Part 9/15:
The interconnectedness of markets means that shifts in US policy ripple worldwide. The system's design—centered on the dollar and views on currency strength—has led to ongoing currency wars, with nations manipulating their currencies through printing and reserves management to maintain competitiveness.
Trade deficits persist in many countries, with surplus nations (like China, Japan, Germany) accumulating dollar reserves and investing back into US assets. This "recycling" of surpluses fuels the US's asset bubble but creates systemic vulnerabilities, especially when dollar strength fluctuates. Countries like Brazil and Turkey owe dollars denominated debts, which can become unmanageable if the dollar appreciates sharply, causing debt servicing crises.