- Welcome to Capital Account. Yesterday the GOP made a counteroffer to the White House’s Fiscal Cliff proposals. Also, on Sunday, House Speaker John Boehner told Fox News “The president is asking for $1.6 trillion worth of new revenue over 10 years, twice as much as he has been asking for in public.” Today the conversation on the Fiscal Cliff continued with President Obama giving his first post-election one-on-one interview to Bloomberg. Even with the back and forth debate over the national debt, the US continues to enjoy an exorbitant privilege: issuing the global reserve currency. And despite a credit downgrade and more Federal Reserve money printing, the dollar has held up relative to other currencies. But do these 24/7 deficit debates undermine perceptions of America and the dollar’s position in the international monetary system? Recently, international news agencies have headlined the US’s troubles, from Der Spiegel exclaiming “US Set to Restage Greek Tragedy” to Xinhua proclaiming “No Deal In Sight for US Fiscal Cliff.” We talk to Barry Eichengreen, professor of economics at UC Berkeley and author of Exorbitant Privilege, about Uncle Sam’s privilege despite the budget woes, and he assesses the competitive currency landscape.
Plus, the US dollar index fell to a six-week low this morning. The drop was due to concerns over a Fiscal Cliff deal, according to Reuters. But what does the so-called dollar index really gauge when it comes to the greenback’s true value? We break it down in today’s Word of the Day.
And can paying people to track the comings and goings of private corporate jets and the big-whigs on them amount to insider trading? Lauren and Demetri talk about investor creativity in today’s “Loose Change.”