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Mazzei Minute: 06/09/23

I get asked a lot about America losing its reserve currency status. Because of our global adversaries from China and Russia, who would like to undermine U.S. dominance on the world economic stage, some talking heads have questioned the ability of the United States to keep the dollar as the top currency in the world.

History warns that empires rise and fall, and the power of currencies comes and goes. The Roman Empire gave way to the Ottoman Empire and once upon a time, the United Kingdom made the British Pound the dominant reserve currency. Who is to say King Dollar might not suffer the same fate someday?

China is certainly doing all it can to encourage or force more global spending into the Yuan. Since the Russian invasion of Ukraine and global sanctions led by the U.S., Russia is all too happy to buy their oil and natural gas from China and settle trades with the Chinese Yuan.

For all the fretting and worry, it’s important to note that our adversaries around the world have failed to establish strong economic foundations like we have through the American Constitution. We have a supercharged economy from supercharged human progress thanks to the rule of law, private property rights, and democratic free elections. Our system is by no means perfect, but the culture of dictators and communists can’t touch our power of innovation and competition.

According to the international publication The Economist, a whopping 90% of global financial transactions are executed in U.S. dollars and 60% of global central bank reserves are held in King Dollar. No other currency comes close to matching our economic dominance and fundamental appeal.

Nevertheless, the U.S. must keep its fiscal and monetary house in order. Policies put forth by socialists in the halls of government have produced bad outcomes such as persistent inflation. We must fight tooth and nail to make sure special interest politicians and the corruption of Marxism do not weaken the pillars of our economic vitality and strength.


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