[Manbo Jeongdam] "If US Fiscal Credibility Wavers, Dollar's Status Will Also Shake"

Attorney Kim Dong-ki, Author of 'The Power of the Dollar'
Dollar Dominance to Continue for the Time Being
Risk Increases if US Treasury Safety Obligations Grow

Attorney Kim Dong-gi, author of "The Power of Geopolitics" and "The Power of the Dollar," is being interviewed in front of the Bank of Korea Currency Museum located on Namdaemun-ro, Jung-gu, Seoul, on the 12th of last month. Attorney Kim pointed out, "As the U.S. fiscal deficit accumulates excessively, the dollar may face a fundamental crisis within the next 10 years." Photo by Jo Yong-jun jun21@

"The U.S. central bank, the Federal Reserve (Fed), lowering interest rates this year does not mean the absolute share and overwhelming status of the dollar will diminish. The dollar-dominated world will continue for the time being."

On the 12th of last month, at the Bank of Korea Currency Museum located on Namdaemun-ro, Jung-gu, Seoul, attorney Kim Dong-gi, author of The Power of the Dollar, addressed the view that the Fed's indication last year of ending interest rate hikes raised market expectations for rate cuts and that the strong dollar trend (King Dollar) would fade. However, Kim said challenges to the dollar will continue. He stated, "Currently, due to its status as a global safe asset, the dollar system is unlikely to collapse easily, but if the U.S. fiscal deficit accumulates excessively and doubts arise about the safety of U.S. Treasury bonds?the top collateral used in global financial transactions?the dollar could face a fundamental crisis." He pointed out that if trust in the U.S.'s fiscal capacity is shaken, the dollar's status will inevitably be undermined, and this issue could become a sensitive topic in about ten years.

Attorney Kim published The Power of Geopolitics in 2020, emphasizing the need to face geopolitical realities above all for the Korean Peninsula to escape its geopolitical trap. The book gained further attention in July 2022, when former President Moon Jae-in recommended it to officials of the Yoon Suk-yeol administration amid heated debates over the West Sea public official death incident and the forced repatriation of North Korean fishermen. As U.S.-China tensions escalated and the Russia-Ukraine war highlighted the importance of 'geopolitics,' the book sold nearly 15,000 copies by the first half of last year, becoming a bestseller. Before the enthusiasm cooled, Kim published The Power of the Dollar in November last year.

While The Power of Geopolitics was written in search of answers to the fundamental question of why the division system on the Korean Peninsula persists, The Power of the Dollar was released with the intent that understanding the dollar properly under the dollar-centered global financial system is essential to understanding Korean finance and economy. Kim graduated from Seoul National University Law School and passed the bar exam the same year, practicing as an attorney. Wanting to experience the wider world, he went to the U.S. for further studies, earning a master's degree from Cornell University Law School and passing the New York State Bar Exam. He also obtained a U.S. Certified Public Accountant (CPA) license and a Chartered Financial Analyst (CFA) certification to study international finance. He has served as head of the Korea IT Venture Investment U.S. branch and as a member of the Korea Communications Commission.

Attorney Kim Dong-ki emphasized that understanding the dollar is essential to comprehending Korean finance and economy under the dollar-centered global financial system. The photo shows dollar bills displayed inside the Bank of Korea Currency Museum. Photo by Jo Yong-jun jun21@

- You have a diverse career background as a former attorney. What sparked your interest in geopolitics?

▲ I entered university in 1979. Coincidentally, the interview date is December 12, and as the film Spring in Seoul about the December 12 military coup shows, I lived through turbulent times. During my university years, overthrowing military dictatorship was a major issue, and I inevitably pondered Korea’s structural problems such as the division system. Being on the periphery of the activist group, after passing the bar exam, I thought I should enter the system and contribute to helping workers and advancing human rights through institutional frameworks. Early in my career as an attorney, I worked as a labor lawyer in Bucheon, Gyeonggi Province, where many small and medium enterprises were located. Later, wanting to change Korean society, I briefly entered politics but felt its limits and continued practicing law in Seocho-dong before going to study in the U.S. in my late 30s.

Foreigners I met at U.S. law school always asked if Korea was safe and whether the Korean War might break out again. Koreans are surprisingly insensitive, but foreigners see Korea as a very unstable country. I kept questioning why the division system on the Korean Peninsula has not ended and searched various materials but could not find a clear answer. By 1989, East Germany had collapsed, and the socialist bloc had fallen; ideologically, the liberal camp had won. Ideology was no longer a matter of debate. All international relations became focused on how to realistically increase one’s own interests, and I began to think the Korean Peninsula could be approached from this perspective.

The Biggest Beneficiary of Improved North Korea-U.S. Relations is South Korea... Need to Unleash Geopolitical Imagination

- Former President Moon Jae-in recommending The Power of Geopolitics caused a stir. You are a classmate of President Yoon Suk-yeol from Seoul National University Law School, class of ’79. You have unique connections with both former and current presidents.

▲ Moon recommended The Power of Geopolitics about two years after its publication. The timing coincided with the new government’s launch and differences in North Korea policy from the previous administration, so recommending it to current officials seemed to carry political significance and attracted attention. I was only an acquaintance with President Yoon from school days, but I had no deep relationship with former President Moon. The first to respond to the book was the diplomatic authorities. In 2021, when face-to-face meetings were limited due to COVID-19, I met with current and former Ministry of Foreign Affairs officials to discuss North Korea-U.S. relations. In 2022, I presented on the possibility of improving North Korea-U.S. relations at the Korea International Peace Forum hosted by the Ministry of Unification. Later, I gave a special lecture to active mid-level officers at the Korea National Defense University, which was a rewarding experience to exchange views on defense. I initially thought the book was not for the general public, but selling over 15,000 copies was encouraging (laughs).

Author Kim Dong-gi of 'The Power of the Dollar' is being interviewed by Asia Economy. Photo by Jo Yong-jun jun21@

- You argued that raising the geopolitical status of the Korean Peninsula requires integration and resolution of hostile relations, but recent trends suggest this is a difficult task.

▲ The biggest risk for our country is war on the Korean Peninsula. As U.S.-China disputes accelerate, interest in the semiconductor industry is intense, but major semiconductor production bases like South Korea and Taiwan carry geopolitical risks. The increased risk of war on the peninsula is fatal to the Korean economy. If war breaks out, everything turns to ashes. What good is it if both sides suffer damage? Above all, reducing the risk of war and maintaining a peace regime must be the top priority. Regardless of ideology, any government must prioritize managing war risks.

Another point to note is that the U.S. perspective on North Korea has recently changed. Officially, the U.S. announced its National Security Strategy with the Trump administration in 2017, designating China and Russia as strategic competitors. The Biden administration identifies China as the only country capable of changing the order based on the Western framework led by the U.S. The U.S. aims to weaken China and has begun viewing North Korea from this perspective. Through the 2018 Hanoi summit between Trump and Kim Jong-un, the U.S. discovered significant conflicts between China and North Korea. The rift between China and North Korea is an opportunity for the U.S., which can use North Korea to check China. Vincent Brooks, former commander of the ROK-U.S. Combined Forces Command, proposed in his July 2021 essay A Grand Bargain With North Korea that South Korea and the U.S. should integrate North Korea into an alliance-led order. If Trump wins the U.S. presidential election next year, this movement could accelerate. South Korea must prepare for such scenarios.

North Korea Holds Rare Earths... Countermeasure Against China’s Rare Earth Weaponization Threat

- South Korea is undergoing de-risking with China, but without China’s economic recovery, export recovery is difficult. Can China continue growing under strong U.S. containment?

▲ The saying "Security is China, economy is the U.S." is over. China used to import intermediate goods from South Korea, but most have been caught up, leaving only semiconductors. If it was easy to make money in the Chinese market before, now it’s difficult. For South Korea to leap forward quantitatively and qualitatively, it must utilize North Korea. While North Korea will be the biggest beneficiary of improved North Korea-U.S. relations and development, the next beneficiary will be Korean companies. Especially, North Korea, which holds large deposits of high-quality rare earths, can be a countermeasure against China’s threat to weaponize rare earths. If North Korea opens up and pursues economic development, and Korean companies enter, the Korean economy, facing low growth, can grow again for the next 20 to 30 years. Now is the time to unleash geopolitical imagination. It is time to dismantle the 38th parallel of imagination.

Author Kim Dong-gi of 'The Power of the Dollar' is being interviewed by Asia Economy. Photo by Jo Yong-jun jun21@

- How long do you think the strong dollar era will last?

▲ If the U.S. fiscal capacity supporting the dollar falters, the dollar’s status could be shaken. In 2001, the U.S. federal government debt was $9.7 trillion, only 55% of GDP, but by the end of 2022, it reached $30.93 trillion, 124% of GDP. That year, $475 billion was paid in interest, sharply increasing from the previous year. Interest costs are expected to reach 20% of federal government revenue by around 2033. Recently, debt has risen to $33 trillion, forcing Congress to cut spending on infrastructure, climate crisis, and defense to repay federal debt. Reducing defense spending lowers U.S. hard power. If U.S. fiscal capacity deteriorates, trust in U.S. Treasury bonds will decline, ultimately shaking confidence in the dollar. Weaponizing the dollar can also cause unintended backlash. Countries subject to or at risk of U.S. financial sanctions may build new channels that avoid using the dollar, damaging its status. The more the U.S. uses the dollar as a political and economic tool for its own interests, the stronger the centrifugal force internationally to move away from the dollar will become.

Need to Open Space to Energize the Young Generation... Time for Political Awakening

- Consistent health management is important for writing books. How do you manage your health, and do you have future plans?

▲ I walk daily. I take my dog for a walk every morning and evening around my home in Seongbuk-dong. No matter how cold the weather, I never skip dog walks. My wife is a 'cat mom' who raises eight cats. I live among animals (laughs). I feel a strong urgency to manage my time well because I don’t have much time left to use. I am diligently reading books I have wanted to read. Nowadays, individuals, citizens, and nations cannot live without an international context. Our thoughts and ideas are shaped by international influences, so I am exploring their historical background and roots. Understanding international trends is essential to know oneself accurately and plan for the future.

Comparing South Korea, China, and Japan, South Korea is the most horizontal society. That is why the Korean Wave (Hallyu) was possible. Japan’s 'lost 30 years' were largely due to political leadership absence. When change was needed, it failed to happen properly. For South Korea to change, politics must change. The younger generation faces fewer economic opportunities and harsher lives. The older generation must open spaces to energize the youth. Now is a turning point. Political leaders and leaders need to awaken.

Lawyer Kim Dong-gi is being interviewed by Asia Economy. Lawyer Kim stated, "Japan experienced the 'Lost 30 Years' due to a lack of political leadership," and warned, "If our politicians do not awaken and change, we could follow in Japan's footsteps."

This content was produced with the assistance of AI translation services.