Re: What-if scenarios

[BMCFARLING@xxxxxxxxxxxxxx]

On Fri, 08 Jul 1994 16:02:49 -0600, Stephen Guastell(o?) writes:
>
> In light of the present discussions, esp. the yen as an international
> medium of exchange, a couple what-if scenarios came to mind:
>
> 1. According to King & Schneider ("The First Global Revolution") it is
> inevitable that the dollar will cease to be the international medium
> of exchange while the yen and/or the mark take its place. (a) what
> would be the effect on the US economy, and (b) is such a scenario
> likely in the next five years?

	Don't forget the possibility of trading spheres with different
international reserve currecnies in each sphere. Just as in the interwar
period, Japan's and the U.S.'s trade area overlap to a substantial extent,
while Germany's is far more independent. It is possible for two
international currencies to exist, one in the America's and Pacific Rim,
another in Europe, Central Asia and Africa.

> 2. There was mention that the US is running up massive deficits while
> the former axis nations are having the opposite economic experience.
> A substantial amount of our deficits accumulated as a result of
> defense-related spending in the last decade. WHAT IF the US took a
> fast about-face, decided that it was no longer interested in playing
> "cops of the world" and demanded greater cost sharing for world
> security. Here I am thinking of the United Nations mechanisms for
> approving military action. (a) What would be the world economic
> impact? (b) Would the impact be different before or after the replacement
> of the dollar as the international medium? (c) Would there be a
> secondary political backlash for taking such a move? (I presume it
> would not be a smooth transition by any stretch, but how deep would
> it go?

	Recall the historical precedent, that the U.S. has a longer and more
persistent history of meddling in the New World and Pacific Rim than in
European, Central and South Asian and African affairs.

	I would suggest that there are two quite different questions here:
will the post WWII involvement with the European North Atlantic nations
persist, and will the dollar remain the international currency of Europe
and its periphery? Will the century-long involvement in Latin America,
the Caribbean, and the Pacific Rim continue, and will the dollar remain
the international currency of this area?

Virtually,

Bruce McFarling, Pellissippi State
bmcfarling@xxxxxxxxxxxxxx