1 00:00:02,720 --> 00:00:11,920 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:11,360 --> 00:00:16,239 Speaker 2: Joe, what's that moving over there? What's that shadow? It's 3 00:00:16,280 --> 00:00:18,599 Speaker 2: the shadow banking system. It's getting bigger. 4 00:00:19,160 --> 00:00:21,799 Speaker 3: I think you've been down here, Tracy and this proverbial 5 00:00:21,840 --> 00:00:24,400 Speaker 3: bunker for a little too long, maybe, but no, it's 6 00:00:24,440 --> 00:00:27,360 Speaker 3: the final installment of our three part Euro Dollar series. 7 00:00:27,840 --> 00:00:30,960 Speaker 2: Yeah, we've been tracing the history of euro dollars, an 8 00:00:31,000 --> 00:00:35,880 Speaker 2: incredibly important component of the global financial system and at 9 00:00:35,920 --> 00:00:40,120 Speaker 2: more than ten trillion dollars, the biggest form of shadow 10 00:00:40,120 --> 00:00:44,239 Speaker 2: banking today. There has been post World War two reconstruction, 11 00:00:44,720 --> 00:00:49,720 Speaker 2: Cold War intrigue, nineteen sixties politics, existential crisis in the 12 00:00:49,800 --> 00:00:55,279 Speaker 2: dollar based monetary system. But this, right here, this is 13 00:00:55,320 --> 00:00:58,640 Speaker 2: the moment when the eurodollar market really takes shape and 14 00:00:58,800 --> 00:01:00,440 Speaker 2: starts to look like it does today. 15 00:01:01,040 --> 00:01:01,200 Speaker 1: Right. 16 00:01:01,240 --> 00:01:03,440 Speaker 3: If you haven't caught the first and second episodes of 17 00:01:03,440 --> 00:01:06,640 Speaker 3: this series, you should first definitely go back and listen 18 00:01:06,680 --> 00:01:08,320 Speaker 3: to them, because if you don't, you're going to miss 19 00:01:08,319 --> 00:01:09,960 Speaker 3: out in a lot of the detail and you're not 20 00:01:10,040 --> 00:01:13,680 Speaker 3: going to really understand what happens next. But this is key, 21 00:01:13,800 --> 00:01:16,720 Speaker 3: because this is when the euro dollar market that we 22 00:01:16,800 --> 00:01:20,400 Speaker 3: talk about all the time and finance, etc. Actually begins 23 00:01:20,440 --> 00:01:23,600 Speaker 3: to assume its modern form and really emerge from the 24 00:01:23,600 --> 00:01:26,280 Speaker 3: inflation and monetary shocks of the nineteen seventies. 25 00:01:26,440 --> 00:01:28,679 Speaker 2: And of course, this story is being told by two 26 00:01:28,760 --> 00:01:31,880 Speaker 2: odd thlots favorites, Levminand and Josh Younger. 27 00:01:32,280 --> 00:01:35,440 Speaker 1: I'm Levminand. I'm a law professor at Columbia Law School, 28 00:01:35,440 --> 00:01:37,880 Speaker 1: where I study money in banking and the history of 29 00:01:37,880 --> 00:01:38,559 Speaker 1: central banking. 30 00:01:39,200 --> 00:01:41,199 Speaker 4: I'm Josh Younger. I'm a policy advisor at the Federal 31 00:01:41,200 --> 00:01:43,920 Speaker 4: Reserve Bank of New York, and the views I am 32 00:01:43,959 --> 00:01:46,280 Speaker 4: going to express are my own and not necessarily those 33 00:01:46,319 --> 00:01:47,800 Speaker 4: of the Federal Reserve Bank of New York or the 34 00:01:47,800 --> 00:01:48,920 Speaker 4: Federal Reserve system. 35 00:01:49,320 --> 00:01:52,040 Speaker 2: Now where we last left off, we closed out the 36 00:01:52,120 --> 00:01:55,640 Speaker 2: nineteen sixties, the euro dollar market has grown to about 37 00:01:55,680 --> 00:01:59,920 Speaker 2: seventy billion dollars, and that growth has bought some time 38 00:02:00,120 --> 00:02:03,240 Speaker 2: for policymakers who are trying to find a solution to 39 00:02:03,320 --> 00:02:07,680 Speaker 2: the problem of funding dollar based activity while maintaining the 40 00:02:07,720 --> 00:02:12,520 Speaker 2: gold peg. Euro dollars have become a pressure valve basically 41 00:02:12,680 --> 00:02:15,600 Speaker 2: to the Bretton Wood system, and they're helping it to 42 00:02:15,720 --> 00:02:16,320 Speaker 2: stay alive. 43 00:02:16,760 --> 00:02:19,600 Speaker 3: But as a consequence of that, eurodellar market is now 44 00:02:19,880 --> 00:02:23,000 Speaker 3: really booming in a wild way, and Nixon is about 45 00:02:23,040 --> 00:02:25,240 Speaker 3: to do something really big in response. He's about to 46 00:02:25,280 --> 00:02:28,600 Speaker 3: abandon Britain Woods all together and do that famous move 47 00:02:28,639 --> 00:03:06,120 Speaker 3: where he went off the gold standard. So take a listen, Okay. 48 00:03:06,160 --> 00:03:09,200 Speaker 4: So now it's nineteen seventy seventy one and things are 49 00:03:09,200 --> 00:03:11,600 Speaker 4: really starting to go off the rails. This system is 50 00:03:11,800 --> 00:03:14,919 Speaker 4: creaking and then swaying, and it really looks like it's 51 00:03:14,919 --> 00:03:17,239 Speaker 4: about to fall down, and your dollars are getting a 52 00:03:17,240 --> 00:03:19,720 Speaker 4: lot of the blame. They're called this hydra headed monster. 53 00:03:20,480 --> 00:03:23,120 Speaker 4: People are really worried that this is the mechanism for 54 00:03:23,200 --> 00:03:26,160 Speaker 4: funding the speculation that is being directed against the dollar 55 00:03:26,200 --> 00:03:28,840 Speaker 4: and really threatening to bring the whole system down. And 56 00:03:28,880 --> 00:03:30,480 Speaker 4: it's nineteen seventy You don't have to be that old. 57 00:03:30,480 --> 00:03:33,520 Speaker 4: In nineteen seventy remember the Great Depression, And one of 58 00:03:33,520 --> 00:03:35,680 Speaker 4: the theories of the Great Depression that's pretty common at 59 00:03:35,720 --> 00:03:38,240 Speaker 4: that point it still is today, is that the depression 60 00:03:38,280 --> 00:03:42,640 Speaker 4: itself was largely a consequence of monetary contraction, global monetary contraction. 61 00:03:42,720 --> 00:03:44,320 Speaker 4: So what does that mean in this context? If the 62 00:03:44,360 --> 00:03:48,080 Speaker 4: dollar system fails, the money goes away in a sense, 63 00:03:48,320 --> 00:03:52,520 Speaker 4: and so that monetary contraction in the early seventies represents 64 00:03:52,560 --> 00:03:55,160 Speaker 4: the same existential threat. This is going to come back again. 65 00:03:55,760 --> 00:03:58,320 Speaker 4: Everyone's really worried about this, this existential threat to the 66 00:03:58,360 --> 00:04:01,440 Speaker 4: global economy, another great depression. No one wants another great depression. 67 00:04:01,960 --> 00:04:04,440 Speaker 4: I think that's generally true, but it's very acutely true 68 00:04:04,480 --> 00:04:07,160 Speaker 4: at this point in time. And so the summer nineteen 69 00:04:07,200 --> 00:04:10,600 Speaker 4: seventy one, things are just completely untenable, and Nixon, after 70 00:04:10,640 --> 00:04:13,320 Speaker 4: a few days huddling with advisors at Camp David, just says, 71 00:04:13,440 --> 00:04:15,480 Speaker 4: enough foot the whole thing right. So it closes the 72 00:04:15,480 --> 00:04:18,719 Speaker 4: gold window. This is the Nixon Shock. On a Sunday evening, 73 00:04:19,200 --> 00:04:21,320 Speaker 4: he addresses the country and he says, among other things, 74 00:04:21,400 --> 00:04:23,080 Speaker 4: We're not going to be giving you gold for your 75 00:04:23,120 --> 00:04:24,000 Speaker 4: dollars anymore. 76 00:04:24,440 --> 00:04:27,279 Speaker 5: In recent weeks, the speculators have been waging an all 77 00:04:27,360 --> 00:04:32,560 Speaker 5: out war on the American dollar. Accordingly, I have directed 78 00:04:32,600 --> 00:04:35,680 Speaker 5: the Secretary of the Treasury to take the action necessary 79 00:04:36,120 --> 00:04:40,480 Speaker 5: to defend the dollar against the speculators. I have directed 80 00:04:40,520 --> 00:04:44,320 Speaker 5: Secretary Conley to suspend temporarily the convertibility of the dollar 81 00:04:44,680 --> 00:04:48,840 Speaker 5: in the gold or other reserve assets accept in amounts 82 00:04:48,880 --> 00:04:52,080 Speaker 5: and conditions determined to be in the interest to monetary stability. 83 00:04:52,520 --> 00:04:55,000 Speaker 5: And in the best interests of the United States. 84 00:04:55,240 --> 00:04:58,120 Speaker 4: This has all kinds of repercussions and it's dealt with 85 00:04:58,160 --> 00:05:00,440 Speaker 4: in various ways and their attempts to mitigate the effective it. 86 00:05:00,640 --> 00:05:02,720 Speaker 4: But like for the year at all market in particular, 87 00:05:03,320 --> 00:05:07,760 Speaker 4: it signals a shift towards a degree of flexibility and 88 00:05:07,800 --> 00:05:10,640 Speaker 4: a lack of a need to have this thing to 89 00:05:11,080 --> 00:05:12,600 Speaker 4: plug the balance of payments gap, because all of a 90 00:05:12,600 --> 00:05:14,840 Speaker 4: sudden we're in a floating exchange rate type of world, 91 00:05:14,920 --> 00:05:17,880 Speaker 4: and the imbalances can be corrected through the foreign exchange market, 92 00:05:18,480 --> 00:05:20,719 Speaker 4: just like people sort of intended for a long time, 93 00:05:20,760 --> 00:05:24,720 Speaker 4: as opposed to through financial engineering in different ways to 94 00:05:24,760 --> 00:05:27,599 Speaker 4: sort of prop up essentially a gold exchange standard. So 95 00:05:27,680 --> 00:05:29,760 Speaker 4: that was a major shift in policy, and it was 96 00:05:29,760 --> 00:05:31,800 Speaker 4: a big signal that the US was willing to rock 97 00:05:31,839 --> 00:05:34,360 Speaker 4: the boat, and that hadn't really been the case previously. 98 00:05:34,400 --> 00:05:36,800 Speaker 4: And you can see that in this clip of John Connolly, 99 00:05:36,800 --> 00:05:39,720 Speaker 4: he was Nixon's Treasury secretary, talking to the British ambassador 100 00:05:39,720 --> 00:05:42,360 Speaker 4: a few months after that, in the winter of nineteen seventy. 101 00:05:42,040 --> 00:05:48,320 Speaker 6: One, gone, how are you it'll be better? 102 00:05:48,520 --> 00:05:51,320 Speaker 7: That's great. Well, I'm delighted to hit you and I'm 103 00:05:51,320 --> 00:05:53,680 Speaker 7: looking forward to seeing you, Gon May. 104 00:05:53,760 --> 00:05:57,360 Speaker 6: I've got you how very much. I admire your drive. 105 00:05:57,560 --> 00:06:02,960 Speaker 6: You're here to do and and the change of pace 106 00:06:03,400 --> 00:06:07,760 Speaker 6: you you're well keep everybody caresing that's right. 107 00:06:08,640 --> 00:06:11,279 Speaker 7: Well, we've got some tough problems water, as you well know, 108 00:06:11,440 --> 00:06:14,839 Speaker 7: and it's hard to deal with ten nations at the 109 00:06:14,880 --> 00:06:17,800 Speaker 7: same time, and and it just takes a lot of 110 00:06:17,839 --> 00:06:21,560 Speaker 7: everything out of us. And the President has just been 111 00:06:21,880 --> 00:06:25,440 Speaker 7: magnificent in his approach and his support. So I'm trying 112 00:06:25,440 --> 00:06:27,960 Speaker 7: to carry out his wishes as best I know him, 113 00:06:28,000 --> 00:06:30,640 Speaker 7: and I think we're going to make some headway. And 114 00:06:30,680 --> 00:06:33,240 Speaker 7: don't you let anybody kid you that we're trying to 115 00:06:33,279 --> 00:06:36,559 Speaker 7: tear things up. We've been the most forthcoming, the most 116 00:06:36,600 --> 00:06:39,960 Speaker 7: expansionist nation in this world. You just take it from me. 117 00:06:40,200 --> 00:06:42,640 Speaker 7: We want to settle this thing, and we've offered more 118 00:06:42,680 --> 00:06:44,440 Speaker 7: to settle it than any other nation in the world 119 00:06:44,560 --> 00:06:45,160 Speaker 7: offered water. 120 00:06:45,640 --> 00:06:51,280 Speaker 6: The reaction around Europe is that you're pretty card to 121 00:06:51,440 --> 00:06:56,599 Speaker 6: a deal and the deal has been roughed out, is 122 00:06:56,640 --> 00:07:02,000 Speaker 6: that the question of that and some of the leaders 123 00:07:02,240 --> 00:07:05,320 Speaker 6: putting the finishing tructures on it. At least the reaction 124 00:07:06,080 --> 00:07:08,600 Speaker 6: I get out of all recuntries over here. 125 00:07:08,680 --> 00:07:12,960 Speaker 7: Well water, that's right. The present's options are entirely open 126 00:07:12,960 --> 00:07:14,880 Speaker 7: to it. We've tried to structure it in such a 127 00:07:14,880 --> 00:07:17,960 Speaker 7: way that we're fairly close, but those countries over there 128 00:07:18,000 --> 00:07:21,360 Speaker 7: have to be forthcoming a bit. Now we've we've already 129 00:07:21,360 --> 00:07:25,080 Speaker 7: gone further than we should. But the present has the 130 00:07:25,120 --> 00:07:27,600 Speaker 7: options that if they're if the Pompy, doot Heath and 131 00:07:27,640 --> 00:07:30,800 Speaker 7: the rest of them are are halfway reasonable, I think 132 00:07:30,840 --> 00:07:32,200 Speaker 7: it can be settled in the next month. 133 00:07:34,800 --> 00:07:39,679 Speaker 6: Very important because if we let it drag on after January, 134 00:07:39,880 --> 00:07:42,040 Speaker 6: you could get into a sticky situation. 135 00:07:42,400 --> 00:07:43,600 Speaker 7: I'm stamp and. 136 00:07:44,440 --> 00:07:48,320 Speaker 6: Proycologtically that could be under correct given that's right, That's 137 00:07:48,320 --> 00:07:49,040 Speaker 6: what I tell them. 138 00:07:49,040 --> 00:07:50,720 Speaker 7: They all preach it, we're having going to have a 139 00:07:50,760 --> 00:07:53,040 Speaker 7: recession of worldwide depression. And I said, well, if you 140 00:07:53,080 --> 00:07:56,400 Speaker 7: already believe that, you'll come up with something, we've made 141 00:07:56,440 --> 00:07:59,680 Speaker 7: you an offer. We're we're willing to take lesson. We 142 00:07:59,720 --> 00:08:02,239 Speaker 7: deserve to keep that from happening. Now, you all come forward, 143 00:08:02,320 --> 00:08:06,640 Speaker 7: But they talk one way, act another. That's the problem. 144 00:08:07,000 --> 00:08:11,120 Speaker 1: Remember in the nineteen sixties we have US policymakers embracing 145 00:08:11,160 --> 00:08:14,800 Speaker 1: the euro dollar market to save Breton Woods, not for 146 00:08:14,840 --> 00:08:17,960 Speaker 1: its own sake, not to help the London financial institutions 147 00:08:18,000 --> 00:08:21,120 Speaker 1: compete in a dollar world, but to save Breton Woods, 148 00:08:21,160 --> 00:08:23,800 Speaker 1: to win the Cold War, to not embarrass ourselves in 149 00:08:23,800 --> 00:08:26,880 Speaker 1: front of the Soviet Union. And now we have Nixon saying, 150 00:08:26,920 --> 00:08:30,960 Speaker 1: you know, what the hell with it? Actually this gold drain, 151 00:08:31,400 --> 00:08:34,080 Speaker 1: we need to get ourselves out of this. That approach 152 00:08:34,120 --> 00:08:38,480 Speaker 1: that Kennedy rejected almost a decade earlier, Nixon embraces. And 153 00:08:38,559 --> 00:08:42,200 Speaker 1: suddenly the question is, well, why are we tolerating this 154 00:08:42,360 --> 00:08:46,200 Speaker 1: destabilizing euro dollar market. We've decided to just rip the 155 00:08:46,240 --> 00:08:47,679 Speaker 1: band aid off so. 156 00:08:47,640 --> 00:08:49,840 Speaker 4: Now people can think about regulating it because it's not 157 00:08:49,920 --> 00:08:53,440 Speaker 4: as essential anymore. And so the BIS Bank for Initial 158 00:08:53,440 --> 00:08:56,040 Speaker 4: Settlements in Basil, recipient of the swap line to support 159 00:08:56,040 --> 00:08:59,800 Speaker 4: the ear dollar market, also starts convening central bankers and 160 00:09:00,040 --> 00:09:01,680 Speaker 4: experts and so forth to try to figure out a 161 00:09:01,679 --> 00:09:04,560 Speaker 4: way to regulate the market. And what they discover quickly 162 00:09:04,600 --> 00:09:06,240 Speaker 4: they come up with this Standing Committee on the ear 163 00:09:06,280 --> 00:09:08,839 Speaker 4: dollar system. It's convened in the early seventies after the 164 00:09:08,920 --> 00:09:12,240 Speaker 4: Niiction shock, and it basically doesn't come to any firm conclusions. 165 00:09:12,240 --> 00:09:14,600 Speaker 4: They agree to have a standstill, which means no new 166 00:09:14,679 --> 00:09:17,480 Speaker 4: central bank deposits. Remember, central banks are the largest or 167 00:09:17,480 --> 00:09:20,200 Speaker 4: among the largest depositors supporters of the EU dollar market. 168 00:09:20,200 --> 00:09:23,440 Speaker 4: They're putting their own money there. So they agree basically 169 00:09:23,440 --> 00:09:27,920 Speaker 4: to stop doing more of that, with a maybe we're 170 00:09:27,960 --> 00:09:29,880 Speaker 4: going to think about reducing our holdings in the future, 171 00:09:29,880 --> 00:09:34,040 Speaker 4: which is like, not exactly the most aggressive regulatory response, 172 00:09:34,080 --> 00:09:35,960 Speaker 4: but it's something, and it's basically the only thing they 173 00:09:36,000 --> 00:09:36,600 Speaker 4: can agree on. 174 00:09:36,720 --> 00:09:36,880 Speaker 6: Right. 175 00:09:36,960 --> 00:09:41,080 Speaker 1: Remember, multilateralism is hard. We spent the last ten years 176 00:09:41,480 --> 00:09:45,080 Speaker 1: basically a group of central banks building up this market 177 00:09:45,160 --> 00:09:47,680 Speaker 1: to try to save this breton Wood system. You have 178 00:09:47,760 --> 00:09:51,560 Speaker 1: all these foreign central banks investing their own reserves into 179 00:09:51,640 --> 00:09:55,120 Speaker 1: these Euro dollar deposits of their domestic banks to try 180 00:09:55,160 --> 00:09:57,840 Speaker 1: to nurture it. You have the US with its swap 181 00:09:57,920 --> 00:10:01,600 Speaker 1: lines trying to suggest there's a lender of last resort 182 00:10:01,640 --> 00:10:04,960 Speaker 1: backing to try to nurture this market. It's this major 183 00:10:05,040 --> 00:10:08,000 Speaker 1: project that everybody is engaged in, and all of a 184 00:10:08,080 --> 00:10:11,480 Speaker 1: sudden you have Nixon walking away from the whole system, 185 00:10:11,720 --> 00:10:13,840 Speaker 1: and now can we agree on what to do with 186 00:10:13,880 --> 00:10:18,120 Speaker 1: the year dollar market. Unsurprisingly, know, everybody's like, oh, whoa, 187 00:10:18,120 --> 00:10:19,840 Speaker 1: we have this whole thing that we built up. What 188 00:10:19,880 --> 00:10:21,280 Speaker 1: are we going to do with that, and the best 189 00:10:21,320 --> 00:10:23,120 Speaker 1: they can sort of do is say, well, we're gonna 190 00:10:23,120 --> 00:10:25,880 Speaker 1: stop making it bigger. It went from half a tether 191 00:10:26,440 --> 00:10:30,160 Speaker 1: to as large as one of our major banks today, 192 00:10:30,520 --> 00:10:33,920 Speaker 1: and larger really by the early seventies. It's like we 193 00:10:34,080 --> 00:10:36,560 Speaker 1: had a Bank of America and a City Group just 194 00:10:36,640 --> 00:10:42,080 Speaker 1: totally operating offshore in Europe. But the tides turned at 195 00:10:42,120 --> 00:10:43,880 Speaker 1: this point and you might think that there's going to 196 00:10:43,880 --> 00:10:46,240 Speaker 1: be a crackdown, But then the year dollar market gets 197 00:10:46,280 --> 00:10:49,400 Speaker 1: another dis x machina in the form of a massive 198 00:10:49,440 --> 00:10:53,000 Speaker 1: dislocation in energy markets. Here's a clip from Nightly News 199 00:10:53,000 --> 00:10:55,760 Speaker 1: with John Chancellor which is indicative of what you would 200 00:10:55,760 --> 00:10:57,240 Speaker 1: have heard during this period. 201 00:10:57,920 --> 00:11:01,480 Speaker 8: Good evening the Middle East war developments all over the 202 00:11:01,520 --> 00:11:05,320 Speaker 8: world today, the oil producing countries of the Arab world 203 00:11:05,360 --> 00:11:08,559 Speaker 8: decided to use their oil as a political weapon. They 204 00:11:08,600 --> 00:11:12,080 Speaker 8: will reduce oil production by five percent a month until 205 00:11:12,120 --> 00:11:14,960 Speaker 8: the Israelis withdrawal from occupied territories. 206 00:11:15,360 --> 00:11:16,160 Speaker 6: If the Arab. 207 00:11:15,920 --> 00:11:18,920 Speaker 8: Countries keep that pledge, it would reduce their production by 208 00:11:19,240 --> 00:11:21,240 Speaker 8: almost fifty percent in one year. 209 00:11:21,880 --> 00:11:24,840 Speaker 4: So it's the fall of nineteen seventy three and conflict 210 00:11:24,840 --> 00:11:28,800 Speaker 4: in the Middle East leads to an embargo buys the 211 00:11:28,800 --> 00:11:31,080 Speaker 4: Saudis against the United States. They will not ship oil 212 00:11:31,080 --> 00:11:33,080 Speaker 4: to the United States, and that causes the price of 213 00:11:33,120 --> 00:11:36,480 Speaker 4: oil to skyrocket. What does oil have to do with 214 00:11:36,559 --> 00:11:37,480 Speaker 4: the Eurdlin market? 215 00:11:37,760 --> 00:11:40,640 Speaker 1: Oil has something to do with everything, right, Think about 216 00:11:40,679 --> 00:11:44,520 Speaker 1: everything that we use. Oil is an input into the 217 00:11:44,559 --> 00:11:47,360 Speaker 1: cost of everything that we use because we have to 218 00:11:47,360 --> 00:11:50,160 Speaker 1: pay to get that to you. And oil is what 219 00:11:50,400 --> 00:11:54,920 Speaker 1: is fueling global trade quite literally. So if oil price 220 00:11:54,960 --> 00:11:59,080 Speaker 1: is double or quadruple, that's going to be felt across 221 00:11:59,120 --> 00:12:02,080 Speaker 1: everything that you buy in consumer goods markets. 222 00:12:02,360 --> 00:12:05,560 Speaker 4: Not good for inflation and also not good for the 223 00:12:05,559 --> 00:12:08,280 Speaker 4: global financial system because now like when oil goes up 224 00:12:08,320 --> 00:12:10,840 Speaker 4: in price, it sort of creates a lot more money 225 00:12:10,840 --> 00:12:12,920 Speaker 4: in a sense, because the value of this thing that's 226 00:12:12,920 --> 00:12:15,920 Speaker 4: flowing around the world has gone up in value a lot, 227 00:12:16,040 --> 00:12:18,400 Speaker 4: somewhat you know, exogenously, and so the world has to 228 00:12:18,440 --> 00:12:21,960 Speaker 4: find a way to deal with the money associated with 229 00:12:22,040 --> 00:12:24,959 Speaker 4: the flow of more expensive oil. And so oil is 230 00:12:24,960 --> 00:12:26,680 Speaker 4: not unique, but it is special in the sense that 231 00:12:26,679 --> 00:12:29,960 Speaker 4: there are producers and consumers. So the producers of oil 232 00:12:30,240 --> 00:12:32,920 Speaker 4: are taking in money and providing oil. The consumers of 233 00:12:32,920 --> 00:12:35,360 Speaker 4: oil are spending money and taking an oil, and so 234 00:12:35,440 --> 00:12:38,000 Speaker 4: the difference between those two is that the producers of 235 00:12:38,000 --> 00:12:41,720 Speaker 4: oil wants short term liquid investments to hold the proceeds 236 00:12:41,720 --> 00:12:45,160 Speaker 4: of the oil sales in safe, short term, easily accessible. 237 00:12:45,679 --> 00:12:47,559 Speaker 4: They could put some of that into their domestic economy, 238 00:12:47,559 --> 00:12:49,640 Speaker 4: but not all of it, especially when the price quadruples. 239 00:12:50,120 --> 00:12:52,080 Speaker 4: The consumers of oil don't want to pay that back 240 00:12:52,120 --> 00:12:55,440 Speaker 4: every day. They want long term, ideally fixed rate loans 241 00:12:55,440 --> 00:12:59,880 Speaker 4: in many cases, so there's a maturity mismatch. They're borrowers 242 00:12:59,880 --> 00:13:02,960 Speaker 4: of money to buy oil want long term loans. The 243 00:13:03,400 --> 00:13:06,800 Speaker 4: investors or sellers of oil want short term investments. And 244 00:13:06,840 --> 00:13:10,880 Speaker 4: so who provides intermediation when you have a maturity mismatch? 245 00:13:11,640 --> 00:13:15,280 Speaker 4: Banks and so you need some way to allow for 246 00:13:15,400 --> 00:13:18,880 Speaker 4: long term lending and short term borrowing. Eurobanks are very 247 00:13:18,920 --> 00:13:20,480 Speaker 4: well set up to do this because it's basically what 248 00:13:20,520 --> 00:13:23,400 Speaker 4: they do already. The actually live ar was invented for 249 00:13:23,559 --> 00:13:25,959 Speaker 4: euro dollar borrowings to allow them to do long term 250 00:13:26,000 --> 00:13:28,760 Speaker 4: maturity loans without taking the interest rate risk. Right, This 251 00:13:28,760 --> 00:13:31,360 Speaker 4: whole mechanism for making loans that are not going to 252 00:13:31,360 --> 00:13:33,200 Speaker 4: blow them up on an interest rate risk basis, but 253 00:13:33,280 --> 00:13:36,560 Speaker 4: have a longer maturity. Eur dollar deposits are considered safe 254 00:13:36,600 --> 00:13:39,319 Speaker 4: in part because of the SWAT network and its perceived backstop, 255 00:13:39,880 --> 00:13:42,360 Speaker 4: the availability of some form of lender of last resort, 256 00:13:42,360 --> 00:13:45,320 Speaker 4: although it's somewhat murkey and complicated, and so the euro 257 00:13:45,400 --> 00:13:48,200 Speaker 4: dollar system is one means by which to accomplish what 258 00:13:48,240 --> 00:13:51,800 Speaker 4: becomes known as petro dollar recycling. So the proceeds of 259 00:13:51,800 --> 00:13:55,280 Speaker 4: oil sales getting recycled back to the consumer of oil 260 00:13:55,320 --> 00:13:57,840 Speaker 4: and on and on again in a circle. And that's 261 00:13:57,880 --> 00:14:00,640 Speaker 4: the thing that keeps the world going because in a 262 00:14:00,679 --> 00:14:03,679 Speaker 4: world where oil supplies are suddenly interrupted, just like let's said, 263 00:14:03,720 --> 00:14:05,319 Speaker 4: I mean it's in everything, right, So if you suddenly 264 00:14:05,400 --> 00:14:08,240 Speaker 4: cut off the supply of oil, either through embargo, but 265 00:14:08,280 --> 00:14:11,080 Speaker 4: more importantly through financial collapse, well you can't actually find 266 00:14:11,080 --> 00:14:12,760 Speaker 4: a way to move the oil because the money isn't 267 00:14:12,760 --> 00:14:16,000 Speaker 4: there when it needs to be there. That's another recipe, 268 00:14:16,240 --> 00:14:17,760 Speaker 4: yet another Great depression risk. 269 00:14:17,840 --> 00:14:17,920 Speaker 6: Right. 270 00:14:17,920 --> 00:14:20,360 Speaker 4: People are very worried that the collapse of the financial 271 00:14:20,360 --> 00:14:24,840 Speaker 4: system that provides for oil to make it where it 272 00:14:24,880 --> 00:14:27,680 Speaker 4: needs to go, well simultaneous collapse world trade. And that's 273 00:14:27,760 --> 00:14:30,880 Speaker 4: yet another theory of the Great Depression, the collapse of 274 00:14:30,920 --> 00:14:32,840 Speaker 4: monetary system, the collapse of world trades. So they're looking 275 00:14:32,840 --> 00:14:33,880 Speaker 4: at a very similar set of. 276 00:14:33,920 --> 00:14:36,600 Speaker 1: Risks, and it's hard to overstate how scary this is 277 00:14:36,640 --> 00:14:41,440 Speaker 1: to policy makers at the time, because we're engaged in 278 00:14:41,480 --> 00:14:45,040 Speaker 1: this Cold War with the Soviets, and there's a massive 279 00:14:45,080 --> 00:14:48,680 Speaker 1: shock to our whole economic system that is threatening to 280 00:14:48,800 --> 00:14:52,920 Speaker 1: disrupt our whole monetary system, which policymakers have spent the 281 00:14:53,040 --> 00:14:57,840 Speaker 1: last decade plus agonizing about and concerned that it might 282 00:14:58,240 --> 00:15:00,200 Speaker 1: go the way of the system in the ninety teen 283 00:15:00,280 --> 00:15:05,800 Speaker 1: thirties and jeopardize this whole almost civilizational conflict that the 284 00:15:05,880 --> 00:15:08,840 Speaker 1: United States is engaged in at the time. And so 285 00:15:09,160 --> 00:15:13,000 Speaker 1: once again, the euro dollars are there to sort of 286 00:15:13,600 --> 00:15:17,720 Speaker 1: save the day in the sense that policymakers they know 287 00:15:17,800 --> 00:15:21,080 Speaker 1: they're euro dollars are a problem now, but they need 288 00:15:21,120 --> 00:15:24,200 Speaker 1: a solution to this oil price shock. They need to 289 00:15:24,240 --> 00:15:28,640 Speaker 1: figure out a way to facilitate the recycling, and the 290 00:15:28,720 --> 00:15:31,840 Speaker 1: euro dollars are in some sense the easy way out. 291 00:15:46,920 --> 00:15:49,000 Speaker 1: By the mid nineteen seventies, there was a sense that 292 00:15:49,040 --> 00:15:51,760 Speaker 1: the whole system was in crisis. Here's a clip of 293 00:15:51,800 --> 00:15:55,320 Speaker 1: the Treasury Secretary Bill Simon in March nineteen seventy five 294 00:15:55,440 --> 00:15:56,400 Speaker 1: laying out the stakes. 295 00:15:56,880 --> 00:16:00,680 Speaker 9: The basic underlying cause of our inflation has in the 296 00:16:00,680 --> 00:16:05,320 Speaker 9: mismanagement of the government spending and monetary policies. And unless 297 00:16:05,320 --> 00:16:09,440 Speaker 9: we change this basic direction, inflation is going to continue 298 00:16:09,440 --> 00:16:11,920 Speaker 9: to plague us for a long time to come. 299 00:16:12,360 --> 00:16:14,120 Speaker 4: Kissinger thinks this is the biggest threat to the world 300 00:16:14,120 --> 00:16:15,960 Speaker 4: since the Second World War, so he thinks this is 301 00:16:16,000 --> 00:16:19,160 Speaker 4: like existential risk. And so to some extent, I think 302 00:16:19,160 --> 00:16:21,720 Speaker 4: they breathe a sigh of relief because of the earninar market. 303 00:16:21,760 --> 00:16:23,560 Speaker 4: I mean, a lot of the pieces are in place. 304 00:16:23,600 --> 00:16:27,840 Speaker 4: They have a pretty deep and broad network of banks 305 00:16:27,840 --> 00:16:30,840 Speaker 4: across multiple countries. The swap lines provide some degree of 306 00:16:30,840 --> 00:16:33,880 Speaker 4: liquidity support in the event of isolated instances of problems. 307 00:16:33,920 --> 00:16:34,040 Speaker 7: Right. 308 00:16:34,080 --> 00:16:37,480 Speaker 4: The key is you don't want amplification spillover contagion. You 309 00:16:37,520 --> 00:16:39,640 Speaker 4: want to be able to solve problems locally, and that's 310 00:16:39,680 --> 00:16:42,400 Speaker 4: what you know liquidity provision is designed to do. And 311 00:16:42,440 --> 00:16:44,360 Speaker 4: so you could imagine a world in which they go, well, 312 00:16:44,400 --> 00:16:46,320 Speaker 4: this is a disaster, But I think how we have 313 00:16:46,360 --> 00:16:49,000 Speaker 4: euro dollars because otherwise what we're going to do, Because 314 00:16:49,160 --> 00:16:51,320 Speaker 4: you could do multilateralism and try to find a way 315 00:16:51,320 --> 00:16:53,040 Speaker 4: to pipe it through the World Bank or the IMF 316 00:16:53,160 --> 00:16:56,480 Speaker 4: or something like that, but like that's again hard and. 317 00:16:56,400 --> 00:17:00,840 Speaker 1: The Europeans do want to do multilateralism, a public sector 318 00:17:00,840 --> 00:17:05,840 Speaker 1: solution to this problem, but US policymakers are very wary 319 00:17:05,880 --> 00:17:10,240 Speaker 1: of that, in part because it's just like Bretton Woods 320 00:17:10,280 --> 00:17:13,919 Speaker 1: all over again. The US doesn't want to share, and 321 00:17:14,000 --> 00:17:18,080 Speaker 1: they're experiencing this incredible shock to their economy. We're entering 322 00:17:18,119 --> 00:17:23,000 Speaker 1: a period of stagflation. And if we can manage the 323 00:17:23,040 --> 00:17:26,639 Speaker 1: petro dollar recycling in such a way that the oil 324 00:17:26,720 --> 00:17:30,880 Speaker 1: producers are reinvesting disproportionally in the US, that will help 325 00:17:30,960 --> 00:17:34,960 Speaker 1: US recover. If we have to spread out that reinvestment 326 00:17:35,080 --> 00:17:38,639 Speaker 1: across Europe as well, then it's going to mean a 327 00:17:38,680 --> 00:17:42,159 Speaker 1: weaker outlook on the US economy. And so the US 328 00:17:42,200 --> 00:17:46,239 Speaker 1: rejects this public sector solution in the hopes that the 329 00:17:46,280 --> 00:17:51,640 Speaker 1: private sector solution euro dollar recycling of petro dollars will 330 00:17:51,640 --> 00:17:54,479 Speaker 1: actually help the US recover relative to everybody else from 331 00:17:54,520 --> 00:17:55,359 Speaker 1: the economic shock. 332 00:17:55,640 --> 00:17:58,240 Speaker 4: Never let a crisis go waste, right, So the USC's 333 00:17:58,280 --> 00:18:02,520 Speaker 4: crisis an opportunity. The opportunity is twofold. One is the 334 00:18:02,520 --> 00:18:06,560 Speaker 4: federal government's running deficits. Somebody's got upon those deficits. These 335 00:18:06,600 --> 00:18:09,000 Speaker 4: oil producing countries have all this cash. You would be 336 00:18:09,080 --> 00:18:10,919 Speaker 4: a shame if he didn't buy some treasury bonds with 337 00:18:10,960 --> 00:18:14,119 Speaker 4: that cash, getting the statues to buy more treasuries. That 338 00:18:14,160 --> 00:18:17,359 Speaker 4: felled that Bill Simon Simon had just been appointed Treasury Secretary. 339 00:18:17,440 --> 00:18:20,800 Speaker 4: He succeeded George Schultz, who was a PhD economist from MIT. 340 00:18:21,320 --> 00:18:23,800 Speaker 4: Schultz had already served in two cabinet level roles before 341 00:18:23,840 --> 00:18:26,520 Speaker 4: he joined the Treasury, so he's very experienced, very expert 342 00:18:26,560 --> 00:18:29,320 Speaker 4: in economic affairs. Bill Simon grew up in New Jersey. 343 00:18:29,359 --> 00:18:31,880 Speaker 4: He went to Lafayette and one of his early profiles 344 00:18:31,880 --> 00:18:34,760 Speaker 4: said he quote unquote liked partying in sports a bit 345 00:18:34,800 --> 00:18:37,880 Speaker 4: more than studying. So he wasn't quite the same personality 346 00:18:37,920 --> 00:18:41,560 Speaker 4: type as an MIT PhD economist. He was actually bond 347 00:18:41,600 --> 00:18:45,000 Speaker 4: trader at Zalen Brothers, but he knew Schultz, and Schultz 348 00:18:45,000 --> 00:18:48,000 Speaker 4: brought him in as Deputy secretary, basically to be the 349 00:18:48,040 --> 00:18:51,640 Speaker 4: chief operating officer of the Treasury Department. But when there's 350 00:18:51,680 --> 00:18:55,800 Speaker 4: a need for expertise on the energy side, Nixon taps 351 00:18:55,880 --> 00:18:58,879 Speaker 4: him as the energies are to respond to the oil shock, 352 00:18:58,960 --> 00:19:02,520 Speaker 4: and he's immediately not very popular with the Nixon team. 353 00:19:02,560 --> 00:19:05,600 Speaker 4: They think he doesn't have enough experience with international economics 354 00:19:05,600 --> 00:19:09,000 Speaker 4: in the international monetary system to really perform that function. 355 00:19:09,560 --> 00:19:12,359 Speaker 4: But he quickly becomes the mouthpiece for Nixon policy on 356 00:19:13,000 --> 00:19:16,040 Speaker 4: petro dollar recycling, and he's firmly of the belief that 357 00:19:16,119 --> 00:19:19,040 Speaker 4: private markets, and by private markets he means commercial banks, 358 00:19:19,040 --> 00:19:22,120 Speaker 4: and by commercial banks he means Euro dollar banks are 359 00:19:22,200 --> 00:19:25,240 Speaker 4: the best way to keep the money and oil flowing, 360 00:19:25,560 --> 00:19:27,800 Speaker 4: the thing that was the most critical aspect of this period, 361 00:19:27,920 --> 00:19:32,399 Speaker 4: keeping that market together without monetary collapse. He thinks private 362 00:19:32,400 --> 00:19:35,960 Speaker 4: markets do that better than public alternatives. But he also 363 00:19:36,119 --> 00:19:38,400 Speaker 4: knows the banking system can only handle so much. There's 364 00:19:38,440 --> 00:19:41,840 Speaker 4: only so much of this maturity transformation that private institutions 365 00:19:41,840 --> 00:19:45,000 Speaker 4: can really perform. The eurobanks have been pretty vocal about 366 00:19:45,000 --> 00:19:46,800 Speaker 4: that from the beginning, so they've been warning since the 367 00:19:46,840 --> 00:19:49,520 Speaker 4: fall of seventy three that they can only get so 368 00:19:49,680 --> 00:19:53,200 Speaker 4: big and provide only so much intermediation before just prudent 369 00:19:53,280 --> 00:19:56,080 Speaker 4: risk management would dictate that they start turning deposits away, 370 00:19:57,040 --> 00:19:58,959 Speaker 4: and the Saudis are going to need an alternative, They 371 00:19:58,960 --> 00:20:02,639 Speaker 4: need a safe investment. It's an alternative to eur dollars eventually, 372 00:20:03,359 --> 00:20:05,800 Speaker 4: so treasury bonds are arguably the best substitute. Simon just 373 00:20:05,840 --> 00:20:07,959 Speaker 4: needs to make sure that they can buy those bonds 374 00:20:07,960 --> 00:20:10,600 Speaker 4: on terms that leave them in position they feel okay with. 375 00:20:11,000 --> 00:20:13,639 Speaker 4: They want them confidential, they want a look at the 376 00:20:13,680 --> 00:20:16,600 Speaker 4: auction pricing, they want certain kinds of special treatment to 377 00:20:16,600 --> 00:20:19,080 Speaker 4: make them comfortable with this kind of investment. And so 378 00:20:19,640 --> 00:20:22,240 Speaker 4: there's a secret mission. Bill Simon flies over to Riodd 379 00:20:22,680 --> 00:20:25,000 Speaker 4: to try to pitch the Saudi's on kind of a 380 00:20:25,040 --> 00:20:27,520 Speaker 4: sweetheart deal. Right, they get to bid on US Treasury 381 00:20:27,560 --> 00:20:30,879 Speaker 4: bonds at auction, but anonymously, and they don't actually have 382 00:20:30,920 --> 00:20:32,159 Speaker 4: to be part of the auction. They get what's called 383 00:20:32,160 --> 00:20:34,840 Speaker 4: an add on, So after the auction happens, if they 384 00:20:34,880 --> 00:20:36,639 Speaker 4: like the price, they can have a little more at 385 00:20:36,680 --> 00:20:38,080 Speaker 4: the price at which the auction cleared is. They're not 386 00:20:38,119 --> 00:20:40,679 Speaker 4: competitive bidders, they have an option to participate or not. 387 00:20:40,800 --> 00:20:43,439 Speaker 4: And so it's pretty attractive, right, you need something you 388 00:20:43,480 --> 00:20:45,080 Speaker 4: want to diversify, you don't want to take a lot 389 00:20:45,080 --> 00:20:47,959 Speaker 4: of risk, Like US treasuries seem pretty good under those contexts, 390 00:20:47,960 --> 00:20:50,520 Speaker 4: and the federal government like would love to sell you 391 00:20:50,840 --> 00:20:54,000 Speaker 4: US treasuries, and so you know that's the opportunity in 392 00:20:54,040 --> 00:20:56,840 Speaker 4: part is another buyer and a large buyer, so that 393 00:20:56,880 --> 00:20:59,600 Speaker 4: the recycling gets piped through the federal government as opposed 394 00:20:59,640 --> 00:21:03,560 Speaker 4: to the private sector. And the second is in exchange, 395 00:21:04,520 --> 00:21:07,840 Speaker 4: or at least implicitly in exchange. Maybe oil is only 396 00:21:07,880 --> 00:21:10,880 Speaker 4: sold in dollars, because in the fall of seventy three, 397 00:21:11,680 --> 00:21:14,080 Speaker 4: I think quarter of oil was in sterling, so the 398 00:21:14,119 --> 00:21:17,120 Speaker 4: sterling system still existed to some extent. There was still 399 00:21:17,160 --> 00:21:18,840 Speaker 4: something of a sterling block, and it was still an 400 00:21:18,880 --> 00:21:21,280 Speaker 4: international currency in some context, and one of them was 401 00:21:21,320 --> 00:21:25,040 Speaker 4: global commodities. And so you know, on the one hand, 402 00:21:25,080 --> 00:21:27,679 Speaker 4: you offer this sweetheart deal with treasury bonds, which is 403 00:21:27,880 --> 00:21:29,240 Speaker 4: sort of beneficial to both sides. 404 00:21:29,280 --> 00:21:30,360 Speaker 1: I think that's fair to. 405 00:21:30,320 --> 00:21:32,840 Speaker 4: Say, and on the other you kind of negotiate for 406 00:21:33,000 --> 00:21:36,640 Speaker 4: a switch in Saudi oil sale policy. And the day 407 00:21:36,720 --> 00:21:39,720 Speaker 4: after the Saudis agreed to this secret arrangement, they also 408 00:21:39,760 --> 00:21:43,640 Speaker 4: announce that Saudi oil will only be available for dollars, 409 00:21:43,920 --> 00:21:45,840 Speaker 4: no more sterling. They actually do this while the chance 410 00:21:45,880 --> 00:21:47,639 Speaker 4: with the h checkers in country, and he doesn't get 411 00:21:47,640 --> 00:21:49,920 Speaker 4: a heads up, so it's a little awkward. He sort 412 00:21:49,920 --> 00:21:51,800 Speaker 4: of telegrams back and it is like, I have no 413 00:21:51,920 --> 00:21:55,159 Speaker 4: idea about this, So maybe the communication could have been 414 00:21:55,160 --> 00:21:58,359 Speaker 4: handled more effectively or less effectively. I'm not sure, but 415 00:21:58,560 --> 00:21:59,840 Speaker 4: at the end of the day, the US gets their 416 00:21:59,840 --> 00:22:02,160 Speaker 4: den is it funding, they get a dollar system in oil, 417 00:22:02,680 --> 00:22:05,399 Speaker 4: and you know, it's still on a nice edge. People 418 00:22:05,400 --> 00:22:07,320 Speaker 4: are still very worried about the ability of the ear 419 00:22:07,440 --> 00:22:11,120 Speaker 4: dollar system to accommodate the continued growth. Is the price 420 00:22:11,200 --> 00:22:14,560 Speaker 4: keeps going up, right, So the price goes up, the 421 00:22:14,600 --> 00:22:17,320 Speaker 4: flows get bigger, the banks get more levered, and all 422 00:22:17,320 --> 00:22:19,160 Speaker 4: of a sudden there was kind of worried that there 423 00:22:19,280 --> 00:22:22,119 Speaker 4: is a point at which this is not going to 424 00:22:22,160 --> 00:22:24,800 Speaker 4: work anymore. And it turns out that point comes a 425 00:22:24,840 --> 00:22:27,840 Speaker 4: little earlier than most people expected. So that's really in 426 00:22:27,960 --> 00:22:31,280 Speaker 4: June of nineteen seventy four, which is only less than 427 00:22:31,320 --> 00:22:34,520 Speaker 4: a year after the oil shock. Initially that you get 428 00:22:34,720 --> 00:22:38,320 Speaker 4: really the critical event in the history of the year 429 00:22:38,400 --> 00:22:40,640 Speaker 4: dollar market, the history of the global dollar system, which 430 00:22:40,680 --> 00:22:42,320 Speaker 4: is the collapse of a bank I'm sure very few 431 00:22:42,320 --> 00:22:45,240 Speaker 4: people have heard of, which is Banko's Hirschtot in Germany. 432 00:22:45,920 --> 00:22:48,679 Speaker 4: So Bankov's Hirschtat is a private bank. It's run by 433 00:22:48,680 --> 00:22:51,840 Speaker 4: a guy named Ivan Hirschtatt, So it's an eponymous banks. 434 00:22:52,000 --> 00:22:55,720 Speaker 4: It's run by its owner and he loves speculating in 435 00:22:55,760 --> 00:22:58,600 Speaker 4: foreign exchange. And one of the you could call it 436 00:22:58,640 --> 00:23:00,840 Speaker 4: benefits of the niiction shock. In a world of floating 437 00:23:00,880 --> 00:23:03,760 Speaker 4: exchange rates, you can start to make money trading exchange rates. 438 00:23:03,760 --> 00:23:06,680 Speaker 4: And so for a while it's not a huge business 439 00:23:06,680 --> 00:23:09,879 Speaker 4: for them, but pretty soon most of their revenue I believe, 440 00:23:10,000 --> 00:23:13,160 Speaker 4: was generated by foreign exchange trading. And he sees this 441 00:23:13,160 --> 00:23:15,720 Speaker 4: as his big moment or something, as he writes an autobiography, 442 00:23:16,200 --> 00:23:19,040 Speaker 4: and he's very excited about the opportunity presented by these 443 00:23:19,119 --> 00:23:23,399 Speaker 4: trading dynamics. And problem trading is sometimes you make money 444 00:23:23,400 --> 00:23:25,840 Speaker 4: and sometimes you don't. And they put a big bet 445 00:23:25,880 --> 00:23:29,280 Speaker 4: on the dollar that goes sour in June and they're 446 00:23:29,320 --> 00:23:32,280 Speaker 4: closed by the German regulators. Now Hirstatt has no regrets, 447 00:23:32,320 --> 00:23:34,840 Speaker 4: he writes an autobiography later called How My Life's Work 448 00:23:34,880 --> 00:23:38,360 Speaker 4: Was Stolen from Me. So he's perfectly fine with this outcome. 449 00:23:38,359 --> 00:23:41,399 Speaker 4: But the global economy is not super fine with this outcome. 450 00:23:41,160 --> 00:23:43,920 Speaker 1: Has little Dick fold Lehman brothers to it. 451 00:23:44,560 --> 00:23:47,840 Speaker 4: So the problem, among others is that the Germans come 452 00:23:47,880 --> 00:23:51,080 Speaker 4: in in the German evening, and if you're very active 453 00:23:51,080 --> 00:23:54,080 Speaker 4: in foreign exchange markets, you're going to make a mark payment, 454 00:23:54,200 --> 00:23:57,119 Speaker 4: the deutsch mark payment in German time, and at the 455 00:23:57,160 --> 00:24:00,480 Speaker 4: time a dollar payment in New York time. The problem 456 00:24:00,920 --> 00:24:04,560 Speaker 4: is that the German regulators close herstot before they're able 457 00:24:04,600 --> 00:24:06,560 Speaker 4: to make their dollar payments. So this is now called 458 00:24:06,600 --> 00:24:10,240 Speaker 4: Hirschtot risk right, which is probably better known than Benka's Hershtot, 459 00:24:10,440 --> 00:24:13,720 Speaker 4: And it's just timing mismatches in transactions and the necessity 460 00:24:13,760 --> 00:24:16,200 Speaker 4: of lining those up. Otherwise, if somebody goes out of business, 461 00:24:16,760 --> 00:24:18,520 Speaker 4: they may not make good on one side of the trade, 462 00:24:18,520 --> 00:24:20,720 Speaker 4: but they will make it on the other. And everybody 463 00:24:20,720 --> 00:24:22,800 Speaker 4: in New York freaks out. Everyone in London freaks out. 464 00:24:23,000 --> 00:24:25,199 Speaker 4: The foreign exchange mark grinds to a halt. There is 465 00:24:25,200 --> 00:24:27,840 Speaker 4: something like two transactions or something like that in the 466 00:24:27,920 --> 00:24:31,760 Speaker 4: whole day after this happens. Almost all these transactions happen 467 00:24:31,840 --> 00:24:33,879 Speaker 4: in New York. By the way, almost all foreign exchange 468 00:24:33,880 --> 00:24:37,280 Speaker 4: transactions with a dollar leg or settled in New York. 469 00:24:37,640 --> 00:24:40,080 Speaker 4: So it affects a lot of trades because New York 470 00:24:40,080 --> 00:24:42,399 Speaker 4: time is the one that's affected, and you have a 471 00:24:42,440 --> 00:24:46,159 Speaker 4: sudden stop to the foreign exchange markets, and that's really scary. 472 00:24:46,119 --> 00:24:49,640 Speaker 1: And you also have a run in the euro dollar 473 00:24:49,720 --> 00:24:55,119 Speaker 1: market and in the money markets more generally. So we've 474 00:24:55,200 --> 00:25:01,040 Speaker 1: had a decade plus of US policymakers build enough this market. 475 00:25:01,800 --> 00:25:06,880 Speaker 1: Now it's reached a size and scale where a run 476 00:25:06,960 --> 00:25:12,280 Speaker 1: on it might jeopardize US financial stability. More generally, this 477 00:25:12,440 --> 00:25:17,960 Speaker 1: one bank fails in Europe and the contagion starts to 478 00:25:18,040 --> 00:25:22,600 Speaker 1: spread on shore in the United States. And there's one 479 00:25:22,720 --> 00:25:28,439 Speaker 1: bank in particular that gets caught up right away, and 480 00:25:28,520 --> 00:25:32,680 Speaker 1: it's this bank called Franklin National Bank. And Franklin National 481 00:25:32,720 --> 00:25:36,760 Speaker 1: Bank has a bank charter, so it's not a shadow bank. 482 00:25:37,080 --> 00:25:40,919 Speaker 4: They invented credit cards. They're like a Long Island local bank, right, 483 00:25:40,920 --> 00:25:42,440 Speaker 4: I mean, they do that business. 484 00:25:42,960 --> 00:25:46,239 Speaker 1: They were an early promoter of credit cards. You know, 485 00:25:46,320 --> 00:25:50,600 Speaker 1: they are pushing the envelope type of bank, and they 486 00:25:50,600 --> 00:25:56,000 Speaker 1: are chartered bank, but they are getting involved in shadow 487 00:25:56,040 --> 00:25:59,680 Speaker 1: banking type funding sources. And so you can run your 488 00:25:59,720 --> 00:26:02,920 Speaker 1: bank with just deposits on your right hand side. That's 489 00:26:02,960 --> 00:26:05,399 Speaker 1: the normal way to do it. But over the last 490 00:26:05,440 --> 00:26:09,680 Speaker 1: ten plus years, these deposit alternatives have been proliferating. One 491 00:26:10,080 --> 00:26:12,760 Speaker 1: is an offshore US dollar deposit, that's what we've been 492 00:26:12,760 --> 00:26:16,040 Speaker 1: talking about. That's a year dollar. Another is a repurchase 493 00:26:16,080 --> 00:26:19,560 Speaker 1: agreement that can be an onshore or an offshore transaction 494 00:26:20,359 --> 00:26:24,280 Speaker 1: and Franklin National Bank is doing both. They're doing both 495 00:26:24,320 --> 00:26:26,760 Speaker 1: of these, and so they have deposits, but they also 496 00:26:26,800 --> 00:26:30,000 Speaker 1: have these deposit alternatives that are highly runnable, that are 497 00:26:30,000 --> 00:26:34,119 Speaker 1: not FDIC ensured, and they experience a run, and if 498 00:26:34,160 --> 00:26:36,760 Speaker 1: you look at their balance sheet over the course of 499 00:26:37,000 --> 00:26:40,320 Speaker 1: the summer of nineteen seventy four, it's a run that 500 00:26:40,400 --> 00:26:42,960 Speaker 1: looks a lot like the run on Lehman Brothers. They 501 00:26:43,000 --> 00:26:46,640 Speaker 1: are rebot. Counterparties drop away and they have to turn 502 00:26:46,680 --> 00:26:49,919 Speaker 1: to the FED for a massive discount window loan, and 503 00:26:50,119 --> 00:26:54,240 Speaker 1: suddenly the FED is thrust into the crisis that policymakers 504 00:26:54,240 --> 00:26:57,760 Speaker 1: have been worrying about for the last several years. The 505 00:26:57,880 --> 00:27:02,800 Speaker 1: hydra headed monster is looking to consume the system, and 506 00:27:02,920 --> 00:27:07,840 Speaker 1: the problem of the year dollar market overseas has hit 507 00:27:07,960 --> 00:27:13,480 Speaker 1: the US domestic financial system. And the story is going 508 00:27:13,520 --> 00:27:15,400 Speaker 1: to have a lot of resonance for anybody who lived 509 00:27:15,400 --> 00:27:18,800 Speaker 1: through two thousand and eight because it starts in much 510 00:27:18,880 --> 00:27:21,800 Speaker 1: the same way and it also sort of ends in 511 00:27:21,800 --> 00:27:22,760 Speaker 1: a similar way. 512 00:27:23,200 --> 00:27:25,160 Speaker 4: So now it's the summer seventy four, things are falling 513 00:27:25,200 --> 00:27:27,680 Speaker 4: apart that mood that we talked about about, maybe we 514 00:27:27,720 --> 00:27:30,719 Speaker 4: should crack down on euro dollars like that doesn't make 515 00:27:30,760 --> 00:27:33,400 Speaker 4: sense anymore, and there's a bunch of op eds that's like, explicitly, 516 00:27:33,480 --> 00:27:35,240 Speaker 4: now is not the time to regulate this market. It's 517 00:27:35,240 --> 00:27:38,560 Speaker 4: precisely opposite. Deregulate the market, make sure it doesn't fall 518 00:27:38,600 --> 00:27:41,160 Speaker 4: apart because people are just looking for the next domino 519 00:27:41,240 --> 00:27:43,960 Speaker 4: next to you to drop. And so the world gets 520 00:27:44,000 --> 00:27:47,280 Speaker 4: together in June. In July rather can't really come to 521 00:27:47,359 --> 00:27:48,960 Speaker 4: a really firm agreement. They're not willing to make a 522 00:27:48,960 --> 00:27:51,679 Speaker 4: firm comitment. And by September like it's very clear that 523 00:27:51,720 --> 00:27:53,919 Speaker 4: something needs to be done, and so the BIS convenes 524 00:27:53,960 --> 00:27:57,280 Speaker 4: the group of ten countries central bank governors and they 525 00:27:57,280 --> 00:27:59,920 Speaker 4: put out a very unusual thing, which is a public statement, 526 00:28:00,200 --> 00:28:03,880 Speaker 4: and they say, we are here to backstop the year 527 00:28:03,960 --> 00:28:06,600 Speaker 4: dollar market. I'm paraphrasing, we're here to back stop the 528 00:28:06,640 --> 00:28:09,040 Speaker 4: year dollar market, and we are convinced that the means 529 00:28:09,080 --> 00:28:12,080 Speaker 4: are available to do so. And so that's an implicit 530 00:28:12,160 --> 00:28:14,480 Speaker 4: reference to the swap lines, and the FMC and others 531 00:28:14,520 --> 00:28:15,960 Speaker 4: are sort of aware of the fact that the swap 532 00:28:16,000 --> 00:28:18,280 Speaker 4: lines are kind of the backbone of that commitment, But 533 00:28:18,320 --> 00:28:19,920 Speaker 4: what they're really doing is saying there is a lender 534 00:28:19,960 --> 00:28:23,200 Speaker 4: of last resort. You all thought there might be there is. 535 00:28:23,640 --> 00:28:27,520 Speaker 4: It's us, and we're here to fix the system. And 536 00:28:27,600 --> 00:28:30,919 Speaker 4: that has a really seismic impact. It really cures the 537 00:28:30,920 --> 00:28:33,639 Speaker 4: problem because people are aware of the fact that this 538 00:28:33,800 --> 00:28:36,320 Speaker 4: announcement effect at its finest right, this is like whatever 539 00:28:36,359 --> 00:28:38,920 Speaker 4: it takes for Mario Draghi is just the mere fact 540 00:28:38,960 --> 00:28:41,760 Speaker 4: of the public statement is enough to cure the run. 541 00:28:42,120 --> 00:28:46,040 Speaker 4: And then it's really off to the races because this 542 00:28:46,280 --> 00:28:49,680 Speaker 4: market has been identified by the most powerful countries in 543 00:28:49,680 --> 00:28:52,880 Speaker 4: the world as critical to financial stability and national security, 544 00:28:52,960 --> 00:28:56,880 Speaker 4: and so the limits on its growth are really pulled back. 545 00:28:57,560 --> 00:28:59,560 Speaker 1: So I think it's worth it saying that the work 546 00:28:59,600 --> 00:29:02,560 Speaker 1: on understanding what happens in nineteen seventy four, a lot 547 00:29:02,600 --> 00:29:05,480 Speaker 1: of archival work was done by Ben Braun and his 548 00:29:05,520 --> 00:29:09,680 Speaker 1: co authors Ari Krump and Steven Morale, and they call 549 00:29:09,800 --> 00:29:15,200 Speaker 1: this communicay the original whatever it takes moment, the original 550 00:29:15,720 --> 00:29:19,360 Speaker 1: sort of central bank response to a run where the 551 00:29:19,400 --> 00:29:24,200 Speaker 1: central bank basically implicitly commits to use its money printing 552 00:29:24,280 --> 00:29:28,280 Speaker 1: ability to stop the run like behavior. And that's an 553 00:29:28,320 --> 00:29:33,280 Speaker 1: incredibly powerful tool that central banks have because they can 554 00:29:33,400 --> 00:29:38,840 Speaker 1: print money, they can make good on everybody's money denominated obligations. 555 00:29:39,560 --> 00:29:45,440 Speaker 1: And in seventy four you have this critical moment where 556 00:29:45,840 --> 00:29:50,600 Speaker 1: the central banks, especially the US Central Bank, commits itself 557 00:29:50,640 --> 00:29:53,920 Speaker 1: to this sort of policy. Remember in the nineteen thirties, 558 00:29:54,400 --> 00:29:58,320 Speaker 1: that's not the attitude of the Federal Reserve, and over 559 00:29:58,400 --> 00:30:02,520 Speaker 1: a third of the bankings system closes its doors. In 560 00:30:02,600 --> 00:30:07,360 Speaker 1: nineteen seventy four, you have the Federal Reserve essentially committing 561 00:30:07,400 --> 00:30:11,600 Speaker 1: to support the banking systems of European countries that are 562 00:30:11,760 --> 00:30:15,440 Speaker 1: doing a dollar banking business without following any of the 563 00:30:15,560 --> 00:30:19,360 Speaker 1: rules that govern the dollar banking business domestically, and that 564 00:30:19,640 --> 00:30:22,520 Speaker 1: puts out this fire in two thousand and eight is 565 00:30:22,600 --> 00:30:25,240 Speaker 1: just in many ways a repeat of nineteen seventy four, 566 00:30:25,880 --> 00:30:29,600 Speaker 1: where it's not clear is the US going to do 567 00:30:29,720 --> 00:30:34,840 Speaker 1: whatever it takes, And eventually that is made clear and 568 00:30:35,160 --> 00:30:39,440 Speaker 1: the fires ultimately subside, and we still sort of live 569 00:30:39,480 --> 00:30:44,040 Speaker 1: in this world where there are lots of runnable money 570 00:30:44,080 --> 00:30:47,920 Speaker 1: claims in the monetary system, and there's always a question 571 00:30:48,560 --> 00:30:51,840 Speaker 1: about the extent to which the central bank is there 572 00:30:51,880 --> 00:30:53,040 Speaker 1: standing behind them. 573 00:30:53,640 --> 00:30:55,160 Speaker 4: So if this was a movie, this would be the 574 00:30:55,160 --> 00:30:57,080 Speaker 4: point where you have the contemplative music and the like, 575 00:30:57,160 --> 00:30:59,280 Speaker 4: what happens to all the characters in the movie, and 576 00:30:59,360 --> 00:31:02,320 Speaker 4: so in this one there's really in one character that's 577 00:31:02,400 --> 00:31:05,440 Speaker 4: really important. That's the ear dollar market. And so you know, 578 00:31:05,520 --> 00:31:07,520 Speaker 4: just for a sense of scale, by the mid eighties 579 00:31:07,560 --> 00:31:10,120 Speaker 4: there are more euro dollars than dollars, which is kind 580 00:31:10,120 --> 00:31:12,560 Speaker 4: of a remarkable fact. By the mid two thousands, there's 581 00:31:12,680 --> 00:31:15,400 Speaker 4: much more one hundred and fifty and seventy percent depends 582 00:31:15,400 --> 00:31:17,200 Speaker 4: on how you count them. So the ear dollar market 583 00:31:17,440 --> 00:31:20,800 Speaker 4: becomes in some sense, the dollar market becomes the much larger, 584 00:31:21,640 --> 00:31:26,000 Speaker 4: more important, more globalized market that like keeps the whole 585 00:31:26,000 --> 00:31:26,640 Speaker 4: system running. 586 00:31:26,760 --> 00:31:31,680 Speaker 1: This is why everybody uses libor as a measure of 587 00:31:32,480 --> 00:31:36,760 Speaker 1: interesting rate. The London Interbank Offer rate is the euro 588 00:31:36,880 --> 00:31:41,239 Speaker 1: dollar market interest rate. We don't actually look to the 589 00:31:41,280 --> 00:31:44,480 Speaker 1: federal funds rate because the real rate that mattered in 590 00:31:44,520 --> 00:31:49,640 Speaker 1: the market once more dollars were being created offshore was 591 00:31:49,680 --> 00:31:54,320 Speaker 1: the offshore dollar rate libor, and so libor is perhaps 592 00:31:54,320 --> 00:31:57,720 Speaker 1: the best sort of known simpol of the euro dollar market. 593 00:31:58,240 --> 00:32:00,800 Speaker 1: And by the time you get to thousand and eight, 594 00:32:00,840 --> 00:32:04,640 Speaker 1: the whole system is key to the rates in this 595 00:32:05,200 --> 00:32:08,480 Speaker 1: offshore dollar market as opposed to the rates in the 596 00:32:08,560 --> 00:32:11,920 Speaker 1: onshore market. That the US banking system was sort of 597 00:32:12,280 --> 00:32:13,880 Speaker 1: developed around. 598 00:32:13,960 --> 00:32:17,160 Speaker 4: So global trade settled in euro dollars. Euro dollars are 599 00:32:17,200 --> 00:32:19,000 Speaker 4: a huge asset that people have, so in a sense, 600 00:32:19,040 --> 00:32:21,120 Speaker 4: it's both the backbone and the life blood in the 601 00:32:21,240 --> 00:32:23,880 Speaker 4: body analogy, right, It's the lifeblood and the backbone of 602 00:32:23,880 --> 00:32:25,960 Speaker 4: the whole global dollar system. It still is in a 603 00:32:26,000 --> 00:32:28,880 Speaker 4: lot of ways. And in the contemplary of music overlay 604 00:32:28,960 --> 00:32:30,840 Speaker 4: version of the program, like you could say, it all 605 00:32:30,960 --> 00:32:34,520 Speaker 4: really goes back to the sixties, and so we're left 606 00:32:34,560 --> 00:32:39,680 Speaker 4: with this remnant of hold war competition that in some 607 00:32:39,800 --> 00:32:44,400 Speaker 4: sense was antithetical to US monetary sovereignty, but served a 608 00:32:44,480 --> 00:32:47,200 Speaker 4: very particular purpose at the time. And it's really a 609 00:32:47,280 --> 00:32:50,480 Speaker 4: lesson in how, for lack of a better word, you know, 610 00:32:50,520 --> 00:32:55,440 Speaker 4: decisions have consequences, and how financial systems evolve in unexpected ways, 611 00:32:55,480 --> 00:32:59,240 Speaker 4: and particularly when the government supports something, it gets a 612 00:32:59,240 --> 00:33:01,640 Speaker 4: lot of room to row and run, and it's very 613 00:33:01,680 --> 00:33:05,200 Speaker 4: hard to predict what comes next. And so you know, 614 00:33:05,320 --> 00:33:08,560 Speaker 4: it does all start in Yugoslavia, but it becomes obviously 615 00:33:08,560 --> 00:33:12,280 Speaker 4: a much much bigger thing over the subsequent fifty years. 616 00:33:12,280 --> 00:33:14,920 Speaker 4: So you know, we're recording this in the fiftieth anniversary 617 00:33:15,040 --> 00:33:18,520 Speaker 4: roughly of the intervention the Communicate, so Stall, the run 618 00:33:18,960 --> 00:33:21,320 Speaker 4: on the Earl market in nineteen seventy four and so like. 619 00:33:21,400 --> 00:33:24,200 Speaker 4: It's a time for reflection in a sense. But I 620 00:33:24,200 --> 00:33:27,080 Speaker 4: think more importantly, it's just a really compelling story. It's 621 00:33:27,160 --> 00:33:29,360 Speaker 4: a how we got o where we are, which is 622 00:33:29,400 --> 00:33:32,200 Speaker 4: a question I think we don't ask enough and be 623 00:33:32,440 --> 00:33:35,880 Speaker 4: like the real sort of underlying reasons why systems evolved 624 00:33:35,880 --> 00:33:37,760 Speaker 4: in the way that they did, which can tell us 625 00:33:37,760 --> 00:33:38,920 Speaker 4: a lot about the future as well. 626 00:33:44,680 --> 00:33:47,800 Speaker 2: Oh look, we're free, We're out of the bunker or 627 00:33:47,840 --> 00:33:51,360 Speaker 2: the vaults or the archive or whatever this is was. 628 00:33:52,120 --> 00:33:53,520 Speaker 3: Uh is the story over? 629 00:33:54,360 --> 00:33:57,200 Speaker 2: I guess it is. All good things must come to 630 00:33:57,240 --> 00:34:00,040 Speaker 2: an end. I feel like I learned a lot. I 631 00:34:00,120 --> 00:34:03,840 Speaker 2: love these historical deep dives, and Lev and Josh really 632 00:34:04,000 --> 00:34:05,520 Speaker 2: dove deep for this one. 633 00:34:05,840 --> 00:34:08,799 Speaker 3: Actually, Like, honestly though, is unreal. I mean, just the 634 00:34:08,840 --> 00:34:11,400 Speaker 3: fact that we got to listen to them talk for 635 00:34:11,560 --> 00:34:15,760 Speaker 3: that long about this really intense historical work. I'm actually 636 00:34:15,800 --> 00:34:18,439 Speaker 3: going to miss hearing about euro dollar history for real. 637 00:34:18,640 --> 00:34:21,279 Speaker 2: Yeah, me too. The good news on that front is 638 00:34:21,440 --> 00:34:24,880 Speaker 2: we are not quite done. Josh and Lev. They've walked 639 00:34:24,960 --> 00:34:27,200 Speaker 2: us through the history, so we have a much better 640 00:34:27,239 --> 00:34:30,200 Speaker 2: sense of where euro dollars come from and the problems 641 00:34:30,200 --> 00:34:33,520 Speaker 2: they were intended to solve. But I think there's still 642 00:34:33,640 --> 00:34:36,400 Speaker 2: a lot of open questions about the Euro dollar markets 643 00:34:36,480 --> 00:34:39,839 Speaker 2: role today and also how it fits into the ongoing 644 00:34:39,880 --> 00:34:42,680 Speaker 2: debate about the future of the US dollar totally. 645 00:34:42,960 --> 00:34:45,360 Speaker 3: There's like a lot of discussions still about whether the 646 00:34:45,440 --> 00:34:49,560 Speaker 3: dollar can maintain its special reserve currency status. People love 647 00:34:49,600 --> 00:34:52,200 Speaker 3: talking about that, whether it can maintain its status within 648 00:34:52,239 --> 00:34:55,160 Speaker 3: the financial system, and euro dollars, as we learn from 649 00:34:55,160 --> 00:34:57,360 Speaker 3: this series, are one of the most important types of 650 00:34:57,400 --> 00:35:01,200 Speaker 3: dollars out there. They facilitate global trade, investment, liquidity, and 651 00:35:01,239 --> 00:35:03,720 Speaker 3: all that stuff. So all of these debates that everyone 652 00:35:03,800 --> 00:35:06,160 Speaker 3: is having all around they sort of come back to 653 00:35:06,200 --> 00:35:06,640 Speaker 3: this area. 654 00:35:06,800 --> 00:35:09,600 Speaker 2: Yeah, so we definitely need to talk more about the 655 00:35:09,640 --> 00:35:12,920 Speaker 2: future of the euro dollar market and buy extension the 656 00:35:13,040 --> 00:35:16,080 Speaker 2: future of the dollar system, and to do that, we 657 00:35:16,160 --> 00:35:18,960 Speaker 2: are going to bring back lev later this week in 658 00:35:19,000 --> 00:35:22,120 Speaker 2: an episode of Lots More to talk about all of that. 659 00:35:22,280 --> 00:35:25,120 Speaker 2: So definitely look out for lots more with lov on 660 00:35:25,360 --> 00:35:28,560 Speaker 2: euro dollars. But for now, this is the end of 661 00:35:28,640 --> 00:35:32,279 Speaker 2: our historic look back at this market. We hope you 662 00:35:32,400 --> 00:35:34,960 Speaker 2: enjoyed listening to Josh and Lev as much as we did. 663 00:35:35,360 --> 00:35:36,839 Speaker 4: I also just want to thank a bunch of folks 664 00:35:36,880 --> 00:35:38,640 Speaker 4: at various archives because a lot of this work was 665 00:35:38,680 --> 00:35:42,080 Speaker 4: based on primary sources and dusty books and forums and 666 00:35:42,120 --> 00:35:44,080 Speaker 4: things like that. So definitely that at the New York 667 00:35:44,120 --> 00:35:46,480 Speaker 4: fed the Archives there have been extraordinarily helpful, the Bank 668 00:35:46,520 --> 00:35:49,360 Speaker 4: Financial Settlements in Basel, the JFK Library and the LBJ 669 00:35:49,520 --> 00:35:53,439 Speaker 4: Library who've been super kind to provide stuff. Columbia has 670 00:35:53,680 --> 00:35:55,960 Speaker 4: a clearinghouse archives which we've had a chance to go through, 671 00:35:56,160 --> 00:35:58,280 Speaker 4: and the National Archives in general. Just a big thanks 672 00:35:58,280 --> 00:35:58,839 Speaker 4: to all of them. 673 00:35:59,280 --> 00:35:59,960 Speaker 2: Shall we leave at that. 674 00:36:00,280 --> 00:36:01,040 Speaker 1: Let's leave it there. 675 00:36:01,280 --> 00:36:04,319 Speaker 2: This has been another episode of the Authoughts podcast. I'm 676 00:36:04,360 --> 00:36:07,200 Speaker 2: Tracy Aalloway. You can follow me at Tracy Alloway. 677 00:36:07,280 --> 00:36:10,040 Speaker 3: And I'm Joe Wisenthal. You can follow me at the Stalwart. 678 00:36:10,120 --> 00:36:13,680 Speaker 3: Follow one of our special guests, levmanand he's at levmanand 679 00:36:14,239 --> 00:36:17,120 Speaker 3: our other special guest, Josh Younger he's not on Twitter. 680 00:36:17,520 --> 00:36:20,880 Speaker 3: Thanks to our producers Kerman Rodriguez at krbin Ermann, Dashel 681 00:36:20,880 --> 00:36:24,839 Speaker 3: Bennett at Dashbot, and Kilbrooks at Kelbrooks. And special thanks 682 00:36:24,920 --> 00:36:28,000 Speaker 3: to our sound engineer Blake Maples from our Oddlots content. 683 00:36:28,080 --> 00:36:30,320 Speaker 3: Go to Bloomberg dot com slash odd Lots, where we 684 00:36:30,360 --> 00:36:33,320 Speaker 3: have transcripts, a blog, and a daily newsletter, and you 685 00:36:33,360 --> 00:36:35,360 Speaker 3: can chat about all of these topics twenty four to 686 00:36:35,400 --> 00:36:39,040 Speaker 3: seven in our discord Discord dot gg slash od lots. 687 00:36:39,360 --> 00:36:41,640 Speaker 2: And if you enjoy odd Lots, if you like it 688 00:36:41,760 --> 00:36:44,480 Speaker 2: when we bring you the hidden history of euro dollars, 689 00:36:44,800 --> 00:36:47,640 Speaker 2: then please leave us a positive review on your favorite 690 00:36:47,680 --> 00:36:51,520 Speaker 2: podcast platform. And remember, if you are a Bloomberg subscriber, 691 00:36:51,640 --> 00:36:54,719 Speaker 2: you can listen to all of our episodes absolutely ad free. 692 00:36:55,080 --> 00:36:57,080 Speaker 2: All you need to do is find the Bloomberg channel 693 00:36:57,160 --> 00:37:01,080 Speaker 2: on Apple Podcasts and follow the instructions there. Thanks for listening.