There is no particular reason to read the book although it does read quickly. Better to listen to the podcast.
The author does make some interesting points:
- TINA: There is no alternative to the dollar. No other country/currency has the depth of capital markets. The Euro is no alternative because the largest currency the d mark's bond market is only 1/4 as large. Rather than being analogous to the US bond market it is more similar to the muni market with a number of different issuers issuing non homogenous paper.
- Much of the Us trade deficit is intra company trade with many of the value added steps going inside the US
- Many US "exports" are handled by US foreign subs. That is Coca Cola Germany only sends some of its profits back to the US. Arguably the whole thing is an export, but the strategy adopted by US companies is: locate in the target market to be closer to the customer, and reduce exposure to foreign exchange etc.
- US leadership in technology and education. The IBM issued more patents than all of China. Also 7 of the ten best universities in the world are in the US. Some huger percentage of graduate students are in the US and many of them stay
- ... and most intriguingly the Triffin Dilemma. In order to be a global reserve currency you need to run a currant account surplus (the foreigners need to have lots of dollars in their hands), but in order for that reserve currency to have value, the deficits cannot be large or that will make the currency undesirable as a reserve currency
- The US has a huge head start - there are already huge numbers of dollars in circulation
- The currencies one might want to have Yen, Yuan and D mark have large trade surpluses
- ... as well as populations, governments, and central banks that would find the sorts of deficits required untenable
And some howlers:
- US is an equity investor and foreigners are debt investors that is why the US earns a higher return on its money that the foreigners. Kirstin Forbes show that higher rates of returns are earned outside the US on debt, equity and FDI. Therefore, if foreigners are investing in the US in preference to their own markets, it must be for non commercial reasons.
- Currency manipulation? (China and Japan)
- Influence ( GCC)