May 3, 2023

The U.S. Dollar and the Debt of a Nation

By: Ericka Andersen

What’s going on with the U.S. dollar? Recent headlines would have you believe that we’re headed for disaster, but does all of the fuss really amount to anything? 

Russia’s Vladimir Putin has said he’s “in favor” of using the Chinese Yuan instead of the dollar. China would love that, but how realistic is it? 

While the yuan is an important currency in the global market, and its value has increased in recent years, it hasn’t reached near the significance of the dollar. In short, the Yuan doesn’t come close to the dominance of the U.S. dollar, which is supported by the size and stability of the U.S. economy. 

Few would actually be willing to try and risk what the global economy currently relies on for both ease and efficiency. Others purpose other currencies, like the Euro, the Japanese Yen or the British pound take over. However, there are many doubts about those as well. 

While these currencies increase in value and prominence, it’s unlikely they would completely replace the U.S. dollar as the world’s dominant reserve currency anytime soon. 

The most pressing issue for the U.S. economy is not the dollar, but the debt. The government has continued to plunge the U.S. deeper into debt with Social Security, Medicaid and over-spending across the board. This is the biggest threat for Americans and the stability of our economic system worldwide. 

The Biden Administration is certainly making it worse. As the Heritage Foundation recently reported, one of those most damaging moves they made was the 2021 $1.9 trillion package of welfare expansions and bailouts. Others include the Inflation Reduction Act, the COMPETES Act and more. 

Rather than worrying about the Yuan taking over the dollar, the U.S. should focus on cutting spending and paying down the national debt. Unfortunately, the Biden Administration doesn’t appear concerned about that at all.