Working Papers

The Future of the US Dollar

I have an op-ed in the business section of today’s Australian on the future of the US dollar (no link, but full text below the fold).  Many commentators mistakenly view the market-clearing price of the US dollar on foreign exchange markets as a reflection on the US dollar’s future role in the international financial system.  As I argue in my op-ed, the US dollar’s role is entirely a function of the role of US capital markets in the international financial system.  It makes the often neglected point that a declining US dollar actually improves the net international investment position of the United States. 

I would also highly recommend Richard Cooper’s PIIE Policy Brief on The Future of the Dollar.  Cooper is particularly good in explaining why it is China that is financially dependent on the US, not the other way around.

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posted on 05 November 2009 by skirchner in

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