US dollar imperialism : the crisis of a changing periphery, a changing core

Abstract

This thesis examines the political economy of the United States (US) dollar and its role as the world's reserve currency in the post-World War Two period. It argues that the dollar has been intrinsic to the exercise of US hegemony in this period. A pivotal moment for the dollar and US power in the world occurred when President Richard Nixon abandoned the partial gold standard in 1971. In 1974 a deal was struck between Saudi Arabia and the US under which the Kingdom of Saudi Arabia (KSA) would only accept US dollars for payment for oil exports. In return for this exclusivity, the US guaranteed the national security of Saudi Arabia. Because of this deal, the US dollar was backed by two differing mechanisms. The first was that the dollar became what is commonly referred to as a petro currency, effectively underpinned by oil. The second was that this arrangement is defended by the prospect of military force on the part of the US if any nation should challenge the national security of Saudi Arabia. In recent years, however, it has become apparent that the US dollar's reign as the world's reserve currency is possibly nearing its end for several reasons, including the US national debt, national/international displeasure at unilateralist policy, and the emerging multi-polarity in the world system. This thesis, employing a grounded theory approach, examines how US hegemony has functioned since World War Two to the present. It offers a comprehensive, theoretical interpretation for the monetary function of US hegemony. Drawing on Wallerstein (2011), it characterizes the US dollar as the core of a world monetary system, the planning for which began in 1939 and extended to 1945. In doing so, it demonstrates how the US dollar, as a petro currency, has enabled US hegemony to function through an integrated world economy to serve US economic interests as per the 'Grand Area policy'. The thesis comprises six chapters and a conclusion. This structure follows a linear historical progression from the late nineteenth century to the current period 2016. The research shows the rise of, and challenges to, the hegemony of the US dollar. Emerging from this research are the perpetual balance of payments issues that were the norm rather than the exception during the twentieth century. As US hegemony still exists, it is difficult to draw conclusions about what will happen in the future, other than the dollar is vital to the continuing exercise of US hegemony. With this in mind, the thesis concludes by reasserting its core argument, which is the dollar being fundamental to the exercise of US hegemony. It further identifies some important trajectories in world politics and economics that may affect dollar hegemony into the future.

Date of Award	2016
Original language	English