US Monetary Hegemony Infrastructural Linkages Between States and Markets

The study of money and finance in the international political economy (IPE) literature has improved our understanding of the persistence of US financial power since Susan Strange's concept of structural power in the 1980s.Nonetheless, the IPE literature unwittingly accepts the international role of the US dollar primarily as a key reserve currency (store of value) and overlooks its more important essence, 'money of account' or 'unit of account' that operates inside and outside the US.The neglect of this crucial feature of the US dollar has prevented constructive debate on whether the reserve role of the US dollar imposes a growing burden on the 'real' US economy and the US state.This paper argues that there is no direct relationship between the reserve role of the US dollar and US current account deficits.The systemic current account deficits of US in the 1980s were a direct consequence of the state's control over the dynamics of international financial markets.That is, the US does not really 'borrow' money from abroad to finance its deficits in global finance.