen in many other dimensions of our situation so in the short run it'll pinch it won't fundamentally threaten the United States people who suggest that our alarmists and are taking this as happening both faster and further than it's likely to be the rest of the world still needs the United States the rest of the world still trades and Depends in many ways on the United States we are a Colossus as a society and an economy in the larger world but a one that is shrinking and that's going to take away part of our power as a nation and part of our economic well-being as a nation it really should surprise no one because the position at the end of World War II when the dollar really took on its Global role was that the rest of the world was wrecked all to potential competitors of the United States were gone and so the dollar played a role it couldn't continually have 75 years a long time and it's not surprising that now others want to participate in that power others want to participate in the economic benefits of having a Global Currency in the longer run the effect of all of this I think is the key issue here not the temporary relatively small pinching that the decline of the dollar will affect on us here's the big question what comes next and how is the United States as a nation going to react to having its power and its wealth in difficulty shrinking when one reaction is the one that we're mostly seeing anger upset a war in Ukraine they are all part of this sanctioning 40 countries around the world don't let them use the dollar the way they used to pinching their economies punishing them crystal clear War noises around Taiwan and against China that's one way trying to hold on trying not to let go that's one response to the decline of the United States Empire exemplified by the dedolarization but there's an alternative an alternative scenario an alternative way to see all this and here's how that goes the united states recognizes history every other Empire that arose declined the American Empire arose across the 20th century and it's begun to decline in the 21st and the best way to handle that is to work out a livable arrangement the most powerful competitor of the United States today everyone knows is the People's Republic of China they are championing an alternative Global Currency by the way not so much their own but a global composite a multi-polar alternative perhaps a currency based on the Chinese Yuan the Russian ruble the Indian rupee and other major players currencies in some Basket in some grouping or maybe a whole new currency that everybody subscribes to who's interested and you know the world already has had more than the dollar the Euro has played a role not as important as the dollar but not unimportant either so this new currency that the Chinese seem to be working on with their brics Partners Brazil India and so on might be a third one alongside the Euro and the dollar that would be a kind of Collective way of handling these issues that would recognize the legitimate desires of other countries to get in on this would recognize the importance of the United States even though that is relatively declining I hope we go in that direction because the alternative trying to hold on against the role of history is that for doomed problem a for doomed project and in a world of nuclear weapons a very dangerous one as well I hope this understanding and this analysis belongs in the National conversation about these crucial issues and if you agree then I would ask you take a look at our website democracy at work dot info sign up for the newsletter so we can keep you informed of all of these kinds of videos that we produce it's a way as I say to partner with us and if of course you can contribute financially to help defray the costs of doing this please know that we will appreciate that enormously as well thank you

Channel: Democracy At Work

Views: 97,334

Keywords: Richard Wolff, democracy, work, labor, economy, economics, inequality, justice, capitalism, capital, income, wages, poverty, yt:cc=on, wealth, Marxism

Id: WKkD9INqQJM

Length: 9min 2sec (542 seconds)

Published: Fri May 12 2023

Reddit Comments

[u/smokecat20]

As BRICS nations lead de-dollarization, they're discussing creating their own currency. This could be a mix of major BRICS currencies backed by gold or a new currency.

With the US economy weakening, Americans might invest more in these countries. This is not new but could become more common for regular folks, potentially causing trouble for banks already hit by rising interest rates.

[u/PatricLion]

how to de-risking from dollar ?

when the world wakes up to russian 300 B $ reserves are frozen. first time SWIFT is weaponized in a big way. the brics and many countries want to reduce the dependence of the dollar. they may be the next victim .

to circumvent the risk,
to price commodity , goods and services in local currency.
to be independent of the SWIFT