The U.S. dollar fell on foreign exchange markets today following a report in The Independent, a British newspaper, that China, Japan, Russia and France were working with Arab oil states to eliminate the dollar as the main currency for conducting international petroleum transactions. The report is probably exaggerated, but coming as it does on the heels of debate about the greenback’s future as a global reserve currency, it highlights America’s waning economic influence. Most Americans have no idea how rapidly their nation’s economic standing in the world is receding as a result of two recessions, record trade deficits and unprecedented federal borrowing.
President Obama is right when he says that he inherited this mess after eight years of Republican mismanagement. But he will soon be getting the blame for America’s decline because he shows no signs of grasping how unaffordable his policy agenda is. He thus is continuing the pattern of Bush-era borrowing that led to the loss of global confidence in the dollar. As the October 6 Independent quotes World Bank president Robert Zoellick saying, “One of the legacies of this crisis may be a recognition of changed economic power relations.” Translation: The American Century is over.
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