When it comes to the US dollar, most Americans are mainly concerned about the amount in their wallet or the conversion rate before embarking on a foreign vacation. However, the US dollar plays a significant role in the global economy. Oil, for example, is priced in USD.
In her new book Paper Soldiers, Bloomberg News reporter Saleha Mohsin investigates the repercussions of the United States’ “strong dollar” strategy, covering everything from the programme’s impact on the US industrial sector to how the dollar has been used as a weapon.
In an interview with Yahoo Finance, Mohsin discusses how Americans “get a layer of safety because we own the world’s reserve asset.” It provides some protection against external economic pressures.
The two major ones are internal. Following that, we militarised the dollar to the point that, for the first time, people are discussing de-dollarization. There is greater momentum behind it.
But the difference is that, as you mentioned, every generation, every decade, there’s a new kid in town who believes that, yeah, the euro is fresh. Perhaps that will take over the dollar status.
The yen might belong to someone else. But the difference right now is that the global economy, the organisation of G20 nations, and everything else is growing more fractured, just as US leadership becomes dubious.
The world operates on money. So you may be a business magnate, an oligarch, a global corporation, or someone in Ghana who is harvesting cocoa beans and needs to sell them to any other country. You will have an impact on the global financial system.
But what this implies for the average citizen, who is watching the show right now, is that we have an extra layer of security because we control the world’s reserve asset. It provides some buffering against external economic risks and pressures.
It also means that we may use it as a weapon to defend our nation. Let’s take 9/11. After 9/11, the first act in the fight on terror was neither a machine gun nor a military
To begin outstripping the scale of our economy, combine numbers 2, 3, and 4. That implies that anyone who comes out with an alternative, whether it’s the Chinese Yuan, which everyone speaks about, or Bitcoin, or just oil, a commodity, or a couple of currencies joined together, the US dollar is so firmly embedded in the global financial system.
The world operates on money. If you wish to make a transaction, you’ll need money to replace it with anything else. There is a significant amount of technology required.
Most oil deals are settled in dollars. To add someone, you must first unwind a significant amount.