A Reversal of Fortune? The (Un)likely Future of the US Dollar

The existing literature on the international role of the dollar largely sees that role as dependent upon developments outside the US, such as the emergence of viable alternative currencies or contenders to US hegemony. By contrast, I see the future of the dollar as international currency as ultimately determined by the deepening conflict between the US financial system, which is based on money as a medium of circulation, and its monetary base, which is based on money as embodiment of the value of social labor. This analysis builds upon a non-monetarist understanding of money as a social relation and inflation as a government policy of regulation of class conflicts. My key argument is that the current strategy of choice for managing the wide-scale insolvency crisis in the US financial sector risks sacrificing the monetary base. Thus, the ailing status of the dollar as national currency (the crumbling monetary base) will ultimately erode its status as an international currency.