{"id":301249,"date":"2011-03-11T12:24:17","date_gmt":"2011-03-11T12:24:17","guid":{"rendered":"http:\/\/www.ghanamma.net\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/"},"modified":"2011-03-11T12:24:17","modified_gmt":"2011-03-11T12:24:17","slug":"dont-bury-the-dollar-just-yet","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/","title":{"rendered":"Don’t bury the dollar just yet"},"content":{"rendered":"
\n

Yes, the dollar is showing its age. But it’s a tough old geezer and it may hang on longer than you expect — indeed, longer than we can easily afford.<\/strong><\/p>\n

The value of the U.S. currency has dropped by more than a third over the past decade (see right), as America fought two wars and embarked on a massive borrow-and-consume binge. With the Federal Reserve now buying U.S. debt for the sake of propping up, um, domestic consumption \u2013 one of the vices that got us into our fix in the first place \u2013 it is no secret that the greenback’s best days are behind it.<\/p>\n

\"\"<\/a><\/p>\n

Heavy burden<\/p>\n<\/div>\n

“We don’t have a world of U.S. hegemony any more,” says Jonathan Lewis of Samson Capital Advisors in New York. “It’s only natural the financial system should reflect a more multipolar world with a less prominent role for the dollar. The question is what.”<\/p>\n

But contrary to popular belief, the end of the dollar’s reign isn’t in sight. For all the posturing about Fed laxity<\/a> and American decline, the rest of the world is just as addicted to cheap dollars as we are — a fact that won’t make\u00a0it any easier to put\u00a0the global economy on the road to a sustainable recovery.<\/p>\n

China, for instance,\u00a0is often mentioned as the economic superpower that will unseat the United States. Yet it is piling up trillions of dollars<\/a> of depreciating Treasury debt. Why?<\/p>\n

Not out of some abiding loyalty to Americans, swell as we are, but because buying dollars keeps the Chinese currency cheap, makes Chinese goods affordable and puts millions of Chinese to work.\u00a0Kicking a habit like that\u00a0is no easier in Beijing than it is in Washington.<\/p>\n

What’s more, as ridiculous as the current system is we are years from even considering an alternative, let alone putting one in place. There’s gold, but so what<\/a>.\u00a0Strategic drawing rights<\/a>? Sorry, back to the drawing board.<\/p>\n

As for other currencies, the euro —\u00a0as we are seeing this week<\/a> — has its own issues. And any talk about China’s yuan<\/a> is almost hilariously premature.<\/p>\n

“You can’t replace a free market system with one that isn’t free,” says Lewis, who runs the Samson Multicurrency Plus strategy. “You need free capital flows and deep local markets, for starters. The yuan as a reserve currency is an idea on a whiteboard.”<\/p>\n

The dollar is dead. Long live the dollar.<\/p>\n

That’s not to say alternatives to the dollar won’t develop over time. Once the Europeans pull themselves together and deal with their bailout problems, the euro may look more like a viable second reserve currency. The Chinese will take their time to put market reforms in place, but they may have opened things up sufficiently in a decade or so that the yuan\u00a0too look more plausible.<\/p>\n

That sounds unnerving, but a move away from the current system could\u00a0actually be good for America. Much of the fretting about a shift away from a dollar-centric world centers on the fear that the United States will see its borrowing costs soar.<\/p>\n

But Fred Bergsten, a Carter administration Treasury official, says<\/a> that shift could be a blessing in disguise, by forcing disciplline on policymakers who have been distinctly\u00a0lacking in that characteristic.\u00a0By cutting our borrowing, we could\u00a0force exporters like China to shape up as well, by rebalancing their own economies. This could\u00a0help prune\u00a0the global imbalances that have vexed the world economy in recent years.<\/p>\n

Of course, this rosy\u00a0view hinges on Congress breaking its addiction to ever-higher spending, which is\u00a0anything but\u00a0a given. But\u00a0just maybe\u00a0we will wake up to the error of our ways before it’s too late. Hey, a guy can dream.<\/p>\n

“If the United States stopped running large trade deficits and acting as the consumer of last resort, many countries would be forced to rebalance their growth strategies to expand domestic demand instead of relying on exports,”\u00a0Bergsten wrote in a 2009 commentary<\/a>. “Other countries should be careful what they wish for when they propose dethroning the dollar.”<\/p>\n

Also on Fortune.com:<\/strong><\/p>\n

<\/span><\/span><\/span><\/div>\n<\/p>\n

<\/p>\n

See original here:
\nDon’t bury the dollar just yet<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Yes, the dollar is showing its age. But it’s a tough old geezer and it may hang on longer than you expect — indeed, longer than we can easily afford. The value of the U.S. <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-301249","post","type-post","status-publish","format-standard"],"yoast_head":"\nDon't bury the dollar just yet - Ghanamma.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Don't bury the dollar just yet - Ghanamma.com\" \/>\n<meta name=\"twitter:description\" content=\"Yes, the dollar is showing its age. But it's a tough old geezer and it may hang on longer than you expect -- indeed, longer than we can easily afford. The value of the U.S.\" \/>\n<meta name=\"twitter:image\" content=\"http:\/\/www.ghanamma.net\/wp-content\/uploads\/2011\/03\/32883c1ahted_dollar.gif.gif\" \/>\n<meta name=\"twitter:creator\" content=\"@ghanamma\" \/>\n<meta name=\"twitter:site\" content=\"@ghanamma\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/\"},\"author\":{\"name\":\"\",\"@id\":\"\"},\"headline\":\"Don’t bury the dollar just yet\",\"datePublished\":\"2011-03-11T12:24:17+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/\"},\"wordCount\":716,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/#primaryimage\"},\"thumbnailUrl\":\"http:\/\/www.ghanamma.net\/wp-content\/uploads\/2011\/03\/32883c1ahted_dollar.gif.gif\",\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/\",\"url\":\"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/\",\"name\":\"Don't bury the dollar just yet - Ghanamma.com\",\"isPartOf\":{\"@id\":\"https:\/\/www.ghanamma.com\/2011\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/#primaryimage\"},\"thumbnailUrl\":\"http:\/\/www.ghanamma.net\/wp-content\/uploads\/2011\/03\/32883c1ahted_dollar.gif.gif\",\"datePublished\":\"2011-03-11T12:24:17+00:00\",\"author\":{\"@id\":\"\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/#primaryimage\",\"url\":\"http:\/\/www.ghanamma.net\/wp-content\/uploads\/2011\/03\/32883c1ahted_dollar.gif.gif\",\"contentUrl\":\"http:\/\/www.ghanamma.net\/wp-content\/uploads\/2011\/03\/32883c1ahted_dollar.gif.gif\"},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.ghanamma.com\/2011\/#website\",\"url\":\"https:\/\/www.ghanamma.com\/2011\/\",\"name\":\"Ghanamma.com\",\"description\":\"News In Ghana - Latest Ghana News Headlines\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.ghanamma.com\/2011\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Don't bury the dollar just yet - Ghanamma.com","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/","twitter_card":"summary_large_image","twitter_title":"Don't bury the dollar just yet - Ghanamma.com","twitter_description":"Yes, the dollar is showing its age. But it's a tough old geezer and it may hang on longer than you expect -- indeed, longer than we can easily afford. The value of the U.S.","twitter_image":"http:\/\/www.ghanamma.net\/wp-content\/uploads\/2011\/03\/32883c1ahted_dollar.gif.gif","twitter_creator":"@ghanamma","twitter_site":"@ghanamma","twitter_misc":{"Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/#article","isPartOf":{"@id":"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/"},"author":{"name":"","@id":""},"headline":"Don’t bury the dollar just yet","datePublished":"2011-03-11T12:24:17+00:00","mainEntityOfPage":{"@id":"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/"},"wordCount":716,"commentCount":0,"image":{"@id":"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/#primaryimage"},"thumbnailUrl":"http:\/\/www.ghanamma.net\/wp-content\/uploads\/2011\/03\/32883c1ahted_dollar.gif.gif","inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/","url":"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/","name":"Don't bury the dollar just yet - Ghanamma.com","isPartOf":{"@id":"https:\/\/www.ghanamma.com\/2011\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/#primaryimage"},"image":{"@id":"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/#primaryimage"},"thumbnailUrl":"http:\/\/www.ghanamma.net\/wp-content\/uploads\/2011\/03\/32883c1ahted_dollar.gif.gif","datePublished":"2011-03-11T12:24:17+00:00","author":{"@id":""},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.ghanamma.com\/2011\/03\/11\/dont-bury-the-dollar-just-yet\/#primaryimage","url":"http:\/\/www.ghanamma.net\/wp-content\/uploads\/2011\/03\/32883c1ahted_dollar.gif.gif","contentUrl":"http:\/\/www.ghanamma.net\/wp-content\/uploads\/2011\/03\/32883c1ahted_dollar.gif.gif"},{"@type":"WebSite","@id":"https:\/\/www.ghanamma.com\/2011\/#website","url":"https:\/\/www.ghanamma.com\/2011\/","name":"Ghanamma.com","description":"News In Ghana - Latest Ghana News Headlines","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.ghanamma.com\/2011\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/www.ghanamma.com\/2011\/wp-json\/wp\/v2\/posts\/301249","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ghanamma.com\/2011\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ghanamma.com\/2011\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ghanamma.com\/2011\/wp-json\/wp\/v2\/comments?post=301249"}],"version-history":[{"count":0,"href":"https:\/\/www.ghanamma.com\/2011\/wp-json\/wp\/v2\/posts\/301249\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.ghanamma.com\/2011\/wp-json\/wp\/v2\/media?parent=301249"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2011\/wp-json\/wp\/v2\/categories?post=301249"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2011\/wp-json\/wp\/v2\/tags?post=301249"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}