In gold we trust, if the US dollar’s exorbitant privilege withers
While the president has walked back a mooted firing of Jerome Powell, the prospect of installing a presumably more pliant chair next will keep market anxiety levels high.
It was former French president Valery Giscard d’Estang who as Finance Minister in the 1960s coined the term “exorbitant privilege”. It was used to describe the benefits accorded to the US as a result of its currency being the international reserve currency.
The disruptive – some might prefer “chaotic” or “erratic” – nature of the Trump 2.0 presidency and its contradictory economic objectives might herald the decline of that exorbitant privilege.
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Stephen Miller is an investment strategy advisor to GSFM and formerly a Treasury officer who served on the personal staff of the then-treasurer Paul Keating from 1985 to 1987.
