Economist Peter C. Earle says that de-dollarization has begun, stressing that “the drafting of the dollar in economic wars as well as an increasingly erroneous monetary policy regime are driving various interests away from the greenback away from the greenback,” he stresses. He described it as: “By weaponizing the dollar’s superiority and allowing the expansion of a mandate to disrupt U.S. monetary policy, the dollar’s fate as the lingua franca of world commerce for the long haul may already be sealed.”
The growing trend of de-dollarization
Economist Peter C. Earle authored aopinion piecetitled “De-dollarization Has Begun,” released last week by the American Institute for Economic Research.
explaining that “the severe economic dislocations experienced by Iran, which was kicked out of dollar-based trading systems like SWIFT, and more recently by Russia, have caused many countries to consider imminent contingency plans,” elaborating:
Dollars in Economic Wars Drafting, as well as an increasingly error-ridden monetary policy regime, has kept a variety of interests away from the greenback.
The monetary policy response to the 2008 crisis and coveted outbreak has resulted in unpredictable fluctuations in the value of the dollar, economists detail. They note that the pandemic triggered a massive expansionary response in 2020, followed by an initial disregard for inflation, which subsequently reached a four-year high “before aggressive contractionary policy shifts that destabilize unstable financial institutions are implemented.”
Earl noted efforts by countries to reduce their dependence on the dollar, such as China and Brazil agreeing to settle in their own currencies. Additionally, the BRICS countries (Brazil, Russia, India, China, and South Africa) are reportedly working to create a new currency.
According to the economist, cryptocurrencies, central bank digital currencies (CBDCs), and commodity baskets representing specific countries are being discussed as alternatives to the US dollar. However, he warns that “a move away from the dollar poses substantial barriers to exit due to historical, technological, financial, and habitual impediments, as well as network effects that must be overcome.”
Earle added, “The dollar, in one form or another, will be around for a long time. Perhaps for a very long time,” Earle warned:
By weaponizing the dollar’s dominance and allowing it to expand its authority to disrupt U.S. monetary policy, the dollar’s fate as the common language of long-term global trade may already be set.
“De-dollarization is inevitable unless there is the political will to bring U.S. fiscal and monetary policy into conformity with a sound monetary structure.