… America’s Dollar Hegemony in Decline:
Global plans to replace the dollar metaphorically highlight America’s decline, the topic economist Michael Hudson addressed in his June 13, 2009 article titled, “De-Dollarization: Dismantling America’s Financial-Military Empire.”
For decades, America stayed economically dominant because other nations agreed to a Washington controlled WTO/IMF/World Bank/Bank for International Settlements (the Central Bank of Central Banks in Basel) system, using the dollar as the world’s reserve currency. Other countries, however, now balk.
A June 2009 Yekaterinburg, Russia meeting with top officials of the six-nation Shanghai Cooperation Organization (led by China and Russia) took the first step to end dollar supremacy, perhaps replacing it eventually with a single global currency or a basket of major ones.
Today, America remains unchallenged militarily, its economic supremacy, however, weakening as it staggers under growing debt, while nations like China, Brazil, India, Russia and others are rising.
In July, 2009, Russian President Medvedev advocated a supranational currency. In September, the UN Conference on Trade and Development proposed an artificial one to replace the dollar. Other alliances, including nine Latin American countries, support a regional currency. China wants its yuan protected, and Russia plans to begin trading in the ruble and local currencies.
Hudson calls the present system a “sinister dynamic (because) the US payment deficit pumps dollars into foreign economies (that have) little option except to buy US (debt) which the Treasury spends on financing an enormous, hostile (global) military build-up,” and its ready-to-unleash-anytime war machine.
Moreover, foreign US Treasury buyers may not only be financing their own endangerment, they’re also buying a depreciating asset, what analyst Matthias Chang calls dollar denominated “toilet paper” from a “toilet paper printing press … issu(ing) irredeemable fiat money.”
Why else would world demand for gold and silver be strong. They reflect real value, not paper backed solely by the eroding faith and credit of issuing countries. Buyers clearly lack it in America with good reason. As a result, expect further dollar erosion, decline and perhaps crisis if current selling ahead surges.
No wonder other countries seek a new monetary system to avoid funding America’s deficit and military. BRIC nations (China, Russia, India and Brazil) took the lead. Others are now following, and the weaker the dollar gets, inevitably they’ll be more.
Economist Paul Craig Roberts also believes the dollar’s global reserve currency hegemony won’t last. Sooner or later wholesale dumping will happen when foreign central banks unload them. As a result, import prices will rise enough to make Wal-Mart shoppers “think they have mistakenly gone into Neiman Marcus.”
Domestic prices will also soar “as a growing money supply chases the supply of goods and services still made” domestically. Disruptions will follow. The dollar won’t survive. When it goes America’s trade deficit can’t be financed. Imports will fall sharply. Inflation will rise, and “(p)anic will be the order of the day” because a corporate – government cabal is “strung out on the ecstasy of Empire,” and obsessed with destroying the nation’s middle class to transfer maximum wealth to America’s super-rich already with too much.
A Final Comment: … (full long text).