Jared Bernstein, President Joe Biden’s nominee to be Chair of the Council of Economic Advisors, has raised concerns over China’s apparent attempts to remove the US dollar from its status as the world’s reserve currency. Bernstein, who previously served as Biden’s chief economic adviser when he was Vice President, warns that there is evidence of this shift and that the US must work to maintain the dollar’s dominance.
Bernstein’s comments come at a time of rising tensions between the US and China, with the two nations locked in a battle for economic and geopolitical supremacy. China has long sought to reduce its reliance on the US dollar, and there have been signs in recent years that it is making progress in this area.
The US dollar’s status as the world’s reserve currency is crucial to the country’s economic and political power. It allows the US to impose sanctions on other nations, as it did in Russia, and gives the country a level of prestige and influence on the global stage.
However, Bernstein acknowledges the costs associated with being the world’s reserve currency. US manufacturers, for example, often struggle with higher export costs due to the dollar’s strength. This is a significant disadvantage for US businesses that rely on exports, as it makes their products more expensive and less competitive in foreign markets.
To protect the dollar’s integrity, Bernstein suggests that the US should raise its debt ceiling. He believes that this would help maintain the dollar’s status as the world’s reserve currency, while also protecting its value. In his view, the threat of default should not be used as a political tool.
Overall, Bernstein’s comments highlight the importance of the US dollar to the country’s economic and political power. While there are costs associated with being the world’s reserve currency, the benefits are significant. As China continues to challenge the dollar’s dominance, it will be crucial for the US to take action to protect its position.