'Princes Of The Dollar': Why Q... Note

'Princes Of The Dollar': Why QE Is Over

The G20 summit signals a major shift in America's monetary playbook, moving towards state-directed capital allocation to productive uses. This new strategy involves guiding private capital towards strategic goals rather than direct state intervention, drawing parallels to historical economic models. The Financial Stability Board is integrating AI into financial regulations, and global stablecoin arrangements are expected to solidify. This contrasts with past policies that led to over-leveraged central banks and unlevered private sectors. The current approach aims to leverage the relatively unlevered private sector for economic growth.The G20 is actively involving banks and private institutions, marking a paradigm shift in credit allocation. This new framework seeks to rebuild U.S. industrial capacity, particularly in digital and AI-related sectors, which are now considered national security priorities. This aligns with "Hamiltonian policy" principles of industrial development. The world is entering a multipolar era, requiring nations to choose sides.Richard Werner's work highlights the importance of credit expansion for economic growth, emphasizing "Main Street over Wall Street." The Foundry School reflects a government refocus on centralizing and deploying capital into productive applications, steering credit centrally but allowing decentralized recipients. Werner's research on banking systems suggests a return to state-directed capital allocation for economic dominance. This approach, successful for millennia, contrasts with the U.S.'s recent focus on financialization and consolidation, which has weakened its economic system.China's rise is attributed to its state-directed capital and credit allocation, building global supply chains. In contrast, the U.S. reduced its number of banks, increasing financialization and risk. The new U.S. strategy emphasizes decentralization, with centralized capital flows directed to a decentralized private sector for growth. This represents a significant departure from recent decades and a return to principles that founded and sustained the American economy. The shift aims to replace the broken petrodollar system with stablecoins and a SOFR-based system, prioritizing productivity. Policies that previously choked growth by reducing competition are being abandoned. An unproductive, overly financialized economy that outsourced production for short-term profits is now being recognized as detrimental. The shift acknowledges that decentralizing resources and profits leads to real economic power, unseating nations that centralize them. The focus is now on providing credit to those with productive capacity, moving beyond the quantitative easing era.
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