The chronic U.S. trade deficits have been blamed on a variety of factors. One reason, in the view of Stephen Miran, the current chairman of President Trump’s Council of Economic advisers, is that America’s status as the issuer of the world’s reserve currency results in capital inflows that the U.S. then uses to import goods from elsewhere, leading to the trade imbalances. To remedy that problem, Miran proposes a tax on foreign holdings of Treasurys. He refers to it as a “user fee,” the purpose of which is to reduce, somewhat, the appetite foreigners have for dollar-denominated assets.

Joseph Sternberg, a member of the Wall Street Journal’s editorial board, has called Miran’s proposal “an even dumber idea than tariffs.” He thinks it is the worst scheme ever concocted by anyone in the first and second Trump administrations. Sternberg is right to be perplexed. Issuing the world’s reserve currency does impose some costs on the U.S. The dollar stays consistently stronger than perhaps it would be otherwise, often making American exports uncompetitive. But the benefits of the dollar’s global status are so much greater than the costs that it is quite bizarre to hear someone in Miran’s capacity suggesting that we surrender some of that advantage.

I must confess though that, like Miran, I have had my own misgivings lately about the dollar’s status as the global reserve currency. My primary concern is that we are heavily abusing the privilege. Because it is so easy for us to attract foreign capital, we have become dangerously undisciplined when it comes to spending.

In a recent column in the Washington Post, George Will provided some sobering statistics that paint a vivid picture of our profligacy. He wrote that our national debt was $20 trillion in early 2017 when Trump’s first administration began. By 2021, at the start of Joe Biden’s presidency, the amount we owe had risen to $28 trillion. Citing data by the Committee for a Responsible Federal Budget, Will noted that the debt jumped to $32 trillion in June 2023, $33 trillion three months later, $34 trillion less than four months later, $35 trillion within the next seven months, and $36 trillion barely four months after that. The amount is projected to reach $37 trillion after Congress raises the debt ceiling this summer.

In his column, Will cited an article from Reason, a libertarian magazine, saying that since the Trump tax cut in 2017, federal spending has increased by 75 percent, while revenues have only risen by 58 percent. Clearly, we are living well beyond our means. We keep borrowing at a pace and at levels that are simply quite frightening.

As anyone who has followed any of the discussions about our ballooning national debt can attest, everyone knows what the problem is. But no one seems to have the courage or the political will to do anything about it. Our only hope then is for the financial markets to act as a disciplining mechanism. That is where Miran’s apparently crazy proposal may actually be just what the doctor ordered.

In fact, we may not even need Miran’s idea. The chaotic ways in which President Trump and his advisers have gone about the implementation of their tariffs and overall trade policies have already scared away some overseas investors. Before the announcement of the 90-day pause on tariffs, Treasury bond yields rose substantially, suggesting that foreigners were losing some of the faith they had in U.S. financial assets as safe havens. The steep drops in U.S. stock markets in recent weeks also indicate capital flight from the U.S. to markets elsewhere.

The opportunity to borrow cheaply is something that many nations around the world would gleefully grab with both hands. That privilege we have is hard-earned, but we are throwing it away carelessly. We seem to take a lot of things for granted in this country. The way things are going, it shouldn’t come as a surprise to anyone if, a few years from now, some other currency were to supplant the dollar as the global reserve currency. Most economists and financial market experts don’t see that as a likely scenario, at least not anytime soon. But overconfidence wouldn’t be wise because nothing is guaranteed in life.