An award-winning economic journalist on why the US dollar is positioned to maintain global primacy—and what that means for America and the world
“Magisterial.”—Edward Chancellor, Reuters
Prophecies that the dollar will lose its status as the world’s dominant currency have echoed for decades—and are increasing in volume. Cryptocurrency enthusiasts claim that Bitcoin or other blockchain-based monetary units will replace the dollar. Foreign policy hawks warn that China’s renminbi poses a lethal threat to the greenback. And sound money zealots predict that mounting US debt and inflation will surely erode the dollar’s value to the point of irrelevancy.
Contra the doomsayers, Paul Blustein shows that the dollar’s standing atop the world’s currency pyramid is impregnable, barring catastrophic policy missteps by the US government. Recounting how the United States has wielded the dollar to impose devastating sanctions against adversaries, Blustein explains that although targets such as Russia have found ways to limit the damage, Washington’s financial weaponry will retain potency long into the future. His message, however, is that America must not be complacent about the dollar; the great power that its supremacy confers comes with commensurate responsibility.
Paul Blustein has written about economic issues for more than 40 years. A graduate of the University of Wisconsin and Oxford University, where he was a Rhodes Scholar, Paul spent most of his career reporting for The Washington Post and The Wall Street Journal. He is currently a Senior Fellow at the Centre for International Governance Innovation. Paul's books have received critical acclaim from leading publications including The Economist, Financial Times, Foreign Affairs, and the New York Review of Books. He especially loves hearing from professors and college students that his books help make complex economic subjects interesting and intelligible. A resident since 2010 of Kamakura, Japan, where he lives with his wife, Yoshie Sakai, he is the father of four children and in 2018 attained his most cherished status yet--grandpa.
Finally finished @paulblustein.bsky.social's latest book, and it's a doozy!
Paul writes clearly and authoritatively, not to mention entertainingly. I've read most of his books, and I always learn so much about how the world works. I wish I could carry in my head a fraction of what Paul does.
This one is, as you might guess, about how money flows internationally and why so much of it is done in dollars. A dizzying array of acronyms and obscure but critical organizations people this book. Who knew money was so complicated?
I love how Paul takes current events and ties them to history. In this one, the stories about the earliest clearing houses in New York and how money was handled in Saudi Arabia in the 1970s both stick with me.
In particular, if you're curious how modern financial sanctions work (and why they don't have unlimited power), you'll love this.
As with all of Paul's books, highly recommended.
Disclosure: Paul is a good friend, so my opinion is biased. Nevertheless, I'm right!
Lots of interesting information, a good explanation of why the dollar is dominant and a good argument put forward for why dollar dominance will continue for the foreseeable future.
The author’s personal biases are, unfortunately, clear and this takes away from the quality of the book. The author, while demonstrating clear expertise regarding economic matters, demonstrates what must unfortunately be regarded as near-total ignorance regarding geopolitical matters, most notably the war between Ukraine and Russia.
These concerns aside, the book is sufficiently informative that I would recommend it to others.
A serious disappointment. I was hoping for a thorough discussion of the future of the dollar in the new economic age, especially with the new tariffs and maybe some more detailed look at the prospects for the stability of the dollar with the changes in debt and deficit levels (one way or another) of the United States. Instead, this is a relatively simplistic book about the 'imperial' nature of the dollar dominance, where somehow there is more focus on the impacts of cryptocurrencies and stablecoins than on budget policy.
There is really just one chapter on the history of the dollar pre-Bretton Woods, and it goes through quite a complex history (like the National Bank Act of 1863) pretty quickly. An interesting point there is that before the Civil War, individual banks issued promissory notes that served as currency. There were not redeemed (for us government minted coins for precious specie like gold or silver) always at par - established banks from New York or Boston (where regulators were seen as strict and thus one could rely on the promise of the bank more) were exchanged or traded closer to par than notes from banks at frontier or from smaller and less-well regulated states.
The main point that the author is trying to make in the historical section is that, effectively, until the Bretton Woods conference (or probably the Lend-Lease agreements, but that is not mentioned), the dollar was not a truly internationalised currency. This supports his almost teleological notion of currency development for the rest of the book.
A couple of other themes are present throughout the book. One is that clearinghouses, an important innovation of Wall Street, serve as important chokepoints for the global financial system (especially the Clearing House Interbank Payments System - CHIPS). Large parts of the middle of the book are devoted to the various abilities of the US Treasury to limit trading in dollars, which makes it a financial weapon. Those parts were quite tedious, and even though they were sometimes technical (like explaining the development of the secondary sanction regime against Iran), it was only one part of the sanction policy.
Blustein is very bullish on the long-term prospects of the dollar as the world's reserve currency (or at least one of them). This is because none of the other currencies can come close to the dollar's wide availability and ease of use. He argues that the key to the dollar’s dominance is the wide availability of the ultimate safe asset - the US Treasuries (the opening part of the chapter on the aftermath of the Nixon shock gives a fascinating look inside the Saudi central bank in the 70s that was for meone of the most interesting parts of the book).
None of the other currencies comes even close. Yen limited its own prospects by not opening up earlier: in the 80s, US Treasury officials actively encouraged the internationalisation of yen, through a sharp reduction of barriers into the Japanese financial markets, but were unsuccessful. The euro is engulfed in its own problems and, according to Blustein, is not stable enough. Yuan has a similar problem like yen early on (plus the influence of the lack of rule of law in Chinese financial markets), but also is limited by the fact that China is an export surplus country buying up treasuries, which makes them much less incentivised to actually limit the global scope of the dollar. The Special Drawing Rights, a non-currency developed by the IMF, are just too complex, can only be used by states, and their 'basket of currency nature means that their new issuances are determined by the existing powers. And a development of a 'BRICS' currency is, according to the author, quite absurd, as the countries are too similar in economic policy, geography and financial reality.
All of this does not mean that the dollar will continue to be omnipresent - there might be a wider use of, for instance yuan for specific transactions, like between China and Russia after the Russian invasion of Ukraine. But that does not mean a replacement of the role of the dollar.
There are also three chapters on cryptocurrencies, which I found quite boring and not fully address the main premise of the book. The author argues that problems with CBDCs (like the Sand Dollar or ECNY) are their limited uptake, not because of the fear of the encroachment on personal liberties, but just because people do not need them when they have other digital forms of online payments that work just fine. He considers the initiatives of the Bank for International Settment in this area of something akin to a politician's syllogism.
The argument of the end of the book is that the continuing and growing internationalisation of the dollar gives it the responsibility for the stability of the global financial system, which can clash with its domestic financial policy imperatives. This can sometimes be resolved, like with the creation of the special repo (repurchase of US Treasuries, effectively overnight loans used for settlement purposes) facility during early COVID or by the creation of extended credit lines with other central banks, but it might not be so. Also, extended use of the financial weapons might speed up the uptake of alternative currencies and forms of payment, effectively limiting the potency of the weapon.
Overall, the book is definitely not boring, but I would not recommend it to anyone who has some understanding of modern financial history and financial markets, as there is too little that would be novel or particularly insightful.
Paul Blustein untersucht in King Dollar die Geschichte und die ungewisse Zukunft der weltweit dominierenden Währung. Er widerspricht den Prognosen, die den Niedergang des Dollars durch Kryptowährungen oder den Aufstieg des Renminbi vorhersagen, und unterstreicht dessen weiterhin zentrale Rolle im globalen Finanzsystem. Gleichzeitig warnt Blustein vor Selbstzufriedenheit: Die Vorherrschaft des Dollars ist nicht nur ein Privileg, sondern auch mit erheblicher politischer Verantwortung verbunden. Im Kapitel 2: Von bescheidenen Anfängen zum König der Währungen zeichnet er den historischen Aufstieg nach, während Kapitel 5: Bewaffnung die Nutzung des Dollars als geopolitisches Instrument – insbesondere durch Sanktionen – kritisch analysiert. So entsteht ein eindringliches Porträt der finanziellen Macht Washingtons und ihrer langfristigen globalen Auswirkungen. Blustein entlarvt den Dollar als das mächtigste nichtmilitärische Instrument Washingtons: Seine Vorherrschaft mag trotz Krypto-Hype stabil erscheinen, doch die exzessive geopolitische Instrumentalisierung lässt erste Risse erkennen. Er zeigt, dass die eigentliche Gefahr für den „King Dollar“ weder in Peking noch auf der Blockchain liegt, sondern in der Versuchung der USA, ihre finanzielle Dominanz so intensiv als Waffe einzusetzen, dass andere Akteure aktiv nach Alternativen suchen. Ein kurzer Impuls dazu: Der Dollar fungiert als Betriebssystem der Weltwirtschaft – doch Washington agiert bisweilen wie ein Administrator, der nach eigenem Ermessen Zugänge beschränkt. Wer Währungen „bewaffnet“, wie Blustein im fünften Kapitel beschreibt, begibt sich auf ein riskantes Terrain: Jede Sanktion kann Anreize schaffen, alternative Zahlungssysteme zu entwickeln, und stärkt den Willen vieler Schwellenländer, sich aus monetären Abhängigkeiten zu lösen. Ein ergänzender Exkurs: Das brasilianische Zahlungssystem Pix ist weit mehr als eine komfortable App – es lässt sich als praktische Antwort auf jene finanzielle Abhängigkeit lesen, die Blustein in King Dollar beschreibt. Während der Dollarraum und klassische Kreditkartensysteme oft mit Gebühren, Verzögerungen und institutioneller Trägheit operieren, demonstriert Brasilien, wie digitale Souveränität finanzielle Teilhabe radikal ausweiten kann. Pix hat in kürzester Zeit erreicht, woran jahrzehntelange Reformversuche scheiterten: Millionen bislang Ausgeschlossene wurden in den Wirtschaftskreislauf integriert – kostenlos, in Echtzeit und weitgehend unabhängig von US-dominierten Zahlungsnetzwerken. Damit entsteht ein nationales Finanzökosystem, das in Effizienz und Zugänglichkeit vielen etablierten Strukturen des globalen Nordens voraus ist. Im Lichte von Blusteins Analyse erscheint Pix wie ein leises, aber wirksames Gegengewicht: kein Angriff auf den Dollar, sondern ein funktionierendes Alternativmodell. Die eigentliche Herausforderung für den „King Dollar“ liegt womöglich weniger in spekulativen Kryptowelten als in solchen staatlich getragenen Infrastrukturen, die Abhängigkeiten schrittweise reduzieren. Wenn ein Straßenhändler in São Paulo Zahlungen per QR-Code in Sekunden abwickelt, während anderswo noch mit Verzögerungen und Intermediären gerungen wird, zeigt sich: Die Zukunft der Finanzarchitektur entsteht nicht allein in den Zentren der Macht, sondern zunehmend dort, wo digitale Innovation mit politischem Gestaltungswillen zusammenfällt.
Part of a vein of books that is rapidly growing in popularity on the role of the dollar as a tool of economic warfare, among which are also Nicholas Mulder's 'The Economic Weapon' (more of a history of sanctions), Farrell and Newham's 'Underground Empire' (interesting book on the actual mechanics of sanctions), Edward Fishman's 'Chokepoints' (an in-depth examination of the use of sanctions in the case studies of Iran, North Korea, and Russia).
An important topic but a disappointingly simplistic treatment. The author makes no attempts to hide a pro-American bias, smugly dismisses past dollar doomsayers with the infallible shield of hindsight bias, spends too long on cryptocurrencies (a much better treatment from Eswar Prasad). A bit too much description and too little actual interrogation of interesting macroeconomic implications of continued dollar dominance, like on fiscal deficits, monetary policy, trade/globalisation, and so on.
Readable but probably a bit too simplistic for anyone who already has a grasp of the foundations of financial plumbing.
The dollar will remain the world’s reserve currency, because:
1. It is liquid and safe, its value holds even in a crisis (even if said crisis is from America itself). The financial market is well developed. 2. There are no competitors. The Euro has too many disparate states with vastly different financial strengths. The Reminbi is not freely movable, the the Chinese court is considered part of the CPC. Bitcoin’s value fluctuates and it’s not backed by any government. SDR relies on IMF nations’ reserve currencies, the majority being the dollar. 3. Even trades outside America uses American dollars. Some reminbi trade exists but mostly for oil from sanctioned countries. Every other country wants dollars. 4. SWIFT allows America to sanction any bank with the threat of cutting it off. So all banks listen to American sanctions. 5. All these quantitative easing had not resulted in hyperinflation or abandonment of the dollar at all.
This book is brilliant for anyone wondering about the decline of Western fiat currencies (notably the dollar, obviously). It is quite technical but otherwise very accessible.
I personally think it is best paired with "How Countries Go Broke" by Ray Dalio, as both books shed light on the future of the US, and thus the global, economy.
Absolutely loved this book. The author was my constant companion, providing short quips and call back jokes to keep me sane.
Although dense at times, I’m sure to a seasoned academic this is light work, for me, I’m proud of my ability to grasp and follow the content. I’m especially fond of the alphabet soup this book churns through, learning each abbreviation is paying dividends in my daily life as I now possess a floor of knowledge to call back to, no longer will I be disengaged by the likes of IMF, NYSE, CBDC, CHIPS, SWIFT, and BIS.
I feel an interest in global finance growing within me, I’m excited to see where it leads.