Published: 7 October, 2009, 19:31
Edited: 25 October, 2009, 17:06
I must say the media storm surrounding British journalist Robert Fisk’s claim that key members of the international financial and monetary community are secretly preparing to dump the dollar anytime soon is rather naive. Of course another internationally accepted monetary unit of exchange is very necessary, but it won’t and can’t happen any time soon. The fact is the world is in a “dollar trap.” This means those with huge sums of dollars – including China, Russia, India and Brazil – can only lose in the short and medium term if the dollar is abandoned.
It is understandable that Fisk focuses on the impact that shorting the dollar would have on the Middle East and global energy markets, however the implications of dumping the dollar are far more profound. Fisk is right in claiming the Middle East will remain the target of outside influences due to its energy wealth if the dollar is replace in energy transactions. However, let’s remember that the global market is not only about oil. What is at stake is the nature of the international trading order that should be truly fair and not only dominated by the West.
One of the truly amazing imbalances the global economy faces today is the ability of the US to print dollars with impunity. No other country can do this today. In many ways it is because the US prints money at will that the world today is experiencing a financial crisis. This must change if the world is to avoid another such crisis, let alone recover from the present one.
Fisk’s claim that there is a hidden conspiracy against the dollar is a total non-starter. Ever since the start of the global financial crisis many countries have questioned the dollar’s continued supremacy – as they should. And it needs to be pointed out that the US is very aware of the anxiety many in the world community have regarding the dollar.
The American greenback is not on its deathbed, but its days of global hegemony are clearly coming to an end. We should welcome this. Everyone must pay their way, including Americans. Alleged backroom discussions cannot change this reality.