17 June 2016

Book Excerpt: The Dollar Trap


The American Dollar is the international currency of reserve. It is the most accepted global currency and the most sought after investment, especially in times of global economic downturn. 

How did the American Dollar come to occupy such an exalted position? 

The Dollar Trap, written by Eswar S. Prasad, seeks to answer this important question. It is a fascinating account of the the pivotal role played by the American Dollar in the global economy and how it has tightened its grip on global finance.

Title: The Dollar Trap

Author: Eswar S. Prasad
Publisher: Portfolio Penguin
Pages featured here: 16-21

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 Happy Reading!


2 comments:

Mohit Golchha said...

Thank you for sharing sir. Very informative :)

Madhu Rayavarapu said...

Nicely written. Looks like China's role in upholding $ as a reserve currency is under appreciated. Out of its $3.4 trillion forex reserves, $1.8 trillion are held in dollar.

Both US and China benefit in following ways:
1) US can continue to spend more at the expense of poor Chinese citizens.
2) China can continue to export more to the US.
3) China also "manages" Yuan ex-rate to keep its exports cheap.

Now with the inclusion of Yuan in IMF-SDR, China looking more inward and other projects such as One Road One Belt projects, it will be interesting to watch the whether China will continue to reduce its dollar reserves. On a side note, despite of all the talk of China-containment and US' Asia pivot, both countries know that it any aggression between is nothing but "mutually assured destruction" and the fate of global economy would go haywire. Indian establishment realizes this very well and despite bonhomie between US and itself, it balances its relationship with China.