The Fiscal Theory of the Price Level & De-Dollarization Myths | Jon Hartley. Beating Sisyphus, EP8

Is the era of US Dollar dominance truly over? And why does the math on government debt rarely add up?In this episode of Beating Sisyphus, hosts Thomas Riveros and Lourdes Casanova sit down with Jon Hartley (Hoover Institution, Stanford PhD candidate, and host of the Capitalism and Freedom in the 21st Century podcast).They dive deep into Jon’s 2023 paper on the International Public Debt Valuation Puzzle, exploring the Fiscal Theory of the Price Level (FTPL) and why inflation is often a fiscal phenomenon rather than just a monetary one. Jon explains why credible fiscal commitments are the secret weapon to defeating hyperinflation, citing historical examples from Brazil to Poland.The conversation then shifts to the hot topic of De-Dollarization. Jon debunks the narrative that the Greenback is losing its status, explaining the concept of "safe asset" demand and why China’s RMB faces an uphill battle to compete. Finally, Jon shares his optimism for Argentina under Javier Milei’s market reforms.Key Topics Discussed:📉 The Debt Puzzle: Why real debt values often don't match future surpluses.💵 De-Dollarization: Why the USD share of global reserves remains sticky .🏛️ Fiscal vs. Monetary: How consolidated government balance sheets explain inflation.🇦🇷 Argentina's Future: Why Javier Milei’s shock therapy might work.About the Guest: Jon Hartley is an economist and Policy Fellow at the Hoover Institution. A former employee of Goldman Sachs, the World Bank, and the Federal Reserve, he is currently a PhD candidate at Stanford University.

Timestamps:(00:00) – Intro: Jon Hartley (Hoover Institution & Stanford)(00:49) – From Goldman Sachs to Academia: Jon’s Journey

(05:26) – Why do Governments Borrow? (Keynes vs. Political Economy)

(08:30) – What is the Fiscal Theory of the Price Level (FTPL)?(10:45) – The International Public Debt Valuation Puzzle Explained

(14:16) – How to Defeat Inflation: Lessons for Emerging Markets

(18:59) – Monetary vs. Fiscal Policy: The Consolidated Balance Sheet

(23:19) – De-Dollarization: Is the Dollar Actually Losing Power?(28:22) – Why China Struggles to Internationalize the RMB

(31:10) – Does "Safe Asset" Demand Let the US Run infinite Deficits?

(34:33) – The Bull Case for Argentina & Javier Milei’s Reforms