Our Dollar, Your Problem: An Insider’s View of Seven Turbulent Decades of Global Finance, and the Road Ahead

Different currencies have been at the center of the world stage in different eras, this book dwells upon the dominance of the dollar at the world stage. The author traces the challenges faced by the dollar in the past, contemporary threats to it, and the potential challenges to its hegemony. The author’s strong academic background, combined with practical experience, results in an analysis that is both theoretically sound and practically relevant, is a key strength of the book. The book is divided into sections exploring past and present challenges, global monetary issues, alternative currencies, the costs and benefits of dominance, and the peak of dollar supremacy. A limitation of the book is that occasionally author drifts away from the main topic, making the book more voluminous; otherwise, the content could have been reduced without losing important information.

The book begins with an analysis of the factors that make a currency dominant, highlighting that it is a slow process either to attain it or even to lose it. Innovation, conflict, inflation, debt levels, the size of the economy, real and financial openness, share in the world trade, size of the financial markets and military strength are the key factors that determine whether a currency becomes dominant. The main conclusion of the book is that current state of affairs and the way the American economy is being run is the biggest threat to the dollar.

The threat either from within or from outside has always been a source of discontent for each entity, and the USA is no exception. The first actual or perceived challenge that struck Washington emanated from the Soviet Union. Particularly, the Soviet achievement in space travel enthralled USA that this sophisticated technology may transfer into an economic technological edge and potentially endanger dollar’s dominance in future. However, the economists were divided: Samuelson and Rostow were of the view that Soviet is a threat, whereas Friedman was sceptic that socially planned economy would ever compete the market economy. I agree with Friedman and opine that to become a dominant currency trade openness and financial openness are essential.