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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Les H who wrote (182334)7/23/2002 10:27:00 AM
From: Les H  Read Replies (1) of 436258
 
Dollar hegemony is a structural condition in world finance and trade in which the US produces dollars and the rest of the world produce things dollars can buy. In 1971, the late US president Richard Nixon abandoned the Bretton Woods regime of a gold-backed dollar and fixed exchange rates to stop the gold drain from the US Treasury caused by chronic lapses of US fiscal discipline. At that point, the dollar, as a fiat currency, theoretically abdicated its reserve-currency status for world trade. Yet for more than three decades since, the dollar has remained the reserve currency for world trade despite continued chronic US government and trade deficits and the transformation of the United States into the world's most indebted nation. Notwithstanding its role as the leading proponent of market fundamentalism, the United States maintains a strong-dollar policy as a matter of national interest, in defiance of market forces.

A reserve currency for world trade without the necessary disciplinary backup is in reality a tax by the issuing sovereign on all other sovereigns participating in world trade via that currency.

more at... atimes.com

why a crash would be good for the United States economy?

atimes.com
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