International Trade at the Casino Royale
Note: Over the next few months, I want to teach you about the in’s and out’s of CBDC’s: Central Bank Digital Currencies. I assume most people reading this haven’t heard of CBDC’s, but I guarantee, after Covid and the economic collapse and the de-globalisation of America and the rise of Bitcoin and the new KFC Triple Stacker Burger… CBDC’s will become a household talking point. These next few articles are to build up to explaining what the heck a CBDC is and why you should pause your TikTok video’s to pay attention to them.
Welcome back to another exciting year of World Series Poker!
All the greatest players from around the globe have joined for this final elimination showdown. Billions of chips are up for grabs in this final round and the contestants have everything to play for. Everything is set for this showdown of the century, all that is left to ask is why does anyone watch this sport?
First up we have plucky Australia with a pair of queens. Not a bad hand, but with such a small bankroll behind him, many wonder if the little guy has what it takes to stay in the game against these giants.
Next, we have Great Britain with a great hand. Incredible, and… oh… did he just say his cards out loud? What’s going on Britain? Are you trying to sabotage yourself?
Indonesia, Venezuela and Egypt have all folded before even looking at their cards… an interesting choice.
Japan has had some amazing hands in the past, but right now they’ve picked up a 2 and an 8… not getting far on that.
Canada just apologised for how good her hand is and has offered to sit this round out.
New Zealand is playing 9 high, like a boss. Not a wise choice, but certainly admirable.
Germany is dominating, but there seems to be a lot of arguing from the French, Spanish, Greek, Portuguese, Finnish and … I’m not going to list them all… coaches in Germany’s corner. That might distract him.
Finally, we have China with the greatest bluff I have ever seen. China has gone all in with what looks like an Uno reverse card and a Blue Eyes White Dragon card from Yugioh. How are they still in this game?
The stakes are high for these major players, so all that’s left is to answer, who’s going to win?
….
Trick question. We all know who’s going to win. The house. The house always wins. So long as everyone is playing with the house’s chips, every game only helps to make the casino stronger.
See, the house in this story is America, and the chips that everyone is playing with are US dollars. They’re the global reserve currency, so everyone on the globe needs to use them to stay in the game. If Egypt needs to trade with the Dominican Republic, they’re not using Egyptian pounds, they’ll use US Dollars.
The problem that many have when they talk about debt, such as America’s debt to China, is that they think of this money as, well… money. If you think of it like a commodity like steel, or oil… or poker chips, it starts to make more sense. China needs a huge amount of these US dollars sitting in their banks in order to trade with everyone, so they are more than willing for America to go into debt buying iPhone cases and shopping on Ali Baba if it means they get more of those poker chips to play with.
Sure, they could theoretically cash in those chips and call for the debt, but then they wouldn’t be able to continue playing, and have you known a gambler to walk away when they’re on a streak? (even if I think it’s a losing streak).
I’ll say it again cause I get paid by the word.
Countries want US dollars/debt because without it they wouldn’t get a seat at the poker table. I don’t know much about poker (as is apparent by this article, clearly), but I do know its very hard to win if you don’t have any chips.
So we can see why the world wants as many US dollars and US Debt as possible. It’s super trade-able.
But there is a dilemma… US citizens would really rather not be in trillions of dollars of debt, thank you very much.
What happens when the house wants you to give them back their chips, but you want to keep playing?
This is known in economics as the Triffin Dilemma. You can’t balance the books domestically because then there would be no US dollars in circulation to keep international trade going.
This also happens to be the reason why the American government ran out of gold back in 1933, leading to the gold confiscation we talked about last time.
What’s the solution? For America, it seems to be keep handing out poker chips to keep everyone at the casino. Sure, it’ll upset the average American worker, but since when has lower wages and higher debt ever caused unrest in America? I’m sure they’ll be fine.
Other countries all want to start their own casino, but who would go there? Trying to make some other countries currency the globally accepted reserve would be like expecting gamblers to move from the MGM Grand Casino in Vegas to the local pub in Toowoomba because they just put in a couple pokies.
A few countries agree to host small poker games at their houses with their neighbours and, for the most part, America turns a blind eye. But as soon as one of the big players threatens to leave the casino, the house starts to get cranky.
Completely off-topic and I’m sure this had absolutely 0 effect on the follow up events, but did you know that in 1999, Saddam Hussein switched the reserve currency of Iraq to Euro’s? If you wanted to buy oil from the region, you had to move to the European casino. I’m sure that had nothing to do with America’s animosity towards Iraq in the proceeding years.
To date, there seems to be only one poker game that could match the grandeur of the US reserve… and that’s online poker. A casino that is purely digital and let’s every country play with their own chips. A casino like Bitcoin.
… But if you think governments and central banks will accept a currency that they can’t personally control, please show me the location of your hippy commune because I have a bridge to sell them.
This is one of the reasons why over the next couple years, you will hear people talking about Central Bank Digital Currencies, or CBDC’s. A casino like Bitcoin that the Central Banks could control. The House could just move to where the players are.
Everyone agrees that we need a better casino to play in, and the quote the poet Eminem, CBDC’s may be the only opportunity that we got.
Originally published at https://quantitativepleasing.substack.com.
