Funny that we talked about this just yesterday in regard to a relatively obscure article, and now it is the 2nd leading story on the front page of the NY Times. Get a load of this:
The president of the World Bank said Monday that America’s days as an unchallenged economic superpower might be numbered and that dollar was likely to lose its favored position as the euro and the Chinese renmimbi assume bigger roles.
“The United States would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency,” the World Bank president, Robert B. Zoellick, said in a speech at the Johns Hopkins School for Advanced International Studies. “Looking forward, there will increasingly be other options to the dollar.”
Mr. Zoellick, who previously served as the United States trade representative and as deputy secretary of state under President George W. Bush, said that the euro provided a “respectable alternative” for financing international transactions and that there was “every reason to believe that the euro’s acceptability could grow.”
Over the next 10 to 20 years, he said, the dollar would face growing competition from China’s currency, the renmimbi. Though Chinese leaders have minimized their currency’s use in international transactions, largely so they could keep greater control over exchange rates, Mr. Zoellick said the renmimbi would “evolve into a force in financial markets.”
Read the article. It is beyond extraordinary that the US-appointed head of the World Bank would be so in-your-face provocative, casting doubt on Obama’s strategy to lead us to financial recovery under the supervision of the Fed (as opposed to the Treasury) and openly questioning whether we can pay our debts without igniting inflation. I personally don’t think so, and it’s clear Zoellick doesn’t, either. All of these points were discussed here yesterday, and it’s clear Zoellick read this site before presenting at Johns Hopkins.
Richard Burger is the author of Behind the Red Door: Sex in China, an exploration of China's sexual revolution and its clash with traditional Chinese values.