Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System

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Overview

For more than half a century, the U.S. dollar has been the single most important currency, not just in the United States but globally. When the greenback became the leading international currency after World War II, this reinforced America's status one of the mightiest economic powers in world history.
However, recent events have raised serious doubts about the future of the dollar. Among these have been the effects of the Great Recession in the U.S.: high unemployment, record federal deficits, and unprecedented financial distress. So profound has been the impact on the esteem in which the dollar is held that some say it may soon cease to be the world's standard currency—which could significant depress American living standards and weaken the country's international influence.
Is the situation that bad? In Exorbitant Privilege, one of our foremost experts on the international financial system argues that while the dollar is bound to lose its singular status—that it will be forced to share it with newcomers like the Euro and the Chinese Renminbi—the coming changes will be neither sudden nor dire. Barry Eichengreen puts today's crisis in historical context, revealing that even after the United States became the world's largest economy around 1880, the dollar had a limited international role. While the founding of the Federal Reserve in 1914 launched the dollar's international career, only after World War II, with Europe and Japan in ruins, did the dollar become the world's monetary lingua franca—the reserve currency of the world's banks and the kind of cash accepted virtually everywhere. French President Charles de Gaulle complained of this "exorbitant privilege"—that a captive demand for dollars allowed the United States to inflate its living standard and extend military power.
Now, with the rise of China, India, Brazil and other emerging economies, America no longer towers over the global economy like before. And the U.S. itself faces very serious economic and financial challenges as it contemplates its medium-term future. But despite this, Eichengreen argues, predictions of the dollar's demise are greatly exaggerated. The most likely outcome is that the dollar will only slowly be supplanted by other currencies in a gradual transition that will resemble the relatively stable situation that prevailed before World War I.
Incisive, challenging and frequently iconoclastic, Exorbitant Privilege is a fascinating analysis of the changes that lie ahead, and a welcome rejoinder to predictions of America's inevitable decline.

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Editorial Reviews

From the Publisher

Shortlisted for FT/Goldman Sachs Business Book of the Year 2011!

"A fascinating and readable account of the dollar's rise and potential fall"--The Economist

"A rare combination of macroeconomic mastery, historical erudition, good political instincts and the sort of stubborn common sense that is constantly placing familiar problems in a new light."--Financial Times

"This short, accessible book about the U.S. dollar by Barry Eichengreen may be one of the most important published this year.--Barron's

"[A] brisk primer on the dollar's role in the international monetary system."--Bloomberg News

"Exorbitant Privilege is a book for anyone who has been perplexed why, despite the frequent predictions of the dollar's demise over the last fifty years, it has managed to maintain its position as the world's pre-eminent reserve currency. The book includes both a lively historical account of the dollar's role in the international monetary system and an incisive and balanced discussion of future challenges."--Liaquat Ahamed, author of Lords of Finance

"Short and eminently readable.... In just 177 pages of text, [Eichengreen] provides a wealth of material for both the lay reader and the scholar.... You can't do better than Eichengreen for a solid read on the dollar's wild ride."--The American Prospect

"Compact and readable...Eichengreen adds much needed nuance and subtlety to the U.S. dollar debate....is [also] a pithy and amusing history of the international monetary system....for those fascinated by historical figures and events, behind-the-scenes machinations, and the logistical elements that make a complex currency and trade system work, the telling is very well done."--Business Insider

"Barry Eichengreen's book couldn't be more timely... Elegant and pithy."--Finance & Development, IMF.org

"The book, written for the general public, is useful and pleasant to read also by the so-called professionals. Those used to Eichengreens clear and fluent prose will find here a particularly light touch obtained by dropping here and there a good dose of anecdotal hints to lessen the weight of serious history and rigorous economics...provides a masterful users manual for the crisis that began in 2007."--EH.net

"This slender and pleasant book is a story of the dollar in the world financial system, and an attempt at speculating on the future of the U.S. currency.... [It] is good reading, contains well organized facts and discussions, and raises important and difficult questions."--Journal of Economic Literature

"The historical narrative in this book is fascinating and I highly recommend it to both specialists and nonexpert advanced readers."--Journal of Economic History

"[A] detailed and fast-moving analysis of the rise of the greenback as an international currency." --EnlightenmentEconomics.com

"This is a brisk and invigorating account of a century of international monetary developments by one of America's foremost economic historians.... As would be expected, Exorbitant Privilege is extremely well informed, cogently argued, and broadly persuasive. Events and policies, such as the Suez war, the EMS breakdown or the current financial crisis--together with sharp criticism of the excessive deregulation favoured by both Alan Greenspan and Larry Summers--are splendidly documented. Conflicting views of what might happen in the future are clearly put forward and analysed. Unexpectedly, perhaps, the book also displays fairly frequent touches of humour. In other words, it is both erudite and readable."--New Left Review

"When everyone from Brazil's leader to Sarah Palin questions the dollar's status as a reserve currency, it is time for an expert to sort out the truth from the hyperbole. Barry Eichengreen performs this service with unwavering clarity."--Sebastian Mallaby, Council on Foreign Relations

"A truly superb book on the role and global standing of the dollar--past, present and future. Those exposed to the evolution of the globally economy, and that's virtually all of us, will find his book extremely thoughtful and a great read."--Mohamed El-Erian, CEO and co-CIO of PIMCO

"Eichengreen is the master of international money in history and its troubles. Exorbitant Privilege is a fine account of whence it came and a judicious survey of where it might go."--James K. Galbraith, author of The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too

"Barry Eichengreen again demonstrates his ability to integrate economic history and theory with political analysis in order to illuminate the critical issues of international finance. The timely and accessible book is must reading for all concerned with the prospective balance of international power--financial, economic and political--in a multi-polar world."--William H. Janeway, Warburg Pincus

"Surprisingly compact and readable book, Eichengreen adds much needed nuance and subtlety to the U.S. dollar debate.... A pithy and amusing history of the international monetary system.... Those fascinated by historical figures and events, behind-the-scenes machinations, and the logistical elements that make a complex currency and trade system work, the telling is very well done." --BusinessInsider.com

"A brief and readable account of how the international monetary system got where it is today and of past efforts, both successful and (mainly) unsuccessful, to reform it." --Foreign Affairs

"A timely book on monetary economics and currencies that is clear and easy to read, with elements of drama and excitement."--The Finance Professionals' Post, a publication of the New York Society of Security Analysts

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Product Details

  • ISBN-13: 9780199753789
  • Publisher: Oxford University Press
  • Publication date: 1/7/2011
  • Edition description: New Edition
  • Pages: 224
  • Sales rank: 908,628
  • Product dimensions: 6.40 (w) x 9.30 (h) x 1.00 (d)

Meet the Author

Barry Eichengreen is Professor of Political Science and Economics at the University of California, Berkeley. His previous books include The European Economy Since 1945, Global Imbalances and the Lessons of Bretton Woods, Capital Flows and Crises, and Financial Crises and What to Do About Them. He has written for the Financial Times, Wall Street Journal, Foreign Affairs, and other publications.

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Table of Contents

Chapter 1: Introduction Chapter 2, "Emergence"
Chapter 3, "Dominance"
Chapter 4, "The Rise of a Rival"
Chapter 5, "Crisis"
Chapter 6, "Today"
Chapter 7, "Tomorrow"

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Sort by: Showing all of 4 Customer Reviews
  • Posted August 28, 2012

    more from this reviewer

    Professor Barry Eichengreen¿s exploration of the dollar¿s reserv

    Professor Barry Eichengreen’s exploration of the dollar’s reserve
    currency role could be merely an interesting history of currencies and
    repositories of value – from wampum and whelk shells to credit default
    swaps – all mapped out from Bretton Woods to the Maastricht Treaty to
    China’s looming role and beyond. But Eichengreen accounts for more than
    history as he expertly guides readers through the maze of the
    international monetary system. getAbstract finds that unresolved issues
    in world markets give this exposition considerable contemporary bite.
    Eichengreen argues solidly that the threats to the dollar’s
    international reserve status are real enough, but says all signs are
    that the dollar will endure as the first among rivals, even if other
    regional kingpins arise. He seems to believe that, despite its various
    crises and challenges, the dollar will remain dominant – but, in the
    end, he ducks a definitive judgment and concludes that its fate is in
    American hands and not in those of the Chinese or other international competitors.

    Was this review helpful? Yes  No   Report this review
  • Anonymous

    Posted July 27, 2011

    No text was provided for this review.

  • Anonymous

    Posted February 18, 2012

    No text was provided for this review.

  • Anonymous

    Posted June 24, 2011

    No text was provided for this review.

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