U.S.A. faces turbulent financial future with dire political consequences

by: Michael Lynch

Implications

Nouriel Roubini, professor of economics at New York University, reported on May 14 in the New York Times that the Chinese renmimbi could replace the U.S. dollar as a reserve currency. In the 19th Century, the British Empire was dominant and the pound sterling was the world’s reserve currency. But the United Kingdom became a debtor nation during the second World War and the U.S.A. became dominant. The dollar took over as the reserve currency. Professor Roubini suggests that we are now entering the Asian Century with a dominant China and its currency. The dollar will not quickly vanish but it is challenged by the renmimbi. For America, financing budget and trade deficits cheaply would vanish. In the past, empires that held the reserve currency were creditors, not debtors. Today the U.S. has fallen into the category of a debtor nation, relying on foreign creditors who have become uneasy. The downfall of the dollar is a matter of time unless U.S. financial policy is changed.

Analysis

Sitting side by side in my office bookshelf are: The German Inflation of 1923 edited by Fritz K. Ringer and Fiat Money Inflation in France by Andrew Dickson White. Looking inside the covers, I see that I acquired both of them in 1975.

more in:
http://www.glgroup.com/News/U.S.A.-faces-turbulent-financial-future-with-dire-political-consequences-39051.html