[A-List] Rep Ron Paul (R-TX) Speech: The End of Dollar Hegemony

Michael Hudson michael.hudson at earthlink.net
Sun Feb 19 13:07:04 MST 2006

Dear All,
    As my name has come up in the discussion, I want to make clear that the
term dollar hegemony is indeed Henry's. We both agree on the process that I
began to trace back in the early 1970s, and warned about almost as soon as
it began -- as it was obvious that if central banks didn't have gold to buy,
the only alternative was U.S. Treasury bills. Hence my fairly neutral,
technical term "treasury-bill standard." Dollar hegemony has the added moral
emphasis that helps put a term into circulation as "brand identification"
for the process.
    Both Henry's and my geopolitical analysis go far beyond the technical
aspect itself. The counterpart to dollar hegemony, from my point of view, is
the seemingly idiotic weakness of European governments and central bankers
throughout the world in not seeing the fact that they never will be repaid
for their dollar holdings. The system transmutes into a worse and worse deal
for the rest of the world each year.
    We need all the allies we can get, and all the elaboration we can get in
tracing how this process operates.
    Michael Hudson

On 2/19/06 11:57 AM, "Henry C.K. Liu" <hliu at mindspring.com> wrote:

> Do a Google search on the term Dollar Hegemony and see whose name come
> up most. As for Michael book, its a very good book. But the term dollar
> hegemony deos not appear in it. I helped to convince his publisher to
> publish a new edition in 2003 and helped edit Michael's new preface for
> it. Michael and I are close friends and see eye to eye on many
> subjects.  If you ask Michael directly he will acknowledge that the
> specific term dollar hegemony to summarize the role of the dollar under
> neo-liberal finance globalization first appeared in print in my 2002
> Asia Times article and on the Internet some years before as early as
> 1998 in my posting to several lists.  Gary Santos knows that as we had a
> public exchange on some list before and he told me that "it is a feature
> in your hat" for having coined the term, or some words to that effect,
> which was not the way I was thinking about it.  Many people contributed
> to public awarness of emreging trends and I no doubt benefited from
> exchange swith Michael after I was invited to join Gang8. Michael
> introduced me to Ann Willaimson and the three of us talked over dinner
> once at my house from 8 pm to the following morning non stop on many
> subjects.  But as a matter of record, the term dollar currency, which
> appeared to have gain some currency, first was coined by me in 2002, for
> which I gave a very clear definition:
> World trade is now a game in which the US produces dollars and the rest
> of the world produces things that dollars can buy. The world's
> interlinked economies no longer trade to capture a comparative
> advantage; they compete in exports to capture needed dollars to service
> dollar-denominated foreign debts and to accumulate dollar reserves to
> sustain the exchange value of their domestic currencies. To prevent
> speculative and manipulative attacks on their currencies, the world's
> central banks must acquire and hold dollar reserves in corresponding
> amounts to their currencies in circulation. The higher the market
> pressure to devalue a particular currency, the more dollar reserves its
> central bank must hold. This creates a built-in support for a strong
> dollar that in turn forces the world's central banks to acquire and hold
> more dollar reserves, making it stronger. This phenomenon is known as
> dollar hegemony, which is created by the geopolitically constructed
> peculiarity that critical commodities, most notably oil, are denominated
> in dollars. Everyone accepts dollars because dollars can buy oil. The
> recycling of petro-dollars is the price the US has extracted from
> oil-producing countries for US tolerance of the oil-exporting cartel
> since 1973.
> Henry C.K. Liu
> Gary Santos wrote:
>> I would like to add that Prof. Michael Hudson, Univ of MI, who wrote a paper
>> in the circa 1971/1972 on post 1971 US balance of payments should be
>> credited with the concept of dollar hegemony. My understanding is that the
>> paper is available in the NYU Business library. The term he prefers for the
>> phenomenon is the "US Treasury Bill Standard" (as in monetary standard). He
>> followed up with a book, Super Imperialsim, published in 1972 which,
>> two/three years ago, is on its second edition.
>> http://michael-hudson.com/
>> ----- Original Message -----
>> From: "Henry C.K. Liu" <hliu at mindspring.com>
>> To: "The A-List" <a-list at lists.econ.utah.edu>
>> Sent: Saturday, February 18, 2006 11:55 PM
>> Subject: Re: [A-List] Rep Ron Paul (R-TX) Speech: The End of Dollar Hegemony
>>> When I first used the term on several discussion lists, I was rebuffed
>>> by many American economists as being anti-US. I officially coined the
>>> term "dollar hegemony" in 2002 on the Internet with an article: US
>>> Dollar Hegemony has got to go.
>>> http://www.atimes.com/global-econ/DD11Dj01.html
>>> The term now is widely used and its gratifying to see that it has
>>> finally made it onto the floor of Congress.
>>> Henry C.K. Liu

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