Dollar hegemony is resilient.

Which, more or less, it continues to be, despite the hallucinations of people like Gaetz, and to the chagrin of Lula and his ilk. Central banks around the world still keep most of their foreign-exchange reserves in dollars. And exporters everywhere love to invoice in dollars — the euro tops the dollar only in Europe itself. Most tellingly perhaps, individual people outside the US hoard an estimated $1 trillion in dollar notes as if those were gold ingots.

All the reports in recent decades of the dollar’s imminent demise as global money have therefore been vastly exaggerated. The euro didn’t displace it, nor will crypto currencies or the Chinese renminbi. One reason is the inertia of network effects. As Steven Kamin, a former director of international finance at the Federal Reserve Board, puts it, “everyone uses the dollar because everyone uses the dollar.” Even China, which hates dollar supremacy, only seems to be diversifying away from the US currency, but really isn’t.