The U.S. has unleashed weapons of financial destruction, and economists are watching for long-term fallout

A group of economists was asked to contemplate a question about sanctions on Russia and their potential for deep, long-term consequences on the United States.

At issue is a source of American power so ubiquitous it's been assumed for generations to be unshakeable: The almighty dollar and its role as a global reserve currency.

Imagine being able to run up massive deficits every year; spend more on your military and government programs; enjoy cheaper interest rates on debt; and still never worry about your currency collapsing because it's used everywhere.

Now imagine also being able to punish your enemies by cutting off access to this currency, making it illegal to transfer any money through U.S. banks.

The U.S. need not imagine this exorbitant privilege, to borrow a term from a former French leader: It's been the reality since the Second World War, when the U.S. dollar became the dominant international currency.

Around the world it's popular with people, companies and governments, in everything from cross-border sales to the central bank holdings other countries use to stabilize their economies.

"It's a pretty great deal," said David Laidler, professor emeritus at Western University and University of Chicago-trained monetary economist.

"It's international money, is what it is."

Now the steward of that international currency, the U.S., with its allies, has cut Russia off from banking systems; prohibited dollar transactions; isolated Russia's central bank; and all but assured Russia's first debt default in a century.

What if Russia tries seeking relief from the Washington-based International Monetary Fund or World Bank? The U.S. and other G7 countries are working to cut off that access too, all punishment for Russia violently invading its neighbour.

As U.S. President Joe Biden said Friday: "[We're] crushing the Russian economy."

So dozens of prominent economists were asked this week in a recurring survey run by the University of Chicago whether we're about to witness a ground-shifting economic event.

Those economists from Yale, MIT, Harvard, Princeton, Berkeley and Stanford were specifically asked whether this weaponization of dollar finance might lead to countries shifting away from the dollar as the dominant international currency.

Most confessed to not having an answer about where things go from here: 42 per cent said they didn't know, 16 per cent predicted a shift, and 28 per cent predicted no shift. Fourteen per cent had no opinion or did not answer.