Macro Renaissance? The Dollar's Not Dead Yet

I bring this up after reading an article in last weekend's edition of Barron's, “The Coming Renaissance of Macro Investing” by macro superstar John Curran. He opens with a story about Nixon's Treasury Secretary William Simon cutting a deal with the Saudis in mid-1974 to buy their oil in exchange for recycling those dollars into US treasuries. Curran claims this set the stage for two generations of US opulence because USD “demand” from petrodollar states underpinned the strength of the dollar as a reserve currency and allowed the US economy to grow amidst low and relatively stable interest rates. That sounds be a good hook--not quite Musk's threat to global humanity, but one that appears to show a courageous Treasury secretary that stepped into the crucible and saved America from inflationary doom. We could sit here all day and argue about the economic history of the United States and the role of the dollar's reserve currency status in the development and maintenance of a global hegemon. Let's look at the facts.