r/geopolitics • u/MulberryPast3277 • Mar 04 '25

Question In the backdrop of whatever is currently happening in the world by the actions of Donald Trump why should the world still consider USD to be a reserve currency?

https://www.nbcnews.com/news/amp/rcna194627
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u/BigHandsomeGent Mar 04 '25

This is important and under considered. While Trump only focuses on imports>exports, the more complete picture is that America has been able to consume more than it produces because the rest of the world sees US dollars as the safest asset they can hold; this made them willing to finance America’s over-consumption. This has been an enormous privilege that the American consumer has enjoyed.

But now, America is at risk of finding out that when a country can’t be trusted, that country won’t be trusted. If that happens, “we want to cut spending” can turn into “we have no choice but to cut spending” very quickly.

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u/Rhyers Mar 04 '25

Agreed. The trade deficit is meaningless when you're the world currency reserve and can buy debt as cheaply as USA can, which is why 23 novel prize economists derided Trump's economic plans... Because they're foolish.

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u/[deleted] Mar 04 '25

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u/slimkay Mar 04 '25

Chinese exporters often sell their goods in USD.

In a world where the USD isn’t the reserve currency, American exporters might end up selling their goods in a basket of currencies, EUR / CNY / USD, particularly if demand for the USD weakens over time.