Our Dollar, Your Problem by Kenneth Rogoff (2025)

December 30, 2025

In Our Dollar, Your Problem, Kenneth Rogoff takes aim at one of the most comfortable assumptions in modern economics: that the dominance of the US dollar is permanent. Borrowing its title from John Connally’s blunt remark to European finance ministers in 1971, the book argues that the dollar’s supremacy has never been guaranteed and is now facing its most serious threats, not from rivals abroad but from dysfunction at home.

Rogoff’s core claim is simple and unsettling. The dollar did not rule the world because of flawless policy or moral authority. It survived because competitors failed, because history broke in convenient ways, and because markets were willing to forgive American excess. That tolerance, he argues, is wearing thin. Fiscal indiscipline, political polarization, and the aggressive use of financial sanctions are steadily eroding the trust that underwrites the dollar’s special status.

Rogoff opens with the Nixon Shock of 1971, when the United States abruptly ended dollar convertibility to gold. Connally’s famous line captures the attitude of the era: the US enjoyed the benefits of issuing the world’s reserve currency while exporting the instability that came with it.

The introduction sets the tone for the book. Dollar dominance was never inevitable. It emerged from historical accidents, geopolitical timing, and institutional design. More importantly, it is far more fragile today than Washington is willing to admit.

Part I revisits the postwar order and dismantles the myth of American monetary genius.

Bretton Woods: Rogoff explains how the US embedded the dollar at the center of global finance by shaping institutions like the IMF and World Bank around it. Power followed architecture.
Luck Over Brilliance: One of the book’s sharper arguments is that the dollar endured largely because its challengers failed. The Soviet ruble never became convertible. Japan’s yen stalled under deflation and demographic decline. The euro stumbled under political fragmentation after 2008. The dollar survived not because it was perfect, but because it remained the least broken option.

In Part II, Rogoff lays out what dollar dominance buys the United States.

Deficits Without Consequences: The US can run persistent trade and fiscal deficits that would cripple any other country. The rest of the world holds dollars out of necessity, effectively lending to the US at low cost.
The Global Reference Point: The dollar serves as the shared language of global trade and finance. That convenience comes at a price. Every Federal Reserve decision ripples across the world, whether other economies want it or not.

Part III is one of the book’s most consequential sections.

Sanctions and the Rubicon: Rogoff focuses on the freezing of Russia’s central bank reserves in 2022 as a turning point. The move worked tactically, but it sent a strategic message. Dollar assets are safe only as long as politics align with Washington. That realization, Rogoff argues, has accelerated efforts by countries like China and Saudi Arabia to seek alternatives that are harder to sanction.

In Part IV, Rogoff evaluates the usual suspects.

China and the Yuan: China’s push to internationalize the renminbi and develop a digital yuan is serious but limited. Capital controls, weak legal transparency, and political intervention prevent the yuan from becoming a true safe haven.
Crypto and Digital Money: Rogoff remains skeptical that private cryptocurrencies can replace state-backed money. However, he warns that efficient digital currencies issued by other governments could slowly erode the dollar’s dominance in cross-border payments and settlement.

In Part V, the most severe risks, Rogoff argues, are internal.

Fiscal Recklessness: The US is starting to resemble an emerging market in its debt trajectory, but without the discipline that markets eventually demand. Rogoff predicts that investors will not tolerate rising debt forever. When confidence breaks, borrowing costs will rise and the dollar will weaken.
Political Instability: Debt ceiling crises, attacks on institutional independence, and erratic governance damage the trust premium that sustains dollar demand. The dollar’s strength rests as much on faith in American stability as on economic output.

Rogoff does not predict a sudden collapse or a single successor currency. Instead, he foresees gradual fragmentation. The dollar remains dominant, but less central, more contested, and embedded in a messier financial system.

To prevent that outcome, Rogoff argues the US must act deliberately:

Restore fiscal discipline and stop assuming the world will finance endless deficits.
Protect core institutions, especially the Federal Reserve and the judiciary.
Use financial sanctions with restraint rather than as a default tool.

Bottom Line: The dollar will not be dethroned overnight. But dominance can decay quietly. If the US continues to treat the dollar as a birthright rather than a responsibility, it risks presiding over a slower, more volatile global order where its influence steadily fades.

Thoughts?