Mar 20, 2024 - Economy

New book reveals the history of U.S. dollar weaponization

The cover of "Paper Soldiers" by Saleha Mohsin

Credit: Portfolio

Some of the most important instruments of U.S. global power are deployed not by the warfighters at the Pentagon or the diplomats at the State Department, but by bureaucrats at 1500 Pennsylvania Avenue — the U.S. Treasury Department.

The big picture: A new book out this week brings to life the narrative of how Treasury officials have used the U.S. dollar as a tool of American foreign policy over the last three decades — along with the hazards that has created.

  • "Paper Soldiers: How the Weaponization of the Dollar Changed the World Order," by Bloomberg senior reporter Saleha Mohsin, arrives as cracks in that order are starting to appear.
  • The aggressive use of economic countermeasures against Russia in retaliation for its invasion of Ukraine — an effort steered out of Treasury — has caused blowback as other nations with tense U.S. relationships seek alternatives to the dollar-based global financial system.

Mohsin delivers the narrative of the recent history of dollar-driven foreign policy, dating to the Clinton administration's dollar policy under Treasury Secretary Robert Rubin.

  • Along the way, she tells behind-the-scenes stories of the Treasury secretaries at the helm of those efforts — Larry Summers, Hank Paulson, Tim Geithner and Steve Mnuchin, among them.
  • But she also includes vivid tales of featured characters, particularly undersecretary Stuart Levey, who directed the Bush and Obama-era Treasury's pursuit of terrorist financing, and Mark Sobel, who guided U.S. dollar diplomacy for decades.

The bottom line: With the dollar-led global financial order — and the power it attends the U.S. — showing signs of fraying, "Paper Soldiers" is essential reading to understand how we got here.

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