Ed, I'm suggesting the following:
It may be that the most stable system, including from the perspective of the US, is one in which - while the dollar is dominant - there is also some flexibility re the existence of other currencies. The creation of the Euro may, form this persepctive, have been functional to the US. (In fact, there was very little concern about the development of the Euro within the American state). It did not threaten the dollar because the Euro is itself integrated into the dollar-led system. This may lead to future conflicts, but this should not be seen in purely economic terms - Europe remains very distant in its capacities and leadership cultute from challenging American dominance or from wanting the burdens of empire. Perhaps an analogy may clarify this. The extent of post-war American dominance was a problem for the US beyond any geopolitical considerations. The US needed a healthy Eruope/Japan for a healthy American economy. The revival of Europe/Japan did create some headaches for the US but it dod not challenge American dominance (in spite of some of the expectations in the crisis of the 70s because they were by then integrated into the American empire). Today, the US remains dominant and the problems it does have, such as the trade deficit, reflect not Europe/Japanese strength but their weakness. The US would love them to both be growing again and absorbing some of the Chinese imports now concentrated on the US (as well as more American exports). -- Original Message ----- From: "Dickens, Edwin" <[EMAIL PROTECTED]> To: <[email protected]> Sent: Wednesday, February 02, 2005 1:50 PM Subject: Re: [PEN-L] Deficits, the Dollar, and IEDs > Sam, > > Many thanks for your thoughtful responses to my questions. They're most > informative. I hope you don't mind one follow-up question. Threads like > this one always fragment in a thousand directions, usually leaving the > original questions that prompted them unresolved. I hope you don't mind > if > I try to prevent that from happening in this case by quoting two of your > statements below. The first explains why the euro cannot serve as an > alternative to the dollar's role as international reserve currency. Does > the second thus retract the first statement, since it (seems to) explain > how > the euro is indeed a viable alternative to the dollar? Indeed, I > interpret > your point in the latter statement to be that the euro plays a key role in > stabilizing the dollar precisely because in provides an alternative way > for > central banks to hold international reserves. > > Tom Dickens > > > Sam Gindin wrote: > >>The related question is where will they put the dollars?....They can't >>put it in Europe - Europe is already freaked at the rising Euro and >>would surely eventually respond - which would frustrate the intent of >>the shift. > > >>I don't know (no-one does) when a degree of diversification implies >>something qualitative re autonomy re the dollar. I'd argue however, that >>some degree of diversification is in fact functional (increases stability >>without fundamentally challenging american dominance)... >
