Is the Almighty Dollar Doomed?

Is the Dollar Doomed?

(Permalink Time Magazine)
So it has been throughout the world, from North Korean souvenir shops to Ethiopian bazaars, for the past six decades. Government officials measure the health of national economies by how many dollars are stashed away in their central bank vaults. The international prices of everything from crude oil to cocoa beans are denominated in dollars. The dollar is a universal medium of exchange, because it is liquid, readily available and backed by the largest economy in the world. There has been little reason for global commerce to function any other way.

Arguments against the status quo have their merits. Over the past two years, global dependence on the dollar has been at the heart of the world's nastiest economic problems. Early in 2008, a weakening dollar was a factor in spiking prices of energy, commodities and food, which placed a disproportionate burden on the limited incomes of the poor. The dollar-dominated system has also allowed the U.S. to finance its budget and trade deficits at a low cost, which perpetuated the global imbalances that contributed to the current economic crisis. A system like the one proposed by Beijing, argues Deutsche Bank economist Jun Ma, would make it possible "for China and many other countries to avoid being victims of the systemic risks generated by domestic economic problems and policy mistakes in issuing countries of major reserve currencies."