Date: 22 May 2026
NIKA DUBROVSKY:
Hello everyone. Thank you so much for coming to this David Graeber Institute evening with Michael Hudson and Kathleen Tyson about the end of the dollar dominance and why that shift is already irreversible. Michael Hudson is an economic historian and one of the most important thinkers who influenced David Graeber. He has spent his life studying how debt, empire and finance shape global power, and how the dollar system allowed the US to extract resources and control other countries' policies without anyone quite noticing. Kathleen Tyson is a former central banker and author of Multicurrency Mercantilism: The New International Monetary Order. Thank you so much for coming, and I'm really excited to hear today's discussion. Kathleen, the floor is yours.
KATHLEEN TYSON:
Thank you very much for inviting me. Always a pleasure to talk to Michael and to exchange ideas on where we are and where we're going. It's best, I think, if we start with a little bit of history, because I didn't realize just exactly how tyrannical politics was in the middle of the last century. A lot of people are saying, well, you know, BRICS is going to need its own currency, there has to be another currency to replace the dollar. And the more I look into it, the more I see that that's just not possible today.
Because Michael suggested it, I did some research on the Bancor, which was an idea raised by John Maynard Keynes from 1942 to 1944, to create a synthetic currency that wouldn't be sterling, wouldn't be dollar, would be based on gold, but not convertible for gold. And it's really quite amazingly restrictive. His ambition — Keynes' ambition — was that the world shouldn't be limited by gold in terms of expanding the money supply. But the many, many rules around the Bancor make it unsurprising that it was rejected and everybody said, yeah, let's just use dollar.
Keynes proposed an international clearing bank. Central banks would be members of this clearing bank and have accounts, and they would buy and sell currencies against the Bancor. Now, they would only acquire the Bancor by depositing gold, which would then create Bancor that they could use for their settlements. But they couldn't redeem the Bancor for gold. So it was a one-way system where they deposit gold and never get it back. I could see where some central banks would find that problematic.
It had limits on both trade surpluses and trade deficits. If you were in deficit for too long, you were punished: you could have your currency depreciated, you would experience rising interest rates to the clearing bank, you could have forced gold sales, and there would be capital export restrictions. Now, again, that's a lot of sovereignty to be given up to a new institution in the middle of a war. But there were also punishments if you had excessive credit balances: the currency could be appreciated, and there was a payment of interest of five percent on positive balances to the clearing bank's reserve fund, and that could rise to ten percent if you had a persistent credit balance.
Now, that's really quite — I don't think we could get away with that in this day and age. In the middle of World War Two, maybe that made sense to Keynes, when Britain was still a global empire and they could force their decisions on the world. But obviously it was rejected.
He saw the advantages as global acceptability — so no more blocked balances — orderly control of relative exchange values. He said that the Bancor would be "less capricious than gold," which is quite a phrase. And both debtors and creditors would be pressured to correct imbalances. Now, the interesting thing is there were only six members that were going to be members of this thing, and it divided the world in two: Britain was going to control all European and all African trade, and New York was going to control all North American, South American, and Asian trade. Now, again, that's a strange thing to decide for however many billion people there were in 1944. And this is key: he assumed capital controls were a permanent feature. Most of the world today doesn't have capital controls. So the idea that you could reimpose them — very, very difficult.
Looking at the Bancor, I'm surprised people reference it as a possible model for BRICS, because BRICS is none of those things. BRICS does not demand you relinquish sovereignty. BRICS doesn't force you, mandatorily, to do anything. BRICS has no system of rewards and punishments. BRICS has no central office, even — they don't even have a secretariat yet. So saying that the Bancor is a model that the BRICS could use doesn't wash. It's just completely the antithesis of the way BRICS are developing, as respecting individual state sovereignty. I'm going to let Michael comment on that, see if I got that right.
MICHAEL HUDSON:
What you've said I agree with completely, but I think you've said it in such a technical way that probably a lot of the audience doesn't follow you. In 1944-1945, the structure of the post-war monetary order was discussed. There were two proposals. The United States wanted to keep things the way it was. The United States had three quarters of the world's gold — much of the gold had fled to the United States during the 1930s as flight capital as World War II was coming. So the United States wanted gold to be the basis, and the dollar to be as good as gold, because the dollar was legally convertible into gold at thirty-five dollars an ounce.
What Keynes wanted to do was not simply make an alternative to gold, but an alternative to the dollar system. He said: if we have the dollar system, Britain and other countries are all going to run a balance of payments deficit with the United States. Right now, the whole rest of the world only has one quarter of the world's gold, and the deficit is going to mean they lose more and more gold. And what are they going to have to do in order to prevent their currencies from depreciating as they run a trade deficit with the United States — ultimately a deficit of being debtors paying interest payments to investors — the United States as the creditor, and profits to the United States, which was buying up companies and firms in Europe in order to control European industry ? And in fact, between 1945 and 1950, the US increased its proportion of monetary gold from seventy-five percent to eighty percent.
So already at the end of World War II, there was an attempt to get free of the dollar controlling the international financial system. Keynes wasn't providing an international currency at all, as you pointed out. He said: what are we going to do when countries like Britain run a trade deficit with the United States, as we in Britain are going to do ? Because the United States has made us give up the Sterling Area, and let all of the Sterling Area countries — India, for instance, Argentina is an outlier — all these countries that are holding sterling to spend in Britain, now they can spend it everywhere, in the United States as well. And of course that's where they'll spend it, because Britain's industry was destroyed.
Well, the result is that countries did run a deficit. And what Keynes was trying to do was asking: how can we denominate countries that are running a deficit and owe money, without them actually having to raise their interest rates and impose a recession on their economy, simply to borrow the money to finance their trade deficits and to finance the increasing debt payments to the United States, which was the world creditor at that time?
So you can see the political problem that he dealt with. This is a similar problem today, when matters are reversed. The United States is now running a huge deficit. Beginning in 1950, the whole US balance of payments situation changed. It was the Korean War, and from the Korean War onwards, the entire US balance of payments deficit — from 1950 all the way through the 1970s and somewhat beyond — was military spending abroad.
So the US military spending, as I've described in my book Super Imperialism, has pumped dollars into the world economy. For instance, in the Vietnam War, they'd spend the dollars in Southeast Asia, which was a French colony. The recipients would turn the dollars over to their banks for local currencies. Their banks were French banks, and they'd send the dollars to Paris, and the Bank of France, when General de Gaulle was president, would cash them in for US gold. Well, the US stopped that.
And so today, as the US is sort of flooding the market with dollars, it's also running up enormous debts that it can't pay. And most of all, the United States has weaponized the whole system of international finance and how central banks and governments relate to each other. How are governments going to create the proceeds — for instance, when Iran exports oil ? And when Russia exports oil, what are they going to do with the dollars that they receive?
Well, Venezuela said: we're making a surplus from our oil exports, we're going to cash it in for gold to rebuild our gold reserves, and deposit it in the Bank of England, because that's where the gold transactions and the gold market is. The Bank of England simply grabbed Venezuela's money and said: we're grabbing it because the Americans say we want a different president, who opposes the government, to be in charge. And so we're confiscating Venezuela's gold.
Russia, until 2022, had developed large export surpluses from its oil. It was sort of afraid to keep these surpluses in US dollars because the United States could simply grab the dollars. So it kept its dollars in Brussels, in a European Union clearing institution. Europe, under US directions, confiscated three hundred billion of its foreign exchange reserves that were all kept in Euroclear.
Same thing when, recently, in the last year, Iran was able to begin exporting its oil more and more to China. How was it going to take payment ? Well, it took payment largely in RMB, China's currency, but it also bought cryptocurrency stablecoins. The United States had Iran's stablecoin holdings confiscated as well.
So the whole world is facing a problem. The United States has become — as Donald Trump said — a pirate empire now. It has weaponized the US dollar. So if people are using the dollar, the United States can simply grab it. Or the United States can impose sanctions against the Chinese banks: if Iran exports oil to Chinese refineries, to be refined into something usable — gasoline or airplane fuel — the United States has sanctions on these banks. American banks and our allies can't have any dealings with these banks because they are not obeying US law, and our law is the law of all nations. Whatever we decree, all the nations have to follow it. If you use a dollar, or cryptocurrency under our control, or any asset that's under our control, and you do not follow our foreign policy, we will grab it and we will destroy you. If we can't control you and own your oil and other resources, we will destroy your country.
So how is the world going to arrange a system of trade and investment without using the dollar, or European currencies, or the currencies of any American ally ? Well, the naive solution is: gee, if we had a different currency. Well, there really isn't another currency beyond the dollar. People have thought of using the Chinese currency, the RMB, but how are they going to find a supply of Chinese currency?
Well, back in the 1950s and 1960s — Kathleen mentioned capital controls — there were two different exchange rates for every country's currency: there was the exchange rate for foreign trade, and there was an exchange rate for capital movements, because they realized that every economy is divided into two sectors. There's a financial sector, and then there's the real economy of production and consumption and trade and distribution. And the economies realized, well, they each have different exchange rates. We don't want to have to do what Britain had to do throughout the post-war period, which was called stop-go policies. Whenever Britain ran a trade deficit, it would have to balance its payments deficit; it would have to prevent its currency from falling by raising its interest rates and borrowing the money to finance the trade deficit, because it was an economically backward country. It was becoming neoliberalized, and not a socialist or industrial country, and just became a debtor that ended up crushing the British economy.
Other economies throughout the Global South have all had a problem, because the World Bank and the IMF and US foreign policy has told them: don't export anything that may compete with American exports. You must not grow your own food. If you're going to have your farms, you have to turn your agriculture into plantation economies to export tropical crops that we may want to buy in America, but not grain to feed yourself. And if you have land reform, we will overthrow your government, as we did in Guatemala, and as we did throughout Latin America, one country after another.
So other countries are trying to realize that this monetary problem — of how they can trade with each other — requires breaking away from the whole US and Western economy. Well, how are they going to create their own monetary system ? Well, what Keynes saw was that we can't create an alternative money, because suppose governments get together — you can't, like the BRICS — it's impossible to imagine the BRICS creating their own money, because any government that creates the money has its Congress create it, and the Congress decides what are we going to spend the money for, who's going to get to spend the money, what parts of the economy. Well, the BRICS are such a broad spectrum of countries — from left to right wing, from oligarchy to military dictatorships — that there's no way that they can agree on who's going to get how much of this new currency allocated to their country as opposed to other countries. It's politically infeasible for the time being.
So really all you'll have as a basis for starting this new means of international payments is China, Russia, and probably Iran being joined with it, and maybe later other countries will join. But how are they going to create some means of settlement ? When China, for instance, makes investments in countries for the Belt and Road Initiative, they're going to spend money in other countries, they're going to build up the ability of these countries for transportation, for ports, port development, to develop their economies, and they're going to have to somehow remunerate and pay China for what it's doing. How is this debt obligation going to be solved?
You really need a means of, first of all, quantifying what is the value of this unit of account that we're going to be using. And we can't have a unit of account that's like a cryptocurrency that everybody can buy, because then it'll just become a speculative cryptocurrency like Bitcoin. It has to be something that only exists as a measure of prices and values among central banks, as a means of bookkeeping. So all we're talking about when we talk about a new international money is a means of bookkeeping for the balances — the trade deficits, the investment deficits, the foreign debt payments, military spending, government spending. We need some means of denominating what they owe, and then some means of actually transferring money without having anything to do with the United States. Because — I won't get into how the United States destroyed the SWIFT system of adding and subtracting bank debits and credits, so that you could just send money from one country to another via the international banking system — the United States said: if countries don't follow our military policy and our US foreign policy, we'll ban you from using this banking system. So you're not able to use the internet or anything else to communicate banks from one country to another. China has created its own alternative to this clearing system already. Okay, well, that's a help. But there is still a problem of how can we create a currency.
And when people talk about what's going to replace the dollar, Kathleen was quite right: the dollar is not going to be replaced. People are going to continue to use the dollar, just as they're going to continue to use euros and pesos and other things. But there has to be some alternative means of holding things besides the dollar. And that's what we're going to talk about today. And that, I think, is where Kathleen has some proposals for how to solve this.
KATHLEEN TYSON:
Well, they're not my proposals — it's just what's happening. Beginning in 2023, every joint declaration from the BRICS summit says that BRICS countries should use local currency trade, that they should settle in their own currency, their partner's currency, or a regional currency acceptable to them. So they have optionality. Instead of just one thing that's acceptable — the US dollar — they have optionality of using their own currency, the partner's currency, or perhaps the renminbi, the ruble, the South African rand, whatever is acceptable, and they can choose that. The point now is the optionality. That optionality conveys a new level of sovereignty that was discouraged before.
And a lot of people think this is horribly complicated and expensive, and, well, none of those currencies really has a fixed value. That's right — they trade in foreign exchange markets, and the values fluctuate depending on the country's performance, or in some cases speculative attacks. But that's acceptable, and it's not actually that complicated. I have built multi-currency systems, even central bank multi-currency systems. I built a system for a central bank in eight currencies, real-time, with real-time balances at all peer central banks. It wasn't very difficult. And if you can do eight, you could probably do a hundred, because technology is no longer a limiting factor. The cost of technology has gotten very low. Software works that you write once, and if it works, you download it infinite times. And if everybody uses the same standards — which in the case of global banking is ISO 20022 — then everything interoperates.
And that's now an ongoing process. Beginning about two years ago, ASEAN unanimously agreed that they were going to make their systems interoperable. Indonesia has linked to — I forget the exact number, probably about a dozen places — and because their systems are all using the same data standard now, they can interlink those systems, so that you can use your Alipay by clicking on a barcode in Indonesia, and it comes out of your renminbi account and gets paid to the Indonesian vendor in Indonesian rupiah. So that has happened at quite a rapid pace, and that integration is advancing. And that's been the big policy shift in recent years — to integrate bilaterally all of these different payment systems so that they can interoperate. And that's working quite well. It's limited in value because it doesn't affect corporate treasuries or bank transfers yet, so it doesn't address the wholesale end of the market, but it's quite important in terms of small trade and tourism and things like that. And it will, once the principle is embedded, expand.
MICHAEL HUDSON:
So, here's the problem, when that already was happening between Russia and India. Russia was able to export its oil to India, and it did just what you described — it took payment in rupees. So every country is paying for its trade in its own currency. The problem is that Russia had more and more and more rupees in its account, and what was it going to use them for?
There was nothing that India had that Russia needed. What is it going to do with the rupees ? Is the rupee going to be devalued ? And if it's devalued, is Russia going to be stuck with taking rupees that are losing their value, when there's nothing that India makes that Russia wants, or that other countries really want — unless Russia maybe transfers its rupees into Chinese currency on some market ? That's the problem: how are you going to deal with the imbalances that develop?
KATHLEEN TYSON:
This is what Keynes called locked balances — you're sitting on a bunch of rupees and India doesn't make things you want.
Now, Russia tried buying some ships, saying: India, you can make ships, make some ships for me. Now, Russia already makes its own ships, it didn't really need India to make ships for it, but it wanted to get rid of those rupees. But that only went so far.
Now, what India does have is a gold exchange. So Russia can use its rupees to buy gold in Mumbai and ship the gold to Moscow. That works very efficiently. And Moscow has a gold exchange, Shanghai has a gold exchange, Mumbai has a gold exchange, Dubai has a gold exchange, Riyadh has a gold exchange. So, again, that's another aspect of what's emerging, in terms of optionality: if you don't like sitting on a blocked balance, you should be able to redeem it for gold and move the gold. Now, that worked until last week, when Modi — Prime Minister Modi of India — said that he didn't want Indians buying much gold anymore. So that could be a pressure point.
And of course, gold was to a certain extent what led to World War II, because countries were confiscating gold from their citizens. Franklin Roosevelt confiscated gold from Americans in 1933 — he forced them to sell their privately owned gold for twenty dollars and sixty-seven cents an ounce, and then the following year he devalued that by setting the price of gold at thirty-five dollars per ounce.
So we might be coming into a period where gold becomes quite important again. Now, that's dangerous, because the United States steals gold wherever it goes. When it invaded Afghanistan, it stole Afghanistan's gold. When it invaded Iraq, it stole Iraq's gold. When it invaded Libya, it stole Libya's gold. As you said, it was John Bolton of the United States that asked Britain to steal Venezuelan gold in 2019, and they've stolen the Venezuelan gold — eighty-seven tons — in January of this year. They've just stolen the gold out of Bolivia in the middle of a coup, by shipping the gold through the airport back to the United States. So if gold does re-emerge, what it does is it creates a rush for gold, and the United States seems to think that the easiest way to get gold is to steal it.
So that means that we're in a new — as you say — pirate economy, where a country like Kazakhstan, which has a very huge territory, a very tiny population, and absolutely enormous gold reserves, becomes a target. And they've not got any really good way to defend themselves.
There was obviously an attempted coup in Kazakhstan in January 2022, which was preliminary to the war in Ukraine. So had that coup succeeded, I'm guessing all of the gold in Kazakhstan would now be in New York.
So we're in a period where there's a lot of things moving, but gold is part of the optionality equation. And in this sense, what I mean is gold in self-custody. Because it's self-custody that makes countries like Libya become a target — if you're sitting on a huge amount of gold, you're on the target list for the pirates. But it also reduces the risk of having it in a foreign depository, where the United States can just nudge the British finance minister and your gold in the Bank of England disappears.
The world is moving in many directions at once. It's not settled — we're in a flux phase. But clearly gold is part of the outcome in terms of currency optionality and convertibility.
MICHAEL HUDSON:
I agree with that. That's always been a basis. The alternative is: well, there must be something besides gold — there's platinum, there's silver, there's uranium and plutonium, there are other raw materials as a basis. But the idea is: why does there have to be a commodity basis for creating money ? Every economy needs to create money, and you don't want gold to limit the amount of bank credit that an economy can create, because in order to grow, there has to be a commercial banking system with a central bank to create this money.
How are countries going to develop this system ? Well, what's complicating it even more is that while the United States has been doing just what you've described, Kathleen — pirating gold — Libya, by the way, wanted to make an African currency area where all the African currencies were based on gold. That was one of the reasons why the United States said this is a threat to the United States dollar. We want to control the world's oil trade and use it as a weapon, to be able to cut other countries off from it and make them turn off their machinery and their lights. We want to control all the gold.
Well, controlling this gold, beginning in World War II, enabled the United States to be a creditor power, and to use its creditor power to create these international organizations like the World Bank and the IMF, to control the trade policy of other countries. And they ran deficits, and these deficits — how were they financed ? They borrowed the money from international bondholders. So today, you're having almost all of the Global South countries owe an enormous amount of dollar debt — debts denominated in US dollars to foreign bondholders, and especially to their own wealthy classes.
For instance, in Argentina and Brazil, I found in the 1990s, when governments were paying forty-five percent annual interest on dollar bonds — who owned these bonds ? Well, they were paying forty-five percent because the Americans wouldn't buy Argentinian or Brazilian bonds, Europeans wouldn't. Only the ruling class of Argentina and Brazil — the central bankers and the presidents and their families — would buy these bonds. So the dollar bonds were held not by Americans or foreigners, but by their own oligarchies.
So you have a whole accumulation of foreign debts denominated in dollars, and if countries pay them, then they're not going to have any money to invest domestically in their own growth. That's the problem of having to owe money for debts: if you pay your debts, you don't have money to invest anymore. Well, that's the situation. And you can imagine how these Global South countries, and many Asian countries and Europe, are being squeezed, because now that oil prices are going way up and they have to pay much higher prices for oil, natural gas, fertilizer, chemicals made out of oil, plastics — how are they going to balance their economy ? They can't simply raise their interest rates to, let's say, eighteen percent or sixteen percent like Russia is charging, because every three years or so their debts would double and redouble and redouble. There's no way in which there can be some kind of balance under this kind of arrangement.
Well, that's why one of the features that Keynes had in his Bancor — and this is a feature I think that may be retained in a future arrangement — is that Keynes said: if a country runs a sustained balance of payments deficit, then it's obviously not going to pay the debt, and that means it was a bad loan. The debt is wiped out to the creditor country. And if the creditors continue to follow policies like the United States is doing — running a surplus — then the United States will be penalized by losing the value of its claims on the debtor country, like England, Britain. So Keynes said: Britain will be running a deficit, the United States a surplus, and the only way that we can rebalance this is debt cancellation of the deficit countries owing money to the surplus economies like the United States.
So Keynes saw that the debt problem was paramount, and the debts would have to be cancelled if there was a sustained inability of debtors to pay, and the debts would have to be written down. That was the most radical point of his proposal, and that's why the United States basically opposed it. They said: we never want to write down our claims on Britain. We want Britain to run a bigger and bigger deficit to us. We want Britain to have to raise its interest rates so that it's desperate for us to come in and buy up British industries, buy control of the British media, of the British government itself. That's what this is really all about politically.
KATHLEEN TYSON:
Well, even there I'm going to be optimistic, because something's been happening the last couple of years. China has been buying US debts from countries and substituting renminbi debts at much, much lower interest rates. And so far it's done Kenya, Sri Lanka, Ethiopia, and Mozambique, which reduced the debt service for those countries substantially. And because renminbi is a much more stable currency than the US dollar, it presents less stability risk. And also China is their biggest export partner, so they know that they're going to get renminbi to service the debts reliably, where they could never be sure that they were ever going to get dollars reliably. So even there I'm going to be optimistic and say that there are solutions.
MICHAEL HUDSON:
I agree. That's the direction that the world is going to take. It's all going to be a matter of the technical arrangements for these. And that's where you're a specialist, because you've worked on these technical arrangements for so long, and you've seen the political motivations behind each country's proposal — how do they benefit from this?
KATHLEEN TYSON:
SWIFT has been a client of mine as well. But this is why I'm an optimist, because I do not see technical barriers to multilaterally agreed credit, bilaterally agreed trade. And yes, it's more complicated than a world in which everybody uses dollars, but it's also probably more stable. Because trade is a knowable thing — you know what crops you're growing, you know what mines you have open, you have a pretty good idea what you're going to produce in any given year, barring crop disasters, weather, whatever.
And you know China is still going to be 1.4 billion people next year, just as it is this year, and they're going to need at least as much of what you produce next year. So it's actually a much more stable system if you convert to renminbi as your debt basis. The United States is proving itself an unreliable partner, as Europe is finding, or even West Asia. So it's a shift towards more complexity, more optionality, but also solutions which are better adapted to local interests, and probably more stable over time. And yes, it's complicated —
MICHAEL HUDSON:
... without speeding up the exchange rate value of the currency. If everybody wants to say: well, you know, we've just exported more to the US, we want to take payments — let's buy Chinese currency. Won't this push up China's exchange rate and make its exports more expensive and its imports cheaper?
KATHLEEN TYSON:
The Chinese exchange rate has been rising very, very moderately within its bands this year. Until this year, it was remarkably stable. The People's Bank of China had a very long-term policy of stability that kept the renminbi within a band of US dollar value. Now, where this gets interesting is, of course, the US dollar was devaluing significantly since the start of the decade, and the renminbi devalued with it. So rather than destabilize its trade partners by having its currency become more expensive, as a matter of policy the People's Bank of China chose to keep the renminbi in the band with the dollar, devaluing with the dollar for trade price stability, and basically exported stability to the world.
The currency has appreciated a little bit more this year, but not by very much — they are still dedicated to a stability policy long-term. And also, of course, if you're exporting to China and you're getting renminbi, that renminbi appreciation expands your purchasing power. And that then, if you're purchasing more from China, gives you more purchasing effectiveness.
MICHAEL HUDSON:
That's exactly what's happening. China's reserves have been going up, but its dollar reserves have been stable. All of the growth has been largely in gold and in the foreign currencies of countries it's trading with.
I want to mention two other things that were means of coping with this problem that were there in the 1930s and 1940s. Some countries tried to cope with this with blocked currencies. For instance, Germany would say: we're buying wheat from Argentina — I'm making this up — but we're giving you Deutsche Marks for this, and you can only use these Deutsche Marks to buy accordions or other musical instruments, or particular things that we've listed. There were blocked currencies that you could only use for certain purposes. So that was one means that countries have used. And do you think that is going to possibly spread?
KATHLEEN TYSON:
I'm seeing we've got some questions that we'll pick up in a bit.
I actually do see barter as very, very viable. For example, Argentina. Argentina of course persistently never has any reserves — it always wastes them away in corruption and silliness. But it wanted a 5G system. And so it contracted Huawei to build a 5G network within Argentina. And Huawei came over and they built the network, because that's what they do, they're very efficient at it.
Then Huawei found that they couldn't get paid because Argentina was out of reserves again. And what they did was actually very clever: Argentina has beef, and Chinese like beef. And so Huawei got paid for their 5G network in beef. They shipped the beef to China, where the founder of Huawei has a son-in-law who's in the food import business, and everybody was very happy. So again, what helps the world is wider optionality that suits national interest. Argentina may not have had dollars to pay Huawei, may not have had renminbi to pay Huawei, but they had beef — and Huawei said, great, I'll take the beef.
MICHAEL HUDSON:
It's another possibility that was used, as I said, in the 1950s and 1960s: the dual exchange rate. There was one exchange rate for use for trade, another for capital movements. What do you think of that?
KATHLEEN TYSON:
I don't think dual exchange rates are workable now in 2026, when most economies are small, open economies. I think a dual exchange rate would force capital flight very quickly.
Oh, there's a crypto question — I'm not going to answer that, sorry, I don't do crypto. The reference is to cryptocurrency that cannot be confiscated by the US government. No such thing exists. If they could get your USD Tether offshore, they can reach anyone anywhere and freeze or seize your currency, because Tether said that they were safe from the US and they weren't.
Oh, how did the US react to the euro ? Now that's a very interesting question — I was thinking about this earlier. When the euro was created, it was a direct threat to the US dollar. But Europe always seems to think that the United States is an ally of Europe — after all, it's the principal power in NATO. So they weren't really expecting what happened. So the euro was sabotaged almost from the start, and repeatedly sabotaged, actually. And European banks are quite easy to unsettle and destabilize. European countries are sometimes quite easy to destabilize, as we've seen in Hungary last month. Europe is actually for sale, and it's quite easy for the US to come in and destabilize it at will. So the euro is always going to be an unstable currency. And I'm sorry — the European Central Bank has been one of my clients too — but this is a reality, that they're never quite secure from infiltration and destabilization or repurposing even.
I was looking into the history of the Bank for International Settlements. When it was founded in 1930, almost the first thing that John Foster Dulles — a very big New York lawyer, he was an advisor to the Treasury at the time — did was to infiltrate his sister Eleanor into Basel, into the Bank for International Settlements, to document every single detail of its founding and organization: every executive, every board member, all their views on all of the different possible policies, what was resolved, all of its transactions, including in 1932 a payment of one hundred and twenty-five million from New York to Nazi Germany. And it's an amazing book because it's basically her diary of her infiltration of the BIS, which of course she then published as her doctorate at Harvard, and gave to her brothers — John Foster Dulles, who became Secretary of State after World War II, and Allen Dulles, who became director of the CIA after World War II. So they had an inside diagram of how to subvert the BIS right from the get-go. And then unsurprisingly, when World War II comes about, there's a very pro-Nazi American at the head of the BIS.
So I mean, this is one reason I'm very skeptical of institutions and synthetic currencies and all of that — they are very, very easy to infiltrate and repurpose. Being quite cynical there, but it is history.
There's a question here for you, Michael. "Mr. Hudson, why is BRICS still not solving the free lunch?"
MICHAEL HUDSON:
Not sure what free lunch exactly ? Why can't it just issue its own currency and have other people pick it up and hold it, like going to the grocery store and just writing an IOU for your groceries and never having to pay it ? The United States could pull it off once. Nobody is ever going to be able to repeat what the United States did again. So once an alternative to the dollar is worked out, this will prevent the United States from being the one-sided rip-off master that it's been for the last — the last eighty years. Because people will stay away from you. You don't want to do business with a pirate who's just going to steal your money, or with a crooked banker. The United States, as you pointed out, is a crooked banker.
KATHLEEN TYSON:
Well, there are a lot of them. I mean, one of the things that was disappointing about the ECB was that as soon as they hit a crisis, instead of being the neutral bank for all of Europe, they completely backed off on enforcing limits on debt, which was critical to their founding — one of the purposes of their founding was to put some brakes on debt accumulation. They gave up on that completely. Mario Draghi said: whatever it takes. But what's really interesting about the quantitative easing in Europe is that the ECB preferred buying the bonds of the over-indebted South, not buying German bonds. So if you're fiscally responsible, the ECB is not interested in your debt. If you're fiscally irresponsible, the ECB subsidizes your debt. And that's how Italy can have a lower interest rate than Germany — because everybody knows that the ECB will subsidize Italy in a crisis. So even there, you see that the institution, whatever its founding documents and charter might say, ends up behaving in unexpected ways.
MICHAEL HUDSON:
So you're saying that money is political, not something natural, a natural law?
KATHLEEN TYSON:
You know, I had a great conversation with my friend Charles Goodhart about this — Professor Charles Goodhart — about how money isn't just one thing. Money is individual to the issuer, and it can vary over time according to the issuer's policy, tolerances, behavior, risk tolerance, risk aversion. And so money is never fixed. Money is the bundle of all properties of the issuer.
MICHAEL HUDSON:
And the creator of money decides who's going to get the money and what this money is going to be used for — that's the whole problem. And now that you have money creation and bank credit privatized, instead of becoming a public utility, it's run by central banks acting on behalf of the commercial banks, not on behalf of countries saying: what do we need in order to grow, increase productivity, and raise our living standards?
KATHLEEN TYSON:
Yeah. There's a question here that's relevant, from Francis: "If African countries become more dependent on China's currency, even if it's more stable and offers lower rates than the dollar, aren't we just shifting the same problem?"
Well, here's where African countries are actually making policy differences that will change this — they are domesticating processing of ores and agriculture, and they're doing that much more quickly than most people realize. I was in Egypt in December 2024, and the most fascinating thing I saw was in the desert beyond Aswan: crop circles — huge irrigation rigs in the middle of just barren desert. They had taken Nile water, brought some irrigation rigs in, and they were growing huge amounts of food. And the driver was very proud of it — he told me they were expanding production by over twenty-two percent a year. That reduces Egypt's imports and it increases their food security. And it's being done at very low cost by using the military as farmers, because they're not at war at the moment — they might as well be farming. And it's all public land, so it didn't cost anything to acquire, because it was just barren desert out in the middle of nowhere.
So really, modern methods and technology that are being shared in agriculture, in mining, in processing, are going to transform Africa quite quickly. So it won't be just a dependent continent — it will become an independent, self-referencing continent. And that's going to make a big difference. I keep being optimistic.
NIKA DUBROVSKY:
So we're just exactly an hour into our discussion. Thank you so much for coming — that was amazing, and I have to watch it again to understand more, because it's really complicated but fascinating. And so my question for next time — please come again — would be about gold and how exactly can we organize a situation with economic stability instead of war. And there were also questions about that in the chat. I just want to read a quote from David, who was saying that historically the association between gold, war and debt is not a coincidence: coins were invented to pay soldiers, soldiers looted gold, gold was brought back to the mines, taxes were paid in coins by the very people — those villagers — the soldiers had just passed through. And gold is rising. So I think that's extremely interesting to discuss: how could it unfold, and what should our position be ? So everybody understands already about cryptocurrency, what it is, but gold still doesn't have a clear definition — so this will be fascinating to discuss.
Thank you so much.
KATHLEEN TYSON:
Thank you. Thank you, Michael.
MICHAEL HUDSON:
Thank you for having me. Thank you, Kathleen.
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