Steve Kamin, former Federal Reserve director and current American Enterprise Institute senior fellow, says the US dollar will maintain global dominance despite current economic policy concerns.
Kamin identifies tariffs and immigration restrictions as significant threats to dollar standing. He notes that current US policies are damaging the currency's global position through rising fiscal debt and reduced R&D support.
Despite these challenges, Kamin emphasizes that dollar dominance stems from American institutional strength rather than policy decisions. The size of the US economy and depth of capital markets continue supporting dollar supremacy.
The economist downplays the concept of America's "exorbitant privilege," calling it overrated given global financial realities. He warns that excessive use of financial sanctions could erode dollar influence.
Kamin notes the dollar's traditional safe haven status faces pressure. Post-liberation day behavior shows the currency becoming more sensitive to market volatility, shifting from flight-to-safety to risk-on characteristics.
However, Kamin maintains the dollar's safe haven status remains resilient despite political uncertainties. The currency's response to market volatility indicators like the VIX remains positive.