Preface: The Misunderstood 'Excessive Privilege'
For a long time, the global dominant status of the dollar has been seen as America's 'crown jewel', with the outside world generally believing that this status endows the U.S. with unparalleled economic advantages, even leading other countries to 'covet' its privileges. However, the reality is far more complex— the benefits brought by the dollar's reserve status are highly concentrated in financial capital, while the costs are borne by society as a whole. This structural imbalance turns what seems like a 'privilege' into a 'gold-plated cage', the underlying contradictions of which are shaking the foundations of the global monetary system.
1. The Hidden Costs of Reserve Status: The Real Interpretation of the Triffin Dilemma
(1) Irreversible Damage to Economic Structure
The 'Triffin Dilemma' proposed in the 1960s is playing out in the United States: to export dollars to meet global trade demands, the U.S. must maintain a trade deficit, which has caused the manufacturing sector's share of GDP to plummet from 25% to 12%. The once 'Rust Belt' has become a symbol of deindustrialization. This transition is not a policy mistake, but a 'mathematical inevitability' for the reserve currency country—when currency becomes a global asset, the country inevitably falls into a cycle of 'consumption > production, imports > exports', where the seemingly prosperous consumerism hides the chronic bleeding of the real economy.
(2) The 'Pitfall Consensus' of Exporting Strong Nations
There is a common assumption that exporting strong nations like China, Germany, and Japan would 'covet' the dollar's status, but the reality is that they are extremely cautious about currency internationalization. Taking Japan as an example, the 1985 Plaza Accord forced the yen to appreciate, directly ending its 'economic miracle' and starting the 'lost thirty years'. For export-oriented economies, reserve currency status means currency appreciation and trade deficits, which would completely undermine their economic foundations. Today, they choose a model of 'undervalued currency + dollar surplus reinvesting in U.S. bonds', maintaining export advantages while avoiding the heavy burden of global liquidity management, forming a tacit agreement of 'hitching a ride on the dollar'.
2. America's Strategic Shift: From 'Defending Privilege' to 'Reassessing'
(1) The Dramatic Shift in Political Winds
The Trump administration reconstructs economic logic with 'America First'; the 10% comprehensive import tariff introduced during its second term (higher for specific countries) is essentially a declaration of war against the model of 'exchanging industrial foundations for dollar hegemony'. When 'tariffs are the most beautiful word' becomes a policy slogan, it signifies that the U.S. is no longer willing to bear trade deficits to maintain reserve status, and the bipartisan questioning of the orthodoxy of free trade further indicates that the consensus of 'dollar hegemony = rationality of domestic deindustrialization' is collapsing.
(2) The Power Vacuum of Non-Alternatives
Historically, there has been no eternal reserve currency, but the current situation is particularly special: the internationalization of the renminbi is cautiously advancing, the euro lacks the support of a fiscal union, and the yen and pound are insufficient in scale. Trump's radical policies may accelerate the 'de-hegemonization' of the dollar, but the world is not yet prepared to bear the shock of the dollar's liquidity exit—if the U.S. refuses to maintain a trade deficit, the world may face a dollar shortage, and the trade and financial systems will fall into turmoil.
3. The Path to Breakthrough: Reconstructing the System from Unipolarity to Shared Governance
(1) The Real Dilemma of a Multipolar Currency System
The envisioned multipolar system (where the dollar, euro, and renminbi share reserve status) may distribute the burden but cannot solve the essential contradiction of the 'Triffin Dilemma'; rather, it may exacerbate transaction costs and policy coordination issues due to liquidity dispersion. Historically, the transition from the pound to the dollar was accompanied by wars and crises; to avoid repeating this pattern, a proactive design of a 'stable transition mechanism' is needed.
(2) Five Key Principles of an Ideal System
1. Collective Governance: Separating the 'domestic-international' dual functions of national currencies, establishing a neutral governance mechanism involving multiple countries, and avoiding political interference from a single nation in global currency supply.
2. Symmetrical Adjustment: Retaining monetary expansion capabilities to meet economic demands while establishing contraction mechanisms to address inflation, balancing the symmetry of 'flooding' and 'draining'.
3. Gentle Transition: Respecting the existing $36 trillion U.S. Treasury stock, gradually reducing dollar dependence through progressive reserve diversification rather than a disruptive 'abandonment of the dollar'.
4. Crisis Resilience: Establishing a Transparent International Liquidity Emergency Mechanism to Reduce Dependence on a Single Central Bank (e.g., the Federal Reserve) and Avoid Political Interference in Crisis Response.
5. Controllable Appreciation: Designing reserve assets with stable appreciation expectations to both incentivize central banks to accumulate more and reserve monetary policy space for exporting countries, maintaining trade balance.
4. Transition Path: Four-Step Evolution from Coexistence to Equilibrium
1. Preliminary Coexistence: The new system appears as a 'supplement' rather than a 'replacement', circulating alongside the dollar and building market credibility.
2. Diversified Allocation: Central Banks of various countries gradually incorporate new assets into their reserve portfolios to reduce dollar concentration and avoid triggering market panic.
3. Settlement Upgrades: As liquidity increases, the new system undertakes more international trade settlement functions, reducing dependence on the dollar payment system.
4. Dynamic Equilibrium: Ultimately forming a dual structure of 'national currency responsible for domestic economy + super-sovereign currency handling international functions', where the dollar transforms into an ordinary sovereign currency, retaining regional influence but shedding 'global burdens'.
The twilight of dollar hegemony is essentially the inevitable result of a single country being unable to sustain the global currency function. Trump's policies are merely a catalyst; the deeper contradiction lies in the structural imbalance of 'concentrated benefits vs. dispersed costs'. The future challenge is not only technical design but also conceptual innovation—we need a monetary philosophy that transcends 'national interest first', allowing the global financial system to serve human prosperity rather than singular hegemony. This may be a crisis, but also an opportunity: when the 'gold-plated cage' opens, humanity may have the chance to jointly design a fairer and more stable new monetary order for the first time.
