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Why Europe should worry about the dollarization of the world economy
Dear Readers,
A few days ago, the British magazine “The Economist” ran the headline: “America’s economy defies gloomy expectations.” This headline sums up well the fact that some of the key data (e.g., the latest labor market figures) are not all that positive for the US economy, but that it also continues to prove itself to be fairly robust.
Why is this the case? Why were even experienced economists wrong with some of their predictions (at least so far)?
These are the questions I want to ask and answer in today’s special edition of my newsletter. That’s why I spoke to Dr. Pippa Malmgren, who is an economist, author, and former advisor to President George W. Bush. Today, Dr. Malmgren continues to advise presidents and prime ministers, as well as CEOs and start-up founders.
I always appreciate her “big picture” takes and her different perspective on certain issues. I had the opportunity to interview her back in 2017 (Donald Trump had just begun his first term in office). At the time, she made some forward-thinking remarks:
* “I think that Germany is definitely going to continue to have a problem. In part, because Trump has the view of ‘you are either with me or against me.’”
* “Donald Trump detests supranational organizations of any kind. He prefers bilateral relationships. He also feels that a big state is hostile to the interest of its citizens, therefore he views the EU as something to oppose.”
* “Trump is confident he can manage Putin. George W. Bush was also, but it didn’t work out that way.”
“This is a strategy for dollarizing the entire world economy”
Eight years later, Malmgren describes Donald Trump’s economic and financial policy as “radical,” but the economist also believes that the US economy is undergoing a fundamental transformation that could lead to great success.
One of her statements stands out in particular and Europe should probably listen closely:
“The President and Scott Bessent in particular, the Secretary of the Treasury, are coming up with innovative new ways to generate inflow into the US bond market. One of those is the introduction of Stablecoins and a Bitcoin reserve, which are convertible to US dollars and collateralized by US treasuries. They, I think, are not well understood in Europe. (…)
That is going to pull money out of Europe, as investors look for higher performance. And that’s one reason the European Central Bank opposed the introduction of Stablecoins and their convertibility to US dollars.
Put really simply, this is a strategy for dollarizing the entire world economy. And most investors, when they’ve made a lot of money (if we think of Asia, for example, where they all have some form of capital controls), they would rather have their money in dollars.”
Listen to the entire interview here on Substack, or also on Spotify and iTunes.
To all of my readers and listeners in Germany and all over the world: Have a great start to your day or a nice evening.
Philipp Sandmann
Get full access to sandmann exklusiv at philippsandmann.substack.com/subscribe
View all episodes
By Philipp SandmannDear Readers,
A few days ago, the British magazine “The Economist” ran the headline: “America’s economy defies gloomy expectations.” This headline sums up well the fact that some of the key data (e.g., the latest labor market figures) are not all that positive for the US economy, but that it also continues to prove itself to be fairly robust.
Why is this the case? Why were even experienced economists wrong with some of their predictions (at least so far)?
These are the questions I want to ask and answer in today’s special edition of my newsletter. That’s why I spoke to Dr. Pippa Malmgren, who is an economist, author, and former advisor to President George W. Bush. Today, Dr. Malmgren continues to advise presidents and prime ministers, as well as CEOs and start-up founders.
I always appreciate her “big picture” takes and her different perspective on certain issues. I had the opportunity to interview her back in 2017 (Donald Trump had just begun his first term in office). At the time, she made some forward-thinking remarks:
* “I think that Germany is definitely going to continue to have a problem. In part, because Trump has the view of ‘you are either with me or against me.’”
* “Donald Trump detests supranational organizations of any kind. He prefers bilateral relationships. He also feels that a big state is hostile to the interest of its citizens, therefore he views the EU as something to oppose.”
* “Trump is confident he can manage Putin. George W. Bush was also, but it didn’t work out that way.”
“This is a strategy for dollarizing the entire world economy”
Eight years later, Malmgren describes Donald Trump’s economic and financial policy as “radical,” but the economist also believes that the US economy is undergoing a fundamental transformation that could lead to great success.
One of her statements stands out in particular and Europe should probably listen closely:
“The President and Scott Bessent in particular, the Secretary of the Treasury, are coming up with innovative new ways to generate inflow into the US bond market. One of those is the introduction of Stablecoins and a Bitcoin reserve, which are convertible to US dollars and collateralized by US treasuries. They, I think, are not well understood in Europe. (…)
That is going to pull money out of Europe, as investors look for higher performance. And that’s one reason the European Central Bank opposed the introduction of Stablecoins and their convertibility to US dollars.
Put really simply, this is a strategy for dollarizing the entire world economy. And most investors, when they’ve made a lot of money (if we think of Asia, for example, where they all have some form of capital controls), they would rather have their money in dollars.”
Listen to the entire interview here on Substack, or also on Spotify and iTunes.
To all of my readers and listeners in Germany and all over the world: Have a great start to your day or a nice evening.
Philipp Sandmann
Get full access to sandmann exklusiv at philippsandmann.substack.com/subscribe