Economist Kenneth Rogoff worked as the economic counselor and chief of the Research Department at the International Monetary Fund from August 2001 to September 2003.1 Earlier he had been a Professor in the Department of Economics at Harvard University. Moreover, Rogoff served as an economist at the International Monetary Fund and the Board of Governors of the Federal Reserve System. He is also associated with the American Academy of Arts and Sciences and is a former Guggenheim Fellow.
Mr. Rogoff has conducted extensive research on policy issues in international finance, including exchange rates, debt issues, and monetary policy. Along with Maurice Obstfeld, he wrote a textbook called “Foundations of International Macroeconomics.”
In his popular book “Our Dollar, Your Problem,” he explains why the US dollar has dominated the global financial system for so long. As the use of the dollar is now often at the core of political conflicts when a global shift away from US financial assets is taking place, this book is particularly relevant now.
Rogoff compares the dollar’s post–World War II performance with other major currencies. The Japanese Yen was at one time serious competitor to the US dollar compared to the Soviet Rouble2. However, the Yen’s sharp appreciation after the 1985 Plaza Accord fuelled a bubble in Japan’s stocks and real estate. By the time Japan recovered from the bursting of that bubble, (which it never fully did as the country’s prolonged stagflation shows) the US and its Dollar had moved ahead.
America’s financial strength has long been dependent on the strength of the dollar. The dollar value declined when U.S. President Donald Trump imposed reciprocal tariffs on multiple countries. The Greenback’s erosion indicated that global investors were gradually losing faith in the dollar as a haven—and in the U.S. economy itself.
Economist Kenneth Rogoff says Trump’s policies could lead to a weaker Dollar, higher inflation, and slower growth. What does it signify for the global economy, and are there viable alternatives to the US$?
In his book, the author explores the global rise of the US dollar and shows why its future stability is far from assured. Our Dollar, Your Problem argues that America’s currency might not have reached its pinnacle without a certain amount of good luck. Drawing from his personal experiences, Kenneth Rogoff spoke about the remarkable postwar run of the dollar—how it beat out the Japanese yen, the Soviet Rouble, and the Euro—and the challenges it faces today from Crypto and the Chinese Yuan, the end of reliably low inflation and interest rates, political instability, and the fracturing of the dollar bloc.3 Americans are smart enough to understand that the ‘Pax Dollar’ era will not last indefinitely, not only because many countries are deeply frustrated with the system, but also because overconfidence and arrogance can lead to avoidable errors. Rogoff harps on the fact that America’s global power and privileges can adversely impact financial stability—not just abroad but also at home.
The main challenge to the dominance of the US dollar tody is China. The Chinese government has the power to disburse state funds to facilitate economic restructuring without having to reckon with legislative pushback. Nevertheless, state capacity does not make China immune to credit cycles; it just means that they play out differently4. The fact that China has managed to avoid inflation without allowing its exchange rate to rise in line with its rapid productivity growth has been a remarkable move in the global economy. Moreover, this is a method that every fast-growing economy should adopt from China.
One of the things China has managed to do quite successfully is to distribute migrants across urban areas at a pace that the cities’ infrastructure and public services can handle, which helps control wage pressures in factories. If this process works smoothly, inflation could be contained.
The question that might come to the readers’ mind is, with a huge population of about 1.4 billion people, how is it possible for Chinese government statisticians to know what is happening in the countryside? The answer to this question dates back a thousand years; the Chinese emperors never had detailed information about what happened in the country, but by 2002, the Chinese government had fair data regarding major cities and made an educated guess for the rest. All thanks to the excellent Chinese surveillance infrastructure that has given the central administration better insight into rural areas.
The author concludes the book by stating that Americans cannot assume that the Pax Dollar era will continue indefinitely, not only because many countries are highly displeased with the system but also because overconfidence and arrogance can lead to unintended mistakes. Prof. Rogoff demonstrates how America’s vast power and special privileges can contribute to financial instability—not just internationally but also within the country5.
Our Dollar, Your Problem offers policymakers important insights about the risks inherent to a Dollar-centric world. Rogoff’s nuanced analysis asserts that understanding and adapting to geopolitical and economic shifts is vital for maintaining global stability, as challenges to the Dollar grow by the day.
References:
1 https://www.imf.org/external/np/bio/eng/kr.htm
2 https://www.imf.org/en/Publications/fandd/issues/2025/06/book-review-critical-look-at-dollar-dominance mouhamadou-sy
3 https://www.hks.harvard.edu/centers/mrcbg/programs/growthpolicy/our-dollar-your-problem
4 https://dokumen.pub/our-dollar-your-problem-an-insiders-view-of-seven-turbulent-decades-of-global finance-and-the-road-ahead-0300275315-9780300275315.html
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