Utter and complete nonsense. The reason the press doesn't discuss the issue is because it is a non-issue. The only necessary harm done to the US by the Euro becoming the world's primary reserve currency (or sharing the status with the Euro) is a loss of a few hundred million in revenue for the Fed.
Should OPEC set oil prices in Euros and hold their cash reserves in Euros what would be the real consequences for the US? 1. A tiny increase in risk wrt oil prices (we know its tiny because the cost of currency hedging is minimal). 2. A tiny loss of income for the Fed from being able to print cash and create reserves as cash is repatriated and foreign banks accounts in dollars are reduced. 3. Some tendency for the dollar to depreciate which can be completely offset by slower money growth (this and 2 are really the same thing). Perhaps slightly more foreign exchange risk for companies doing business with countries that cease to peg to the dollar. Will be still be able to borrow in our own currency? Of course we will as we will still have the largest and most efficient capital markets in the world. Will investors pull out of the dollar and move into the Euro? So what if they do? That just means higher returns for US investors in US investments (but don't count on that as money has a way of flowing to where it earns the best risk adjusted returns). Is George Bush worried about the Euro? Please! He probably thinks its a river in the Balkans. - - Bill Dickens
