Re: end of the reserve currency?

From: Maxwelton (maxwelton_at_my-deja.com)
Date: 11/30/04 

Date: 29 Nov 2004 20:13:33 -0800

William F Hummel <wfhummel@comcast.net> wrote in message news:<4gocq099nohpesjom9bkvr7m1fkpk4356s@4ax.com>...
> On Wed, 24 Nov 2004 21:56:52 -0500, "anon" <me@privacy.net> wrote:
>
> >America already needs almost $2 billion a day from abroad to finance its
> >spending habits, and the situation deteriorates by the week because America
> >imports more than it exports, which worsens the current-account deficit.
>
> The US current account deficit is not a matter of the US being
> dependent on borrowing to finance its spending habits. It is the
> automatic result of the policies of its trading partners who fight
> successfully to increase their share of the US market. They do so by
> supporting unrealistic exchange rates (especially the Asian countries)
> and by maintaining effective barriers to US exports. Consumers will
> buy at the most favorable prices regardless of the country of origin.
> If foreigners are happy to accept US paper for their goods, they are
> financing the purchases themselves.
>
> These trade policies are politically popular with exporting countries
> because they help support their domestic employment. But they are
> self-defeating in the long run because the exchange value of their
> dollar holdings will continue to fall. The only problem for the
> domestic US economy is that the falling dollar will raise the cost of
> imported goods, many of which the US no longer produces, and thus
> increase the cost of general price level.
>
> If and when exporting countries lose their desire to hold more US
> dollars, they will stop pushing so hard for market share and the trade
> deficit will vanish. In the meantime the US consumer will enjoy the
> bonanza.

Bonanza? Not following you. Your previous paragraph is contrary to this,
that is the cost of imported oil is adding cost to the general price
level of the products purchased by the US consumer. An added value that
is in effect paid to another economy.