'INTENSIVE CARE'
[Excelsior, Mexico]
Le Monde,
France
The Inevitable End of the
Dollar's Reign
"The omnipotence of the dollar remains a
fact, but China and Brazil have agreed to take a small first step to challenge
and then free themselves from it. … The end of the dollar's reign may be slow. But it is
nevertheless inevitable."
By
Edward Hadas
Translated
By Mary Kenney
May
21, 2009
France - Le Monde - Original Article (French)
The
omnipotence of the dollar remains a fact, but China and Brazil have agreed to
take a small first step to challenge and then free themselves from it.
Beijing and Brasilia have
agreed to fix the rates of bilateral trade in their respective currencies - the
renminbi (or yuan) and the real. If this test works, the global supremacy of
the greenback will be weakened. [Brazil will pay for Chinese goods with reals -
and China will pay for Brazilian goods with renminbi].
Although the United States is
the planet's largest debtor, it is permitted to practice unorthodox monetary
practices and its trade deficits reach levels that are beyond unsupportable.
But they have the enormous advantage of being able to borrow in dollars - their
own currency: this is what economists call their "exorbitant privilege."
Moreover, their currency is used as the unit of reference in all sorts of
situations, from establishing the price of petroleum to comparing gross
domestic products of different countries.
BODY-BLOW
TO TRADITION
Force of habit helps maintain
the greenback's status. Thirty years ago, the United States unquestionably
dominated the world on all fronts: economic, political, military and cultural.
If it has since lost its sense of haughtiness, other nations have continued to
consider the U.S. the authority of reference, and ... to think in dollars. Old
habits die hard.
If it succeeds, the accord
between Beijing and Brasilia would deal a body blow to this aforementioned
tradition. But as long as the global price of reference for most raw materials
continues to be expressed in dollars, no significant change can be expected.
The
enormity of sums owed by the United States to the rest of the world also
permits it to maintain a certain ascendancy. Countries that extend it credit
have every reason to put up with this famed "exorbitant privilege,"
because they benefit from what might be called a strange arrangement: by giving
American consumers the means to purchase imported goods, they ensure markets
and job opportunities in their own economies. To risk allowing change for the
U.S. consumer would only compromise this precious lever.
Posted by WORLDMEETS.US
The
conjunction of two factors - the weight of tradition and of American debt -
mean that the reign of the dollar is not nearly over, even if the
Sino-Brazilian experiment works out.
We could be noted, however,
that the initiative is an expression of irritation that the privileged role of
the dollar inspires in China, a sentiment that has already been stated on a
more-or-less official level. The idea of a world free of the grip of the dollar
is gaining ground. Moscow and New Delhi could join the movement and allow the
currencies of the BRIC (Brazil-Russia-India-China) to form the "4 R"
bloc (real-ruble-rupee-renminbi). The end of the dollar's reign may be slow.
But it is nevertheless inevitable.
CLICK HERE FOR FRENCH VERSION
[Posted by WORLDMEETS.US May 22, 2:55am]
