The 1944 Bretton Woods agreement established the dollar as the world’s reserve
currency and the United States as the most economically powerful nation on earth.
Its termination in 1971 gave the United States the “exorbitant privilege” of a fiat
reserve currency. America’s export of fiat dollars supported decades of chronic
current account deficits and debt-fueled overconsumption.
Like the prototypical resource-rich nation, America suffers from a dollar-induced
Dutch disease. An abundance of fiat dollars predisposed institutional failure: the
economy increasingly advantaged few at the expense of many. Corporate activity
reconfigured to transfer wealth from labor to capital, the proprietor of the dollar
resource. Financialization undermined investment and production by capital
reallocation from the real economy to the financial economy.Englis