Shocks, Crises, and False Alarms

CHAPTER 20 The False Alarms of Dollar Death

Over the past 50 years or so, the false alarm of the dollar’s death has sounded over and over. Starting with the Nixon shock of 1971 that finished off the remaining facade of the gold standard, obituaries for the greenback have been written many times. In recent years, the surge in US government borrowing needed to finance the pandemic stimulus brought a new wave of obituaries.¹ Yet over the decades, the dollar’s share of world reserves has been dominant, with no other currency even coming close to dethroning it (see figure 20.1B). And despite the elevated debt, significant external borrowing, and large foreign liabilities (see figure 20.1C), in 2023 the greenback traded near record high valuations ...