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How is the US dollar a Ponzi scheme? I have no incentive to get other people to use the dollar.

by daenz 5y ago

reedjosh 5y ago
> I have no incentive to get other people to use the dollar. Ponzi != Pyramid
- daenz 5y ago
  Thanks, TIL. So the basic difference is it seems like the pyramid nature is concealed in a ponzi scheme.
rafale 5y ago
You do. You just don't have enough dollars to realize it.
andybak 5y ago
> I have no incentive to get other people to use the dollar. I live in a country that doesn't use the dollar. I have a large incentive to persuade the world to use my currency in favour of the dollar. (It's only the enormity of the task that prevents me taking immediate action)
nszceta 5y ago
It's similar but more guns are involved. As David Graeber wrote in “Debt,” “Nixon floated the dollar in order to pay for the cost of a war in which he ordered more than four million tons of explosives and incendiaries dropped on cities and villages across Indochina… the debt crisis was a direct result of the need to pay for the bombs, or, to be more precise, the vast military infrastructure needed to deliver them. This was what was causing such an enormous strain on U.S. gold reserves.” For the first time in history, the world was in a pure fiat standard. The dollars held by central banks across the globe lost their backing, and there was a geopolitical moment where U.S. dominance was called into question and where a multipolar financial world was a distinct possibility. Adding even more pressure, in 1973 the Arab petroleum exporters of OPEC decided to quadruple the price of world oil and embargo the U.S. in response to its support for Israel during the Yom Kippur War. In just a few years, a barrel of oil rose from less than $2 to nearly $12. Faced with double-digit inflation and declining global faith in the dollar, Nixon and his Secretary of State and National Security Advisor Henry Kissinger came up with an idea that would allow them to keep “guns and butter” going in the post-gold standard era and alter the fate of the world. In 1974, they sent new Treasury Secretary William Simon to Saudi Arabia “to find a way to persuade a hostile kingdom to finance America’s widening deficit with its newfound petrodollar wealth.” Simply put, a petrodollar is a U.S. dollar paid to a petroleum exporter in exchange for oil. As a Bloomberg report says, the basic framework was “strikingly simple.” The U.S. would “buy oil from Saudi Arabia and provide the kingdom military aid and equipment. In return, the Saudis would plow billions of their petrodollar revenue back into Treasuries and finance America’s spending.” This was the moment that the U.S. dollar was officially married to oil. From https://bitcoinmagazine.com/culture/the-hidden-costs-of-the-petrodollar https://bitcoinmagazine.com/culture/the-hidden-costs-of-the-...
- 8note 5y ago
  "lost its backing" is an odd statement. Its not like gold is backed by anything. The taxable product of the USA is way more valuable than some gold, especially since you an eat some of it

How is the US dollar a Ponzi scheme? I have no incentive to get other people to use the dollar.

by daenz 5y ago

How is the US dollar a Ponzi scheme? I have no incentive to get other people to use the dollar.

reedjosh 5y ago

> I have no incentive to get other people to use the dollar. Ponzi != Pyramid

daenz 5y ago
Thanks, TIL. So the basic difference is it seems like the pyramid nature is concealed in a ponzi scheme.

rafale 5y ago

You do. You just don't have enough dollars to realize it.

andybak 5y ago

> I have no incentive to get other people to use the dollar. I live in a country that doesn't use the dollar. I have a large incentive to persuade the world to use my currency in favour of the dollar. (It's only the enormity of the task that prevents me taking immediate action)

nszceta 5y ago

It's similar but more guns are involved. As David Graeber wrote in “Debt,” “Nixon floated the dollar in order to pay for the cost of a war in which he ordered more than four million tons of explosives and incendiaries dropped on cities and villages across Indochina… the debt crisis was a direct result of the need to pay for the bombs, or, to be more precise, the vast military infrastructure needed to deliver them. This was what was causing such an enormous strain on U.S. gold reserves.” For the first time in history, the world was in a pure fiat standard. The dollars held by central banks across the globe lost their backing, and there was a geopolitical moment where U.S. dominance was called into question and where a multipolar financial world was a distinct possibility. Adding even more pressure, in 1973 the Arab petroleum exporters of OPEC decided to quadruple the price of world oil and embargo the U.S. in response to its support for Israel during the Yom Kippur War. In just a few years, a barrel of oil rose from less than $2 to nearly $12. Faced with double-digit inflation and declining global faith in the dollar, Nixon and his Secretary of State and National Security Advisor Henry Kissinger came up with an idea that would allow them to keep “guns and butter” going in the post-gold standard era and alter the fate of the world. In 1974, they sent new Treasury Secretary William Simon to Saudi Arabia “to find a way to persuade a hostile kingdom to finance America’s widening deficit with its newfound petrodollar wealth.” Simply put, a petrodollar is a U.S. dollar paid to a petroleum exporter in exchange for oil. As a Bloomberg report says, the basic framework was “strikingly simple.” The U.S. would “buy oil from Saudi Arabia and provide the kingdom military aid and equipment. In return, the Saudis would plow billions of their petrodollar revenue back into Treasuries and finance America’s spending.” This was the moment that the U.S. dollar was officially married to oil. From https://bitcoinmagazine.com/culture/the-hidden-costs-of-the-petrodollar https://bitcoinmagazine.com/culture/the-hidden-costs-of-the-...

8note 5y ago
"lost its backing" is an odd statement. Its not like gold is backed by anything. The taxable product of the USA is way more valuable than some gold, especially since you an eat some of it