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)...
