When we discuss currency dominance, we also need to think about the world order. Politics and economics intersect. The exorbitant privilege the US receives through the dollar and Treasury rates is financial compensation for serving as the world’s dominant hegemon. The US has played a special role in creating and maintaining the world order, and in exchange for providing this order, it receives gains in capital markets and financial flows.
If the US either does not want to play that special role or is usurped in controlling the world order, it will lose some of its special financial privileges. This is a slow process of world control, given that no one country or group of countries wants to impose a world order not driven completely by self-interest.
As put by some market observers, the US has moved from Magnanimous to Mercantilist, from global interest to self-interest. This world of self-interest is inherently unstable.
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