"But what could replace it? The British pound, the Japanese yen and the Swiss franc remain minor reserve currencies, as those countries are not major powers. Gold is still a barbaric relic whose value rises only when inflation is high. The euro is hobbled by concerns about the long-term viability of the European Monetary Union. That leaves the [Chinese] renminbi."Do most people know that the Chinese currency is called the renmindi? That being said, we aren't there yet:
"At the moment, though, the renminbi is far from ready to achieve reserve currency status. China would first have to ease restrictions on money entering and leaving the country, make its currency fully convertible for such transactions, continue its domestic financial reforms and make its bond markets more liquid. It would take a long time for the renminbi to become a reserve currency, but it could happen."So if we are in bad times, borrowing too much, and China is not quite there to come in and replace the dollar, what does the Doctor suggest?
"Now that the dollar’s position is no longer so secure, we need to shift our priorities. This will entail investing in our crumbling infrastructure, alternative and renewable resources and productive human capital — rather than in unnecessary housing and toxic financial innovation. This will be the only way to slow down the decline of the dollar, and sustain our influence in global affairs."Telling America to stop spending more than it makes is a tall order. Clinton got our deficits down to where we had a surplus. Bush destroyed all that by spending way too much while at the same time cutting taxes. It's now up to us and Obama to get us back to where we need to be.
Source: NYT
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