Thursday, November 30, 2023

Balaji Srinivasan, the former Chief Technology Officer at Coinbase, recently took to Twitter to remind his followers about Jared Bernstein’s earlier position on de-dollarization. Srinivasan found it noteworthy that Biden’s new top economist had abandoned certain views regarding the U.S. dollar’s status as a global reserve currency.

Contrary to Bitcoin Maximalism – Insights from Biden’s Chief Economic Aid

On Monday, the ex-CTO of Coinbase tweeted, “The government needs to drop its commitment to maintaining the dollar’s reserve-currency status!” Srinivasan asked his followers to guess who made this statement, teasing, “Some Bitcoin maximalist, perhaps?”

To his followers’ surprise, Srinivasan revealed that it was Biden’s new top economist, Jared Bernstein, who made the statement. The tech entrepreneur highlighted Bernstein’s previous stance on Washington’s policy towards the greenback, recognizing a certain rationale in it.

Srinivasan referred to an op-ed titled “Dethrone ‘King Dollar'” published by Bernstein in the New York Times back in August 2014. In the article, Bernstein argued that the dollar’s status as a preferred currency for foreign banks and governments undermines job growth in the United States, increases budget and trade deficits, and inflates financial bubbles.

President Joe Biden nominated Bernstein to chair the Council of Economic Advisers in mid-February. During the vetting process, Bernstein blamed China for seeking an end to the dollar’s dominance, citing its role in helping the U.S. impose sanctions on Russia following the invasion of Ukraine. Bernstein acknowledged the privileges and benefits of having the reserve currency, stating:

“There are extremely important privileges, and even in the realm of security, benefits to having the reserve currency.”

On June 13, Jared Bernstein was confirmed as Chairman of the economic council at the White House. Srinivasan acknowledged Bernstein’s public recantation during the confirmation process but stood by the economist’s original de-dollarization stance, which spanned over a decade.

‘De-Dollarization Isn’t Happening, and It’s a Positive,’ According to Srinivasan

Srinivasan pointed out that both Biden and Trump had advocated for economic nationalism, trade wars, and industrial policies, suggesting that Bernstein aligns with a “sort of left-MAGA” viewpoint. He further explained that Bernstein’s perspective stems from a desire to depreciate the USD, making American exports more competitive globally. Srinivasan believes that Bernstein’s case is not irrational.

While Srinivasan supports the notion of de-dollarization, he recognizes the challenges associated with such a shift. He rhetorically questioned how policymakers transition from viewing the reserve currency status as unquestionable to considering it an undeniable burden.

Srinivasan predicts that politicians will approach de-dollarization similarly to inflation, starting with denial and eventually accepting it as an obvious and beneficial change. He contends that individuals will be held responsible for not hedging against this shift, as “the privilege of having the world’s reserve currency is one America can no longer afford.”

In addition to his comments on de-dollarization, Srinivasan has previously highlighted potential challenges for the U.S. and the global economy, including sovereign defaults, rising credit card debt, and negative developments in various markets, such as bonds and real estate.

In his recent tweets, Srinivasan emphasized that de-dollarization is not driven by a single market or state but rather by numerous states. He argued that they seek to protect their economies from being controlled by the flip of a switch in Washington. Srinivasan concludes that the world is declaring independence, rejecting the idea of being under the influence of “King Dollar,” akin to how George Washington rejected rule by the “King of Great Britain.”

What are your thoughts on Balaji Srinivasan’s comments on de-dollarization? Share them in the comments section below.

Frequently Asked Questions (FAQs) about de-dollarization

What is Balaji Srinivasan highlighting about Biden’s top economist and de-dollarization?

Balaji Srinivasan is highlighting Jared Bernstein’s previous stance on de-dollarization, discussing the challenges and potential benefits associated with it. He points out Bernstein’s view on the U.S. dollar’s status as a global reserve currency and its impact on job growth, deficits, and financial bubbles.

Who is Jared Bernstein and what was his stance on de-dollarization?

Jared Bernstein is Biden’s top economist and the Chairman of the economic council at the White House. He previously advocated for dropping the commitment to maintaining the U.S. dollar’s reserve-currency status. In an op-ed titled “Dethrone ‘King Dollar'” in the New York Times, Bernstein argued that the dollar’s role undermines job growth, increases deficits, and inflates financial bubbles.

What are the potential benefits of de-dollarization according to Balaji Srinivasan?

Balaji Srinivasan sees potential benefits in de-dollarization, such as making American exports more competitive globally. He believes that depreciating the USD could align with economic nationalism and industrial policies, creating a positive impact on the economy.

How does Balaji Srinivasan view the transition towards de-dollarization?

Srinivasan acknowledges the challenges in transitioning from considering the reserve currency status as unquestionable to viewing it as a burden. He believes that politicians will gradually accept de-dollarization, similar to how they approach inflation, and may shift blame onto individuals for not hedging against the change.

What are some other concerns highlighted by Balaji Srinivasan?

Srinivasan has expressed concerns about sovereign defaults, rising credit card debt, and negative developments in various markets such as bonds and real estate. He also emphasizes that de-dollarization is driven by multiple states seeking to protect their economies from potential control by Washington.

More about de-dollarization


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