This is something that pen-l has discussed a lot in the past, so I'm not going to provide a full-scale reply. But, _of course_ their are limits to U.S. power and I didn't say otherwise. And the fall of the USSR was crucial to boosting the power of the US, so that the dollar is better seated as the world currency than it was in the 1970s or 1980s.
Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine > -----Original Message----- > From: Ulhas Joglekar [mailto:[EMAIL PROTECTED]] > Sent: Wednesday, May 15, 2002 1:36 PM > To: pen-l > Subject: [PEN-L:26017] Re: RE: Re: Re: Re: Protectionism US style > > > Devine, James: > > > Ulhas writes:>Why does the world continue to accept debt payment in > dollars? > > I remember De > > Gaulle refusing dollars and demanding payment in gold in '60s.< > > > > because the U.S. is the most powerful country in the world > and in the era > > since 1971-73, money based on political-military power has > replaced money > > based on precious metals. > > US is powerful, but there are limits to US power. (e.g. US > has not been able > to capture Bin Laden 8 months after 9/11) US is the most > powerful country > in the world, but this power has grown dramatically after the > disintegration > of fSU. US power wasn't so all pervading in the 70s and 80s. > e.g. India's > trade with the Soviet block (between 15-20% of India's > foreign trade) was > entirely in Indian currency. US political- military power > could do nothing > about it. Can US compel China to hold fx reserves in dollars, > if China was > unwilling? > > Yes, precious metals have been replaced by $. But, if Euro or Yen > were strong enough, the rest of the world would, perhaps, > hold its reserves > or a portion of them, in those currencies? > > Ulhas > > > >
