Slate Money: Money Talks – "The Mighty Dollar"
Date: March 18, 2025
Host: Felix Salmon
Guests: Edward Fishman ("Choke: American Power in the Age of Economic Warfare"), Saleha Mohsen ("Paper Soldiers: How the Weaponization of the Dollar Changed the World Order")
Episode Overview
This episode explores how the United States deploys economic power—primarily through sanctions, tariffs, and the dominance of the dollar—to assert global influence in the modern era. Host Felix Salmon discusses these strategic tools, their efficacy, their long-term sustainability, and their consequences with authors Edward Fishman and Saleha Mohsen, both leading observers of American financial hegemony and its evolving challenges.
Key Discussion Points and Insights
1. The Rise of Economic Warfare
[01:15] Edward Fishman:
- His book, "Choke," investigates the new era of economic warfare, where economic tools have replaced traditional military methods in geopolitics.
- Explains that not only the U.S., but also powers like China and the EU, now leverage sanctions, tariffs, and export controls for global competition.
2. The Weaponization and Status of the Dollar
[02:08] Saleha Mohsen:
- "Paper Soldiers" examines how the USD became the world's reserve currency and the implications for American power and global order.
- Tracks the evolution of U.S. economic might since its early years, acceleration after WWII, and post-9/11 focus on financial instruments as foreign policy tools.
- Notes the "tension between maintaining the dollar’s supremacy and rising economic populism and isolationism in U.S. politics."
3. Tensions in U.S. Economic Policy
[03:59] Felix Salmon:
- Highlights the contradiction in aiming for a strong, globally dominant dollar while pursuing "America First" policies that often undermine global confidence.
[04:39] Saleha Mohsen:
- Outlines huge fiscal and strategic benefits to the U.S. in being the issuer of the reserve currency.
- But notes the "huge tension" between wanting reserve status and simultaneously pushing for a weaker dollar to support local manufacturing.
"You can't keep telling the world that we want to be the world’s reserve asset, and also we want a weaker dollar..."
—Saleha Mohsen [05:43]
4. The "Charm-to-Bullying" Tactic Shift
[06:44] Saleha Mohsen:
- Trump administration shifts from “charm tactics” (attracting investment, voluntary global use) to open threats: "Trump is talking about shifting to a bullying tactic by saying that I will tariff your country 100% if you abandon the dollar."
5. Weaponization Undermining Its Own Power
[07:14] Edward Fishman:
- Weaponizing the dollar and choke points incites other countries—even allies—to seek alternatives and “insurance policies.”
- The second Trump administration escalates this by targeting allies, not just adversaries, fostering "hedging behavior" globally.
"He's deploying these tools against not just adversaries, but also allies. And that's leading to this sort of hedging behavior occurring globally."
—Edward Fishman [08:17]
6. Parallel Financial Infrastructures & Future Risks
[09:05] Edward Fishman:
- Predicts that rather than a new global reserve currency outright replacing the dollar, we'll see increasing alternatives (e.g., China's cross-border interbank payment system, digital renminbi) enabling countries to circumvent the dollar in crises.
"Countries like China...are developing parallel financial infrastructure that could grow quite quickly in the event of a crisis."
—Edward Fishman [10:08]
7. The SWIFT "Nuclear Option" and Its Limits
[10:54] Felix Salmon & Saleha Mohsen:
- Discusses the expulsion of Russia from SWIFT in 2022: initial expectation of catastrophe didn't come to pass.
- Saleha: "Sanctions goalposts change... President Biden is one of the people who changed the goalposts with those sanctions..." [11:59]
[13:39] Edward Fishman:
- Context matters: By 2022, Russia had reduced its dollar exposure, built up alternatives.
- SWIFT ban more symbolic by then; real leverage came from freezing Russian central bank assets.
"We in the State Department interpreted that [SWIFT ban] as Russia might respond militarily... But when Russian banks were finally kicked out of Swift in 2022, it was a totally different story."
—Edward Fishman [15:24]
8. The Art of Narrative Management in Sanctions
[16:18] Saleha Mohsen:
- Both books highlight how governments continually "manage the narrative" around sanctions to suit evolving political goals.
- Success of sanctions often depends as much on market perception and storytelling as on material impact.
9. Efficacy and Deterrence of Sanctions — and Their Difficult Reversal
[18:19] Edward Fishman:
- U.S. is much more effective at imposing pain than delivering relief (“turning off” vs. “turning on” economic activity).
- Deterrence relies on credible threat and credible offer of relief; unpredictability (especially political) undermines the latter.
"You can't mandate that ExxonMobil must drill in the Russian Arctic...This is the problem with sanctions relief."
—Edward Fishman [18:42]
10. American Hegemony, Rule of Law, and Democratic Fragility
[21:31] Saleha Mohsen:
- The current era is marked by extreme unpredictability in U.S. global policy, deep partisanship, and unprecedented fiscal deficits.
- Draws on historical analogies: “All empires think they’re special, but all empires fall... when their deficits got out of control.”
- Points to uncertainty in U.S. democracy and its effect on the dollar’s credibility.
"The appearance of stability and...projecting confidence and following the law is as important as actually doing all those things."
—Saleha Mohsen [29:51]
11. Rule of Law as Foundation of Dollar Primacy
[24:12] Edward Fishman:
- Dollar dominance outlasted U.S. relative economic influence due to the credibility of its legal and institutional frameworks.
- If U.S. rule of law or Fed’s independence is undermined, dollar’s global position could quickly erode.
"...if you saw the rule of law in the U.S. debased...I think that the value of the dollar as the world's reserve currency does begin to look a lot less solid than it does today."
—Edward Fishman [25:25]
12. Domestic Echoes of Economic Weaponization
[26:51] Felix Salmon & Edward Fishman:
- Discuss attempts to politicize Treasury and the U.S. Fiscal Service, risking the appearance and possibly the substance of U.S. debt reliability.
- Possible payment prioritization (paying some obligations over others) would constitute a "default by another name."
[29:51] Saleha Mohsen:
- Safe-haven status of the dollar is as much about perception as it is about reality; loss of appearance of order can be as damaging as material slippage.
13. The Debt Ceiling as Institutional Farce
[32:08] Felix Salmon & Edward Fishman:
- Both agree: debt ceiling mechanism never made much sense, but recent years have seen a general breakdown of previously stable norms and institutions.
14. The Trump Cabinet’s Difference
[34:46] Edward Fishman:
- Trump’s second term marked by fewer independent or expert voices, more strict loyalty to the President, raising risks of erratic policymaking.
15. The Role of the Treasury Secretary — Past and Present
[35:52] Saleha Mohsen:
- Previous Treasury Secretary Mnuchin ultimately seen as the steady hand amidst chaos, in part because he stayed the course for four years.
- Current Secretary Scott Bessant faces a test: Markets seek reassurance and continuity, but with increased politicization and disruptive figures like Elon Musk in the mix, stability may be elusive.
"Treasury is not one of those places where you can move fast and break things."
—Saleha Mohsen [37:19]
Notable Quotes & Memorable Moments
-
"You can't keep telling the world that we want to be the world's reserve asset, and also we want a weaker dollar..."
—Saleha Mohsen [05:43] -
"He's deploying these tools against not just adversaries, but also allies. And that's leading to this sort of hedging behavior occurring globally."
—Edward Fishman [08:17] -
"Countries like China...are developing parallel financial infrastructure that could grow quite quickly in the event of a crisis."
—Edward Fishman [10:08] -
"All empires think they're special, but all empires fall."
—Saleha Mohsen [22:09] -
"If the US government is not making payments that it's legally obligated to make... it starts undermining the credibility of the dollar…"
—Edward Fishman [28:18] -
"The appearance of stability and...projecting confidence and following the law is as important as actually doing all those things."
—Saleha Mohsen [29:51]
Timestamps for Important Segments
- [01:15] – Edward Fishman on the new era of economic warfare
- [02:08] – Saleha Mohsen on how the USD became world money
- [03:59] – Felix Salmon poses the central tension: “America First” vs. dollar supremacy
- [06:44] – The Trump administration’s weaponization shift
- [08:17] – Why targeting allies backfires
- [10:08] – How other countries are building alternatives to the dollar system
- [13:39] – Why kicking Russia off SWIFT wasn’t the “nuclear” move
- [18:19] – Why sanctions are easier to impose than to lift
- [21:31] – Saleha Mohsen on the fragility and unpredictability of American global power
- [24:12] – Rule of law as linchpin of financial hegemony
- [26:51] – Politicization of Treasury and Fiscal Service
- [29:51] – Market psychology and the importance of perception
- [32:08] – Debt ceiling as a symptom of broken norms
- [34:46] – Policy-by-loyalty: Trump’s second-term staffing
- [35:52] – Comparing secretaries: Can Treasury stay stable under Bessant?
Takeaway
This episode offers a deeply informed, candid conversation on the shifting tectonics of American financial power and its sway over the international system. The guests provide both a current analysis and historical context, illuminating how narrative, perception, and confidence—alongside legal and political stability—remain central to the mighty dollar’s fate. The hosts caution that the very tools which once made America powerful may undermine its primacy if overused, weaponized domestically, or stripped of their institutional underpinnings.