The US dollar’s reserve currency status is one of America’s greatest strengths, but President Joe Biden seems intent on dethroning the dollar through both domestic and foreign policy. We’ve seen this movie before, but it’s not a good ending, Americans should be careful.
In the late 3rd and early 4th centuries, the Roman emperor Diocletian degraded Roman coins as a source of government spending far in excess of taxes collected. The result was rampant inflation, a hidden tax that the empire needed to collect extra revenue, while simultaneously destroying the economy and leading to the abandonment of Roman coinage. (Related: Stephen Moore: ‘Bidenomics’ is a failure)
When it comes to inflation, Biden has followed in Diocletian’s footsteps. As the Biden administration spent, borrowed and printed trillions of dollars, the value of the currency fell and inflation returned to levels not seen in the last 40 years. Biden then pulled another page from Diocletian’s strategy, blaming everyone but himself for causing inflation: greedy businessmen, overseas wars, and domestic speculators.
Biden’s scapegoat is virtually identical to the words of Emperor Diocletian’s infamous pricing decree of 301 AD.
As in Roman times, foreigners today are reassessing whether the dollar is actually a good store of wealth after seeing the dollar fall in value by about 16% since Biden took office. The deterioration of Roman coins under Diocletian’s reign eventually led to their abandonment in trade. Foreigners do not receive worthless currency, much less save it.
But Biden has compounded an inflationary domestic policy failure and a foreign policy failure. A key element of a reserve currency is its apolitical nature. International currencies should not lose their value as the geopolitical winds turn.
This has been very favorable to gold in the past, as precious metal coins do not lose value when the country that issued them faces instability. What people wanted was the physical content of the coin, not the image on the coin or the issuing authority that gave the currency its value.
The US dollar has no such value today, but people have continued to use it as the world reserve currency under the impression that it will continue to have an apolitical character. It too is coming to an end.
Biden has repeatedly brandished the dollar like a weapon in foreign policy. He threatened to impose sanctions on countries that disagreed with his own political policies, and confiscated dollars owed to other governments, not the United States. Even at the height of the Cold War, US presidents did not play games that endangered the sanctity of the dollar.
In short, Biden’s policies are causing foreigners around the world to reassess the dollar’s safety. Under this administration, the dollar lost not only purchasing power but also credibility. What was once considered a reliable asset is increasingly seen as a gamble.
For this reason, an increasing number of countries are abolishing the dollar as a key currency. Many countries, including America’s arch-enemy China, are poised to replace the dollar entirely on the world stage. The dollar’s reserve currency status is one of America’s greatest strengths, and losing it would be a huge blow to America’s power and prestige, as happened in Rome. (Related: EJ Antoni: ‘Bidenomics’ can be summed up in just one word)
However, this reduction is reversible. All we need is to restore the dollar to its divine status as a guarantor of property rights and a stable unit of measurement. This is what Rome failed to do with its currency.
The similarities between Biden and Diocletian are so amazing and terrifying that they make people question the parallels between the fall of Rome and the decline of America. But this is not a fair comparison. Rome had good roads that lasted her over 1,000 years.
By contrast, Mr. Biden’s legacy could be a road to ruin. No more time to make a U-turn.
EJ Antoni is a financial economist at The Heritage Foundation and a Senior Fellow on the Commission on Unleashing Prosperity.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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