The Global South Is the Engine of Global Growth

After the global financial crisis, the global north is largely not expanding credit at all. The credit expansion is happening in the global south. So if you're looking for yield, that's where you're going to find yield. And so this is, again, I come back to this point, the dollar system expands geographically two steps forward, one step back. There was this two steps forward going on in the last 10 years to the global south and now we're testing that.

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Today, Perry Mehrling, Economist and internationally recognized expert on our monetary system, joins us to talk about his new book: “Money and Empire: Charles P. Kindleberger and the Dollar System”. Perry’s book is a “biography of the dollar” told through the life “Charlie” Kindleberger, an economist who helped craft the Marshall Plan and spent his life studying and writing about the best way to organize international money. We discuss why Charlie thought the world needs a “key currency” and how the Fed - reluctantly and slowly - grew to support the dollar as it took on that role. Perry explains why the dollar system has proved so resilient. We finish the talk with an examination of two of the Fed’s most important tools - QE and swap lines and discuss why one supports the system while the other might undermine it.

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Episode TimeStamps:

02:27 - Introduction to Perry Mehrling and Charles Kindleberger

10:03 - What is the Sterling System?

15:01 - Establishing a central bank

23:35 - The impact of World War 2

31:32 - What does it take to be a key currency country?

48:53 - Fed - From lender to dealer

54:49 - Are swap lines structured the right way?

01:01:14 - War in Ukraine - what would Charlie have thought?

01:04:25 - Book recommendations

01:07:43 - Key takeaways from Niels

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