Our Dollar, Your Problem
From gold bugs to global imbalances, Rogoff and Rey discuss money, power and the limits of American privilege
If the global financial system has a family album, Kenneth Rogoff knows where the embarrassing photos are kept.
In conversation at London Business School, the Harvard economist and self-confessed contrarian traced the dollar’s long, accident-strewn rise with a storyteller’s instinct and a historian’s memory. Hosted by the Wheeler Institute for Business and Development and deftly moderated by LBS Professor Hélène Rey, the evening moved briskly from personal anecdote to systemic risk.
Rogoff began close to home. His aunt, an entrepreneur before the term had cachet, built a shoe business but turned down a chance to exploit commercial artwork from a then-unknown Andy Warhol. A missed opportunity, he suggested lightly, can change a life. A missed inflection point can change the world economy.
From there, the discussion jumped to bigger missteps. Rogoff revisited America’s quiet default in the 1930s, when Franklin Roosevelt devalued the dollar against gold, and the far louder rupture of 1971, when Richard Nixon ended the Bretton Woods system. Inflation, Vietnam and electoral politics collided, and the dollar was cut loose. When European finance ministers protested, US Treasury Secretary John Connally delivered the line that later gave Rogoff the title for his new book: “It’s our dollar, but it’s your problem.”
Rey pressed him on the consequences of that arrogance. Was the dollar’s dominance a product of design or drift? Did the United States still enjoy an “exorbitant privilege”, or had it become a dangerous complacency? Rogoff’s answer was characteristically unsentimental. The dollar’s role as the global lingua franca has survived wild swings in its value, repeated crises and the absence of any coherent stabilisation plan in the 1970s. Not because it is flawless, but because no rival has yet proved ready.
That observation framed a wider exchange on China, real interest rates and financial globalisation. Rey challenged Rogoff on whether today’s fragmented world economy might finally loosen the dollar’s grip. Rogoff countered that while history is littered with monetary transitions, they are rarely tidy and never fast.
The conversation captured exactly what the Wheeler Institute was created to foster. Established with the generous support of Tony and Maureen Wheeler, founders of Lonely Planet, the Institute brings together rigorous economic analysis with a global perspective rooted in emerging and under-served communities. As with travel, understanding the world economy requires curiosity, context and a willingness to look beyond the obvious route.
On this occasion, that journey ran from gold bars to global imbalances, via Warhol, Nixon and Beijing. Short on certainty, rich in insight, and sharpened by Rey’s probing questions, it was a reminder that in international finance, history never quite lets go, and the bill, sooner or later, comes due.