money in order to buy cars and homes, and it allows Washington to run up deficits it could not otherwise afford. Despite the best efforts of China and the EU, the U.S. dollar is the foundation of the global financial system. Around 90% of global financial transactions that go through banks are conducted with the dollar – even if they don’t involve U.S. buyers or sellers. As of late last year, just over 60% of global foreign exchange reserves are in dollars (the euro trails at 21%). The biggest and most liquid market in the world, by far, is for U.S. Treasuries. When companies, investors, and governments want safety, they go to the U.S. dollar. Countries don’t retire, but right now it’s difficult to tell if the post-pandemic success of the United States is a prelude to another great season... or the end of an era. When stability and liquidity are self- reinforcing, success begets success with reserve currencies. No pandemic can take that away... AMERICA HAS AN ALL-STAR SUPPORTING CAST As Sports Illustrated magazine wrote after that 2016 game, “Peyton Manning was not the reason Denver won the Super Bowl.” Instead, as Rolling Stone magazine explained, Manning “did pretty much what he’s been doing for the majority of the season... which is to hand the
ball off and make a few wobbly and dyspeptic throws and stay the hell out of the way of the Broncos’ defense, which will likely go down as one of the great units in NFL history.” Manning won on the fumes of a Hall of Fame career – and because he was a calm, confident, smart leader on the field. But most importantly, he had a fantastic supporting cast... That’s also similar to the U.S. now, as the New York Times explains... America has a failed federal government, laughed at and pitied the world over. But America is not a failed state. It will be saved by its scientists and doctors, its hospitals and universities, its nimble and creative companies, and leaders in the statehouses who act more decisively than the family of frauds in the White House. Peyton Manning retired a champion, after winning his second Super Bowl. He knew his time was up – and that he was lucky to have played a final season, to say nothing of going out on top. Countries don’t retire, but right now it’s difficult to tell if the post-pandemic success of the United States is a prelude to another great season... or the end of an era. Still, despite the challenges it faces, America will come out of the other end of the pandemic in a strong position... not necessarily because it’s doing well, but because everyone else is doing worse. And for now, that’s enough to “win” in the post-pandemic world.
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June 2020
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