Why ‘The Tide Is Going Out On US Dollar Exceptionalism’

In "Exceptionalism Lost", I placed recent US dollar weakness in the context of America's failure to stop the spread of COVID-19. In previous work, I've suggested that fractious domestic politics and social tensions threaten to forever alter the way the rest of the world perceives the US. The transmission mechanism from the ongoing epidemic to the currency is relatively straightforward. As more states are forced to pause or rollback the re-opening push, the prospect of a durable economic rebound

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7 thoughts on “Why ‘The Tide Is Going Out On US Dollar Exceptionalism’

  1. In addition to concerns over the fade of US exceptionalism – other countries focus efforts and resources to increase their opportunities of exceptionalism.

    From Reuters today – India is increasing their spending on education from 4% to 6% of GDP. Currently, 750,000 Indian students study abroad and the country to making an effort to get top global universities to open campuses in India to bring students home. They are expanding higher education to 50% of high school students by 2035- adding 35 million students.

    It is not just the mistakes that US is making, the rest of the world is catching up.

    We are not “invincible”.

    1. It wouldn’t hurt so much if the US hadn’t pissed away it’s hegemony. It really was a once in 500 years opportunity that we were presented with these last 75 years. Seems now that I was naive; human nature was always going to prevail. I was hopeful of a greater human and social transformation. The US has been a force for much, much good these last 75 years. Just pisses me off that we couldn’t have done more with the opportunity. Human nature was a big part, but so were the blunders of the US’ elites these last three decades (which is human nature…sigh).

  2. I’m with you H re the status of the dollar in our life times.

    Despite our problems here in the US, I remain long-term optimistic about the US’s prospects. This even considering climate change, COVID-19, risk of authoritarianism, hot war with China, undermined elections via cyber warfare, the social/political dysfunction, out of touch elites, and that we have too many poor children who don’t get enough to eat. It’s the third most populous country (that will slip to maybe fourth) with a huge economy and the world’s best geography. (Oh, forgot the risk of revolution here in the US.) It’ll suck for the US for the next six or seven years. But, I don’t see a replacement for the dollar as either a store of value or medium of exchange.

    Oh, I just heard and watched Mitch McConnell on TV from an interview earlier today. Depressing. He was uttering senile nonsense. Almost incomprehensible. He was espouing talking points form a bygone era. He is an ancient person out of touch with about 270M people in the US and the current, world reality. Revolution in the US is inevitable. We are doomed after all as is the USD.

  3. Ray D takes a really long view of things; whereas I just use Genrational Dynamics / Cycles.
    Start looking back using 30 year cycles and you will see repetition of boringly repeated “changes”.
    The same hat just gets passed around. Any reserve currency is the one that has the best ROE.
    The only true breakthrough I’ve noticed is the invention of the zipper.

    1. Zippers are truly great inventions until they suddenly break on you…then the thing is pretty much always a throw-away.

      For me these pandemic days, the greatest invention of my lifetime is the microwave oven. Yesterday’s leftovers are hot and near-tasty again within seconds, bringing me gratification so I can return back to the grind here in my own castle.

  4. Sounds like Ruskin is not a MMT fan, and not concerned about strong dollar induced deflation. I will have to research what currencies could win in the expected downturn. Euro? Swiss franc ? HKD?

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