Why the U.S. Dollar’s Reserve Status Is An Exorbitant Burden
Economic disadvantages outweigh the benefits reaped from the reserve status. Although the dollar gives the US political power and prestige, higher costs of exports mean that it is doomed to run a current-account deficit and is forced to borrow in order to maintain full employment.
Published in
5 min readJul 9, 2019
It is a widely accepted conventional wisdom that the reserve currency status of the US dollar gives America certain vague but nevertheless important benefits — after all, we call the position of the greenback an “exorbitant privilege”. It seems like a no-brainer, as a former French finance minister charged in the 1960s, that the United States enjoys an “exorbitant privilege” from the dollar’s reserve currency status.
Media all around the world presents possible dumping of the US dollar in international transactions as a disaster for the American economy. Yet, as surprising as it may seem when…
