In this week’s installment of “Three on Thursday,” let’s explore some of the dynamics surrounding the United States dollar. In an era of inflation and large deficits, there are persistent rumors circulating that the dollar is at risk of losing its reserve currency status. These rumors are stoked by the desire of China (and others) to see this happen. We think these fears are vastly overblown. The U.S. is not strong because the dollar is the reserve currency, the dollar is the reserve currency because the U.S. is strong. Not just in economic might, but in its governance. The Constitution still stands, along with its protections of private property rights and the rule of law, which have created honest, deep and liquid financial markets. The U.S. remains one of the few places where people risk their lives daily to get into, not out of. To provide further insight, we’ve included three informative charts.

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