Saturday, December 4, 2010

Volcker Laments Decline of U.S Hegemony

Former Federal Reserve Chairman Paul Volcker, who is chairman of President Barack Obama’s Economic Recovery Advisory Board, said the U.S. dollar is in danger of losing its role as a global benchmark currency.

“The growing question is whether the exceptional role of the dollar can be maintained,” Volcker told a gathering of New York civic leaders at the University Club of New York last night.

The decline of the U.S. economy, political gridlock at home, U.S. involvement in two wars and “festering” geopolitical issues in the Middle East and Asia have undermined the ability of the U.S. to influence global events, Volcker said.(1)

Much of what Volcker says is influenced by his hard money bias, but there's still not much here to disagree with. It also appears that large sections of the U.S. ruling class have given up reclaiming competitiveness in most industries - believing that the U.S. can only be dominant in finance, and then only by leveraging dollar hegemony.

1'Volcker Says Dollar's Role in Danger as U.S. Influence Declines Globally' - Bloomberg

1 comment:

The Arthurian said...

Some people say that our politicians want things to be worse for the people... I don't see it that way, myself. And obviously, Volcker doesn't see it that way, either (despite that 1979 news clipping you have in the sidebar).

Sadly, it was finance that undermined the U.S. economy in the 1970s. Arnold Toynbee said civilizations die by suicide. If large sections of the U.S. ruling class believe we can only be dominant in finance, we are witness to our own suicide.

When you put finance people in charge of policy, they cannot see debt as a problem.