There are upsides and downsides to being a reserve currency though that other nations might not want to take on, a non nation state currency that wants/needs to

There are upsides and downsides to being a reserve currency though that other nations might not want to take on, a non nation state currency that wants/needs to inflate might be a better bet. The US built up on the good side of being a reserve currency. > The advantages of reserve currency status for the dollar are well known. The world’s willingness to accumulate dollar reserves in the post World War II period first removed and later reduced the requirement of maintaining balance of payments equilibrium, or, more specifically, current account balance. By removing or weakening this restraint, U.S. policymakers had more freedom than policymakers in other countries to pursue strictly domestic objectives. We ran current account deficits year after year, balanced, or paid for, by capital inflows from our trading partners. The good side of that was that we could import real goods and services for domestic consumption or absorption and pay for them with paper, or the electronic equivalent. In other words, our contemporary standard of living was enhanced by others’ willingness to hold our currency without “cashing it in” for goods and services, or, before 1971, gold. [1] The US is in the bad side of this process now and losing because of the reserve currency status. > The bad side of our reserve currency status, although seldom recognized, was that the very leeway that enhanced our current standard of living built up debt (and/or reduced foreign assets) to dangerous levels. I remember well when, in 1985, the United States ceased being a net creditor nation to the rest of the world and, instead, became a net debtor nation. Our net indebtedness has only grown over the years, and hangs over us like the legendary sword of Damocles. [1] Every nation knows that being the reserve currency comes at great risk and harms middle class and internal markets eventually. It might even be a fatal flaw. What other country wants to take that on other than one with decades and decades of growth ahead of them and an already robust middle class they can devolve. Being a reserve currency helps build up the middle class and then when you switch to debt, which is natural as a reserve currency, it slowly widdles it away. US is scraping the barrel and the middle class is all but tapped, stagnation and lower purchasing power since the 70s in lower/middle class is evident. Worker share of GDP being on a long dwindle down [2] and velocity of money is off a cliff [3]. [1] https://www.forbes.com/sites/bobmcteer/2013/09/05/reserve-currency-status-a-mixed-blessing/ https://www.forbes.com/sites/bobmcteer/2013/09/05/reserve-cu... [2] https://fred.stlouisfed.org/series/W270RE1A156NBEA https://fred.stlouisfed.org/series/W270RE1A156NBEA [3] https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V