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Economic lens
Money
7 questions that expose connected mechanisms beneath this part of the world.
All lensesWhy does the dollar dominate the world?
US economic scale, legal and institutional credibility, open capital markets, and the supply of Treasury securities created a strong foundation. On top of it, a coordination loop developed: firms invoice in dollars because suppliers, customers, banks, and hedging markets already use dollars; that use deepens dollar funding and asset markets, making the next dollar transaction cheaper and safer. The loop is powerful, but it is conditional rather than permanent.
5 min LeverWhat really causes inflation?
Sustained inflation can emerge when total spending outruns productive capacity, when supply or energy shocks raise costs, and when wages, prices and expectations propagate the initial shock. The mix changes across episodes.
5 min LeverWhy does raising interest rates tend to reduce inflation?
Higher policy rates feed into borrowing costs, saving returns, asset prices, exchange rates and credit supply. Spending and investment tend to weaken, easing demand pressure - but with long, variable and uncertain lags.
5 min LeverWhy is oil priced in dollars?
Oil is usually quoted and traded in dollars because the dollar is already the common currency of global trade and finance. Dollar funding, benchmarks, derivatives and liquid assets reinforce that choice. It is a durable convention, not a universal legal rule.
5 min LeverWhy can the United States sustain such a large public debt?
The United States borrows in its own currency, has a large tax base and issues the world's deepest pool of liquid government securities. That creates exceptional demand and refinancing capacity, but not unlimited fiscal space: interest costs, inflation, politics and confidence still constrain it.
5 min LeverWhy do countries hold foreign exchange reserves?
Countries hold liquid foreign assets so they can pay external obligations, support market functioning and absorb shocks when private foreign funding disappears. Reserves buy time and credibility, but they are costly insurance rather than free wealth.
5 min LeverHow do central-bank swap lines stop dollar shortages?
A swap line temporarily exchanges currencies between central banks at a fixed exchange rate for the transaction. The foreign central bank then lends the dollars locally, supplying institutions the Federal Reserve cannot efficiently reach directly while retaining their credit risk.