WEEK IN REVIEW: "The Dollar: Shrinkable But (So Far) Unsinkable," by Peter S. Goodman, New York Times, 11 May 2008, p. W1.
Between 2001 and 2007, the dollar's share of the world's total foreign exchange reserves drops from 73% to 64%, but it's mostly due to a drop in value that was long in the making.
Still, it signals a long-term development in my mind. I think I wrote in PNM about the inevitable reality of a triad of global reserve currencies: the dollar, the euro, and some yuan/yen basket.
As that day approaches, the U.S. economy and consumer will learn more discipline, but the corrections and the balancing will come faster, and not merely as the result of a once-every-decade "Plaza"-like accord.
This will be a good thing for us and the world. We outgrew the mysticism of gold in the early 1970s and we—meaning the world—need to outgrow too much faith in the dollar. We simply don't dominate the global economy like that anymore, like we did in the early 1970s when the "global" economy was just the West.
So ultimately we're made to adjust by the very same international liberal trade order that we created, set in motion, defended and nurtured since 1945.
This is a "problem" of our success and not our failure. Our order extends over the near-entirety of the planet, dwarfing what the European colonial orders achieved.
And this is an "empire" (if you must) that actually enriches its subjects!
How else to explain the coming huge growth in the global middle class?
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Comments (3)
you touched on the fundemental issue of our time;some say this is the unavoidable process of capitalism,some say there is no more "empire" or imperialism, some say there is no more defined classes(ex;middle class,workingclass) exist anymore.some say it is international liberal trade order and define globalization that way,
some see it as the era of vanishing of the classic capitalism's competetions,and replaced by big cartel and trusts merging (wether
contractually,or spoken agreement maybe at gulf course by ceos) intially at home (1997 was good highlight.ex;exxon/mobil,shell/...,
boeing/...,and many others & so on).now these big cartels expanded
and gone globally,and call it globalization.there is no competetion in
capital globally,only in labor.
Posted by farhad | June 2, 2008 9:29 AM
Collier @ TEDhttp://www.ted.com/talks/view/id/270
Posted by Jarrod Myrick
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June 2, 2008 11:11 AM
Before the sequence of global crises that started with WWI we did not operate in a dollar based global economic network. We did just fine adapting to and often leading economic and technology advancements of that important era.
Posted by Louis Heberlein | June 2, 2008 2:06 PM