Re: [A-List] Rep Ron Paul (R-TX) Speech: The End of Dollar Hegemony

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

mdriscoll@xxxxxxxxxxxxx wrote:

> Strike such ignorance
> from your mailing list.  ( I could go on for pages, but the obvious
> example...oil sold at $60. a barrel is the same as oil sold at 50 euros, 36
> pounds, etc.  NO ONE cares a damn.  The money is fungible and in one second
> on the internet can be converted into any currency at known ratios.)"
I have always maintained that the euro, or the yen or whatever, are no
threat to dollar hegemony.  This observation reinforces the concept of
dollar hegemony. These currencies are mere derivatives of the dollar,
not alternatives. But something fundamentally different is happening
with the emergence of the Chinese economy.  As China develops, its
demand for commodities will require a readjustment in the current
international finance architecture which is dominated by dollar hegemony
at present.  This is because, as some in the US are beginning to become
aware, dollar hegemony has caused the dollar economy to become
noncongruent with the US economy, that what is good for the dollar is
not necessarily good the US economy or population.  Dollar hegemony will
fall if and when exporting nations begin to demand payment in their own
currencies rather than dollars that cannot be used in their domestic
economies and the country with the largest trade will command the
dominant currency in world trade. This was how the dollar became the
dominant currency for trade after WWII, at a time when the US economy
was most productive.  As oil producers begin to understand where their
new markets are shifting to, they will want to denominate oil in the
currencies of that market or they may not be able to sell the oil or buy
products from that country. So dollar hegemony will be threatened only
by new terms of trade, not by central banks shifting their reserves from
one currency to another.

The statement above by whoever shows only the narrow perspective of a
trader. Iit has no relevance to marco economics in the context of
geopolitics. Further, to say that "oil sold at $60. a barrel is the same
as oil sold at 50 euros, 36 pounds, etc. NO ONE cares a damn. The money
is fungible and in one second on the internet can be converted into any
currency at known ratios.)" shows real ignorance.  It makes a great deal
of difference to who can print dollars, who can only print euros and who
can only print pounds, the dollar derivatives. The so-called known
ratios of conversion  are affected by how many dollars the Fed decides
to print.  Usually, the aggressive tone of a response betrays the real
ignorance of the respondent.

Henry C.K. Liu