Our youngest son earned his first detention this week. When we asked why, he looked us in the eye and insisted he honestly didn’t know. Turns out he was watching a video on his school iPad when he should have been working. Everyone at his school has iPads because they don't use textbooks. His sentence was a 7:00 a.m. report time where he had to sit silently for 30 minutes in a room. The real victim was his older brother, who drives him and was not thrilled about the early wake-up call.
As a Pittsburgh native, I’ve raised my kids right, so our daughter was in the stands when the Steelers came to Tampa Bay on Sunday. She picked a good one. She said about 70% of the crowd was in black and gold, so it felt like a home game.
Chris is diving into chorus at Southeastern University, where he is really starting to love chorus, and he sings alto. The group is preparing a pre-Christmas performance of hymns and traditional carols, and we can’t wait to be in the audience for a little early Christmas joy.
Finally, Yaya and I spent last Saturday at the Sarasota Orchid Society’s annual auction: three hours, about 150 orchids. I’ve figured out the trick. Prices run high early while everyone has energy and money, but as people leave or hit their limit, the bidding cools way off. So I waited it out and went a little crazy at the end.
What Is a Reserve Currency — and Why It Matters
Every so often, you’ll hear the term "reserve currency" tossed around on the news. When you hear it, you probably glaze over and tune it out. Some people smile and nod while quietly thinking, I have no clue what that means. So here’s the plain-English version.
A reserve currency is the money the rest of the world uses to do business. When countries trade oil, wheat, or technology, they almost always use U.S. dollars. If Venezuela sells oil to Uruguay, it pays in dollars. If Ireland sells potatoes to Italy, they pay in dollars. And when governments save for emergencies, they hold U.S. dollars.
In other words, the global system runs on dollars.
How Did America Get This Role?
Mostly because we're the best country.
After World War II, the U.S. had the strongest, most stable economy. Our financial markets were reliable, and our government was trusted. That made the dollar the obvious choice. Before us, the British pound held the spot. Before that, the Dutch. It can change, but only after a major world upheaval.
Why Being the Reserve Currency Is Such a Big Advantage
The country with the reserve currency gets benefits no one else gets:
• We can borrow at lower interest rates.
• Our money stays strong because the whole world needs it.
• And yes, in a crisis, we can print money without the economy collapsing overnight.
Economists call it "exorbitant privilege", a phrase coined in the 1960s by a disgruntled French finance minister who watched the U.S. play by a different set of rules than everyone else.
Other countries don’t have that luxury. If they print money, it is still pegged to the dollar, and they get runaway inflation. Their only tool is to raise interest rates and hope their currency survives. It's almost not fair. The U.S. has a massive advantage in the global economy. I know it's easy to listen to economists scream that the country is going bankrupt, but the fact is we would be the last country to go bankrupt.
Could the Dollar Lose This Status?
Anything is possible, but it would be extremely hard. Another country would need:
• A huge, stable economy
• Trustworthy financial markets
• Political stability
• Rule of law
• And global confidence for decades
Another huge reason the dollar stays dominant is the strength of the U.S. military. Our navy keeps the world’s shipping lanes open and safe. If the United States stopped protecting global trade routes, international trade would fall into chaos. No other country can step in and do that job.
Right now, no other country comes even close to checking those boxes. China wants the job, but the world doesn’t trust its government. Europe is too divided. Russia is unstable.
So yes, the headlines shout about a "dollar collapse," but the reality is far calmer: the dollar is deeply entrenched and hard to replace.
Be Blessed,
Dave