Is the Era of Dollar Harvesting Coming to an End?

A Historical Perspective on the Fragility of Dollar Hegemony Recently, the Federal Reserve's announcement of another interest rate cut has attracted widespread global attention.

Some analysts believe that this may be a signal that the dollar is about to "harvest" the world for the last time.

Looking back at history, the hegemonic position of the dollar is not invincible, and it hides deep vulnerabilities.

The Establishment of Dollar Hegemony and Two "Harvests" After World War II, with its strong economic power, the United States led the establishment of the Bretton Woods system, linking the dollar to gold and establishing its status as the world's currency.

Advertisement

As the relative economic strength of the United States declined, and with factors such as the Vietnam War, the Bretton Woods system eventually collapsed, and the dollar was decoupled from gold.

To continue to maintain dollar hegemony, the United States then tied the dollar to oil, ushering in the "Petrodollar" era.

In the "Petrodollar" era, the United States successfully used its dollar hegemony to carry out two beautiful "harvests."

The first was at the end of the last century when, by forcing the yen to appreciate, the United States eventually burst the Japanese economic bubble and took the opportunity to scoop up high-quality Japanese assets.

The collapse of the Soviet Union was also related to the United States' manipulation of international oil prices, leading to the economic collapse of the Soviet Union.

The second "harvest" occurred in 2008, targeting the European Union.

Through careful planning, the United States triggered the Greek debt crisis and spread it throughout Europe.

The United States also used means such as raising interest rates and waging wars to further strike at the EU economy, ultimately leading to a decline in the status of the euro and an increasing gap with the dollar.

In the new era, dollar hegemony faces challenges.

As emerging economies rise and the international political and economic landscape undergoes profound changes, dollar hegemony begins to face unprecedented challenges.

The trend of de-dollarization worldwide is becoming increasingly apparent.

More and more countries are aware of the risks brought by over-reliance on the dollar and are starting to seek the establishment of a more diversified international monetary system.

For example, countries like Russia and Iran are actively promoting settlement in their own currencies and reducing their dependence on the dollar.

The rise of China's economy poses a strong challenge to dollar hegemony.

China is the world's second-largest economy, with a complete industrial system and huge market potential.

The steady progress of the internationalization of the renminbi also provides the world with another option besides the dollar.

The United States' own economic structural problems and policy mistakes have also weakened the credit foundation of the dollar.

In recent years, the U.S. government has continuously adopted quantitative easing policies, leading to the devaluation of the dollar and triggering global concerns about dollar inflation.

Can the dollar still "harvest" the world?

Back to the original question, is this time the Federal Reserve's interest rate cut really the last time the dollar "harvests" the world?

The answer may be negative.

Although dollar hegemony faces challenges, its influence is still not to be underestimated.

What can be affirmed is that compared with the past, the difficulty of the United States using dollar hegemony for "harvesting" will greatly increase.

The rise of emerging economies, especially China's rapid development, provides new momentum for the world economy and also provides a solid support for resisting dollar hegemony.

As the international pattern evolves, dollar hegemony will inevitably be further weakened.

Establishing a more fair, just, and diversified international monetary system is the inevitable choice for maintaining global economic stability.