The Remarkable Ted W. Hall

Ted_hall Today’s Wall Street Journal ran an op ed politely suggesting that the British give up pound sterling and switch to greenbacks. It is the kind of strange idea that is so counterintuitive that you are prepared for satire or possibly a rant by someone still upset about the gold standard. Instead, you get this:

"There is much at stake in the U.K.’s choice. Adoption of the dollar would eliminate exchange rate risk, improving risk-adjusted returns for all asset classes. More venture capital would stay in the U.K. (and flow to it from the U.S.), stemming brain drain and fostering a more innovation-friendly environment in the U.K. The cost disadvantage and illiquidity premium associated with participating in a $40 trillion pool (euro zone plus the U.K.) will be significant compared to participating in a 40% larger $56 trillion pool (U.S. plus the U.K.). This is especially true because the U.S. already has thriving primary and secondary markets in the broadest range of financial instruments, especially longer tenure debt and niche products. The bad news is that both sides of the Atlantic have been nonchalant to date about which way the U.K. goes. The good news is that it isn’t too late.

"Like competition among computer operating systems, very few regimes will emerge as successful. Advantages from absolute scale and increasing returns created as additional participants join will define the winners. In this battle for scale, the U.K. has the enviable position of casting the $8-trillion swing vote. The euro needs it desperately. But for the U.K., the dollar may be more attractive, not least because of regulatory, legal, accounting, cultural and linguistic commonalities. The U.K. will likely find it easier to fashion a coordinated monetary policy with one compatible counterparty than with 15 countries with whom it agrees on wine but not on beef or Iraq.

Meet Ted Hall, master of the provocative, fact-based, global conclusion. Spend a few minutes with Ted and you will realize that he has a broader perspective than you do and you will find yourself wanting to spend a few more minutes with him. He is wicked smart, a hopeless polymath, and has a knack for making money. He is also a mentor, friend, and hero. Read on if you like to hear about highly accomplished people. Otherwise stop now.   Ted Hall: seldom wrong, never in doubt. Gordon Brown may be laughing now, but as Chancellor of the British Exchequer and potential future Prime Minister, he will very likely preside over the sunset of what was once the world's most powerful currency and its first reserve currency. Surely Ted Hall is right that we have a stake in this decision. Indeed, Ted quite likely has a point of view about what the US should be willing to pay the British to dollarize.
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Economics, Other classics, Politics

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