“EXORBITANT PRIVILEGE” Barry Eichengreen, Oxford; 215 pages, $27.95
If you fret that the dollar risks losing its global clout, consider this: It still beats wampum.
Long before the greenback was born, shell beads became legal tender in Massachusetts Bay Colony, as Barry Eichengreen reminds us in “Exorbitant Privilege,” a brisk primer on the dollar’s role in the international monetary system.
Eichengreen teaches economics and political science at the University of California, Berkeley. He borrows the book’s title from former French President Valery Giscard d’Estaing’s famous complaint that dollar dominance affords America an “exorbitant privilege.”
Eichengreen breezes through the reasons why the dollar retains its edge over would-be rivals, starting with the simple fact that the nation still has the world’s biggest economy and most liquid financial market. The biggest threat to the dollar, it turns out, won’t come from abroad. It will come from America’s failure to strengthen its own economy at home, Eichengreen writes: “We may yet suffer a dollar crash, but only if we bring it on ourselves.” James Pressley, Bloomberg News
