An article today titled ‘China Wants a Global Currency? Here's How' by Dr. Peter Morici, Professor of International Business at the University of Maryland, gives a brief history of how and why the U.S.$ has ended up where it is against other currencies – notably the Yuan, and why he thinks the countries (read China) that are now petitioning for a new World Reserve Currency should ‘look inward'.  I recommend you click here and read the article.

I see the article as being a useful read, but don't see things quite the way Dr. Morici does.  After reading the article I added the following comment to it:

I found this article to be a well written and thoughtful commentary on how things have gotten to where they are. The question I have of Dr. Morici is: Exactly what U.S. goods and services does he see ‘China and others' purchasing that would allow the ‘U.S. economy to grow robustly'? It seems to me that U.S. manufacturing jobs lost are unlikely to be recovered given the ‘country comparative' wage discrepancies, and 'service offerings' are unlikely to be exportable over time as exportable services are based on knowledge offerings that can be replicated in developing countries.

This comment captures my concerns with Dr. Morici's conclusion that "If China and others want that problem (holding dollars that chronically fall in value against other currencies) fixed, they need to abandon currency manipulation and let their populations purchase more U.S. goods and services.  The U.S. economy would grow robustly, federal borrowing would subside and the threat of too many dollars compromising the dollar's role in international finance would vanish".  I see this conclusion as inconsistent with what I see as:

•    the reality that past U.S. Administration policies and decisions have resulted in a significant continuing erosion of U.S. economic power vis a vis the developing countries, particularly after the turn of this century; and,

•    U.S. economic power inevitably further eroding over time given ongoing geo-economic realignment, and the different underlying ideologies of its principle trading partners.

Comments on this post, particularly disagreements with my views, will be appreciated.