Revoking America s Exorbitant Privilege

For the exorbitant a receptacle.

For the exorbitant a receptacle.

Then as for him who waxed exorbitant,

Who all waxed exorbitant in the cities,

Who all waxed exorbitant in the cities,

Go thou unto Fir'awn verily he hath waxen exorbitant.

Go thou unto Fir'awn verily he hath waxen exorbitant.

Go ye twain unto Fir'awn, verily he hath waxen exorbitant,

Saying 'go thou Unto Fir'awn verily he hath waxen exorbitant.

Go ye twain unto Fir'awn, verily he hath waxen exorbitant,

Saying 'go thou Unto Fir'awn verily he hath waxen exorbitant.

This and verily for the exorbitant there shall be an evil retreat

This and verily for the exorbitant there shall be an evil retreat

And we had over you no authority, but ye were a people exorbitant.

And we had over you no authority, but ye were a people exorbitant.

However, the reprogramming of FBPMS could entail exorbitant costs which may not be sustainable for UNU.

On the bright advertising board against a tangerine colored wall, they listed their respective exorbitant price tags.

The twain said O our Lord! verily we fear that he may hasten against us or wax exorbitant.

The twain said O our Lord! verily we fear that he may hasten against us or wax exorbitant.

On the other hand, if you're visiting an underdeveloped country, and 25 dollars buys you a gourmet meal, it's exorbitant for a Big Mac.

For a regime whose credibility is gone, the costs of maintaining power are exorbitant and eventually unbearable because it must resort to repression more frequently and heavily.

Accordingly, the Committee on Contributions, during its forthcoming deliberations and in the application of any methodology approved by the General Assembly, should endeavour to avoid such, exorbitant increases.

Saying eat of the clean things wherewith We have provided you, and wax not exorbitant in respect thereof, lest My wrath alight on you and upon whomsoever My wrath alighteth, he surely perisheth.

Saying eat of the clean things wherewith We have provided you, and wax not exorbitant in respect thereof, lest My wrath alight on you and upon whomsoever My wrath alighteth, he surely perisheth.

In short, the US no longer has what Valéry Giscard d Estaing, as France s finance minister in the 1960 s, accurately called the exorbitant privilege that stemmed from having a reserve currency as its legal tender.

Dissatisfaction with the dollar s role as the dominant global reserve currency is not new. In the 1960s, French Finance Minister Valéry Giscard d Estaing famously condemned the exorbitant privilege that the dollar s status bestowed upon the United States.

To manage exorbitant demand for financial and physical assets, China s leaders must address its root cause the low cost of capital. Doing so will require maintaining some capital account control, while raising interest rates to market clearing levels.

It has been a great ride for the US, and America s financial supremacy has certainly eased the burden of being a superpower. But, between the sub prime US mortgage crisis and the dollar s ongoing decline, America s exorbitant privilege now looks a bit shaky.

Health care costs in the US are exorbitant, with low value for money. One can only hope that Obamacare, together with the models being implemented by the US s future competitors, will nudge the US to adopt a long overdue universal, publicly financed health care system.

These inferior substitutes often imply exorbitant costs for borrowers and financing that is usually too short term for productive investment activity. Moreover, the lack of consumer protection and regulatory and supervisory frameworks exposes informal activities to vulnerabilities that can harm borrowers and jeopardize financial stability.

Former French president Valéry Giscard d Estaing once famously complained about America s exorbitant privilege. D Estaing was incensed that the US seemed to be able to flood the world with dollar currency and debt without ever seeming to pay a price in terms of higher inflation or interest rates.

Such a cost shock has a more prolonged effect than a negative demand shock. Without negative external shocks, exorbitant TFP growth would have declined gradually, as the returns from institutional adjustment, reallocation of resources, and technological catch up naturally diminished, in accordance with the convergence hypothesis.

Yet the US found a way to finesse this problem. Exploiting what 160 Valéry Giscard d Estaing called the exorbitant privilege of the world s reserve currency, the US borrowed surplus savings from abroad on very attractive terms, running massive balance of payments, or current account, deficits to attract foreign capital.

This reflects the fact that the market in dollar denominated assets is exceptionally deep and liquid, which limits transaction costs. In other words, European practice reflects the dollar s exorbitant privilege as the only true global currency, freely accepted by currency traders and investors in China and around the world.

Moreover, they do not pose moral hazard issues (unless one thinks of the long term moral hazard that the exorbitant privilege of printing the world s international currency creates for US fiscal policy). Finally, ECB purchases of dollars would help push down the euro s exchange rate against the dollar.

Yet the US found a way to finesse this problem. Exploiting what Valéry Giscard d Estaing called the exorbitant privilege of the world s reserve currency, the US borrowed surplus savings from abroad on very attractive terms, running massive balance of payments, or current account, deficits to attract foreign capital.

Already squeezed by exorbitant property prices and popular resistance to land takings, they now face higher interest rates, property taxes, villagers empowered by stronger rights, and expensive new requirements to provide social services to migrants. The desperation of local potentates and SOE executives has created powerful resistance to reform.

Yet, in America and most of the world, drug prices are still exorbitant and the spread of knowledge is tightly limited. That is because we have created a patent system that gives innovators a temporary monopoly over what they create, which encourages them to hoard their knowledge, lest they help a competitor.

But, yoked to weak economies such as Greece, Spain, and Portugal, the euro has also been much weaker than the Deutschemark would have been. In effect, Germany has had the double exorbitant privilege of lower borrowing costs and a weaker currency a feat that a non monetary union currency like the US dollar cannot accomplish.

Saddled in the performing arts as we are, by antiquated union agreements that inhibit and often prohibit mechanical reproduction and streaming, locked into large facilities that were designed to ossify the ideal relationship between artist and audience most appropriate to the 19th century and locked into a business model dependent on high ticket revenues, where we charge exorbitant prices.

Of course, China stands to gain much from the renminbi s emergence as an alternative international reserve currency, sharing in the exorbitant privilege that the US currently enjoys by virtue of the dollar s global status. Beyond the convenience of conducting international transactions in local currency, China would be able to take advantage of seigniorage safe in the knowledge that it would not face a balance of payments crisis.

The political costs for the ECB of making this type of mistake could be exorbitant. This is why the ECB must be very prudent as it considers whether to maintain the current pace of rate hikes, in which case it would raise rates by 25 basis points in September, or slow the pace down a bit, in which case the next rate hike would come in October at the earliest.

Finally, a less well recognized insight from the euro crisis concerns the role and impact of a currency union s dominant members. It is often argued that the United States, as the major reserve currency issuer, enjoys what then French Finance Minister Valéry Giscard d Estaing famously called in the 1960 s an exorbitant privilege, in the form of lower borrowing costs (a benefit estimated to be worth as much as 80 basis points).