The "exorbitant privilege"? You mean the exorbitant privilege to create government debt to cancel out a savings glut? I've never understood this argument. I always heard how the USA is "riding" or "abusing" the US to achieve some nefarious goal when from my perspective it was always the inverse.

Since I lacked the necessary knowledge I tried to think about how the effects work from first principles and I always came to the same conclusion. When it helps it does nothing and when it hurts the downsides are grave and a strong economy is necessary to just be able to counteract the effects of the exorbitant burden. This is compared to the misguided idea that the dollar having the global reserve "status" as some benefit that helps the USA.

Global reserve status is basically equivalent to a partial currency union similar to the eurozone. There are two potential effects. Either your currency becomes stronger than the average currency in the currency union or your currency becomes weaker. Germany is "riding" the effect of a weaker euro to export goods and thus creates a savings glut in the nations it is exporting goods to. The reserve situation is that your currency becomes stronger than it should be. You get nations like Greece or Spain that are struggling with debt because additional savings can only exist if there is a debt somewhere to balance savings and investments.

Once I started reading up on the downsides [0] of having your currency be a major global reserve currency it pretty much confirmed everything and it made the situation completely hopeless. There are no good answers here. The hands of the USA are tied and the situation is pretty dire.

The USA obviously has a stronger currency than it would usually have. This means importing products from overseas becomes the obvious choice and domestic consumption is avoided. The weak demand causes unemployment and now you are at the ultimate economic dilemma. Do you create government debt to create investments for the savings glut or do you let people become unemployed so that domestic savings go down to make room for foreign savings? The only choice is to just do endless deficit spending thanks to the "exorbitant privilege". It's not really a choice.

[0] https://carnegieendowment.org/chinafinancialmarkets/56856

It is clear that if you want to be viewed as the demon whose vileness exceeds all other demons you just give everybody who wants something what they want reliably. After that nothing you do will fail to be evil. If you restrict them you are a tyrant. If you don't you enable all evils of the world. If you vanish from the world you destroyed all out of spite.

Whether it is hosting videoes or simply not guarding your currency from export like a jealous dragon.

The US Fed is starting to come around to this viewpoint too, and starting to address the employment mandate a lot more aggressively. I'm absolutely a layman compared to the complexity of the problem, so we shall see how this will work.

Why would they want riyal for their oil? That would cause massive price action and destabilize their currency causing wild swings in the value of the riyal depending on the demand for oil. The last thing in the world an export economy wants is a currency that becomes stupidly expensive when people want it and worthless when people don’t. Settling in dollars allows for a stable riyal.

The riyal is pegged to the dollar.

But the point is that if you want the "maximum wealth" for your export stuff and you export a lot you obviously want to settle in your domestic currency, since that would lead to you being able to stock up on enormous amounts of foreign currency reserves. Just like China did.

Because if there's demand your your currency you can just print it.

Sure, this way they are stocking up on USD, but they can't print USD.

The destabilization on the other hand is also "exported" to the US. Eg, when oil demand drops, US Treasury rates increase coupled with the economic downturn, less tax revenue, more volatility, but this increase in uncertainty leads to people flocking to stable investments, which pushes rates back down a bit, plus it seems central banking is inseparably coupled to near-zero rates going forward.

(Of course the US economy is a lot bigger, they were the main buyers of oil anyway, so it made sense to just settle in USD, and initially the extra demand for USD was seen as a good thing, as it helped finance the US public spending via keeping bond yields - interest rates - low.)

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That said, I'm not fully sold on the linked article's arguments.