Russian Prime Minister Vladimir Putin has told the Davos economic forum it is dangerous for the world to over-rely on the dollar as its reserve currency.The emergence of regionally based reserve currencies would create more political instability, not less. It would beget trading blocs, which would lead to the kind of economic rivalries that capitalist powers had during the first half of the 20th century, ending with World War 2. Capitalism is not a very stable economic system to begin with, as its components seek constant expansion and productivity growth. Without the unifying backdrop of dollar-based assets, there would be an intensifying of rivalries and trade disputes.
He called for a range of reserve currencies and said he envisaged the emergence of several strong regional currencies in the future.
Friday, January 30, 2009
Putin Calls for the End of the Dollar's Reserve Status
From the BBC:
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2 comments:
As long as the US dollar continues to be the world's reserve currency, there will be few or no jobs for ordinary Americans, who may not always have a Ph.D. The only real reason the US dollar continues to be the world's reserve currency is that the US military and diplomatic activities ensure that the Gulf oil countries continue to stockpile US dollars in their forex reserve and till date there is no way to purchase petroleum without first changing to dollars.
The compulsion to maintain the dollar as a CB reserve helps companies like Exxon Mobil make ever higher record profits, while the ordinary (otherwise working)American stands in a food line.
Ever since the Williams Jennings Bryan Cross of Gold speech the choice in America has simply been whether to save the domestic economy by de linking from the globe, or to save it by dominating the globe. The latter choice leads to fluctuations that are beyond the control of the working American. The former leads to a loss of accumulated wealth, both for America and several trading partners.
thanks for your comment..the projection of US military power is an important (but usually undiscussed) element to currency issues.
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