Brendan Greeley on the Real 500-Year History of the Dollar

SPEAKER_2 (0:02)

Bloomberg Audio Studios, Podcasts, Radio, News.

Tracy Alloway (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:22)

And I'm Joe Weisenthal.

Tracy Alloway (0:23)

Joe, we enjoy talking about money.

Joe Weisenthal (0:25)

Yeah.

Tracy Alloway (0:26)

In all its flavors.

Joe Weisenthal (0:27)

I love money.

Tracy Alloway (0:29)

We all love money.

Joe Weisenthal (0:29)

Someone's gonna clip that out.

Tracy Alloway (0:30)

That's it, that's the podcast.

Joe Weisenthal (0:32)

Someone's gonna clip that out, Joe, saying I love money. You know, I love money, talking about it in particular, having it's good too, talking about it's nice.

Tracy Alloway (0:42)

Finding it is even better.

Joe Weisenthal (0:44)

What you can do with it, where you can allocate it to all very interesting questions. But I have to admit, I am a sucker for like a good old fashioned, two in the morning, where does money come from discussion? You know what I'm saying?

Tracy Alloway (0:58)

I have never been invited to any of your two a.m. in the morning, where does money come from discussions?

Joe Weisenthal (1:02)

You know, dorm room, like which came first, the money, you know, I love like, I love philosophy of money, that sort of like history of money, all that stuff. It's a great topic.

Tracy Alloway (1:12)

There are a lot of social implications tied up with the idea of money, which I think, you know, have been explored at various times, but they're always so interesting to me, because I think even today, if you think about money, and if you think about the dollar specifically, you know, we're used to talking about like, oh, the dollar is doing this, the dollar is doing that, but there's more than one flavor of the dollar, right? So there's clearly cash at a simplistic level. So the stuff that we keep in our wallets or whatever, there are bank dollars that are created by a bank that can live in the bank and which you never tangibly see, but you can do a lot of stuff with if you have them.

Joe Weisenthal (1:49)

You can convert them to cash dollars at a one-to-one ratio.

Tracy Alloway (1:53)

That's right.

Joe Weisenthal (1:53)

They trade at a one-to-one ratio to the other dollar.

Tracy Alloway (1:56)

That's the important thing. But there are also things like euro dollars, which you and I will never see being a non-foreign depository institution.

Joe Weisenthal (2:05)

And there are reserves held at the central bank, which is arguably, it's its own thing, right? There are also stable coins, which are dollar, also often aspire to trade at a one-to-one ratio to the dollar, etc. What is the dollar?

You know what's an interesting question? So one of the topics that comes up a lot is like the future of the dollar, etc. We don't talk as much about like, well, where did it come from in the beginning? And what was like, if we're going to talk about the future of the dollar, don't we need to know how we got here and how the dollar was born and all that stuff? That seems like an important question to answer before we talk about the future.

Tracy Alloway (2:41)

Yes, and also just in terms of social and political economy terms, who actually controls the dollar? Because there's this idea that it belongs to the US. Treasury.

They control the supply and all of that. But as I just mentioned, there are all these flavors of dollars that kind of sit outside the U.S.'s direct control. And so if you think about the dollar being both an exorbitant privilege of America, it's also in many respects a burden, right?

Joe Weisenthal (3:12)

Yeah, so they say. I mean, I don't know. It seems pretty good as a currency. But I've heard that and it is very interesting to think about, like, you know, there's this interest. I think it was Mark Carney when he was Bank of England governor. He gave a Jackson Hole speech talking about America's declining role as a share of global GDP and the dollar's increasing role as the currency of trade.

There's all this stuff where it's like the central bank, the Fed sets rates based on American conditions and so forth. But then that transmits globally because so many entities use the dollar. We could go on and on.

Tracy Alloway (3:51)

This intro is just going to be a Forrest Gump style list of all the different types of dollars. But no, I mean, we should talk about all the different types of dollars, but also where they all came from and what all their different purposes actually are and what the upsides are for each of them and the downsides. And we do, in fact, have the perfect guest.