The end of dollar hegemony
And how it’s will impact the U.S. economy
I don’t usually post stuff I write for other publications on here. But I thought this might be of interest. It is an essay in which I predict the end of the U.S. dollar as the reserve currency, the impact on U.S. living standards and a possible policy to ease the transition. Enjoy!
Nice work, Philip! I quite agree that dollar hegemony will disappear soon. But I'm skeptical about the feasability of any useful Import Substitution program for the USA.
One substantial obstacle would be the availability of a properly-skilled workforce. By and large, Americans no longer covet jobs in the industrial sector. The loss of dollar hegemony would diminish the ability of the USA to acquire skilled immigrants (or even those willing to be trained) because the depreciation of the dollar would weaken the value of any remittances back home.
A more significant problem, however, is that of capital goods. The USA is no longer self-sufficient in that area and would need to import large quantities of these to produce the needed substitutes. These, obviously, would become a great deal more expensive with a weakened dollar. There is also the possibility that countries would impose export controls preventing the USA from acquiring them at any price. You can refer to the current dispute between Russia and the EU - now a matter for the WTO to consider - for a recent example.
And speaking of the WTO, any large-scale import substitution effort will likely result in grievances being filed against the USA.
Thoughts?