White House Economist Warns China Wants to Weaken US Dollar’s Reserve Currency Status — Senator Says Biggest Threat Comes From Within

China wants the U.S. dollar to lose its status as the world’s reserve currency, Bernstein noted

White House economist Jared Bernstein answered several congressional questions about the U.S. dollar’s status as the world’s reserve currency at a hearing Tuesday before the Senate Banking Committee on his nomination to chair the Economic Advisory Committee.

Bernstein is currently a member of the White House Council of Economic Advisers and served as chief economist for then Vice President Joe Biden in the Obama-Biden administration, and was a senior fellow at the Center on Budget and Policy Priorities from 2011 to 2021. She was.

At the hearing, Senator Bill Haggerty (R-Tenn.) noted the efforts of several countries to threaten the U.S. dollar’s status as the world’s reserve currency, including Brazilian President Luiz Inacio Lula da Silva’s call to end the dollar’s trade dominance. The Tennessee senator emphasized that China applauds this and asked Bernstein: “Do you agree that China wants this to happen?” The White House economist immediately replied:

I think the evidence suggests that they do.

As to why China would want to reduce the dominance of the U.S. dollar, Bernstein commented: “I think having a reserve currency is a very important privilege and an area of security reasons.” He added: “One of the most obvious ones is, of course, sanctions. If you control the reserve currency, you can impose sanctions like we did against Russia, and it can be quite effective.

debt ceiling and the “biggest threat” to the U.S. dollar

Rep. Haggerty expressed concern about the “incredible debt that the U.S. government has accumulated” and “interest costs that the CBO [Congressional Budget Office] actually projected would exceed the entire defense budget.”

But Bernstein said: “One thing that the dollar could really do to maintain its reserve currency status and protect its value would be to raise the debt ceiling.”

Haggerty emphasized the importance of getting fiscal policy in order regarding the possibility of the U.S. dollar losing its reserve currency status. He said, “I think fiscal spending will leave it up to the markets to decide what happens to the dollar as a reserve currency. If we continue to allow deficit spending to get out of control, I am very, very seriously concerned that we ourselves will. I know China wants that.” He concluded.