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The Value of the U.S. Dollar … Is it Real or Memorex?

Is America status around the world losing its power? The International Monetary Fund issued a report Thursday on a possible replacement for the dollar as the world’s reserve currency.

The IMF said “Special Drawing Rights,” or SDRs, could help stabilize the global financial system. While the SDRs are not a tangible currency, some economists argue that SDRs could be used as a less volatile alternative to the U.S. dollar.

The goal is to have a reserve asset for Central Banks that better reflects the global economy since the dollar is vulnerable to swings in the domestic economy and changes in the U.S. policy.

Is the world looking at the U.S. economy and its inability to stabilize itself as a turning point to look elsewhere for reserves that could compete more favorably,worldwide?

Fred Bergstein, director of the Peterson Institute for International Economics, said at a conference in Washington that IMF member nations should create $2 trillion worth of SDRs over the next few years.

Where will that leave the U.S. and its lack luster dollar? Can the U.S. dollar survive another 10 years of weak economy and high unemployment numbers? Is the Super Power losing its influence on the rest of the world because it can’t get its own house in order? Is this the beginning of the end or can the U.S. turn itself around before it is viewed around the world as inconsequential?


February 11, 2011 - Posted by | Business News | , , , , , ,

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