home > by publication type > articles > The Future of the Dollar: Currency Challenges in a Globalized World
Email
| Author: | Benn Steil, Senior Fellow and Director of International Economics |
|---|
Winter 2009
Harvard International Review
“They get our oil and give us a worthless piece of paper,” exclaimed Mahmoud Ahmadinejad at an OPEC summit in November 2007. Unkind words about the American currency from an Iranian president could normally be dismissed as political bluster, but in this case it was bluster with a disturbing kernel of truth to it. Over the course of 2007, states with large dollar holdings were becoming increasingly fearful about the dollar’s long-term global purchasing power, but they simply had less incentive to sound the alarm about it.
A dollar was once redeemable for a fixed amount of precious metal, but has for four decades now been redeemable only for near-worthless metal - pennies, nickels, dimes, and quarters. It is valuable only to the extent that vast numbers of people believe that vast numbers of other people will continue, of their own volition, to exchange intrinsically valuable things for it. Should this confidence evaporate, the dollar is truly just “a worthless piece of paper.”
It is hard to imagine that this confidence could be fatally undermined any time soon. History, however, does not provide kind testimony to the durability of national monies. Many dozens of them lost more than half of their purchasing power between 1950 and 1975 alone - including the dollar, which lost 57 percent.
To order Task Force reports, Council Special Reports, and Critical Policy Choices, please call, fax, or order online from our distributor, the Brookings Institution Press: phone +1.800.537.5487, fax +1.410.516.6998.
For information on other reports that are not for sale, or for general publications information, please call +1.212.434.9516 or email publications@cfr.org.
Start-Up Nation addresses the trillion-dollar question: How is it that Israel—a country of 7.1 million, only sixty years old, surrounded by enemies— produces more start-up companies than large, peaceful, and stable nations like Japan, China, India, Korea, Canada, and the UK? With the insights of geopolitical experts and investors, the authors examine this nation’s adversity-driven culture to answer this question and offer prescriptions for a global economy on the rebound.
In Forces of Fortune, Vali Nasr presents a paradigm-changing revelation that will transform the understanding of the Muslim world at large. He reveals that there is a vital but unseen rising force in the Islamic world—a new business-minded middle class—that is building a vibrant new Muslim world economy and that holds the key to winning the cold war against Iran and extremists.
In Cuba: What Everyone Needs to Know, Julia E. Sweig presents a remarkably accessible portrait of Cuba's unique place on the world stage over the past fifty years, including its internal politics, its often fraught relationship with the United States, and its shifting relationship with the global community.
Complete list of CFR Books
Copyright 2009 by the Council on Foreign Relations. All Rights Reserved.