For all
> these years, mainstreamers have said that being the reserve currency
> doesn't get you more than a risible seignorage. But these two guys are
> now saying that in fact it leads to an unbelievably enormous profit -- a
> profit they can quantify (or could if they were thinking clearly): the
> difference between the cumulative net investment income outflow the US
> should have experienced over the last 25 years if investment yields were
> equal -- and zero, which is what we've experienced.
A few years ago, during the run up to the Iraq war, there was a lot of talk about the fact that, a few years earlier, Saddam had switched to selling the little oil he had in euros instead of dollars. Then last year there was a lot of anxiety about Russia switching as well--along with a lot of discussion about the free ride the US was getting.
I know what happened to Saddam, but was it the fear of this collapse that kept Russia from switching? Or do you think a country attempting to do this would face something along the lines of Iraq? Perhaps a better question is, is this paper really a revelation or is it something that has been suspected all along? Where might I find other interpretations of this particular situation?
sorry for the barrage of questions, but I am very interested in this and am in the process of writing a paper that is related.
thanks, s