A recent Bloomberg News story highlights a moment in a video for the movie ``American Gangster,'' where hip-hop maestro Jay-Z thumbs through a wad of 500-euro notes on a night of cruising the concrete canyons of New York City. Of course he can’t spend Euros in Manhattan, but the scene says something about the value of today’s greenback.
The Bloomberg piece on the dollar's decline begins by reminding us just how cavalier the U.S. was in 1971 when President Richard Nixon, in a stopgap move to cope with the inflationary financing of the Vietnam War, announced that the dollar would no longer be backed by gold: ``It may be our currency, but it's your problem'' was Treasury Secretary John Connally's taunt when the U.S. unhooked the dollar from the gold standard in 1971, unilaterally rewriting the rules of world business in America's favor.
Now Bloomberg notes, “the world is taunting back. Almost four decades after the U.S. tore up the monetary arrangements that governed the post-World War II international economy, the dollar's fall from grace amounts to a tectonic shift in the global hierarchy. This time, the U.S. currency is on the losing side.
“After declining in five of the last six years, the weakest dollar in the era of floating currencies reflects a period of diminished U.S. political and economic hegemony. Whoever wins the White House next year will confront two unpopular choices: Accept the fall in U.S. clout and the rise of new rivals, or rein in record public and consumer debt that the rest of the world no longer wants to bankroll.”
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