When we hear that “Bitcoin is too risky,” as citizens of the U.S. and as holders of dollars we must remember that this simple statement comes from a position of substantial privilege, specifically “exorbitant privilege.” First termed by French Finance Minister Valéry Giscard d’Estaing in the 1960s, exorbitant privilege refers to the unique benefits that the U.S. enjoys due to the widespread use of the dollar in international trade, finance and as a global reserve currency. Some of the benefits from the global ubiquity and near-insatiable demand for dollars are the U.S. government’s ability to print dollars with minimal consequence and to borrow at lower interest rates than other countries, many with checkered financial pasts (like Argentina). Global reserve status also simplifies monetary policy decisions for the U.S., as the Federal Reserve is the de facto global central bank, setting the tone for other central banks to follow similar rate policies to defend their exchange rates. Or, as John Connally, President Richard Nixon’s Treasury Secretary, bluntly put it to a group of European finance ministers: “The dollar is our currency, but it’s your problem.”
