economy
February 6, 2026
Prof. Schlevogt’s Compass No. 40: The global reserve ratchet
Why supplying the world’s money pressures the US to import more than it exports, and why the imbalance is so hard to reverse
TL;DR
- The US dollar's role as the world's reserve currency pressures the US to import more than it exports.
- Global demand for dollars leads to a net outflow of US currency.
- Reversing the trade imbalance is difficult due to the dollar's international significance.
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