Rather than the US net debt threatening the dollar's role, it is the dollar's global role that has driven the deficit: US financial assets — treasuries plus private securitized assets — are uniquely attractive due to the economy's size, perceived military and legal safety, and the creativity of US financial markets, which sustains the dollar's reserve role and skews the trade deficit toward the US.

causalpending

Speaker

Joseph Gagnon

Evidence Quote

we think it's the dollar's global role that has basically driven this process.

Source

The changing dollar regime: An updatePeterson Institute for International Economics
Created: 6/18/2026, 1:57:48 PM

My Notes

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