Kenneth Rogoff discusses the historical supremacy of the U.S. dollar as the dominant global currency and highlights the complexities introduced by the Trump administration's policies. Traditionally, this 'exorbitant privilege' has provided America with advantages in borrowing, intelligence, and enforcement of sanctions. However, the administration's viewpoint suggests that America should demand higher costs from users of the dollar, creating friction with other nations. This approach may exacerbate challenges from emerging economies like China, indicating potential shifts away from dollar dependence.
For decades now, America has dominated the global financial system, with the dollar being the primary currency for international trade, granting unique advantages.
The Trump administration views dollar dominance as a burden rather than an advantage, suggesting countries should pay more for using it, which may destabilize the system.
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