In response to:

The Struggle for the Fed from the February 26, 2026 issue

To the Editors:

In his review of my May 2025 book Our Dollar, Your Problem [“The Struggle for the Fed,” NYR, February 26], Trevor Jackson takes little interest in engaging with the book’s core thesis that the absolute dominance of the US dollar is being undermined by weaponization of US economic power against enemies and friends alike, unsustainable US fiscal policy, and threats to central bank independence. This last, of course, is ostensibly the topic of his essay. Perhaps Jackson did not feel it necessary to take the book seriously because “it is not for beginners…. Nor is it a book for experts.” This is quite an assertion for a late-cycle review of a highly influential well-established national best seller that has received countless positive reviews from prestigious publications. Jackson might instead have asked himself how the book found such a large and enthusiastic audience and why it continues to be so impactful. Instead, he spends much of his review dwelling on the evils of austerity (without defining it), giving great attention to a 2013 critique of a short 2010 conference paper of mine with Carmen Reinhart on growth and high debt, claiming our paper was riddled with errors and therefore deeply misleading. Our paper did have one mistake, which is not unusual in early-stage research. The error, however, does not carry through to the complete published 2012 paper based on a much longer and more complete dataset, and that reached the same conclusion: very high legacy debt weighs on growth. Of course, this conclusion is completely consistent with the view that short-term stimulus helps boost the economy, it just means there can eventually be a tradeoff. Why? Because highly indebted countries might be in less of a position to use full-throttle stimulus to fight financial crises and pandemics, not to mention wars. This does not mean never using stimulus and it certainly does not automatically imply austerity: as we broadly argued, highly indebted governments need to think outside the box, for example allowing temporarily high inflation to ease public and private debt burdens. My research and public engagement also called for large debt write-downs for subprime homeowners in the US and debt-strapped countries in Southern Europe. Only a blind polemicist would view such proposals as “advocat[ing] for austerity,” as Jackson states without any qualification or context. Perhaps Jackon still believes in the 2010s progressive view that government debt is a veritable free lunch, so any notion of tradeoff between stimulus and debt is “austerity.” That view, however, is increasingly looking foolish, and not just because it goes against a now sizable body of research suggesting otherwise. It is notable that many leading progressive scholars who once unequivocally endorsed the free lunch view have been vigorously walking back those claims after the sharp rise in interest rates and inflation post-pandemic. I have no problem with someone sharply disagreeing with the ideas in Our Dollar, Your Problem, on exchange rates, China, cryptocurrencies, inflation, or whatever. But Jackson seems to prefer mudslinging to thoughtful engagement.

Kenneth Rogoff
Cambridge, Massachusetts