Weekly Geopolitical Report – Weaponizing the Dollar: The Nuclear Option, Part I (September 16, 2019)

by Bill O’Grady

Last month, we wrote a two-part report on weaponizing the dollar.[1]  The continued strength of the dollar has become newsworthy recently, prompting us to provide an update to those earlier reports and include an analysis of groundbreaking new legislation that was introduced in the Senate.

In Part I of this report, we will review the U.S. current account problem and examine how that persistent deficit affects the economy.  We will also include how the U.S. current account deficit is tied to American hegemony and the way the deficit could be addressed.  In Part II, we will introduce the Competitive Dollar for Jobs and Prosperity Act (CDJPA).  Along with details of the proposed law, we will introduce the macroeconomics of the CDJPA and discuss how it would affect the dollar’s reserve currency status.  We will then examine the potential political effects of the bill, the likely retaliation from foreign nations and, as always, conclude with potential market ramifications.

View the full report

[1] See WGRs, Weaponizing the Dollar: Part I (8/12/19) and Part II (8/19/19).