Introducing Hegemoney

A project on how the U.S. wields the dollar

Secretary of State Dean Acheson speaks at a meeting on the Bretton Woods Monetary Agreement (edited, source: World Bank archives)

Silicon Valley and DC have come around to the fact that trade can be a more effective weapon than boots on the ground. We now, rightly, are debating the controls around chips, fiber optic lines, and the merits of heavy crude. However, this dialogue overlooks the plumbing that not only underlies trade but also enforces our will: the dollar. This is an existential problem. We can argue about controls, but without the monetary infrastructure to enforce them, we’re just screaming into the wind.

I spend a lot of time talking to businesses and financial institutions in complex regions. Lately I’ve been traveling in the border regions between the East and West, because they’re often the first to adopt new financial technologies or workarounds by necessity (Western de-risking, hyperinflation, rumors of war). You can learn more in an hour with a hawala dealer in Kinshasa or Bishkek than a week with some banker in London or crypto lobbyist in DC.

Most talking heads ignore these countries because they aren’t major economies or even U.S. allies, but their resources and locations will make them pivotal in a future conflict. Who they’d side with, and where their resources will flow, in any conflict very much depends on which country they’re more integrated with economically. Our adversaries realize this. They’re flooding these regions with state-sponsored financial weapons. You can’t visit some countries in Central Asia, Africa, or even south of our border without getting hit in the face with Chinese financial infrastructure and services designed to not only tightly couple these financial systems to China, but also blunt the use of America’s greatest weapon — the dollar.

Controlling the world’s monetary and trade infrastructure is a primary source of American power projection: if the U.S. can cut off dollar access to stop a bad guy from invading their neighbor or building a nuke, that saves us from having to put boots on the ground or weapons in the air. That’s good for America, good for roughly 80 years of global stability, and something we’re at risk of losing. Rivals like China are building payment and settlement systems to circumvent our financial system entirely, and supporting offshore synthetic dollars that weaken our control over our own currency.

The United States is sleepwalking our way through a financial cold war. With Silicon Valley’s newfound interest in national security, there’s a lot of energy going into conventional defense, space, and artificial intelligence fronts. That’s good and long overdue. But let’s not forget that we won the Cold War largely as an economic war through economic means.

I run a regulated tech company. I interact with the government a lot, so it’s very apparent to me how our financial system draws legitimacy from and reinforces America as a sovereign nation. However, this connection has historically been implicit. It needs to be made explicit.

Today we’re launching Hegemoney to publish analysis on how the U.S. wields the dollar, and what we can do to dominate financially through new technologies and better policy.

Hegemoney is named after hegemonic stability theory; in the words of Charles Kindleberger:

“For the world economy to be stabilized, there has to be a stabilizer, one stabilizer.”

Jess Hoversen, the Chief Economist on our team, will be the main voice for this project. She joins us after 13 years as an economist at the CIA, Department of State, and Department of the Treasury, focusing on national security. I might drop in from time to time. But mostly we’re giving her the space to publish on whatever she finds most important.

If you’re interested in working with us on something, get in touch at hegemoney@column.com.