America’s high and rising inflation is a serious indictment of its monetary policy.

After decades of extraordinarily loose credit conditions, rising interest rates are now converting a “technical” recession into a downturn of unknown amplitude and duration.

As a result, in addition to having caused losses of dollar’s real purchasing power, the monetary policy will be destroying jobs and incomes in an economy where 100 million Americans (38% of the civilian population) are already out of the labor force and virtually unemployable.

Politicians and their advisers, paid by taxpayers’ money, are sweeping all that under the rug because the bad news brings no brownie points. Some of them are fretting instead about using the dollar, and a largely dollarized world economy, as a vehicle of wide-ranging sanctions to fight hybrid and proxy wars in defense of a “rules-based international order.”

Well, they need not worry about that. The world has no alternative to the high-flying greenback. And, as things now stand, such alternatives are nowhere in sight for the foreseeable future.

To see that, one only has to look at how well the dollar still fulfils the key functions of money in global commerce and finance.

The shining greenback

The dollar’s share of official foreign currency reserves is usually taken as a gauge of greenback’s world standing. That share during the post-WWII period has fluctuated in the range of 75% to 60%. The latest data available show that at the end of last June the dollar accounted for 60% of global currency reserves, a slight increase from 59% a year earlier.

That is a remarkably stable indicator of the dollar as a store of value during a period of an exceptionally unusual and crises-ridden American monetary policy.

In contrast, the euro, the dollar’s main competitor, continued to retreat. Over the same interval, the euro’s share of world reserves declined to 19.8% from 20.6%.

The key Asian currencies, the Chinese renminbi and the Japanese yen, were far behind with global reserve shares of 2.88% and 5.1%, respectively.

The dollar’s other main money functions, such as unit of account and a means of payment, are reflected in its share of foreign exchange (FX) operations. The most recent data show that the dollar accounts for nearly 90% of global FX transactions, and that its share has been stable over the past 20 years, while the euro’s share continued to decline.

The fact that the dollar remains so firmly entrenched as the world’s key currency reflects the euro’s disappointing performance in global trade and finance.

That is somewhat counterintuitive because the size of the E.U. economy -- where the euro serves as a de facto legal tender and a key transactions currency -- is almost the same as the one in the U.S., and the two area’s volumes of foreign merchandise trade are roughly comparable. But that’s where the similarities end.

Hold the Fed accountable

The lack of E.U.’s fiscal integration and of a unified, broad and deep euro area bond market is a significant drawback to euro’s appeal as a reserve currency.

Beyond that, there are still lingering doubts regarding the euro’s finality as a single currency. More importantly, a similar skepticism prevails concerning the viability of the European project of economic and political union. Recent election victories of Euro-skeptic center-right political parties, and the creation of a talking forum called the European political union are reinforcing beliefs that the genuine integration process has reached a dead end.

The Chinese renminbi’s supposed claim on a key currency status is a very long shot. Those speculations are based on a rapidly growing size of China’s economy and foreign trade. Based on purchasing power parity, China’s GDP already exceeds the U.S. economy, although in nominal terms that is unlikely to happen until 2030s.

There are also structural problems that will require important reforms of the Chinese economy. The renminbi is not fully convertible, the capital account is not open, and the financial markets remain tightly controlled. None of those problems can be circumvented with digital currencies and similar contraptions.

All that does not mean that the U.S. can relax and continue to badly mismanage its currency. The pillar of the world financial system is the foundation of a sound, balanced and steadily growing world economy that underpins the “rules-based international order.”

The U.S. Federal Reserve must be held accountable to its charter: Delivering maximum employment consistent with a clearly defined measure of price stability.

That sounds like a pipedream in a world where the Nobel Memorial Prize in Economic Sciences is given for “quantitative easing” to stabilize the banking system and manage financial crises set in train by disastrous monetary policies.