I may owe your columnist John Plender an apology. Back in 2021, I criticised him for suggesting the dollar’s dominance could be over (“Powell faces difficult path to normalisation in his second term”, The Long View, November 27 2021).
In a letter in these pages (“Recalling Hamilton’s great insight about borrowing”, December 3 2021) I argued that people had been talking about the end of the dollar for decades, yet it survived the advent of the euro, the rise of China, the dotcom boom and bust, even the 2008-09 financial crisis, which was centred on a peculiarly American phenomenon — the subprime mortgage market meltdown.
One could argue the dollar emerged stronger than ever, more deeply embedded in the global financial system. I suggested that his conclusion that “US government IOUs are very unsafe assets” was a stretch.
Mea culpa. In an astonishing first 50 days of Donald Trump 2.0, Plender’s four-year-old opinion piece now looks prescient, and I look complacent.
Barry Eichengreen’s excellent Weekend Essay “How low can the dollar go?” (Life & Arts, FT Weekend, March 22) brings the argument up to date. Eichengreen takes Plender’s concerns about “monetary instability and fiscal excess” and weaves in the impact of tariffs, the overuse of sanctions and now the extraordinary possibility of compulsory conversion of short-term Treasuries into “100-year securities bearing low interest rates” or the imposition of “user fees” on foreign holders of US government debt.
I keep reading caveats implying that the legal pillar of the US constitution may yet have the final word on this assault on a century of carefully constructed convention that has served the US so well.
The trouble is, by the time the machine guns of this administration have stopped whirring, there may be nothing left of America’s international reputation to salvage.
Faisal Sheikh
Managing Director, Monmouth Capital, London W1, UK
