DOLLAR'S SOUND DOPPLER : CURRENCY MASTER PRECIS

 

International money madness strikes again. No, the dollar isn't about to become worthless.

The dollar is about become ''toilet paper,'' says Robert Kiyosaki, author of '' Rich Dad, Poor Dad.'' ''Get rid of your U.S. dollars now,'' says the investor and economic commentator Peter Schiff.

They aren't alone; I'm seeing a lot of stuff like this in my inbox lately.

Now, some of this is coming from ''Weimarists,'' people who are always predicting hyperinflation. Schiff, for example, insisted back in 2009 that the Obama administration policies would cause runaway inflation. [ For the record, they didn't. ]

Still, as it says on investment prospectuses, past performance is no guarantee of future results. People who have been consistently wrong in the past could be right in the future.

And today's Weismarists have a new argument. Recently a number of countries, alarmed or maybe just annoyed by what they perceive as the weaponization of the dollar against Vladimir Putin, have been taking at least symbolic steps to reduce the dollar's role in the world economy. 

For example, China has asked oil producers to accept payments in yuan instead of dollars.

This has even relatively sober commentators like Fareed Zakaria warning that the dollar's status as the world's reserve currency is at risk.  And losing reserve-currency status, many people imagine, would be an economic catastrophe for America.

Put aside for the moment the question of whether dollar dominance is really at risk. [ Short answer : No.]

The Canadian dollar, the Australian dollar, the New Zealand dollar and the Swedish krona have never been reserve currencies. 

A few decades ago Japanese officials had ambitions of turning the yen into a global currency, but that never went anywhere. Yet Australians, Swedes and Japanese continue to do domestic business in their own currencies, with nary a hyperinflation in sight.

The British pound is an even more interesting example, because once upon a time it was an international currency, and one as dominant as the dollar later became. The pound's essential role rapidly declined after World War II, eventually disappearing by 1970.

The global role of the dollar sounds important and seems mysterious; that makes it a natural subject for conspiracy theories and catastrophic thinking.

The World Students Society thanks author Professor Paul Krugman.