The discussion on the dollar's decline is at a fever pitch. While the dollar's demise has been an ongoing topic, it has never been as front and center with investors this century. The talk has been one-sided, with all commentators focused on the dollar's decline. It is a question focused on when, as opposed to if. Yet, little work has framed the question appropriately through criteria for why the dollar will lose its premier status.
Nevertheless, a good book on the subject has provided a valuable framework for thinking about the dollar's value. See The Future of the Dollar. The editors, Helleimer and Kirshner, engaged with some of the leaders in international political economics to generate different views on the dollar's future. The framework of looking through market-based, instrumental, and geopolitical lenses is a helpful way of focusing on the key issues concerning dollar dominance. The dollar dominance can either be sustained, albeit with stress, or in decline. The three-level approach provides the stories for each of these choices. The book also presents the best way to classify different parts of the world based on their relationship with the dollar. Although this book is over a dozen years old, the characterization still fits the current time. The exception is the rise of China and how the current tariff wars fit within this framework.
Will the dollar lose its dominance? The decline in dollar hegemony is not likely to be reversed, yet it will remain dominant. The dollar is overvalued. There will be a standard adjustment. The move to US neo-isolationism with trade will cause the dollar to lose importance, and the use of sanctions to isolate other countries will place more downward pressure on the dollar. This seems to be conventional thinking, but unlikely to be wrong.
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