The Exorbitant Curse: Why The Dollar’s Reserve Status May Be America’s Biggest Liability

Key Points

1. The term 'exorbitant privilege' refers to the perceived advantage of the U.S. dollar being the global reserve currency, but the article suggests it may be detrimental.

2. Maintaining the dollar's reserve status requires persistent balance-of-payments deficits, which can hollow out the U.S. economy over time.

3. The U.S. has seen its currency rise significantly against the euro and pound, but this is not due to a balanced economy or sound financial discipline.

4. China avoids seeking reserve currency status to focus on exporting goods, contrasting with the U.S. strategy.

5. The article warns that the 'exorbitant privilege' might lead to long-term economic decline, as the U.S. continues to accumulate deficits and sell off assets.