Reg Little gets very close to the truth.

The position of the American Dollar as the currency of world trade, and as the principal reserve currency, made sense while the USA had a positive trade balance from the end of WW2 until the end of the sixties. Once the USA became a significant debtor nation the USA political system has been corrupted as the government and business struggled to maintain the USA's no longer warranted prime position.

In my view Keynes saw this likely problem when he sought to have future international trade in real goods and services denominated in a separate currency, the Bancor. That proposal had its own built in future problem. Even starting such a system with a disproportional share of the new currency going to the debtor nations, the most successful creditor nations would eventually corner most of that currency.I doubt if even tying a Bancor to a basket of currencies would solve that problem.

International trade is always exactly balanced; the total accumulated wealth of the successful trading nations equals the accumulated debts of the unsuccessful.

Ultimately sovereign currencies have to fluctuate in relative values and some international debts have to be forgiven.

After all, a significant proportion of trade is carried out to solve problems associated domestic underemployment of either people and capital equipment, or both and particularly with manufactured goods.

As David Hume said, and as Smith repeated, money is not a valid item of trade it is the lubricant, that, in modern terms, should stop the wheels falling off.

some valid points.

for past few centuries it has been the UK (18th and 19thC) and then the US which has played the important stablising role in terms of currency.

But while you bag the predicement of the US, ask yourself who would the world trust to the be the new US; it may be China as it wins support from other countries, but i for one have a problem with greater leadership from a far less transparent and more corrupt authoritarian nation.

I see problems ahead, dont you Reg?

It's about time Australian thinkers and commentators took heed of the excellent criticism of the USA by it's leading philosophers and critics. It isn't only the financial shenanigans we should be very concerned about, but also human rights, freedom of speech and thought and government accountability.
Chris Lewis you are deluding yourself if you think the USA is one whit better than any other state. As Paul Craig Roberts pointed out in an excellent article "You are the Hope" in ICH on 4th May:- "...the First Black President, the first member of the oppressed class to sit in the Oval Office, validates the Bush Regime’s assertion of the right of the unaccountable executive to ignore habeas corpus and due process. Not satisfied with this crime, Obama asserted the right of the executive branch to murder any citizen suspected, without proof being offered to a court, of undefined “support of terrorism.” Today all Americans have fewer rights than blacks had prior to the Civil Rights Act. Anything, including a column critical of war and the police state, can be declared to be “in support of terrorism.” As the tyrant Bush put it: “You are with us, or you are against us.” The print and TV media and many Internet sites got the message: Serve Washington’s agenda, and will you will prosper. Advertisers and the CIA will pump money into your coffers. Challenge us and you will be demonized and could face a military tribunal, indefinite detention, or assassination. Bradley Manning and Julian Assange are being persecuted for telling the truth."
The article continues with dreadful examples of state corruption and intimidation. Like so many critics, Roberts isn't an ignorant loudmouth, he was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. His latest book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is now available

so you are saying China will provide better internaitonal leadership?

Please explain why?

no doubt the more the Christian Judeo ethics are trashed the more corrupt a nation becomes. Can't keep a marriage vowel you are far more likely not to keep your word as a pollie. Moral relativsism has equalled decay and corruption. We have seen this in Aussie.

Very interesting article on a conservative perspective of the state of the American nation.

"...a world where Anglo-American exceptionalism could become a troubled memory."

Of course it could, but what is the probability that development will actually occur?

All this seems very familiar. The one reliable characteristic of economic and political forecasts is that they're usually wrong, so I 'd recommend some caution in regard to the rise of Asia and the decline of the US. Twenty years ago Japan was the star performer and I can remember attending economic seminars with the "Japan as Number One" theme---the rest is history.

Confucianism was also presented at the time as the factor that animated South Korean and Japanese development. The fact is that no culture has been able to reach industrial maturity without introducing liberal democratic reforms to some extent, regardless of its cultural traditions. Can the Chinese Communist Party manage that process and manage Chinese society at the same time?

I'd a agree with Chris Lewis, America, despite its flaws, particularly its bellicose foreign policy, still possess enormous intellectual, institutional and material resources, so discounting a Niall Ferguson style "Precipitate Imperial Collapse", I'd put all my money on the USA to maintain its position into the long term, and it's the "least bad" of any potential hegemons

Australians are always looking for a "Great and Powerful Friend", there aren't any, just trading partners.