Dollar power on the wane, new reserve system likely : Stiglitz

[lem34]

Dollar power on the wane, new reserve system likely : Stiglitz

HT Correspondent, Hindustan Times
Guwahati, January 10, 2012
First Published: 22:34 IST(10/1/2012)

The days of the US dollar as a global currency, with its overarching charisma as a brand to measure everything from hamburger prices to trade between remote nations could be on the wane, says Nobel-prize winning Joseph Stiglitz. Stiglitz expects a new world reserve system to evolve at the next meeting of the G-20 group of the world’s leading economies.

“I am for a new global reserve system because money is moving in the wrong direction – from poor to rich countries. China and Russia pushed for a new reserve system at the last G-20 meeting but the United States did not agree to let the dollar be replaced,” Stiglitz said. “Hopefully, there will be a consensus on a departure from the dollar-dominated regime.”

Stiglitz, who won the Nobel in 2001, was in Guwahati to participate in a conversation with economist Lord Meghnad Desai on ‘Asia Rising: Implications for the World Economy’.

Stiglitz, a staunch critic of economic globalisation, feels a new global monetary order is imminent in view of the slide in the US economy and China’s emergence as a major economic power. The weakening of the euro was also a factor, he said.

Calming pessimists, Stiglitz said both China and India could expect stronger financial markets as they both had strong savings.

“Savings in the US is very low. People spend lavishly, and it is showing,”he said

 

[Rocky25]

Who helps the nation more, a spendthrift or a miser? It itslelf is a big topic to debate!

 

[gambit]

Who helps the nation more, a spendthrift or a miser? It itslelf is a big topic to debate!

That is called a 'false dichotomy' or false choices. What happened to moderation or even periodic cyclings between the two?

Ask Marilyn Sunday's Column November 20, 2011 | Parade.com

I keep reading about how slowly the economy is growing and how this is such a bad thing. Why do we need growth? If we depend on more and more people to swell the economy, how can we—or the world, for that matter—possibly sustain this? —Andrew Karpe, Brookline, Mass.

Economic growth refers to escalating productive transactions from the use of natural resources, technology development, labor, etc. It doesn’t correspond to population growth. A “growing” economy is one in which more and more of these buy-and-sell activities occur, regardless of the number of people involved. In other words, an economy can grow with a stable population. Economic growth is what raises our standard of living. An economy can be perfectly sound without an expanding output of goods and services, but the quality of everyday life won’t increase rapidly, if at all.

In other words, economic growth depends on consumption, aka 'spending'. In a closed economic system, the consumption must come from the people inside this closed system. But in international trade one people's consumption can fuel another country's economic growth. That is why the US have been the preferred vehicle for many to grow their economies.

No one forced anyone to sell to American consumers. No one forced anyone to use the dollar as de facto global currency. Those who sold to Americans and used the dollar as a standard benefited economically. So how credible is the charge that America 'did not let the dollar be replaced' when in 2008 China VOLUNTARILY returned to the dollar and continued to buy US Treasury notes and to hoard the dollar?

RIETI - Revaluation of Yuan Expected to Resume Soon

The yuan appreciated moderately against the dollar following China's move to a managed floating rate system in July 2005, but returned to the dollar peg system in July 2008 as part of the response to the global financial crisis. However, to keep the exchange rate of the yuan below the equilibrium rate, the central bank needs to intervene heavily in the foreign exchange market, and the accompanying expansion of liquidity has increased inflationary pressure and driven up real estate prices.

Want to replace the dollar? Replace the driving consumers.

 

[SinoChallenger]

That is called a 'false dichotomy' or false choices. What happened to moderation or even periodic cyclings between the two?

Ask Marilyn Sunday's Column November 20, 2011 | Parade.com

In other words, economic growth depends on consumption, aka 'spending'. In a closed economic system, the consumption must come from the people inside this closed system. But in international trade one people's consumption can fuel another country's economic growth. That is why the US have been the preferred vehicle for many to grow their economies.

No one forced anyone to sell to American consumers. No one forced anyone to use the dollar as de facto global currency. Those who sold to Americans and used the dollar as a standard benefited economically. So how credible is the charge that America 'did not let the dollar be replaced' when in 2008 China VOLUNTARILY returned to the dollar and continued to buy US Treasury notes and to hoard the dollar?

RIETI - Revaluation of Yuan Expected to Resume Soon

Want to replace the dollar? Replace the driving consumers.

I'll take the opinion of Nobel-prize winning Joseph Stiglitz over your "economics expertise" anyday, gambit.

"The days of the US dollar as a global currency, with its overarching charisma as a brand to measure everything from hamburger prices to trade between remote nations could be on the wane."

 

[lem34]

I'll take the opinion of Nobel-prize winning Joseph Stiglitz over your "economics expertise" anyday, gambit.

"The days of the US dollar as a global currency, with its overarching charisma as a brand to measure everything from hamburger prices to trade between remote nations could be on the wane."

Some will continue to live in denial no matter what. Its just too painful for them to imagine a bust America

 

[Sugarcane]

Can we link this news to topic as well

Russian authorities are considering creating a reserve stock of Russia’s main natural resource – oil. They say it would provide a more flexible oil export policy as well as affect domestic prices.

The Russian Ministry of Energy plans to adapt disused salt mines to store 15 million tonnes of oil, the equivalent of 2-3 days production. The project was prepared by Moscow Institute for Energy and Finance, it has been chosen by Ministry of Energy among other applicants.

“Construction of above ground facilities is very expensive. We plan keeping oil in salt mines”, Vladimir Revenkov from the Moscow Institute for Energy and Finance told Izvestiya Daily. “Logically, the oil reserve fund requires special legislative regulation, other than Rosreserv and commercial stocks”, he added.

But not all experts agree Russia needs an oil reserve stock. “Usually importing countries create oil stocks to secure themselves from changes of supply. But Russia is an oil producer, it has enough oil anyway”, says Sergei Vakhrameev from Metropol invest company. “The oil reserve stock in Russia could be created mainly for logistic purposes”.

Nowadays many countries such as the USA, Germany, France and South Africa have their own oil stocks. The International Energy Agency (IEA) requires its members to make provision for 90 days supply. In the middle of 2011 IEA asked its members to sell a part of the stock as Libya’s unrest pushed oil prices up.

Black gold for a black day — RT

And how about this one

The American dollar will no longer be used in trade between Iran and Russia, and will be replaced by their national currencies in bilateral trade.

*According to the Iranian Ambassador to Moscow, Seyed Reza Sajjadi, the proposal to switch to the rouble and the rial came from Russian President Dmitry Medvedev at a meeting with Mahmoud Ahmadinejad, during the Shanghai Cooperation Organization summit in Kazakhstan.

The move follows sanctions imposed by the European Union, the U.S. and the United Nations against Iran over its nuclear program. The Islamic Republic has already replaced the dollar with national currencies in its oil trade with India, China and Japan.

“I think it’s relatively positive for the Russian currency, actually as for any currency which is used when bilateral contracts are enumerated in this currency”, says Evgeniy Nadorshin, chief economist of JSFC Sistema.

“This was expected taking into account that the United States can no longer support the stability of its own currency. That’s the major problem… Many countries are switching to more stable currencies, to make it more comfortable for them to fulfil trade obligations. And this trend will continue”, he added.

No more bucks for Iranian-Russian trade — RT

 

[Sugarcane]

Currency Swap agreements between China-Japan, Iran-Russia will defiantly put lot of pressure on US.

 

[jamal18]

Some will continue to live in denial no matter what. Its just too painful for them to imagine a bust America

It takes a blind man to believe that the dollar can continue as the world currency. It really is over for the dollar.

Its just a matter of time before it goes over the precipice.

 

[Sugarcane]

I think world should revert back to gold coins and dump all paper money, Save Trees and Go Green

 

[gambit]

I'll take the opinion of Nobel-prize winning Joseph Stiglitz over your "economics expertise" anyday, gambit.

"The days of the US dollar as a global currency, with its overarching charisma as a brand to measure everything from hamburger prices to trade between remote nations could be on the wane."

Good thing that you do because I highlighted the significant words 'could be' for you. But I doubt that he got his Nobel laureate from his English whereas you seems to need instructions on what 'could be' really mean.

 

[foxbat]

US dollar to remain dominant global currency despite its economic travails - The Economic Times

 

[FairAndUnbiased]

Some will continue to live in denial no matter what. Its just too painful for them to imagine a bust America

The USD is involuntarily forced on every industrial country that's not swimming in oil.

Sure, it's not forced on African dictatorships. But for everyone else its essentially a ball and chains locked in by Saudis and US Navy.

 

[lem34]

The USD is involuntarily forced on every industrial country that's not swimming in oil.

Sure, it's not forced on African dictatorships. But for everyone else its essentially a ball and chains locked in by Saudis and US Navy.

Only a matter of time. Tyrants always end up in the dust bin of history that's where this lot really belong

 

[fd24]

Currency Swap agreements between China-Japan, Iran-Russia will defiantly put lot of pressure on US.

Put pressure? Bro they are foaming at the mouth. The dollar is a spent force. At the moment quantitive easing and artificially stimulating the economy is just about keeping its head above water. The tsunami is just around the corner and lets be honest the destiny of the dollar no longer is in the hands of the Americans.

 

[gambit]

The thing about these Nobel laureates who wishes to remain in the public spotlight without being held accountable is to caveat their commentaries with 'could' or 'possibly' or 'perhaps' or 'potential' but not with 'likely' or 'will be'. Then they sit back with satisfaction as calls from media talking heads come pouring and that people like the ones in this discussion begins to take their words as if they are from the gods themselves. And when whatever predictions that came from specious interpretations of their words fail to materialize, they could always fall back upon those caveats and retreat into the safety of academia.