The US Dollar’s Exorbitant Privilege and The International History of Reserve Currencies with Barry Eichengreen | Hoover Institution

When governments respond in a stabilizing way, they raise taxes to balance the budget or whatever, they respond to the interest payments on the debt and not the debt-to-GDP ratio. So we economists are kind of trained to look at the debt-to-GDP ratio, but governments are really concerned about the flow of costs they incur that crowd out other things.

This is the Capitalism and Freedom in the 21st Century podcast, an official podcast of the Hoover Institution Economic Policy Working Group, where we talk about economics, markets and public policy. I'm John Hartley, your host. Today, my guest is Barry Eichengreen, one of the world's leading economic historians, who is the George Pardee and Helen Pardee Professor of Economics and Political Science at the University of California, Berkeley, where he's taught since 1987. He's the author of many economic history books, several on international monetary history, including most recently Money Beyond Borders, Global Currencies from Croesus to Crypto. Thanks so much for coming on the podcast, Barry. It's a real honor to have you on. You're truly one of the most esteemed international monetary economists in the world and one of the most esteemed economic historians in the world. So it's a real honor to have you on the podcast.

You are too kind, John.

I want to first get into your background. Where did you grow up and how did you first get interested in economics? I know earlier in your career, you also met Milton Friedman. Tell us about your background, how you got interested in economic history and the history of international monetary systems.

Well, truth be known, I was born and grew up in wait for it, Berkeley, California. So my parents were not academics, but I was surrounded by professors and their kids. I think a third of my elementary school was made up of children of professors. So in those days, they tracked us. And as a result, I was not in in the highly tracked class. At that time. I was impressed at my parents dinner parties where a bunch of the other attendees were professors by the lifestyle, if you will, these people had job security, which was somewhat rare back then and is even more rare now. they had the freedom to basically choose what they worked on. And they traveled a lot. So that seemed to me like the ideal lifestyle. So I had my eye on possibly becoming an academic from an early age my original interests were uh history and political science but i found found them hard to get my mind around neither discipline really had a organizing framework that i could identify with. I needed a set of models in order to make sense of a very complicated and unruly set of facts. And I found that set of models in economics. So what I've done ever since is, if you will, to combine history, political science, and economics with emphasis on the latter. So you, not to go on, but you asked John about the Milton Friedman story. And it goes back to 1989 or 1990. So I was recently arrived at Cal and visited by Lars Yoning, who was another esteemed monetary economist and monetary historian known for his book with Michael Bordo on the velocity of money and known for many other things as well. Well, Lars wanted