With the US printing paper dollars by the truckload the American currency cannot remain the world's gold standard. Can something akin to gold be created to act as the measure of value for world trade? China's call for a new stand alone currency for international trade will not work. The difficulties of the Euro has highlighted this. Putting the world's "strong" currencies in a pot with gold then calculating out a value for transactions is also problematical. Wouldn't this be a partial return to the gold standard?
The gold standard worked for a long time mainly because is was a scarce commodity and new finds of the mineral were increasing the gold "pot" at about the same rate as the world growth in trade. A new gold standard would probably not work now because there would be a rush to invest in gold companies which could flood the market.
This would not solve the problem of nations openly trying to weaken their currency to gain a market edge. Quantitative easy by the US is a case in point. The US Treasury bought up securities to increase the money supply. This could still be done with a gold standard.
As time passes people will lose confidence in the US dollar. This is inevitable as the US tries to pull the economy out of recession. China's dominance in low-cost labor industries will not last, but things will not improve for the US as cheap-labor industries move to other less-developed Asian countries. The US cannot turn the clock back. Like Britain, it has had its day in the industrial limelight.
The sun will truly set on US hegemony when the national deficit will finally have to be paid. Many countries beside the US will be in trouble then, particularly the ones issuing bonds in US dollars.
The gold standard worked for a long time mainly because is was a scarce commodity and new finds of the mineral were increasing the gold "pot" at about the same rate as the world growth in trade. A new gold standard would probably not work now because there would be a rush to invest in gold companies which could flood the market.
This would not solve the problem of nations openly trying to weaken their currency to gain a market edge. Quantitative easy by the US is a case in point. The US Treasury bought up securities to increase the money supply. This could still be done with a gold standard.
As time passes people will lose confidence in the US dollar. This is inevitable as the US tries to pull the economy out of recession. China's dominance in low-cost labor industries will not last, but things will not improve for the US as cheap-labor industries move to other less-developed Asian countries. The US cannot turn the clock back. Like Britain, it has had its day in the industrial limelight.
The sun will truly set on US hegemony when the national deficit will finally have to be paid. Many countries beside the US will be in trouble then, particularly the ones issuing bonds in US dollars.
