The metamorphosis framing is a genuine improvement on the reserve-currency succession story, and the transport analogy earns its keep: "horseless carriage" is exactly the right diagnosis of what "reserve currency" has become. But I want to press on where the piece ends, because I think your Beijing colleague's remark — that a currency system is ultimately defined by the class relations that underpin it — deserves to be the premise of the periodization rather than its coda.
Read that way, the five regimes are not primarily monetary architectures that happen to have political economies attached. They are successive settlements between the American state and shifting configurations of wealth-holders, with the pegs, convertibility rules, and flow patterns as the visible instrumentation. Dollar #2 was the settlement in which finance was subordinated (Bretton Woods as the deliberate anti-Edwardian break you describe); #3 was its overthrow by a resurgent Wall Street; #4 was the accommodation with emerging-market state managers accumulating self-insurance; and #5 — your profit dollar — is the settlement in which the dollar's value is, in effect, the capitalized expectation that the US-centred order will continue to deliver differential returns to whoever can get their wealth inside it. Nitzan and Bichler's Capital as Power arrives at your closing formulation from first principles: nothing "backs" a fiat currency in the commodity sense; capitalization is the discounting of expected future control into present prices. "A promise of liquidity and a vehicle for outsized and unfettered capital accumulation" is that thesis in FT-compatible language.
Two implications follow that the monetary-architecture framing tends to obscure.
The first concerns China, which is the pivot of your #5 and, I would suggest, more than a firewall. The capital controls trapping $50–60tn are evidence of a regime type: a polity in which wealth-holders hold wealth at the sufferance of the party-state rather than the reverse (Ma, Evergrande, "common prosperity"). Chinese integration into dollar #5 is impossible on American terms not merely because Beijing fears an exodus, but because integration would mean Chinese capital escaping party discipline. The honeypot's catchment is therefore not "the rest of the world" but the allied-bloc oligarchies — European, Japanese, Korean, Taiwanese, Gulf — whose inflows now finance the deficits. The system's boundary is drawn by which states permit their wealth-holders to defect into it. That is a class-relations boundary, not a monetary one.
The second concerns enforcement, and it is where the forward-looking question actually lives. Every prior dollar regime rested on a coercive arm as well as an attractive one: the capacity to make exit or defiance expensive (the selectivity of that enforcement — Venezuela squeezed, Riyadh courted — is itself a tell about the system's logic, but that is another comment). What seems genuinely new is that the coercive arm is decaying while the attractive one persists. The diffusion of cheap precision denial — a strait closed by a militia that could not build a frigate, and that the assembled navies of the order could render merely survivable rather than safe — inverts the cost arithmetic on which enforcement depended. If the original divergence was factor prices and coal rather than constitutions (Pomeranz, Allen), there was never any reason the technology would stay put; the chip war is an attempt to re-bottle the genie at the one node where it might still be possible, and the outcome is open.
Which yields, I think, a sharper statement of your conclusion. Dollar #5 is a system whose capitalization depends less on the ability to punish exit than on the absence of anywhere better to go. That is a more fragile foundation than the gunboat-and-Treasury eras it succeeded, because it is hostage to relative performance rather than to force — and relative performance is precisely the dimension on which the one deliberately excluded party is closing. A reserve currency, in the time-honoured sense, could survive its issuer's relative decline for decades on institutional inertia. A profit dollar, by definition, cannot.
The question "what comes after the dollar?" may therefore be malformed in one further respect beyond those you identify: it assumes succession by another currency, when the more plausible discontinuity is succession by another settlement — a sixth metamorphosis in which the class relations shift before the unit of account does.
How does this relate to modern monetary theory (MMT)? Is there a limit to how much debt the US government can create? Is there a risk that the rest of the world will start to decline to use dollars in order to use something else, some type of stablecoin?
Can you more clearly define the nature of the problem(s) that you perceive? Currencies that are not "backed" by gold and other PM's, are simply placeholders for imaginary values that are proclaimed by sovereign governments. What is the alternative(s) once gold has been abandoned? If debtors don't pay creditors, would liquidation or military expropriation provide a meaningful alternative? What are the limits to the expansion of a national currency, REALLY?
We're testing the limits now. Inflation rates or the amount of interest on the national debt may reach politically intolerable levels. Meanwhile, people overseas will accept and hold dollars as long as they want what dollars can buy. Like Ivy League educations, US real estate, stocks, etc. [Then there's the $20 trillion in bank-issued dollars, which overlaps with the national debt. Banks lend money into existence, presumably on good credit or collateral and only up to the Fed's generosity with reserves. Banks have a temptation to over-lend, and speculators to over-borrow, however.] Bottom line: we risk deflation if we stop creating new money. Money/debt creation may now be hostage to inflated asset prices. Reassuringly, the Fed will always buy back US bonds with cash at face value if no one else steps up; they're just exchanging one liability for another. That's what makes Treasuries safe. The real yield isn't guaranteed, however... except possibly on TIPS.
"The era of gold-sterling, was quite distinct from what came after. It had relative longevity. A reasonably full accounting of the “dollar system”, by contrast, would suggest that we have been through at least five distinct dollar regimes, each with its own, particular political economy.
My intention in making this point is not to argue for “splitting” against “lumping”, but to insist that we not underestimate the restless dynamic of uneven and combined development. If, as Barry Eichengreen quips in his recent history of money, the successor to the dollar was the dollar, that is because it wasn’t. The dollar before and after 1971 was quite different. The global dollar is not one thing, but something constantly shifting."
Just as foreign central banks dollar holdings tie those banks to the continued success of the dollar, the dollar continues to hold its value and be the lynchpin of trade and finance because everyone of influence and authority agrees that it must be.
"America’s deficits are financed by inflows from Europe, South Korea, Taiwan and Japan." Wait. Aren't the economies of those countries financed by American payments for their goods? Isn't it our exorbitant privilege that they accept diluted dollars for their goods, so that we don't have to earn their currencies before buying from them? My conversations with people in the financial industry here show that most Americans don't understand that much of our foreign-held "national debt" is our own money coming back to us. I.e., that they give us the dollars that we will use to redeem the debt. As for the interest on our debt, "we" have passively chosen to finance our imbalances by paying more in interest instead of paying more in taxes. Most people don't even appreciate that debt are also assets, or that our grandchildren will inherit assets (individually, in many cases) along with debt (collectively). There are two sides to every balance sheet. Too often, we only look at one side and say, OMG or WTF, That's unsustainable!
It was less one "Offshoring Act" than an accumulation of tax architecture, trade law, and securities regulation whose combined effect was to make offshore production systematically more profitable than domestic. The main pieces, roughly in order of importance:
Deferral of foreign income (the core of it). From the origins of the corporate income tax until 2017, US multinationals owed US tax on foreign subsidiaries' profits only when those profits were repatriated. Park the earnings in an Irish or Bermudan subsidiary and the US tax liability deferred indefinitely — effectively an interest-free loan from Treasury that grew forever. Subpart F (1962) was supposed to close this for passive income, but it left active manufacturing income deferrable, which is precisely an incentive to put the factory abroad. The result by the mid-2010s was roughly $2.5–3 trillion in earnings "trapped" offshore.
Check-the-box regulations (1997). A Treasury administrative rule, not even legislation, that let companies elect how foreign entities were classified for tax purposes. It inadvertently gutted what remained of Subpart F by enabling structures like the Double Irish, where profits from IP-intensive production flowed to near-zero-tax jurisdictions. Clinton's Treasury realized the mistake almost immediately and tried to revoke it in 1998; Congress, under corporate lobbying, blocked the revocation.
Transfer pricing and IP migration. The arm's-length standard in Section 482 allowed companies to sell their intellectual property to their own offshore subsidiaries at early-stage valuations, after which the profits attributable to that IP accrued offshore forever. Since modern manufacturing value is heavily IP (pharma, semiconductors, Apple), this made the location of production follow the location of the IP for tax purposes.
Tariff provisions 9802 / the old 806/807. These charged duty only on the value added abroad when US-made components were assembled offshore and re-imported. This is the legal foundation of the maquiladora system — an explicit statutory subsidy for splitting production across the border, decades before NAFTA formalized it.
Trade law as the enabler: NAFTA (1994) and especially PNTR with China (2000) didn't create the tax incentives but removed the risk premium. Before PNTR, China's tariff status required annual congressional renewal; no board would sink fixed capital into a supply chain that Congress could reprice every year. PNTR made the tariff treatment permanent and credible, and the empirical literature (Pierce and Schott's work is the standard reference) finds US manufacturing employment fell off a cliff precisely in the industries most exposed to that uncertainty removal — the legislation changed expectations, and capitalized expectations moved the factories. That mechanism, incidentally, is pure Nitzan-Bichler: it wasn't current costs that moved production, it was the discounting of newly-secured future profits.
The 2004 repatriation holiday (American Jobs Creation Act) deserves mention as the perverse capstone: a one-time 5.25% rate on repatriated earnings, sold as job creation. Studies found the money went overwhelmingly to buybacks and dividends, and — worse — it taught every multinational that deferred earnings would eventually be amnestied, strengthening the incentive to offshore and defer.
Securities regulation, indirectly. SEC Rule 10b-18 (1982) created the safe harbor for stock buybacks, and the 1993 attempt to cap executive pay (Section 162(m)) pushed compensation into stock options. Together these hardwired management incentives to short-horizon share price, for which offshoring is the fastest cost lever. Not offshoring legislation by name, but it built the principal-agent machinery that made the tax and trade incentives irresistible.
TCJA (2017) ended deferral but replaced it with GILTI, which taxes foreign intangible returns at roughly half the domestic rate and — a detail its own drafters have conceded is perverse — calculates the exemption as a percentage of foreign tangible assets, so the more factories you hold abroad, the larger your tax-free allowance. The reform advertised as ending offshoring incentives arguably codified a milder, permanent one.
The notable pattern is that almost none of this was enacted as offshoring policy. It accreted through provisions individually defensible (avoiding double taxation, administrative simplification, trade normalization), each one lobbied for by the fraction of capital that stood to gain, with the cumulative architecture only legible in retrospect — which is rather better evidence of structural class power than a deliberate conspiracy would be. Deliberate policy gets debated; accretion doesn't.
I am not sure that "decided" is the right word, but that is how it worked as a practical matter.
The Opium Wars came about because trade deficits with Qing China were causing a worldwide shortage of silver to pay for Chinese goods. The only thing foreigners had that Chinese people wanted was silver, until the british introduced opium.
Sharp periodization. Each dollar regime also swapped its control model: the gold peg was rules-based, Bretton Woods 2.0 substituted reserve accumulation as sovereign self-insurance, itself a costly but verifiable control. The profit dollar has no equivalent control, it runs on investor confidence rather than audited reserves. That is a control gap at the scale of a currency system, and control gaps are usually priced only after the incident, not before.
Dear Adam, thank you for yet another stimulating article. I do however have some remarks and one objection. First, the objection. Although the PE approach is refreshing by comparison to the technical jargon usually resorted to in discussing global currencies and their relative significance, I think the actual requirements for a currency to rise to the position of a dominant, global one deserve to be mentioned/included in your analysis. If anything, they reinforce the argument made about the balance of economic power being a fundamental determinant. Now, my remark. The Eichengreen historical approach is in a sense complementary to the PE approach, which is also historically embedded in the changes taking place in the socioeconomic environment. Thus the reference to BE's work could be made better use of. Having said the above, I must say your article got me thinking in the right direction! Thanks again. Marica Frangakis, Athens
This is the reframe the de-dollarization crowd keeps missing, professor — they keep waiting for the funeral while the corpse changes outfits. "Dollar #5" is the tell: the world stopped hoarding dollars as reserves and started buying America itself.
Put a number on your "billionaire dollar" and it's staggering. The US is roughly 4% of the planet's population and a quarter of its GDP — yet American equities are now about half of all the stock-market value on Earth: ~$75 trillion of ~$148 trillion (Siblis Research / World Federation of Exchanges). That's not a reserve currency; it's a gravity well. Capital no longer parks in Treasuries for safety — it piles into US assets for the upside.
Which is why "what replaces the dollar?" is the wrong question. You don't dethrone the deepest, most liquid casino on Earth by building a shallower one. The dollar didn't weaken. It stopped pretending to be a store of value and admitted it's a profit engine — your words, and the tape agrees.
You state: "national debt may reach politically intolerable levels."
About that, I am certain: it is not and will not become an issue. Why? US public is too ignernt about economics. Consider how many CONTINUE to pay outrageous rates of credit card interest as the normal course of action.l To me, just nuts to willingly pay such rates for the luxury of debt. Same conditions for macro situation. Most John Q Public's would claim they were not affected by the national debt doubling again from here. They certainly have not become excited about the last 10 Trillion in debt. Billions- Trillions. They're innumerate; the only material price is the price of gasoline, To John Public, what is the difference? None as afar as they perceive. For a $1 cut in price at the pump, they would GIVE Iran nukes without reservation.
Larger issue goes beyond FUBAR. It is the realization that the long road of historical ignorance about so much has created a society with no hope of remediation. Doubt that? Chapters 4,10 and 1174 appear nightly on Jesse Watters' interviews of the no-minds on the beach. Just another chapter of Johnny Carson's interviews of JQPublic as street urchins, aka Proles. Joey Chestnut is the main player on the horizon of their minds.
Professor Tooze,
The metamorphosis framing is a genuine improvement on the reserve-currency succession story, and the transport analogy earns its keep: "horseless carriage" is exactly the right diagnosis of what "reserve currency" has become. But I want to press on where the piece ends, because I think your Beijing colleague's remark — that a currency system is ultimately defined by the class relations that underpin it — deserves to be the premise of the periodization rather than its coda.
Read that way, the five regimes are not primarily monetary architectures that happen to have political economies attached. They are successive settlements between the American state and shifting configurations of wealth-holders, with the pegs, convertibility rules, and flow patterns as the visible instrumentation. Dollar #2 was the settlement in which finance was subordinated (Bretton Woods as the deliberate anti-Edwardian break you describe); #3 was its overthrow by a resurgent Wall Street; #4 was the accommodation with emerging-market state managers accumulating self-insurance; and #5 — your profit dollar — is the settlement in which the dollar's value is, in effect, the capitalized expectation that the US-centred order will continue to deliver differential returns to whoever can get their wealth inside it. Nitzan and Bichler's Capital as Power arrives at your closing formulation from first principles: nothing "backs" a fiat currency in the commodity sense; capitalization is the discounting of expected future control into present prices. "A promise of liquidity and a vehicle for outsized and unfettered capital accumulation" is that thesis in FT-compatible language.
Two implications follow that the monetary-architecture framing tends to obscure.
The first concerns China, which is the pivot of your #5 and, I would suggest, more than a firewall. The capital controls trapping $50–60tn are evidence of a regime type: a polity in which wealth-holders hold wealth at the sufferance of the party-state rather than the reverse (Ma, Evergrande, "common prosperity"). Chinese integration into dollar #5 is impossible on American terms not merely because Beijing fears an exodus, but because integration would mean Chinese capital escaping party discipline. The honeypot's catchment is therefore not "the rest of the world" but the allied-bloc oligarchies — European, Japanese, Korean, Taiwanese, Gulf — whose inflows now finance the deficits. The system's boundary is drawn by which states permit their wealth-holders to defect into it. That is a class-relations boundary, not a monetary one.
The second concerns enforcement, and it is where the forward-looking question actually lives. Every prior dollar regime rested on a coercive arm as well as an attractive one: the capacity to make exit or defiance expensive (the selectivity of that enforcement — Venezuela squeezed, Riyadh courted — is itself a tell about the system's logic, but that is another comment). What seems genuinely new is that the coercive arm is decaying while the attractive one persists. The diffusion of cheap precision denial — a strait closed by a militia that could not build a frigate, and that the assembled navies of the order could render merely survivable rather than safe — inverts the cost arithmetic on which enforcement depended. If the original divergence was factor prices and coal rather than constitutions (Pomeranz, Allen), there was never any reason the technology would stay put; the chip war is an attempt to re-bottle the genie at the one node where it might still be possible, and the outcome is open.
Which yields, I think, a sharper statement of your conclusion. Dollar #5 is a system whose capitalization depends less on the ability to punish exit than on the absence of anywhere better to go. That is a more fragile foundation than the gunboat-and-Treasury eras it succeeded, because it is hostage to relative performance rather than to force — and relative performance is precisely the dimension on which the one deliberately excluded party is closing. A reserve currency, in the time-honoured sense, could survive its issuer's relative decline for decades on institutional inertia. A profit dollar, by definition, cannot.
The question "what comes after the dollar?" may therefore be malformed in one further respect beyond those you identify: it assumes succession by another currency, when the more plausible discontinuity is succession by another settlement — a sixth metamorphosis in which the class relations shift before the unit of account does.
How does this relate to modern monetary theory (MMT)? Is there a limit to how much debt the US government can create? Is there a risk that the rest of the world will start to decline to use dollars in order to use something else, some type of stablecoin?
Dollar #5, is the “profit dollar”. Until its no longer profitable to hold USD assets. What happens then? Or does anyone think that will never occur.
Pardon an old proofreader, but it's derring-do.
Can you more clearly define the nature of the problem(s) that you perceive? Currencies that are not "backed" by gold and other PM's, are simply placeholders for imaginary values that are proclaimed by sovereign governments. What is the alternative(s) once gold has been abandoned? If debtors don't pay creditors, would liquidation or military expropriation provide a meaningful alternative? What are the limits to the expansion of a national currency, REALLY?
We're testing the limits now. Inflation rates or the amount of interest on the national debt may reach politically intolerable levels. Meanwhile, people overseas will accept and hold dollars as long as they want what dollars can buy. Like Ivy League educations, US real estate, stocks, etc. [Then there's the $20 trillion in bank-issued dollars, which overlaps with the national debt. Banks lend money into existence, presumably on good credit or collateral and only up to the Fed's generosity with reserves. Banks have a temptation to over-lend, and speculators to over-borrow, however.] Bottom line: we risk deflation if we stop creating new money. Money/debt creation may now be hostage to inflated asset prices. Reassuringly, the Fed will always buy back US bonds with cash at face value if no one else steps up; they're just exchanging one liability for another. That's what makes Treasuries safe. The real yield isn't guaranteed, however... except possibly on TIPS.
"The era of gold-sterling, was quite distinct from what came after. It had relative longevity. A reasonably full accounting of the “dollar system”, by contrast, would suggest that we have been through at least five distinct dollar regimes, each with its own, particular political economy.
My intention in making this point is not to argue for “splitting” against “lumping”, but to insist that we not underestimate the restless dynamic of uneven and combined development. If, as Barry Eichengreen quips in his recent history of money, the successor to the dollar was the dollar, that is because it wasn’t. The dollar before and after 1971 was quite different. The global dollar is not one thing, but something constantly shifting."
Just as foreign central banks dollar holdings tie those banks to the continued success of the dollar, the dollar continues to hold its value and be the lynchpin of trade and finance because everyone of influence and authority agrees that it must be.
"America’s deficits are financed by inflows from Europe, South Korea, Taiwan and Japan." Wait. Aren't the economies of those countries financed by American payments for their goods? Isn't it our exorbitant privilege that they accept diluted dollars for their goods, so that we don't have to earn their currencies before buying from them? My conversations with people in the financial industry here show that most Americans don't understand that much of our foreign-held "national debt" is our own money coming back to us. I.e., that they give us the dollars that we will use to redeem the debt. As for the interest on our debt, "we" have passively chosen to finance our imbalances by paying more in interest instead of paying more in taxes. Most people don't even appreciate that debt are also assets, or that our grandchildren will inherit assets (individually, in many cases) along with debt (collectively). There are two sides to every balance sheet. Too often, we only look at one side and say, OMG or WTF, That's unsustainable!
The US must run current account deficits to maintain the reserve status of the dollar, as otherwise, nobody will have dollars to hold as reserves.
Are you saying that we decided to offshore our procurement of manufactured goods in order to maintain the reserve status of the dollar?
It was less one "Offshoring Act" than an accumulation of tax architecture, trade law, and securities regulation whose combined effect was to make offshore production systematically more profitable than domestic. The main pieces, roughly in order of importance:
Deferral of foreign income (the core of it). From the origins of the corporate income tax until 2017, US multinationals owed US tax on foreign subsidiaries' profits only when those profits were repatriated. Park the earnings in an Irish or Bermudan subsidiary and the US tax liability deferred indefinitely — effectively an interest-free loan from Treasury that grew forever. Subpart F (1962) was supposed to close this for passive income, but it left active manufacturing income deferrable, which is precisely an incentive to put the factory abroad. The result by the mid-2010s was roughly $2.5–3 trillion in earnings "trapped" offshore.
Check-the-box regulations (1997). A Treasury administrative rule, not even legislation, that let companies elect how foreign entities were classified for tax purposes. It inadvertently gutted what remained of Subpart F by enabling structures like the Double Irish, where profits from IP-intensive production flowed to near-zero-tax jurisdictions. Clinton's Treasury realized the mistake almost immediately and tried to revoke it in 1998; Congress, under corporate lobbying, blocked the revocation.
Transfer pricing and IP migration. The arm's-length standard in Section 482 allowed companies to sell their intellectual property to their own offshore subsidiaries at early-stage valuations, after which the profits attributable to that IP accrued offshore forever. Since modern manufacturing value is heavily IP (pharma, semiconductors, Apple), this made the location of production follow the location of the IP for tax purposes.
Tariff provisions 9802 / the old 806/807. These charged duty only on the value added abroad when US-made components were assembled offshore and re-imported. This is the legal foundation of the maquiladora system — an explicit statutory subsidy for splitting production across the border, decades before NAFTA formalized it.
Trade law as the enabler: NAFTA (1994) and especially PNTR with China (2000) didn't create the tax incentives but removed the risk premium. Before PNTR, China's tariff status required annual congressional renewal; no board would sink fixed capital into a supply chain that Congress could reprice every year. PNTR made the tariff treatment permanent and credible, and the empirical literature (Pierce and Schott's work is the standard reference) finds US manufacturing employment fell off a cliff precisely in the industries most exposed to that uncertainty removal — the legislation changed expectations, and capitalized expectations moved the factories. That mechanism, incidentally, is pure Nitzan-Bichler: it wasn't current costs that moved production, it was the discounting of newly-secured future profits.
The 2004 repatriation holiday (American Jobs Creation Act) deserves mention as the perverse capstone: a one-time 5.25% rate on repatriated earnings, sold as job creation. Studies found the money went overwhelmingly to buybacks and dividends, and — worse — it taught every multinational that deferred earnings would eventually be amnestied, strengthening the incentive to offshore and defer.
Securities regulation, indirectly. SEC Rule 10b-18 (1982) created the safe harbor for stock buybacks, and the 1993 attempt to cap executive pay (Section 162(m)) pushed compensation into stock options. Together these hardwired management incentives to short-horizon share price, for which offshoring is the fastest cost lever. Not offshoring legislation by name, but it built the principal-agent machinery that made the tax and trade incentives irresistible.
TCJA (2017) ended deferral but replaced it with GILTI, which taxes foreign intangible returns at roughly half the domestic rate and — a detail its own drafters have conceded is perverse — calculates the exemption as a percentage of foreign tangible assets, so the more factories you hold abroad, the larger your tax-free allowance. The reform advertised as ending offshoring incentives arguably codified a milder, permanent one.
The notable pattern is that almost none of this was enacted as offshoring policy. It accreted through provisions individually defensible (avoiding double taxation, administrative simplification, trade normalization), each one lobbied for by the fraction of capital that stood to gain, with the cumulative architecture only legible in retrospect — which is rather better evidence of structural class power than a deliberate conspiracy would be. Deliberate policy gets debated; accretion doesn't.
I am not sure that "decided" is the right word, but that is how it worked as a practical matter.
The Opium Wars came about because trade deficits with Qing China were causing a worldwide shortage of silver to pay for Chinese goods. The only thing foreigners had that Chinese people wanted was silver, until the british introduced opium.
An amazingly informative comment!! More please!!
Sharp periodization. Each dollar regime also swapped its control model: the gold peg was rules-based, Bretton Woods 2.0 substituted reserve accumulation as sovereign self-insurance, itself a costly but verifiable control. The profit dollar has no equivalent control, it runs on investor confidence rather than audited reserves. That is a control gap at the scale of a currency system, and control gaps are usually priced only after the incident, not before.
Dear Adam, thank you for yet another stimulating article. I do however have some remarks and one objection. First, the objection. Although the PE approach is refreshing by comparison to the technical jargon usually resorted to in discussing global currencies and their relative significance, I think the actual requirements for a currency to rise to the position of a dominant, global one deserve to be mentioned/included in your analysis. If anything, they reinforce the argument made about the balance of economic power being a fundamental determinant. Now, my remark. The Eichengreen historical approach is in a sense complementary to the PE approach, which is also historically embedded in the changes taking place in the socioeconomic environment. Thus the reference to BE's work could be made better use of. Having said the above, I must say your article got me thinking in the right direction! Thanks again. Marica Frangakis, Athens
Jean-Pierre Dupuy, Economy and the Future, is interesting on the epistemological aspect of this.
This is the reframe the de-dollarization crowd keeps missing, professor — they keep waiting for the funeral while the corpse changes outfits. "Dollar #5" is the tell: the world stopped hoarding dollars as reserves and started buying America itself.
Put a number on your "billionaire dollar" and it's staggering. The US is roughly 4% of the planet's population and a quarter of its GDP — yet American equities are now about half of all the stock-market value on Earth: ~$75 trillion of ~$148 trillion (Siblis Research / World Federation of Exchanges). That's not a reserve currency; it's a gravity well. Capital no longer parks in Treasuries for safety — it piles into US assets for the upside.
Which is why "what replaces the dollar?" is the wrong question. You don't dethrone the deepest, most liquid casino on Earth by building a shallower one. The dollar didn't weaken. It stopped pretending to be a store of value and admitted it's a profit engine — your words, and the tape agrees.
By
You state: "national debt may reach politically intolerable levels."
About that, I am certain: it is not and will not become an issue. Why? US public is too ignernt about economics. Consider how many CONTINUE to pay outrageous rates of credit card interest as the normal course of action.l To me, just nuts to willingly pay such rates for the luxury of debt. Same conditions for macro situation. Most John Q Public's would claim they were not affected by the national debt doubling again from here. They certainly have not become excited about the last 10 Trillion in debt. Billions- Trillions. They're innumerate; the only material price is the price of gasoline, To John Public, what is the difference? None as afar as they perceive. For a $1 cut in price at the pump, they would GIVE Iran nukes without reservation.
Larger issue goes beyond FUBAR. It is the realization that the long road of historical ignorance about so much has created a society with no hope of remediation. Doubt that? Chapters 4,10 and 1174 appear nightly on Jesse Watters' interviews of the no-minds on the beach. Just another chapter of Johnny Carson's interviews of JQPublic as street urchins, aka Proles. Joey Chestnut is the main player on the horizon of their minds.