The US Dollar has been on a rollercoaster ride as of late. Since Trump took office, it has lost ten percent of its value compared to a basket of other currencies and hovers around 0,85 Euros at the end of August 2025. This overall decline masks the swings that have accompanied each of Donald Trump’s policy jolts: the announcement of indiscriminate tariffs in April sent the dollar into a tumble, the attack on Iran in June led to a rally, just for the greenback to sink to a three-year low days later with Trump’s unrelenting attacks on the Federal Reserve’s chairman Jay Powell. The trade deals in July helped the dollar to regain about two percent, but with the nomination of Stephen Miran, a Trump ally, to the Fed’s Board of Governors, and with Trump’s attempt at firing Fed Governor Lisa Cook—a case that may well end up before the Supreme court—it is clear that central bank independence—a cornerstone of the contemporary monetary order—is in limbo.

My world is the world

In the face of such disarray, it can be good to leave the news cycle and turn to a book that explains the causes of our current predicaments and that might even offer some ways out. One candidate might be economist Kenneth Rogoff’s Our Dollar, Your Problem: An Insider’s View on Seven Turbulent Decades of Global Finance, and the Road Ahead. A professor of economics who has spent his career at the United States’ most prestigious universities, Rogoff also served as chief economist at the International Monetary Fund from 2001 to 2003 and has given advice to political leaders the world over. His book draws on over five decades of academic and policy work on state debt, exchange rate regimes, and how their volatility can contribute to financial crises. In Europe, he is probably best known for his book (co-authored with Carmen M. Reinhart) This Time Is Different: Eight Centuries of Financial Folly, which was published right as the 2008 global financial crisis was beginning to ebb.

Unfortunately, Our Dollar, Your Problem, is, despite its title, not a book about money, dollar dominance, or global finance. Instead, it is a book about how Kenneth Rogoff sees the world. In a nutshell, he believes that the dollar’s position at the apex of the global currency hierarchy cannot be taken for granted. Yes, there have been challengers like the Soviet Union, Japan, and the Eurozone. But all lacked the economic or military strength needed to dethrone the dollar. Likewise, Rogoff argues that the current challenger, China, will not succeed in toppling the dollar in the near future. While he doesn’t deny that China is accumulating military power and building upon decades of phenomenal growth, he offers a laundry list of reasons why it won’t reach the peak any time soon: China’s managed float of the renminbi against the dollar, tapering growth, and lack of economic openness.

But don’t get too excited, Rogoff cautions his readers, for the threat to dollar dominance comes from within. Government debt has been ballooning for decades. Sitting at over 120 percent of GDP, it is ever closer to spinning out of control. We cannot rely on low interest rates forever, Rogoff warns, because inflation has had a comeback since 2021. To fight it, the Fed must raise rates, which further increases the government’s burden to service its debt. And if the Fed were to try to limit the government’s interest burden by refraining from raising rates, thereby letting inflation take its course, creditors would be left holding the bag. Sure, the government might find it easier to pay down its nominal debt, but the ensuing inflation would eat into the value of the repayments. Thus, if the US government doesn’t get its finances in order, the country might be headed towards another financial crisis. When this might happen is unclear, Rogoff says, but in the meantime, it is everybody’s problem that the government debt backing the world’s most important currency is not as safe as it used to be.

Soothing economics

If you’re interested in economics and regularly read the news, none of Rogoff’s arguments will be novel to you. You might even be able to recite the counterarguments: China’s economic model is better than Rogoff claims, inflation was transitory because it was an effect of the Covid pandemic, interest rates will be low forever, Japan’s government debt sits at over 200 percent of GDP and yet the country is still standing. In a way, the predictability of these debates has a soothing quality to it. They imply that this is the economy and the world we know from past decades. It is an economy that can be measured, predicted, and steered at will by sensible governments and independent central banks. In that world, the only real disagreement is over how to interpret the data: your position is either hawkish or dovish, bearish or bullish, short or long. If only Trump’s “political brinkmanship” (p. 256) can be overcome and policymakers can again focus on growth, sound money, and open markets, the uncertainty and chaos inflicted by his second presidency will subside. Sure, dollar dominance will have taken a hit, but overall, we will be back in Rogoff’s economic world. The problem is: nothing could be further from the truth.