The King Dollar Dilemma: Rising Powers and the Future of Global Currency

Rhys WilliamsAdvisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

Investors are focused on domestic issues such as the aftermath of the debt-ceiling resolution, the regional bank crisis and the implications of AI, which will be a focus for a long time. Few are paying close attention to recent geopolitical events that may profoundly change our country.

The invasion of Ukraine may change many things, but the longest-lasting implication may be a reorienting of the post-World War II status quo and the unquestioned role of the United States dollar as the reserve currency for global trade. The unipolar world that existed in the post-Soviet era since 1991 may have morphed officially into a multi-polar world.

What caused the change?

China has transitioned from riding bicycles to its rice farms in the mid-1980s to an economic superpower. In the U.S., trade has become a partisan, four-letter word. Why is trade so terrible? Americans exchanged IOUs in government bonds for inexpensive but excellent goods. Standards of living soared globally for virtually everyone. While it is a popular opinion in some circles that only the rich got richer, global trade changed almost every American's life for the better. Arguably, the poor received the most benefits from trade, gaining access to cheaper clothes and food, a much bigger percentage of their wallet.

But in 2023, the dollar isn’t a tool for achieving global prosperity – it is now a weapon.