Here's the thing about dominance: it feels unbeatable—right until it's not. Rome believed in eternal superiority until Visigoths strolled through the gates. The British Empire was invincible until tea-drinking revolutionaries with poor dental hygiene spoiled the party. Today, Uncle Sam enjoys a similar delusion with the almighty U.S. dollar, a currency so robust that it's treated like oxygen—unquestioned, abundant, and essential. But what if we're all inhaling a bit too deeply?
Look around. America's exorbitant privilege—a term coined with envy-coated venom by French Finance Minister Valéry Giscard d’Estaing in the 1960s—is starting to feel, well, a bit more exorbitant and a bit less privileged. As economist Kenneth Rogoff neatly put it in a recent chat, the U.S. dollar is not just a currency; it's an emotional attachment. It's our identity, our swagger. But identities built on swagger alone tend to end badly (ask the Winklevoss twins).
But why should you care, really? After all, you’re busy trading zero-day options, flipping meme stocks, and making TikToks about financial freedom—life is good. Here's the rub: dollar dominance isn't just a flex; it's America's foundational competitive advantage, embedded deep within our financial marrow. Lose that, and suddenly your adjustable-rate mortgage spikes, your Tesla lease balloons, and your Bitcoin, ironically your hedge against central bank madness, crashes harder than a SBF polycule party.
This "dominance" is precisely why the U.S. can print money faster than streaming services produce bad Marvel spin-offs. Everyone else holds our paper because it’s stable—right until the moment they decide otherwise. As Rogoff argues, trust in a currency is less about economics and more about group therapy: collective belief is all that holds it together. And right now, our therapy session is led by an unpredictable counselor prone to policy whiplash and 3 a.m. Twitter diplomacy.
Europe’s response to dollar dominance was supposed to be the euro, a currency meant to reflect stability, discipline, and boring competence—essentially, Angela Merkel in monetary form. But somewhere along the way, they mistakenly invited Greece, whose bookkeeping resembled FTX circa 2022. The euro quickly morphed from sensible elder statesman into an awkward teenager suffering existential crises every six months.
Then, of course, there's China. As the world's most skilled economic copycat-turned-innovator, they're making all the right moves: quietly stockpiling gold, building bilateral trade channels that avoid the dollar altogether, and patiently waiting as America argues over pronouns and Bud Light. The Renminbi might not yet be ready for prime time globally, but it's already headlining in regional theaters. And like any good streaming show, it just needs one breakout season to dominate.
Meanwhile, the American consumer—who until recently believed in perpetually low inflation, limitless credit, and eternally rising asset prices—is starting to sense something’s amiss. Chipotle warns of lower foot traffic. Walmart predicts emptier shelves. Suddenly, the very idea of scarcity—something previously reserved for Supreme drops—is a real, anxiety-producing thought.
It's tempting to dismiss these signals as background noise. After all, we've been down this road before, haven't we? The dollar survived Nixon, Volcker, Greenspan, and the implosion of Lehman. But each episode chipped away at our underlying strength. Each time, trust eroded just a bit more, leaving cracks that became normalized. Just like the frog who doesn't realize he's boiling because the heat increases gradually, we're lounging comfortably as the temperature inches upward.
In his recent conversation, Rogoff said something quietly devastating: "Once we've lost it, we'll wish we had it." Imagine waking up to find out America's greatest export—the greenbacks that fuel global trade, finance your Tesla, and bankroll our military dominance—is suddenly the equivalent of MySpace, Blockbuster, or your high school quarterback’s glory days. Great while it lasted, but awkwardly irrelevant today.
If the dollar's dominance is America's greatest advantage, our complacency about it is our most dangerous delusion. Dominance feels good. Dominance feels eternal. But like a good hangover, when it's gone, you'll wonder why you ever believed otherwise.
Until then, let's hope the music keeps playing, because dancing without it—well, that could get ugly.