Jared Bernstein, President Joe Biden’s nominee to chair the Council of Economic Advisers, has raised concerns over China’s apparent attempts to remove the US dollar from its status as the world’s reserve currency. Bernstein, who previously served as Biden’s chief economic adviser while vice president, cautioned that there was evidence of this shift and that the US must work to maintain dollar dominance.
Bernstein’s comments come at a time of escalating tensions between the US and China, with the two countries locked in a battle for economic and geopolitical supremacy. China has long sought to reduce its dependence on the US dollar, and there have been signs in recent years that it is making progress in this area.
The US dollar’s status as the world’s reserve currency is crucial to the country’s economic and political strength. This allows the US to impose sanctions on other countries, as it did on Russia, and gives that country a level of prestige and influence on the global stage.
However, Bernstein acknowledged the costs associated with becoming the world’s reserve currency. US manufacturers, for example, often struggle with higher export costs due to a stronger dollar. This is a significant loss for US businesses that rely on exports, as it makes their products more expensive and less competitive in foreign markets.
To protect the integrity of the dollar, Bernstein suggested that the US raise its debt ceiling. He believed that this would help maintain the dollar’s status as the world’s reserve currency, while protecting its value. According to him, the threat of default should not be used as a political tool.
Overall, Bernstein’s comments highlight the importance of the US dollar to the country’s economic and political strength. While there are costs associated with becoming the world’s reserve currency, the benefits are significant. As China continues to challenge dollar dominance, it is important for the US to take action to protect its position.