Dollar Dominance Key to US Debt and Deficits

THE ECLIPSE OF the dollar, and with it the ability of the US to borrow on a scale that would cripple any other country, has been long predicted.

- DANIEL MOSS

For at least half a century, skeptics have counted on something—or someone—coming along to knock American assets from their perch. Don't plan for a requiem just yet.

Might the moment of reckoning have finally come, courtesy of President-elect Donald Trump, who has dissed the dollar as much as defended it, and is pushing an unabashedly expansionist fiscal policy? Interest rates on 10-year US government bonds, the global benchmark, did climb after the election. Yields are, however, still significantly lower than they were for most of the 1990s, the heyday of the so-called Great Moderation, the period after the Cold War characterized by benign inflation, modest fluctuations in business cycles, and a consensus that the state should be less, not more, involved in economic life.