The Decline and Fall of the U.S. Dollar
Jul 13, 2023 2 min read
EJ Antoni @RealEJAntoni
Research Fellow, Grover M. Hermann Center
EJ Antoni is a Research Fellow in The Heritage Foundation’s Grover M. Hermann Center for the Federal Budget.
Key Takeaways
The U.S. dollar’s reserve currency status is one of America’s greatest strengths, but President Joe Biden seems hellbent on toppling the dollar from its throne.
People have continued using it as the reserve currency of the world under the impression that it would continue having an apolitical nature. That’s coming to an end
This decline is reversible. We merely need to return the dollar to its sacred status of the guarantor of property rights and a stable unit of measure.
The U.S. dollar’s reserve currency status is one of America’s greatest strengths, but President Joe Biden seems hellbent on toppling the dollar from its throne through both his domestic and foreign policy agenda. Americans need to pay attention because we’ve seen this movie before, and it doesn’t end well.
In the late third and early fourth centuries, the Roman Emperor Diocletian debased Roman coinage to finance profligate government spending far in excess of collected taxes. The result was rampant inflation, a hidden tax by which the Empire collected the additional revenue it needed, while also destroying the economy and leading to the abandonment of Roman coinage.
On inflation, Biden has followed in Diocletian’s footsteps. As Biden’s government spent, borrowed, and printed trillions of dollars, inflation returned to levels not seen in 40 years with the currency becoming devalued. Biden then took another page out of Diocletian’s playbook and blamed everyone but himself for causing inflation: greedy businessmen, wars overseas, speculators at home, etc.
Biden’s scapegoating is virtually identical to the words of Diocletian’s infamous price-setting edict of 301 AD.
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As in Roman times, foreigners today are reevaluating if the dollar is actually a good store of wealth after seeing the currency lose about 16 percent of its value since Biden took office. The debasement of Roman coinage under Diocletian ultimately led to its abandonment for use in trade. No foreigner would accept, let alone save, the worthless currency.
But Biden is compounding his inflationary domestic policy failures with foreign policy disasters. A key ingredient for a reserve currency is its apolitical nature. An international currency shouldn’t lose its value as geopolitical winds change direction.
That was a tremendous advantage for gold in the past because a precious metal coin wouldn’t lose value when the nation that struck the coin faced instability. It wasn’t the image on the coin or the issuing authority that gave the currency value—it was the physical content of the coin which people wanted.
The U.S. dollar has no such value today, but people have continued using it as the reserve currency of the world under the impression that it would continue having an apolitical nature. That’s coming to an end.
Biden has repeatedly wielded the dollar like a weapon in foreign policy. He has imposed and threatened sanctions against nations who disagree with his political agenda, and he has seized dollars owed not by the U.S. but by other governments. Even during the height of the Cold War, U.S. presidents did not play such games which put the dollar’s sanctity at risk.
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In short, foreigners around the world are now reevaluating the safety of the dollar because of Biden’s policies. Under this administration, the dollar has not only lost purchasing power but reliability. What was once considered a dependable asset is increasingly seen as a gamble.
That’s leading more nations to drop the dollar as a reserve currency. Many countries, including America’s biggest adversary, China, are moving to replace the dollar entirely on the world stage. The dollar’s reserve currency status is one of America’s greatest strengths, and losing it would deal a tremendous blow to our power and prestige, like what happened to Rome.
But this decline is reversible. We merely need to return the dollar to its sacred status of the guarantor of property rights and a stable unit of measure – something Rome failed to do with its coinage.
The similarities between Biden and Diocletian are striking and scary, enough so to make people wonder about parallels between the fall of Rome and the decline of America. But that’s not a fair comparison—Rome had good roads that lasted more than a millennium.
Biden’s legacy, by contrast, may well be a road to ruin. We’re running out of time to make a U-turn.
