Trump attack on global dollars

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Domination to eliminate the domination of the dollar? Donald Trump It insists that “We have lost the dollar as the world currency … This war would be the equivalent of losing.” Again, it can be the cause of such a loss. Relying on foreign currency depends on your health and liquidity confidence. Trust in dollars slowly overturned. Now under the Trump, the United States has been wrong, neglected and even an enemy: Why does the allies trust a country starting in the trade war?

Again, when the outside people want to move away from the dollar, they do not have a compelling alternative. So if anything can replace the hegemony?

The dollar is the world’s leading currency for a century. Again, after the dollar world war, the dollar replaced the pounds, because the power and wealth of England decreased. This is objectively, as in this period in this period, the US share in nominal global GDP, 26 percent in 2024, in this period, it is noteworthy. The United States also remains in the border of world technological development and the most advanced military force. Its financial markets are still the deepest and most liquid. Moreover, 58% of global reserves in the fourth quarter last year are more than 71 percent in the first quarter of 1999 and 20 percent of the euro. According to Macromicro81 percent of trade finance, 48 percent of international bonds and 47 percent of the bank’s claims on the border are still in the dollar.

What can happen wrong? In the work of the international system, Charles Kindeberger It depended on the availability of the stability of the open world economy, the power of hegemon and informed that important public goods were able to provide: open markets for trade; a fixed money; and the loan of the last resort in the crisis. The British also provided three to 1914. After 1945 he had to do it. However, during this period, the United States could not provide these goods. The result was tempting.

The period of the dollar hegemony saw a lot of shock. Europe and Japan referee rehabilitates in 1944 shakes the stable exchange rate system agreed in Bretton Woods. In 1971, the most similar President Richard Nixon, the most similar President, Devalved. This, in turn, only led to high inflation ending in the 1980s. At the same time, the European rate mechanism and then the European rate mechanism and the mechanism of the European exchange rate and the floating exchange rates and creation. Economists thought that foreign exchange reserves would be tended to think that in the world of the Asian crisis in the 1990s, on the end of the 1990s, on the other hand, the opposite of financial and currency crisis. Loans from the federal reserve also proved constant importance to the financial crisis of 2008-09.

Kindleberger Terms are still relevant as soon as possible. The network is a broader point that supports the formation and sustainability of dominant global currencies, because all users continue to use the same currency as others. But if Hegemon uses every economic rod, including financial sanctions, can be obtained? If Hegemon threatens friendly countries and promotes the occupations of friends by despots? If Hegemon violates its financial and cash stability and institutional foundations Economic success? What happens if the leader is a principle of bully?

Then both the country and individuals will consider alternatives. The difficulty is that there may be hegemon, there may be a hecemon, alternatives look even worse. Renminbi can be the best currency to use in trade with China. However, China has capital control and the annual internal capital markets. These include the strategic priority of the Chinese Communist Party, which is both economically and politically. China is also likely to use economic coercion. Thus, China cannot offer the US Liquid and Safe Assets provided by the United States.

The euro Renminbi does not suffer from these disabled people. So the dollar cannot be replaced at least in part The London Business School claims to be Hélène Ray? Yes, it can be. However, he suffers a lot of flaws. It is divided into the eurozone, because it is not a political union, but the club of sovereign states. This political decision also shows in the financial and economic disintegration of innovation and growth. First of all, the EU is not the power of hegemon. His appeal can be passed on the worst of the United States, but it is not suitable for us.

Then a competition between three alternatives, a competition with some other options, a world-based world-based world – is undoubtedly unimaginable. The first choice would be the transformation of China or the eurozone, and therefore one of them would be emerging as the issuer of the Hegemon currency. Second, each dominant in different regions would be a world with two or three competition currencies. However, network effects will create an unstable balance in such a world because people fled from one currency to another. This would be more than 1920 and the 1930s since this. The third would continue to power for the dollar.

Which dollar can be hegemony? Ideally, a trusted US would reappear. However, this is more impossible to do this now and the damage done in the house and abroad. In the blind kingdom, a standing person is the king. Similarly, a currency can continue to control the money world, taking into account the lack of high quality substitutes. Trump would like this world. There would be no more of our rest.

martin.wolf@ft.com

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