The era of the U.S. dollar’s dominance may be coming to an end, according to Kenneth Rogoff, a professor of economics at Harvard University. In his latest book, “Our Dollar, Your Problem,” Rogoff examines the dollar’s historical role in global trade and central bank reserves, suggesting that its supremacy is waning.
Rogoff argues that while the dollar will remain a leading currency in global finance, it will no longer hold the unique position it once did. The book draws on Rogoff’s personal experiences, including his time as a teenage chess prodigy traveling to Eastern Bloc countries and his tenure as chief economist at the International Monetary Fund.
Recent events, such as the sell-off of U.S. Treasuries and the dollar’s decline following President Trump’s April 2 tariff announcement, highlight the pressures on the dollar’s dominance. Rogoff attributes this decline to both internal factors, like the U.S. fiscal deficit and rising interest rates, and external factors, such as other countries’ desire to reduce their reliance on the dollar.
The impact of dollar dominance on everyday Americans includes lower interest rates and the ability of the U.S. government to borrow extensively during crises. However, if this privilege is lost, Americans will feel the effects.
Rogoff’s book also reflects on historical challenges to the dollar, including the post-World War II rise of the Soviet Union and the economic prowess of Japan and Europe in the late 20th century. Despite these challenges, the dollar reached unprecedented heights.
Rogoff concludes that the dollar’s dominance is in ‘late middle-age, but still in good health,’ though Trump’s trade policies have accelerated its decline.
— new from Harvard Gazette