The Power and Price of the Dollar: Kenneth Rogoff Delivers the Henry L. Stimson Lectures on World Affairs

How does the U.S. dollar shape the world we live in?

Drawing from his new book Our Dollar, Your Problem (Yale University Press), Harvard economist, chess grandmaster, and Yale alum Kenneth Rogoff (’75 B.A., M.A.) answered this question and others as he returned to campus to deliver the 2025 Henry L. Stimson Lecture on World Affairs. During a time when economic uncertainty is tied to nearly every aspect of global politics, Rogoff examined how the dollar gained its position as the world’s dominant currency and how its influence extends into daily economic life, shaping prices, employment, and financial stability around the world. 

The United States, Rogoff explained, still benefits from what former French president Charles de Gaulle once called an “exorbitant privilege.” The dollar’s global role allows the U.S. to borrow at lower costs, shape international markets, and extend its influence through the financial system. He also warned that the same system making the United States so powerful can just as easily expose it to risk.

That control extends beyond markets to geopolitics. The U.S. financial infrastructure, from banks to digital payment networks, gives policymakers significant leverage in global affairs. However, the repeated use of sanctions has encouraged other countries to look for alternatives. “Other countries notice,” he said. “They don’t want to be that dependent.”

Today, China’s efforts to develop its own financial architecture, the rise of cryptocurrencies, and political threats to central bank independence all put pressure on the dollar’s dominance.

"Everybody thought we’d never have inflation again,” Rogoff shared, recalling conversations after the 2008 financial crisis. “But if you look at the longer sweep of history, you see these cycles always return.” The real risk lies not in external competition, but in domestic overconfidence."

So, what’s next for the world’s leading currency? Rogoff urged humility. The dollar’s strength, he argued, relies as much on credibility and cooperation as on economic size. “We can’t assume the Pax Dollar will last forever,” he said. “Power without perspective becomes its own undoing.” He suggested that the real challenge is to ensure the dollar’s power helps build stability, not just sustain it.

The next day following the lecture, Rogoff visited Cecilia Fieler’s International Finance economics class to meet with students and discuss current challenges in global monetary policy and the evolving role of the U.S. dollar. Fieler assigned her students readings from Our Dollar, Your Problem in preparation for the interactive session, and Rogoff signed the students' books at the end of the class.

Each year, the MacMillan Center hosts more than 450 events that bring leading voices to Yale for world-shaping dialogue – promoting understanding of the world and in the world. Among them, the Stimson Lectures – established in 1998 to honor Yale alumnus Henry L. Stimson and presented in collaboration with Yale University Press (YUP) – stand out as a forum where distinguished diplomats and foreign policy experts engage the global challenges of our time.