I recently read the published version of an interview given by Doug Casey, author of a book titled „Surviving FedCoin“. In that interview, he makes a number of rather harrowing predictions regarding the US – and therefore ultimately worldwide – financial and/or currency system.
I have not read his book. But his idea that the Fed might create a blockchain-based currency named FedCoin as a parallel or replacement currency to the current USD struck me, not necessarily as a realistic scenario, but as an undeniable – though crazy – possibility. And then I remembered vaguely that decades ago there did indeed exist a currency named Petrodollars, which we might consider in this new context a kind of „restricted“ – or parallel – USD.
That set me off thinking (or, if you will, speculating). In a world that seems to turn crazier by the day, what might president-elect Donald Trump do not only to significantly lighten the debt burden of the US government but – at the same time – to effect a tremendous increase in demand for export goods and services ex the USA. Both part and parcel of his program of making America great again.
This is what he might do: Offer all non-US citizens, corporations, institutions, governments holding US Treasuries 2 (two) options, namely (1) Sell their treasuries back to the US Treasury/Fed at 10, 20 or maybe 30 percent of face value, against unrestricted (normal) USD, or (2) Sell these at 100 percent of face value, against „US Exportdollars“, valid only for buying US goods and services (but not corporations, real estate or farmland) originating from the USA.
Treasurybonds not offered for re-sale to the US government within a specific – short – period of time would become null and void. Not surprisingly, the exchange rate of the US Exportdollar would drop significantly, thus cheapening US exports.
Certainly, there would be pandemonium. And, of course, such a re-purchase offer would have to be extremely narrowly formulated to prevent abuse (or smartassing) by current holders, in the eyes of the US government.
But I see little that the rest of the world could do but make the best out of it, i.e. start buying US goods and services originating from the USA, to avoid partial or complete loss of value on all of its US treasury bond holdings. And – in the process – relieve the US of a huge amount of debt.
What about that? Would it be technically possible for the USA to launch such an Exportdollar? Would any national government or international institution be in a position to prevent the US government from doing so?
If YES and NO is your answer, would there be significant and longterm negative consequences for the USA that counter- or outweight the positive ones mentioned earlier in this paper?