This is the Kader Daily Podcast for Friday, August 7th, 2020. I'm Caleb Brown.

How secure is the status of the dollar as the world's reserve currency.

Some big financial firms appear to believe it's not that

secure. Cato's George Selgin argues that first of all there has to be a credible alternative and

for the near term, there just isn't one. We spoke last week.

For a really long time when people were concerned about US debt, when people were

concerned about profligate spending in the United States that the

backstop phrase I always heard was, well we can do that because the dollar is the world's reserve currency.

And so we can get away with a lot of things that other countries feel constrained against doing.

What does that mean in context right now

during a global pandemic

where Congress may well double federal spending this year.

Well, what it means is that there's a lot of demand for dollar debt and and we do have an advantage if in some respects it's not an

unmitigated or it's not an advantage that is without its disadvantages but we do have the ability to

to pay bills and to borrow extensively without having to worry about our capacity to borrow

being very strictly limited as it would be if we had a currency that didn't have an international reserve status.

So right now there has been a lot of turmoil to call it that in the bond market.

There has been some uncertainty there.

The dollar has depreciated against some things, but the bottom line is that there's a vast capacity

for us to borrow in international markets, particularly in a crisis when the demand for dollars tends to increase, if anything, internationally.

And for the most part, that's what's been happening.

It's true that the Fed has been, the Fed and the Treasury, I should say, between them have

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