An exorbitant privilege. That is what French President Valéry Giscard d’Estaing called the U.S. dollar’s role as the global international reserve currency. That role brings many advantages but is it sustainable and worth any costs? What would it take for an alternative to emerge? The raising of the debt ceiling, the rise of China as a financial power and recent troubled economic times in the United States have many questioning the future of the U.S. dollar. A BETTER PEACE welcomes Rob Farley and Mark Duckenfield to discuss the realities of the power and place of the U.S. economy in the international market. They join podcast host Ron Granieri for a conversation about world finance. Their goal is to explain why debt is actually necessary, why the Chinese renminbi won’t likely become the new reserve currency and how much gold could fit in Bliss Hall here at the War College.
The U.S. dollar is one of the currencies and the primary currency that other countries hold, essentially as a hedge with respect to their own obligations, concerns about the international economy, and to maintain their own currencies. And so they will hold a portfolio of different currencies, kind of like they used to hold gold, and one of these, or the biggest one of those currencies, is the American dollar.
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Rob Farley is a Senior Lecturer at the University of Kentucky and has been a Visiting Professor at the U.S. Army War College. He is the author of Grounded: The Case for Abolishing the United States Air Force and The Battleship Book and co-author of Patents for Power: Intellectual Property Law and the Diffusion of Military Technology and the new book Waging War with Gold: National Security and the Finance Domain Across the Ages.
Mark Duckenfield is the Dwight D. Eisenhower Chair of National Security and a Professor of International Economics in the Department of National Security and Strategy at the U.S. Army War College. Prior to joining the USAWC, he taught at the Air War College, the London School of Economics, and University College London. He holds an MA and Ph.D. in political science from Harvard University. He has held research appointments at the Max Planck Institute (Cologne) and Birkbeck College. He is the author of Business and the Euro and editor of The History of Financial Disasters, 1763-1995.
Ron Granieri is Professor of History at the U.S. Army War College and the Editor of A BETTER PEACE.
The views expressed in this presentation are those of the speakers and do not necessarily reflect those of the U.S. Army War College, U.S. Army, or Department of Defense.
Photo Description: Trading Floor at the New York Stock Exchange during the Zendesk IPO
Photo Credit: Scott Beale / Laughing Squid via flickr