As I warn in this interview, something similar could happen if the federal government convinces other nations to reject the dollar because they no longer want to acquiesce to the extraterritorial imposition of U.S. laws.
This is a wonky issue, but the bottom line is that the United States benefits enormously because the rest of the world uses the dollar.
The best article I can recommend was published earlier this year by the Cayman Financial Review. It’s a good tutorial on the issue and it explains why the United States enjoys an “exorbitant privilege” because the dollar is the world’s reserve currency.
A reserve currency is a currency that governments hold in their foreign exchange reserves to settle international claims and intervene in foreign…
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