Vice President Vance Slams Dollar's Reserve Status: 'We're Stuck with It'

The U.S. dollar's status as the world's reserve currency has been questioned by Vice President JD Vance, who pointed to its origins in the 1970s under Presidents Nixon and Reagan. He noted that the system was solidified in 1981 with high interest rates that crippled industries, especially in the Rust Belt.

Vance grew up in an area devastated by these policies, which also led to the dollar's increased value. However, this came at a cost: the U.S.'s industrial and military power declined as Germany and Japan gained ground. The 'end of history' crowd argued that the U.S.'s financial rewards would continue, but Vance's comments suggest otherwise.

Today, China is an industrial peer to the U.S., but it has chosen not to adopt a reserve currency system, instead maintaining capital controls and managing its exchange rate. This allows China to accumulate vast reserves of oil, metals, and strategic minerals while keeping its wealth distribution intact.

The problem with the dollar's supremacy is that it prevents the U.S. from rebuilding its industrial and military power, which would require a whole-of-society effort akin to the 1930s and 1940s. James K. Galbraith, author of 'The Power to Destroy,' argues that even if the dollar system collapses, it would not solve the problem.