In any case, predictions about the decline of the greenback generally fail to appreciate the extent to which the dollar’s role results from “network externalities” – situations in which people find it beneficial to engage because many others do the same thing – which none of its potential rivals are able to offer. International banks make payments in dollars because the markets in this currency are huge, in particular because lots of people use the greenback. Importers and exporters write contracts in dollars because everyone does it and everyone holds dollar balances to make these payments. And so on.
Forty years ago, I wrote an article about how these network effects would make it difficult to replace the dollar, despite many predictions at the time that it was on the verge of collapse. In the years since, there has been occasional disturbing news – for example, that Saudi Arabia is willing to accept payments in yuan, China’s currency – which some interpret as the beginning of the end of the dollar. But this kind of nonsense is marginal compared to the enormous advantage of the greenback.
That being said, it is not impossible that the dollar could lose its prestige if the American government behaves really badly. Let’s imagine that the United States suffers from disastrous economic management leading to very high inflation. Let us imagine a major degradation of the rule of law in our country, with companies which, because they benefit from good political connections, take over in different industrial sectors. If either or both of these hypotheses come true, it is easy to understand how the dollar could lose its special status – yes, the strength of this currency lies in its ubiquity, but also in stability perceived by the country that issues it. And these scenarios seem much more likely today than they did a few years ago. But while I expect Donald Trump to take us down the path of crony capitalism, I don’t believe he’s about to destroy the dollar as a brand.
It could be different for X. Before Elon Musk, Twitter was a space where people in my party had to be. I used this network to interact and learn from people with real expertise, sometimes in areas I know quite well, sometimes in others where I am more ignorant, like international relations or climate policy. I won’t list the litany of points where the platform has changed for the worse under the leadership of Elon Musk, but, in my opinion, it has become totally unusable, overwhelmed by trolls, weirdos and extremists.
But then, which platform should you turn to? In recent years, there have been several attempts to promote alternatives to X, however, none have really taken off. This result was probably partly due to errors in their design, but, for the most part, it was simply due to the lack of critical mass: you could not find enough people on these alternative sites with whom you wanted to interact. .
And then this year came the US presidential election, which seemed to have triggered an exodus – “Xode”? – from Muskland. From my point of view, Bluesky [réseau social décentralisé] in particular has suddenly reached its critical mass, in the sense that most of the people I want to follow are now speaking there. Its user numbers are still much smaller than those of X, but as far as I can tell, Bluesky is now the place to find useful and intelligent analysis. I don’t know what this means for X’s finances, and I don’t care. What I see is that by insisting, we can very well succeed in scuttling a network. And there are signs that Musk has succeeded.
