Exorbitant Privilege? What explains the continued rise of the US Dollar?

Prof Perry Mehrling usually explains monetary systems from a different lens. In this new paper, he discusses what explains the continued rise iof US Dollar in the global monetary system.

He says academic theories and models are based on multiple currencies whereas the financial world is more inclined towards a universal currency or key currency as it helps in global payments. The academic world is clearly disconnected and ence surprised to see the continued rise of USD:

The global dollar system, though repeatedly reported to be on its last legs—most recently in the Global Financial Crisis of 2008, but most famously in the Nixon devaluation of 1971—has repeatedly instead consolidated and gone on to further geographical expansion (McCauley 2021).

The key currency approach to international monetary economics, first put forward by John H. Williams in the aftermath of the 1931 devaluation of sterling, suggests that such resilience arises from the actions of market practitioners who appreciate the convenience of a global means of payment.

So the question arises, why has the key currency approach remained a minority view, if not among practicing bankers then certainly among practicing academics? This paper proposes two main reasons—the discredit of monetary optimism during the depression, and the subsequent fateful adoption of Walrasian equilibrium as the frame for academic discussion after WWII.

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Complexity, Policymaking, and The Austrian Denial of Macroeconomics

Scott Scheall of Arizona State University in this paper discuss Austrian school denial of macroeconomics:

Economists associated with the Austrian School of Economics are known to deny the value of macroeconomics as descended from the work of John Maynard Keynes and, especially, his followers. Yet, Austrian economists regularly engage in a related scientific activity: theorizing about the causes and consequences of economic fluctuations, i.e., the business cycle. What explains the Austrians’ willingness to engage in theorizing about the business cycle while denying the scientific import of macroeconomics? The present paper argues that the methodological precepts of the School, which have remained largely in place since Carl Menger first pronounced them at the start of the Methodenstreit, justify the kind of business-cycle theorizing that Austrians do and imply the limited scientific value of macroeconomics as descended from Keynes.