On Sunday, May 28, 2023, 1:30-3:00 p.m. (Eastern U.S. Time), Mr. David Goldman addressed the Mackinder Forum on “The Inevitable, But Not Imminent, Decline of The Dollar.”
Abstract: No alternative to the US dollar as the main world reserve currency exists and none will for the foreseeable future. China would have to eliminate exchange controls and open its capital markets to promote the RMB as an alternative and cannot do so now or any time during the next decade. The fact that the dollar cannot be replaced in any definable time horizon, though, does not mean that all is well.
The use of alternatives to the dollar, such as Saudi-Chinese trade in RMB or Russian-Indian trade in rupees, is a non-economic decision that entails higher volatility and transactions costs, but it effectively nullifies the weaponization of the dollar for economic sanctions and erodes the US strategic position.
Some of the areas of world trade expanding the fastest are adopting or are likely to adopt alternatives to the dollar, e.g., ASEAN, which is discussing a regional currency clearing arrangement. This development will tend to push developing Asia and other parts of the Global South further into the Chinese sphere of economic influence.
The internal strains on the dollar system resulting from the accumulation of thirty years' worth of trade deficits constrain credit expansion in the dollar sphere and may led to downward repricing of US assets. A parallel system of finance is growing that limits American strategic and economic options and gives more opportunity and flexibility to America's competitors.
Biography: David Goldman is Deputy Editor of Asia Times, where he has written the "Spengler" column since 2001. Previously he was an award-winning market strategist and research director at Credit Suisse and Bank of America. From 2013 to 2016 he was a partner at Reorient Group (now Yunfeng Financial), a Hong Kong investment bank. His 2011 book How Civilizations Die addressed the impact of culture, religion, and demographics on world conflicts. His 2020 book You Will Be Assimilated: China's Plan to Sino-Form the World was praised by Deputy National Security Adviser K.T. McFarland, who wrote: "If you read just one book about how China plans to make the 21st century theirs and what we can do about it, read You Will Be Assimilated." He contributes to The Wall Street Journal, Newsweek, Claremont Review of Books, and other publications. He has consulted for the Defense Department's Office of Net Assessment and for the National Security Council.