This year there has been a flurry of news and opinion editorials discussing an alleged de-dollarization trend amid a wave of revelations associated with the BRICS bloc. In a recent article, American political scientist and author Ian Bremmer insisted that claims about the death of the US dollar are exaggerated. In addition to Bremmer’s comments, economist Paul Krugman also asserted in a recent op-ed that the dollar is not going away anytime soon, calling some of the speculators “‘Weimarists,’ people who always predict hyperinflation.”
Political scientist Ian Bremmer insists that speculation about the death of the dollar is greatly exaggerated
The issue of de-dollarization has been a topical debate in 2023, as several market observers suspect that the US dollar could collapse in the near future. Many conversations and debates revolve around the BRICS nations (Brazil, Russia, India, China, and South Africa) and the alliances these countries have made. Several decisions have been made with the help of members of the Organization of the Petroleum Exporting Countries (OPEC) to dump the dollar on oil and gas settlements.
Furthermore, all over the world Google Trends data shows that the term “de-dollarization” reached the highest score out of 100 in terms of search interest during the week of April 2-8, 2023. Google Trends data indicates that the topic began to gain momentum during the last week of March 2023. Prior to that, interest spiked at the end of January 2023, but not as much as the week of April 2-8 recorded by Google Trends 12-month metrics. Although interest has increased, the internet has been awash with stories discussing the theoretical demise of the US dollar and its removal from the throne of the world’s dominant reserve currency.
In the midst of these stories, Ian Bremmer, founder of the Eurasia Group and author known for his insight into global political risk, has offered a different perspective about the supposed collapse of the dominance of the dollar. Bremmer acknowledges the de-dollarization headline trend by highlighting eight different articles. The author says these stories have “provided fertile ground for gold geeks, cryptocurrency shills, hyperinflation truthers, technolibertarians, anti-imperialists, and run-of-the-mill con artists to stoke fear about the impending doom of the world.” dollar and its supposedly catastrophic consequences for the United States and the global economy.
Bremmer shows USD Usage Data of the Federal Reserve and insists that “the rumors about the death of the dollar are greatly exaggerated.” He also claims that, by most measures, the dollar “remains indisputably dominant in global trade and finance.” The Eurasia Group founder emphasizes that the US dollar has several “desirable characteristics,” such as offering stability while also being “liquid, safe, and convertible.” However, Bremmer admits that the dollar’s dominance could decline one day, as other dominant currencies have done in the past. The author states:
None of this means that the dollar’s advantage cannot be slipped, of course. After all, all the reserve currencies prior to the dollar were dominant until the very moment they ceased to be so.
Economist Paul Krugman says the role of the US dollar “seems pretty safe”
The Eurasia Group founder isn’t the only one who feels the dollar isn’t going to lose its dominance any time soon. Economist Paul Krugman also published a opinion piece on the issue of de-dollarization in The New York Times. Krugman points to gold lover Peter Schiff and “Rich Dad Poor Dad” author Robert Kiyosaki. The op-ed says that some of these individuals are “Weimarists,” and insists that they have been predicting Inflation similar to the Weimar Republic in the U.S. Krugman insists that the US dollar’s dominance is not really at risk and that “the role of the dollar seems pretty secure.”
“The dollar has three great advantages,” said the Nobel laureate. “One is ownership: Since everyone is already using dollars, it would take exceptional circumstances for them to change. A second is that the US financial markets are open: unlike China, we don’t impose controls on people trying to bring money into or out of the country. The third is the rule of law,” Krugman added.
Wrapping up his “subscriber-only newsletter,” Krugman says there’s “one important caveat.” He believes there is a chance the US could default on the debt because the Republican-controlled House of Representatives refuses to raise the debt ceiling. In terms of the political spectrum, Krugman is a left-wing democrat forks classified “more liberal” by allsides.com. “Who will trust the currency of a nation that seems to have lost its mind politically?” Krugman asks in his NYT op-ed. “If that happens, the threat to the dollar’s reserve currency status will be the least of our problems.”
What do you think the future holds for the US dollar as the world’s dominant reserve currency and how could the de-dollarization trend affect the global economy? Share your thoughts on this topic in the comments section below.
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